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Home My WebLink About12-5-2018 Council Agenda PacketSaratoga City Council Agenda – Page 1 of 5 SARATOGA CITY COUNCIL REGULAR MEETING DECEMBER 5, 2018 6:00 P.M. JOINT MEETING Linda Callon Conference Room, City Hall | 13777 Fruitvale Avenue, Saratoga, CA 95070 Joint Meeting with Santa Clara County Sheriff's Office 7:00 P.M. REGULAR SESSION Civic Theater, Council Chambers | 13777 Fruitvale Avenue, Saratoga, CA 95070 PLEDGE OF ALLEGIANCE ROLL CALL REPORT ON POSTING OF THE AGENDA The agenda for this meeting was properly posted on November 29, 2018. REPORT FROM JOINT MEETING ORAL COMMUNICATIONS ON NON-AGENDIZED ITEMS Any member of the public may address the City Council for up to three (3) minutes on matters not on the Agenda. The law generally prohibits the City Council from discussing or taking action on such items. However, the Council may instruct staff accordingly. ANNOUNCEMENTS CEREMONIAL ITEMS Commendation for Leslee Warick Recommended Action: Present the commendation to Leslee Warick. Saratoga City Council Agenda – Page 2 of 5 1. CONSENT CALENDAR The Consent Calendar contains routine items of business. Items in this section will be acted on in one motion, unless removed by the Mayor or a Council Member. Any member of the public may speak on an item on the Consent Calendar at this time, or request that the Mayor remove an item from the Consent Calendar for discussion. Public Speakers are limited to three (3) minutes. 1.1. City Council Meeting Minutes Recommended Action: Approve the City Council minutes for the Regular City Council Meeting on November 21, 2018. 1.2. Review of Accounts Payable Check Registers Recommended Action: Review and accept check registers for the following accounts payable payment cycles: 11/20/2018 Period 5; and 11/27/2018 Period 5. 1.3. Treasurer’s Report for the Month Ended October 31, 2018 Recommended Action: Review and accept the Treasurer’s Report for the month ended October 31, 2018. 1.4. Ordinance Amending Parking Standards in the C-H Districts (The Village) Recommended Action: Waive the second reading and adopt the attached ordinance amending Chapter 15 (Zoning Regulations) of the Saratoga Municipal Code related to parking standards. 1.5. Annual Audit Reports Recommended Action: Review and accept the following annual audit reports for Fiscal Year 2017/18; A. Comprehensive Annual Financial Report (CAFR) B. Transportation Development Act Audit Report (MTC Grants) C. Single Audit Report D. Appropriation Limit Report (Gann, Fiscal Year 2018/19) E. SAS 114 Report F. SAS 112 Report G. State Controller’s Office Financial Transaction Report Summary 1.6. Annual Code Update for 2018 Recommended Action: Waive the second reading and adopt the attached ordinance updating various provisions of the City Code. Saratoga City Council Agenda – Page 3 of 5 2. PUBLIC HEARING Items placed under this section of the Agenda are those defined by law as requiring a special notice and/or a public hearing or those called by the City Council on its own volition. 2.1. Offer to Dedicate Easement for Storm Drainage and Control from Boguslaw and Barbara Marcinkowski to the City of Saratoga Recommended Action: 1. Adopt Resolution accepting Offer to Dedicate Easement for Storm Drainage and Control from Boguslaw Marcinkowski, trustee of the Boguslaw J. Marcinkowski Revocable Trust, (“Marcinkowski”) to the City of Saratoga for a Storm Drainage and Retention System at 21143 Chadwick Court, City of Saratoga (APN 503-15-042). 2. Adopt Resolution Vacating Public Service Easement currently held by the City of Saratoga. 3. GENERAL BUSINESS 3.1. Resolution to Support the Formation of a Regional Housing Needs Allocation Subregion for Santa Clara County Recommended Action: Approve the attached resolution to support the formation of a Regional Housing Needs Allocation (RHNA) subregion. 3.2. Resolution Approving the Adoption of CalPERS Supplemental Income 457 Plan Recommended Action: Adopt the attached resolution approving CalPERS Supplemental Income 457 Plan as an additional 457 Deferred Compensation plan option. 3.3. Acceptance of Public Art Recommended Action: Authorize execution of the attached agreement accepting donation of a painting from artist Pavel Mester and approve placement of the artwork in the Joan Pisani Community Center for a period of at least 1 year. 3.4. Review of City Council Assignments Recommended Action: Review the list of City Council assignments and provide direction on changes to items included in the assignments. COUNCIL ASSIGNMENTS Mayor Mary-Lynne Bernald Cities Association of Santa Clara County-Legislative Action Committee Cities Association of Santa Clara County-City Selection Committee Council Finance Committee Hakone Foundation Board Public Art Committee Saratoga Historical Foundation South Flow Arrivals Ad Hoc Committee West Valley Clean Water Program Authority Saratoga City Council Agenda – Page 4 of 5 West Valley Mayors and Managers West Valley Solid Waste Management Joint Powers Authority Vice Mayor Manny Cappello Cities Association of Santa Clara County Board of Directors Santa Clara County Housing and Community Development (HCD) Council Committee Saratoga Area Senior Coordinating Council (SASCC) West Valley Sanitation District Council Member Howard Miller America in Bloom Committee Council Finance Committee Saratoga Ministerial Association Saratoga Sister City Organization Silicon Valley Clean Energy Authority Board of Directors Valley Transportation Authority (VTA) Policy Advisory Committee VTA State Route 85 Corridor Policy Advisory Board Council Member Emily Lo Hakone Foundation Board & Executive Committee KSAR Community Access TV Board Public Art Committee Santa Clara County Library Joint Powers Authority Council Member Rishi Kumar Association of Bay Area Governments Saratoga Chamber of Commerce & Destination Saratoga Santa Clara County Expressway Plan 2040 Policy Advisory Board Santa Clara Valley Water District Commission CITY COUNCIL ITEMS COUNCIL COMMUNICATIONS CITY MANAGER'S REPORT ADJOURNMENT CERTIFICATE OF POSTING OF THE AGENDA, DISTRIBUTION OF THE AGENDA PACKET, COMPLIANCE WITH AMERICANS WITH DISABILITIES ACT I, Debbie Bretschneider, City Clerk for the City of Saratoga, declare that the foregoing agenda for the meeting of the City Council was posted and available for review on November 29, 2018 at the City of Saratoga, 13777 Fruitvale Avenue, Saratoga, CA 95070 and on the City's website at www.saratoga.ca.us. Signed this 29th day of November 2018 at Saratoga, California. Debbie Bretschneider, City Clerk Saratoga City Council Agenda – Page 5 of 5 In accordance with the Ralph M. Brown Act, copies of the staff reports and other materials provided to the City Council by City staff in connection with this agenda are available at the office of the City Clerk at 13777 Fruitvale Avenue, Saratoga, CA 95070. Note that copies of materials distributed to the City Council concurrently with the posting of the agenda are also available on the City Website at www.saratoga.ca.us. Any materials distributed by staff after the posting of the agenda are made available for public review at the office of the City Clerk at the time they are distributed to the City Council. These materials are also posted on the City website. In Compliance with the Americans with Disabilities Act, if you need assistance to participate in this meeting, please contact the City Clerk at 408.868.1269. Notification 24 hours prior to the meeting will enable the City to make reasonable arrangements to ensure accessibility to this meeting. [28 CFR 35.102-35.104 ADA title II] 12/05 6:00 p.m. Joint Meeting with Sheriff’s Office | 7:00 p.m. Regular Session 12/13 7:00 p.m. Council Reorganization 12/19 6:00 p.m. Study Session – Council Norms | 7:00 p.m. Regular Session CITY OF SARATOGA CITY COUNCIL MEETING CALENDAR 2018 City of Saratoga CITY COUNCIL JOINT MEETING Meeting Discussion Topics Joint Meeting with Santa Clara County Sheriff’s Office December 5, 2018 | 6:00 p.m. Saratoga City Hall | Linda Callon Conference Room 6:00 p.m.Welcome & Introductions 6:10 p.m. 6:30 p.m. News & Updates Crime Trends 6:45 p.m.Other Remarks & Wrap-up Dinner will be provided at the Joint Meeting. The Regular Session of the City Council begins at 7:00 p.m. in the Civic Theater. Joint Meeting attendees are invited to attend the Regular Session and share an overview of the Joint Meeting. 6 SARATOGA CITY COUNCIL MEETING DATE:December 5, 2018 DEPARTMENT:City Manager’s Office PREPARED BY:Debbie Bretschneider, City Clerk SUBJECT:Commendation for Leslee Warick RECOMMENDED ACTION: Present the commendation to Leslee Warick. BACKGROUND: Leslee Warick has been a member of the Saratoga community since 2012 when she opened the Barn Owl. In 2016, Leslee was selected as the Chamber of Commerce’s Business Person of the Year. Leslee is well-known as an enthusiastic volunteer for the Saratoga Village and as the creator of the Scarecrow Project. ATTACHMENTS: Attachment A –Commendation for Leslee Warick 7 COMMENDATION OF THE CITY COUNCIL OF THE CITY OF SARATOGA HONORING LESLEE WARICK WHEREAS, in 2013, Leslee Warick organized a project to decorate the Saratoga Village with scarecrows and 25 scarecrows were contributed by Village businesses, residents, and community groups the first year; WHEREAS, the Scarecrow project has continued to grow, with 50 scarecrows on display in 2015 and 75 scarecrows decorating the Saratoga Village in 2018; and WHEREAS,Leslee Warick and The Barn Owl have been in Saratoga since 2012 and Leslee has been a shining light of hospitality and volunteerism; and WHEREAS, Leslee has demonstrated a strong community spirit by regularly volunteering in the Saratoga Village and jumping in where needed by promoting the Downtown Sidewalk Affaire, the America the Beautiful project, the Scarecrow project, St. Paddy’s Day Celebration, Love Notes, and more; and WHEREAS, Leslee has been a strong supporter of the Saratoga Village Development Council and the Saratoga Chamber of Commerce and goes above and beyond in her volunteer support of the Saratoga Village; and WHEREAS,Leslee Warick was selected as the 2016 Chamber of Commerce’s Business Person of the Year, an award that is presented to individuals who demonstrate outstanding service to Saratoga, active engagement and participation in activities that foster a positive image of Saratoga, and efforts to foster a positive environment for Saratoga businesses. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Saratoga does hereby recognize Leslee Warick for her service to the Saratoga community. WITNESS MY HAND AND THE SEAL OF THE CITY OF SARATOGA this 5th day of December 2018. Mary-Lynne Bernald, Mayor City of Saratoga 8 SARATOGA CITY COUNCIL MEETING DATE:December 5, 2018 DEPARTMENT:City Manager’s Office PREPARED BY:Debbie Bretschneider, City Clerk SUBJECT:City Council Meeting Minutes RECOMMENDED ACTION: Approve the City Council minutes for the Regular City Council Meeting on November 21, 2018. BACKGROUND: Draft City Council minutes for each Council Meeting are taken to the City Council to be reviewed for accuracy and approval. Following City Council approval, minutes are retained for legislative history and posted on the City of Saratoga website. The draft minutes are attached to this report for Council review and approval. FOLLOW UP ACTION: Minutes will be retained for legislative history and posted on the City of Saratoga website. ATTACHMENTS: Attachment A –Minutes for the Regular City Council Meeting on November 21,2018 9 MINUTES WEDNESDAY, NOVEMBER 21, 2018 SARATOGA CITY COUNCIL REGULAR MEETING At 6:00 p.m., the City Council announced that the Joint Meeting with Assembly Member Low was cancelled. At 6:45 p.m., the City Council held a Closed Session in the Linda Callon Conference Room at 13777 Fruitvale Avenue in Saratoga (meeting was scheduled to begin at 5:45 p.m.). Mayor Bernald called the Regular Session to order in the Civic Theater, Council Chambers at 13777 Fruitvale Avenue in Saratoga at 7:08 p.m. and led the Pledge of Allegiance. ROLL CALL PRESENT:Mayor Mary-Lynne Bernald, Vice Mayor Manny Cappello Council Members Emily Lo, Howard Miller, Rishi Kumar ABSENT:None ALSO PRESENT:James Lindsay, City Manager Richard Taylor, City Attorney Crystal Bothelio, Deputy City Manager Debbie Bretschneider, Interim City Clerk Debbie Pedro, Community Development Director Mary Furey, Finance & Administrative Services Director Michael Taylor, Recreation & Facilities Director Lauren Pettipiece, Public Information Officer REPORT ON POSTING OF THE AGENDA Interim City Clerk Debbie Bretschneider reported that the agenda for this meeting was properly posted on November 15, 2018. REPORT FROM CLOSED SESSION Mayor Bernald announced that there was nothing to report. REPORT FROM JOINT MEETING No report. ORAL COMMUNICATIONS ON NON-AGENDIZED ITEMS Sunil Ahuja spoke about the Men’s Health cause, Movember. Jeff Klopotic spoke about the State of California’s background check laws. 10 Lakhinder Walia spoke about the Council’s support of City Commissioner site visits. ANNOUNCEMENTS Mayor Bernald announced the Silicon Valley Turkey Trot, the Saratoga Ministerial Association Thanksgiving Day Interfaith Service, the Holiday Tree Lighting & Wine Stroll on the day after Thanksgiving, the Hakone Koi Pond Sustainability Project Ribbon Cutting on November 27, the Celebration of Light event on December 15, the City Food and Toy Drive, Chinese language materials now available from the City, and a reminder to be careful of package theft. CEREMONIAL ITEMS Appointment of Heritage Preservation Commissioner and Traffic Safety Commissioner & Oath of Office Recommended Action: Approve the attached resolution appointing 1 member to the Heritage Preservation Commission and 1 member to the Traffic Safety Commission; and direct the City Clerk to administer the Oath of Office. RESOLUTION 18-061 CAPPELLO/MILLER MOVED TO ADOPT A RESOLUTION APPOINTING 1 MEMBER TO THE HERITAGE PRESERVATION COMMISSION AND 1 MEMBER TO THE TRAFFIC SAFETY COMMISSION; AND DIRECT THE CITY CLERK TO ADMINISTER THE OATH OF OFFICE. MOTION PASSED. AYES: BERNALD, CAPPELLO, MILLER, LO, KUMAR. NOES: NONE. ABSTAIN: NONE. ABSENT: NONE. 1. CONSENT CALENDAR 1.1. City Council Meeting Minutes Recommended Action: Approve the City Council minutes for the Regular City Council Meeting on November 7, 2018. LO/CAPPELLO MOVED TO APPROVE THE CITY COUNCIL MINUTES FOR THE REGULAR CITY COUNCIL MEETING ON NOVEMBER 7, 2018. MOTION PASSED. AYES: BERNALD, CAPPELLO, MILLER, LO, KUMAR. NOES: NONE. ABSTAIN: NONE. ABSENT: NONE. 1.2. Review of Accounts Payable Check Registers Recommended Action: Review and accept check registers for the following accounts payable payment cycles: 11/06/2018 Period 5; and 11/13/2018 Period 5. 11 LO/CAPPELLO MOVED TO ACCEPT CHECK REGISTERS FOR THE FOLLOWING ACCOUNTS PAYABLE PAYMENT CYCLES: 11/6/2018 PERIOD 5; 11/13/2018 PERIOD 5. MOTION PASSED. AYES: BERNALD, CAPPELLO, MILLER, LO, KUMAR. NOES: NONE. ABSTAIN: NONE. ABSENT: NONE. 1.3. AB1600 Development Impact Fee Report Recommended Action: Review and accept the annual AB1600 Development Impact Fee report for the year ended June 30, 2018. LO/CAPPELLO MOVED TO ACCEPT THE ANNUAL AB1600 DEVELOPMENT IMPACT FEE REPORT FOR THE YEAR ENDED JUNE 30, 2018.MOTION PASSED. AYES: BERNALD, CAPPELLO, MILLER, LO, KUMAR. NOES: NONE. ABSTAIN: NONE. ABSENT: NONE. 1.4. Ordinance Establishing Regulations for Storage of Firearms Recommended Action: Waive the second reading and adopt the attached ordinance that would establish regulations for storage of firearms in Saratoga residences. Council Member Miller pulled this item for discussion. Mayor Bernald invited public comment on the item. The following people requested to speak: Sonia Chang spoke against the ordinance Tony spoke against the ordinance Jeff Klopotic spoke against the ordinance Mark Towber spoke against the ordinance Jonathan Hsu spoke against the ordinance Christine Cagliostro spoke against the ordinance Tom Gamble spoke against the ordinance John Q. Citizen spoke against the ordinance Annette Ladowitz spoke in support of the ordinance Carol Wiess spoke in support of the ordinance 12 Eric Swanson spoke in support of the ordinance Steve Siegal spoke in support of the ordinance Shubral Dubey spoke in support of the ordinance Nandini Balakrishna spoke in support of the ordinance Public speaker spoke against the ordinance No one else requested to speak. ORDINANCE 358 MILLER /CAPPELLO MOVED TO ADOPT THE ATTACHED ORDINANCE THAT WOULD ESTABLISH REGULATIONS FOR STORAGE OF FIREARMS IN SARATOGA RESIDENCES.MOTION PASSED. AYES: BERNALD, CAPPELLO, MILLER, LO. NOES: NONE. ABSTAIN: KUMAR. ABSENT: NONE. 2.PUBLIC HEARING 2.1. Annual Code Update for 2018 Recommended Action: Conduct the public hearing, introduce and waive the first reading of the attached ordinance updating various provisions of the City Code and direct staff to place the matter on the consent calendar for the next regular meeting of the City Council. Richard Taylor, City Attorney, presented the staff report. Mayor Bernald opened the public hearing and invited public comment on the item. The following people requested to speak: Kookie Fitzsimmons spoke against the change in the Planning Commission schedule Leonard Almalech spoke in support of the change in the Planning Commission schedule Joyce Hlava spoke in support of the change in the Planning Commission schedule Tom Sloan spoke against the change in the Planning Commission schedule Tina Walia spoke against the change in the Planning Commission schedule Lakhinder Walia spoke against the change in the Planning Commission schedule No one else requested to speak. 13 Mayor Bernald closed the public hearing. MILLER/CAPPELLO MOVED TO INTRODUCE AND WAIVE THE FIRST READING OF THE ATTACHED ORDINANCE UPDATING VARIOUS PROVISIONS OF THE CITY CODE AND DIRECT STAFF TO PLACE THE MATTER ON THE CONSENT CALENDAR FOR THE NEXT REGULAR MEETING OF THE CITY COUNCIL; DIRECT STAFF TO SCHEDULE FURTHERPLANNING COMMISSION CONSIDERATION OF THE DEFINITION OF SUBTERRANEAN STRUCTURE; DIRECT THE PLANNING COMMISSION TO SCHEDULE SITE VISITS AS A GROUP; DIRECT STAFF TO RESERVE THE CIVIC THEATER ON THE 4TH WEDNESDAY OF THE MONTH AND SCHEDULE KSAR TO BE AVAILABLE TO RECORD POTENTIAL PLANNING COMMISSION MEETINGS ; AND DIRECT STAFF TO REVIEW A CODE OF CONDUCT FOR THE CITY COUNCIL AND COMMISSIONERS, INCLUDING PROTOCOLS FOR HOW COMMISSIONERS RAISE CONCERNS TO THE MAYOR AND CITY MANAGER. MOTION PASSED. AYES: BERNALD, CAPPELLO, MILLER, LO, KUMAR. NOES: NONE. ABSTAIN: NONE. ABSENT: NONE. 2.2. Ordinance Amending Parking Standards in the C-H Districts (The Village) Recommended Action: 1. Conduct a public hearing. 2. Introduce and waive the first reading of the ordinance amending Chapter 15 (Zoning Regulations) of the Saratoga Municipal Code related to parking standards. 3. Direct staff to place the ordinance on the Consent Calendar for adoption at the next regular meeting of the City Council. Debbie Pedro, Community Development Director, presented the staff report. Mayor Bernald opened the public hearing and invited public comment on the item. No one requested to speak. Mayor Bernald closed the public hearing. CAPPELLO/LO MOVED TO INTRODUCE AND WAIVE THE FIRST READING OF THE ORDINANCE AMENDING CHAPTER 15 (ZONING REGULATIONS) OF THE SARATOGA MUNICIPAL CODE RELATED TO PARKING STANDARDS AND TO DIRECT STAFF TO PLACE THE ORDINANCE ON THE CONSENT CALENDAR FOR ADOPTION AT THE NEXT REGULAR MEETING OF THE CITY COUNCIL.MOTION PASSED. AYES: BERNALD, CAPPELLO, MILLER, LO, KUMAR. NOES: NONE. ABSTAIN: NONE. ABSENT: NONE. 14 3.GENERAL BUSINESS 3.1. Preview of Proposed City Code Changes for Rotating Emergency Shelters (Safe Car Park and Severe Weather Shelter Programs) Recommended Action: Preview the proposed amendments to the City Code and direct staff to prepare an ordinance implementing the amendments for consideration by the City Council in January 2019. James Lindsay, City Manager, presented the staff report. Members of the Safe Park Program spoke about the program. Mayor Bernald invited public comment on the item. No one requested to speak. MILLER/CAPPELLO MOVED TO DIRECT STAFF TO PREPARE AN ORDINANCE IMPLEMENTING THE AMENDMENTS FOR CONSIDERATION BY THE CITY COUNCIL IN JANUARY 2019 AND FOR THE CITY TO DONATE $1000 TO THE SAFE PARK PROGRAM FROM THE COUNCIL DISCRETIONARY FUND.MOTION PASSED. AYES: BERNALD, CAPPELLO, MILLER, LO, KUMAR. NOES: NONE. ABSTAIN: NONE. ABSENT: NONE. 3.2. Authorize Issuance of Special Tax Bonds for Arrowhead Community Facility District through a Private Placement and Approve Related Documents and Actions Recommended Action: Approve the attached resolution authorizing the issuance of the Community Facilities District No. 2016-1 (Arrowhead Project) Special Tax Bonds, Series 2018 (“2018 Bonds”) through a private placement and related documents in support of the bond issuance, and authorize the City Manager or his designee to execute the documents and take all related actions in connection with the issuance of the bonds, including minor edits that may be necessary. Mary Furey, Finance & Administrative Services Director presented the staff report. Paul Hansen addressed the City Council. Mayor Bernald invited public comment on the item. No one requested to speak. RESOLUTION 18-062 MILLER/LO MOVED TO APPROVE THE ATTACHED RESOLUTION AUTHORIZING THE ISSUANCE OF THE COMMUNITY FACILITIES DISTRICT NO. 2016-1 (ARROWHEAD PROJECT) SPECIAL TAX BONDS, SERIES 2018 15 (“2018 BONDS”) THROUGH A PRIVATE PLACEMENT AND RELATED DOCUMENTS IN SUPPORT OF THE BOND ISSUANCE, AND AUTHORIZE THE CITY MANAGER OR HIS DESIGNEE TO EXECUTE THE DOCUMENTS AND TAKE ALL RELATED ACTIONS IN CONNECTION WITH THE ISSUANCE OF THE BONDS, INCLUDING MINOR EDITS THAT MAY BE NECESSARY. MOTION PASSED. AYES: BERNALD, CAPPELLO, MILLER, LO, KUMAR. NOES: NONE. ABSTAIN: NONE. ABSENT: NONE. 3.3. Enhanced Communications Program Recommended Action: Approve the resolution to amend the Fiscal Year 2018/19 Operating Budget to fund enhancements to the communications program. Crystal Bothelio, Deputy City Manager, presented the staff report. Mayor Bernald invited public comment on the item. No one requested to speak. RESOLUTION 18-063 LO/MILLER MOVED TO APPROVE THE RESOLUTION TO AMEND THE FISCAL YEAR 2018/19 OPERATING BUDGET TO FUND ENHANCEMENTS TO THE COMMUNICATIONS PROGRAM.MOTION PASSED. AYES: BERNALD, CAPPELLO, MILLER, LO, KUMAR. NOES: NONE. ABSTAIN: NONE. ABSENT: NONE. COUNCIL ASSIGNMENTS Mayor Mary-Lynne Bernald Saratoga Historical Foundation – there was discussion of potential naming request through the City. Vice Mayor Manny Cappello No report. Council Member Howard Miller Saratoga Ministerial Association – there was discussion of the Thanksgiving Service and the Celebration of Light, an update on sensible firearms regulations was provided, the Safe Park Program was discussed, and there was a request for the yearly City hosted meeting to be held at Hakone. Silicon Valley Clean Energy Authority Board of Directors – there were reports on SVCE lowering the carbon footprint of residents by 25% and regional movement to have incentives from Cities to require all new housing to have electric water heaters. 16 Council Member Emily Lo No report. Council Member Rishi Kumar Saratoga Chamber of Commerce – there was a meeting last week and an update was sent to the Chamber. CITY COUNCIL ITEMS None COUNCIL COMMUNICATIONS Council Member Kumar shared information about safety tips for the holidays. Council Member Lo spoke about the changes on the Executive Committee for the League of California Cities Peninsula Division CITY MANAGER'S REPORT None ADJOURNMENT MILLER/CAPPELLO MOVED TO ADJOURN THE MEETING AT 9:52 P.M. MOTION PASSED. AYES: BERNALD, CAPPELLO, LO, MILLER, KUMAR. NOES: NONE. ABSTAIN: NONE. ABSENT: NONE. Minutes respectfully submitted: Debbie Bretschneider City Clerk City of Saratoga 17 Gina Scott, Accounting Technician SUBJECT: Review of Accounts Payable Check Registers RECOMMENDED ACTION: Review and accept check registers for the following accounts payable payment cycles: BACKGROUND: The information listed below provides detail for weekly City check runs. Checks issued for $20,000 or greater are listed separately as well as any checks that were voided during the time period. Fund information, by check run, is also provided in this report. REPORT SUMMARY: Attached are Check Registers for: Date Ending Check # 11/20/18 137427 137480 54 619,020.01 11/20/18 11/13/18 137426 11/27/18 137481 137505 25 32,215.66 11/27/18 11/20/18 137480 Accounts Payable checks issued for $20,000 or greater: Date Check # Issued to Dept.Amount 11/20/18 137433 PW 26,607.46 11/20/18 137459 PS 473,395.42 11/20/18 137466 Various 20,033.13 Accounts Payable checks voided during this time period: AP Date Check #Amount 09/12/18 136934 225.00 10/16/18 137157 268.05 05/22/18 136013 650.00 ATTACHMENTS: Check Registers in the 'A/P Checks By Period and Year' report format A Justice Design Kiran Keshava Reason Void check Issued to Never received check Status Lost or destroyed checkYi Zhang Paid by Cal Card Re-issue check Re-issue check Shute Mihaly & Weinberger Prior Check Register Checks Released Total Checks Amount Fund Purpose Attorney Services BKF Engineers Law Enforcement Railroad Crossing Imp Various SCC Office of the Sheriff CIP Parks Project General 11/20/2018 Period 5; and 11/27/2018 Period 5. PREPARED BY: Ending Check #Starting Check #Type of Checks Date Accounts Payable Accounts Payable SARATOGA CITY COUNCIL MEETING DATE:December 5, 2018 DEPARTMENT:Finance & Administrative Services 18 19 20 21 22 23 24 25 26 SARATOGA CITY COUNCIL MEETING DATE: December 5, 2018 DEPARTMENT: Finance & Administrative Services PREPARED BY: Ann Xu, Accountant SUBJECT: Treasurer’s Report for the Month Ended October 31, 2018 RECOMMENDED ACTION: Review and accept the Treasurer’s Report for the month ended October 31, 2018. BACKGROUND: California government code section 41004 requires that the City Treasurer submit to the City Clerk and the legislative body a written report and accounting of all receipts, disbursements, and fund balances. The Municipal Code of the City of Saratoga, Article 2-20, Section 2-20.035 designates the City Manager as the City Treasurer. This report is prepared to fulfill this requirement. The following attachments provide various financial transaction data for the City of Saratoga’s Funds collectively as well as specifically for the City’s General (Operating) Fund, including an attachment from the State Treasurer’s Office of Quarterly LAIF rates from the 1st Quarter of 1977 to present. FISCAL STATEMENT: Cash and Investments Balance by Fund As of October 31, 2018, the City had $2,153,666 in cash deposit at Comerica bank, and $20,132,863 on deposit with LAIF. The City Council’s adopted policy on the Working Capital Reserve Fund states that effective July 1, 2018: for cash flow purposes and to avoid occurrence of dry period financing, pooled cash from all funds should not be allowed to fall below $1,000,000. The total pooled cash balance as of October 31, 2018 is $22,286,529 and exceeds the minimum limit required. City’s Current Financial Position In accordance with California government code section 53646 (b) (3), the City is financially well positioned and able to meet its expenditure requirements for the next six months. As of October 31, 2018, the City’s financial position (Assets $22.5M, Liabilities $4.8M and Fund Equity $17.7M) remains very strong and there are no issues in meeting financial obligations now or in the foreseeable future. Unrestricted Cash Comerica Bank 2,153,666$ Deposit with LAIF 20,132,863$ Total Unrestricted Cash 22,286,529$ Cash Summary 27 The following Fund Balance schedule represents actual funding available for all funds at the end of the monthly period. This amount differs from the above Cash Summary schedule as assets and liabilities are components of the fund balance. As illustrated in the summary below, Total Unrestricted Cash is adjusted by the addition of Total Assets less the amount of Total Liabilities to arrive at the Ending Fund Balance – which represents the actual amount of funds available. Fund Balance Designations In accordance with Governmental Accounting Standards Board (GASB) Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, the components of fund balance are categorized as follows: “non-spendable fund balance”, resources that are inherently non-spendable from the vantage point of the current period; “restricted fund balance”, resources that are subject to enforceable legal restrictions; “committed fund balance”, resources whose use is constrained by limitations the government imposes upon itself through formal action at its highest level of decision making and remains binding unless removed in the same manner; “assigned fund balance”, resources that reflects a government’s intended use of resources, such intent would have to be established at either the highest level of decision making, by a body, or an official designated for that purpose; and “unassigned fund balance”, net resources in excess of what can properly be classified in one of the other four categories. Currently, the City’s fund balance reserves fall into one of the four spendable categories; restricted, committed, assigned, or unassigned fund balance. ATTACHMENTS A – Change in Total Fund Balances by Fund under GASB 54 B – Change in Total Fund Balances by CIP Project C – Change in Cash Balance by Month D – Local Agency Investment Fund (LAIF) Quarterly Apportionment Rates Total Unrestricted Cash 22,286,529$ Plus: Assets 252,823 Less: Liabilities (4,840,476) Ending Fund Balance 17,698,876$ Adjusting Cash to Ending Fund Balance 28 ATTACHMENT A CHANGES IN TOTAL FUND BALANCE UNDER GASB 54 * Prior year balances are unaudited and do not include budgeted transfers. These figures will be updated for future reports once the FY 2017/18 independent audit is completed. Fund Description Prior Year Carryforward 7/1/18* Increase/ (Decrease) Jul-Sep Current Revenue Current Expenditure Transfer In Transfer Out Fund Balance 10/31/2018 General Fund Restricted Fund Balances: Environmental Services Reserve 213,182 - - - - - 213,182 Committed Fund Balances: Hillside Stability Reserve 1,000,000 - - - - - 1,000,000 Assigned Fund Balances: Future Capital Replacement & Efficiency Project Reserve 1,564,588 - - - - - 1,564,588 Facility Reserve 2,200,000 - - - - - 2,200,000 Unassigned Fund Balances: Working Capital Reserve 1,000,000 - - - - - 1,000,000 Fiscal Stabilization Reserve 3,150,000 - - - - - 3,150,000 Compensated Absences Reserve 223,988 - - - - - 223,988 Other Unassigned Fund Balance Reserve (Pre YE distribution)3,782,160 (3,346,400) 1,581,653 2,087,894 - - (70,481) General Fund Total 13,133,918 (3,346,400) 1,581,653 2,087,894 - - 9,281,277 Special Revenue Landscape/Lighting Districts 1,385,339 (80,356) 17,488 80,448 - - 1,242,022 Debt Service Library Bond 997,756 (671,310) 4,792 - - - 331,238 Internal Service Fund Liability/Risk Management 553,907 (149,924) 87,500 8,041 - - 483,442 Workers Compensation 297,374 (6,009) 44,870 43,582 - - 292,654 Office Support Fund 116,964 221 11,054 4,302 - - 123,938 Information Technology Services 364,263 (4,968) 146,278 53,432 - - 452,141 Vehicle & Equipment Maintenance 236,330 16,022 68,750 28,975 - - 292,127 Building Maintenance 515,786 28,762 231,250 92,229 - - 683,569 Vehicle & Equipment Replacement 517,948 (86,911) 37,500 69,009 - - 399,528 Technology Replacement 423,730 23,526 37,500 - - - 484,756 Facility FFE Replacement 420,814 (71,996) 50,000 - - - 398,817 Internal Service Fund Total 3,447,117 (251,277) 714,702 299,570 - - 3,610,971 Trust/Agency WVCWP Agency Fund - 455,664 156,425 28,152 - - 583,937 Capital Project Street Projects 2,175,561 (95,256) 29,275 25,774 - - 2,083,806 Park and Trail Projects 702,319 (80,452) - 38,384 - - 583,484 Facility Projects 136,103 (49,732) - 8,108 - - 78,264 Administrative Projects 742,106 (39,450) 2,930 25,612 - - 679,973 Tree Fund Projects 92,029 189 3,000 - - - 95,218 Park In-Lieu Projects 392,073 (11,339) - 3,610 - - 377,124 CIP Grant Street Projects (2,219,113) (730,364) - 139,864 - - (3,089,341) CIP Grant Park & Trail Projects 12,809 - - 1,896 - - 10,913 Gas Tax Fund Projects 1,503,137 183,258 156,689 13,099 - - 1,829,986 CIP Fund Total 3,537,025 (823,145) 191,894 256,345 - - 2,649,429 Total City 22,501,154 (4,716,824) 2,666,954 2,752,410 - - 17,698,876 29 ATTACHMENT B FUND BALANCES BY CIP PROJECT * Prior year balances are unaudited and do not include budgeted transfers. These figures will be updated for future reports once the FY 2017/18 independent audit is completed. CIP Funds/Projects Prior Year Carryforward 7/1/18* Increase/ (Decrease) Jul-Sep Current Revenue Current Expenditure Transfer In Transfer Out Fund Balance 10/31/2018 Street Projects Annual Road Improvements 329,218 (12,271) 29,275 14,505 - - 331,716 Roadway Safety & Traffic Calming 110,404 - - 10,688 - - 99,717 Prospect/Saratoga Median Improvement 745,818 (13,421) - - - - 732,397 Big Basin Way Turn Around - (18,988) - 581 - - (19,569) Annual Infrastructure Maintenance& Repair 64,279 (38,413) - - - - 25,866 EL Camino Grande Storm Drain Pump 378,269 - - - - - 378,269 Storm Drain Capture Device 17,000 - - - - - 17,000 Saratoga Village Crosswalk & Sidewalk Rehabilitation 44,000 - - - - - 44,000 Quito Road Sidewalk Improvements 48,650 (6,630) - - - - 42,020 Fourth Street Bridge Widening 99,837 - - - - - 99,837 Quito Road Bridge Replacement 157,830 - - - - - 157,830 Quito Road Bridge - ROW Acquisition 39,374 (5,532) - - - - 33,842 Annual Retaining Wall Maintenance & Repairs 42,137 - - - - - 42,137 Underground Project 98,744 - - - - - 98,744 Total Street Projects 2,175,561 (95,256) 29,275 25,774 - - 2,083,806 Parks & Trails Projects Park/Trail Repairs 23,357 - - - - - 23,357 Hakone Gardens Infrastructure Improvements 89,613 - - - - - 89,613 Hakone Gardens Koi Pond Improvements 115,248 (55,366) - 29,430 - - 30,452 Quarry Pond Walkway Clearing - (19,544) - 7,508 - - (27,052) Joe's Trail at Saratoga/De Anza 33,997 - - - - - 33,997 Guava/Fredericksburg Entrance 99,418 (5,542) - 816 - - 93,060 Saratoga Village to Quarry Park Walkway - Design 33,000 - - - - - 33,000 Saratoga to Sea Trail - Construction 307,686 - - 629 - - 307,057 Total Parks & Trails Projects 702,319 (80,452) - 38,384 - - 583,484 Facility Projects Civic Theater Improvements 70,690 4,254 - 1,723 - - 73,221 CC/SC Panel Upgrade 65,414 (53,986) - 4,980 - - 6,448 Community Center Stage Renovation - - - 1,405 - - (1,405) Total Facility Projects 136,103 (49,732) - 8,108 - - 78,264 Administrative and Technology Projects Combined Document Imaging Project 12,263 - - 7,642 - - 4,621 City Website/Intranet 16,949 - - - - - 16,949 Development Technology 80,301 (8,811) 2,930 667 - - 73,753 Trak-It Software Upgrade 27,383 (1,750) - - - - 25,633 LLD Initiation Match Program 50,000 - - - - - 50,000 Horseshoe Beautification 24,650 - - 675 - - 23,975 General Plan Update 295,989 (24,822) - 16,598 - - 254,569 Village Specific Plan Update 80,158 (3,580) - - - - 76,578 Risk Management Project Funding 154,412 (487) - 31 - - 153,895 Total Administrative and Technology Projects 742,106 (39,450) 2,930 25,612 - - 679,973 30 ATTACHMENT B (Cont.) FUND BALANCES BY CIP PROJECT * Prior year balances are unaudited and do not include budgeted transfers. These figures will be updated for future reports once the FY 2017/18 independent audit is completed. CIP Funds/Projects Prior Year Carryforward 7/1/18* Increase/ (Decrease) Jul-Sep Current Revenue Current Expenditure Transfer In Transfer Out Fund Balance 10/31/2018 Tree Fund Projects Citywide Tree Planting Program 68,154 64 3,000 - - - 71,218 Tree Dedication Program 23,875 125 - - - - 24,000 Total Tree Fund Projects 92,029 189 3,000 - - - 95,218 CIP Grant Street Projects Highway 9 Safety Improvements - Phase IV (108,547) - - - - - (108,547) Prospect/Saratoga Median Improvement (2,133,920) (757,113) - 139,864 - - (3,030,897) Citywide Signal Upgrade II (965) - - - - - (965) Saratoga Ave Sidewalk 23,512 26,749 - - - - 50,261 Quito Road Bridges - ROW Acquisition 808 - - - - - 808 Total CIP Grant Street Projects (2,219,113) (730,364) - 139,864 - - (3,089,341) CIP Grant Park & Trail Projects Joe's Trail at Saratoga/De Anza 12,809 - - - - - 12,809 Saratoga to the Sea Trail - Design - - - 1,896 - - (1,896) Total CIP Grant Park & Trail Projects 12,809 - - 1,896 - - 10,913 Park In-Lieu Projects Quito/Pollard Open Space - - - 3,610 - - (3,610) Hakone Koi Pond Improvement 9,320 - - - - - 9,320 Saratoga Village to Quarry Park Walkway - Design 88,689 (11,339) - - - - 77,350 Unallocated Park In-Lieu Funds 294,064 - - - - - 294,064 Total Park In-Lieu Projects 392,073 (11,339) - 3,610 - - 377,124 Gas Tax Fund Projects Annual Roadway Improvements 690,289 190,523 156,689 12,818 - - 1,024,684 Prospect/Saratoga Median Improvements 685,014 (7,265) - 281 - - 677,468 Citywide Signal Upgrade II 99,759 - - - - - 99,759 Big Basin Way Sidewalk Repairs 20,990 - - - - - 20,990 Quito Road Bridges 7,085 - - - - - 7,085 Total Gas Tax Fund Projects 1,503,137 183,258 156,689 13,099 - - 1,829,986 Total CIP Funds 3,537,025 (823,145) 191,894 256,345 - - 2,649,429 31 ATTACHMENT C CHANGE IN CASH BALANCE BY MONTH 32 ATTACHMENT D March June September December 1977 5.68 5.78 5.84 6.45 1978 6.97 7.35 7.86 8.32 1979 8.81 9.10 9.26 10.06 1980 11.11 11.54 10.01 10.47 1981 11.23 11.68 12.40 11.91 1982 11.82 11.99 11.74 10.71 1983 9.87 9.64 10.04 10.18 1984 10.32 10.88 11.53 11.41 1985 10.32 9.98 9.54 9.43 1986 9.09 8.39 7.81 7.48 1987 7.24 7.21 7.54 7.97 1988 8.01 7.87 8.20 8.45 1989 8.76 9.13 8.87 8.68 1990 8.52 8.50 8.39 8.27 1991 7.97 7.38 7.00 6.52 1992 5.87 5.45 4.97 4.67 1993 4.64 4.51 4.44 4.36 1994 4.25 4.45 4.96 5.37 1995 5.76 5.98 5.89 5.76 1996 5.62 5.52 5.57 5.58 1997 5.56 5.63 5.68 5.71 1998 5.70 5.66 5.64 5.46 1999 5.19 5.08 5.21 5.49 2000 5.80 6.18 6.47 6.52 2001 6.16 5.32 4.47 3.52 2002 2.96 2.75 2.63 2.31 2003 1.98 1.77 1.63 1.56 2004 1.47 1.44 1.67 2.00 2005 2.38 2.85 3.18 3.63 2006 4.03 4.53 4.93 5.11 2007 5.17 5.23 5.24 4.96 2008 4.18 3.11 2.77 2.54 2009 1.91 1.51 0.90 0.60 2010 0.56 0.56 0.51 0.46 2011 0.51 0.48 0.38 0.38 2012 0.38 0.36 0.35 0.32 2013 0.28 0.24 0.26 0.26 2014 0.24 0.22 0.24 0.25 2015 0.26 0.28 0.32 0.37 2016 0.46 0.55 0.60 0.68 2017 0.78 0.92 1.07 1.20 2018 1.51 1.90 2.16 Quarterly Apportionment Rates Local Agency Investment Fund 33 SARATOGA CITY COUNCIL MEETING DATE:December 5, 2018 DEPARTMENT:Community Development Department PREPARED BY:Debbie Pedro, Community Development Director SUBJECT:Ordinance Amending Parking Standards in the C-H Districts (The Village) RECOMMENDED ACTION: Waive the second reading and adopt the attached ordinance amending Chapter 15 (Zoning Regulations) of the Saratoga Municipal Code related to parking standards. BACKGROUND: On November 21, 2018, the City Council introduced amendments to Chapter 15 (Zoning Regulations) of the Saratoga Municipal Code related to parking standards in the C-H Districts and directed staff to place the ordinance on the Consent Calendar for adoption at the next regular meeting of the City Council. ADVERTISING, NOTICING AND PUBLIC CONTACT: This ordinance or a comprehensive summary thereof shall be published in a newspaper of general circulation of the City of Saratoga within 15 days after its adoption. ATTACHMENT: Attachment A -Ordinance 34 ORDINANCE NO. ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SARATOGA AMENDING THE CITY CODE REGARDING PARKING REGULATIONS FOR THE C-H DISTRICTS ZOA18-0002 The City Council of the City of Saratoga finds that: 1.The City desires to make amendments to its City Code to implement Phase 1 of the Village Plan update regarding parking regulations for the C-H Districts; 2.Between 2016 and 2017 the Planning Commission met five times in community study sessions to discuss updates in the areas of the Village Vision and Parking/Circulation which is under the first phase of the Village Policy Update process. The Commission’s comments were forwarded to the City Council who affirmed the Commission’s recommendations on April 5, 2017; 3.The Planning Commission held a hearing on November 14, 2018. Following consideration of all testimony and written materials, the Planning Commission approved Resolution No. 18- 027 on November 14, 2018 recommending approval of this ordinance. 4.The City Council of the City of Saratoga held a duly noticed public hearing on November 21, 2018, and after considering all testimony and written materials provided in connection with that hearing introduced this ordinance and waived the reading thereof. The City Council adopted this ordinance after a second reading was waived at a duly noticed public meeting on December 5, 2018. The City Council of the City of Saratoga does ordain as follows: Section 1.Adoption. The Saratoga City Code is hereby amended as set forth in Attachment A. Section 2.California Environmental Quality Act. Pursuant to the California Environmental Quality Act (“CEQA”), this action to amend the City Code regarding parking in the C-H Districts is exempt from CEQA under California Code of Regulations, Title 14, Section 15061(b)(3) which provides that CEQA applies only to projects which have the potential of causing a significant effect on the environment, and that where, as here, it can be seen with certainty that there is no reasonable possibilitythat the activity in question may have a significant effect on the environment, the activity is not subject to CEQA. 35 Section 3.Severance Clause. The City Council declares that each section, sub-section, paragraph, sub-paragraph, sentence, clause, and phrase of this ordinance is severable and independent of every other section, sub-section, sentence, clause, and phrase of this ordinance. If any section, sub- section, paragraph, sub-paragraph, sentence, clause, or phrase is held invalid, the City Council declares that it would have adopted the remaining provisions of this ordinance irrespective of the portion held invalid and further declares its express intent that the remaining portions of this ordinance should remain in effect after the invalid portion has been eliminated. Section 4.Applicability. Development applications submitted for a site which is located within a C-H District after November 21, 2018 shall be subject to this ordinance. Section 5.Publication. A summary of this Ordinance shall be published in a newspaper of general circulation of the City of Saratoga within fifteen days after its adoption. Following a duly noticed public hearing, the foregoing ordinance was introduced at the regular meeting of the City Council of the City of Saratoga held on November 21, 2018 and was adopted by the following vote on December 5, 2018. COUNCIL MEMBERS: AYES: NAYS: ABSENT: ABSTAN: ATTEST: SIGNED: Mary-Lynne Bernald MAYOR OF THE CITY OF SARATOGA Debbie Bretschneider INTERIM CITY CLERK APPROVED AS TO FORM: Date: Date: Richard Taylor CITY ATTORNEY 36 Attachment A — An Ordinance Adopting Amendments to the City Code Related to Off-Street Parking The sections of the Saratoga Municipal Code as set forth below are amended or adopted as follows: Text added to existing provisions is shown in bold double underlined text (example) and text to be deleted in shown in strikethrough (example). Text in italics is explanatory and is not an amendment to the Code. 15-06.560 - Retail establishment. "Retail establishment" means a use engaged in the sale or rental of goods directly to the consumer with no more than two thousand square feet or twenty-five percent of the total floor area dedicated to food and/or beverage sales for off-site human consumption. Any use engaged in the sale of personal services is not a retail establishment. (a)Extensive retail establishment,as used with respect to parking requirements, means a retail use having more than seventy-five percent of the floor area used for display, sales and related storage of bulky commodities, including household furniture and appliances, lumber and building materials, carpeting and floor coverings, air conditioning and heating equipment, and similar goods, which uses have demonstrably low parking demand generation per square foot of floor area. (b)Intensive retail establishment,as used with respect to parking requirements, means any retail use not defined as an extensive retail establishment. 15-35.030 - Schedule of off-street parking spaces. Off-street parking spaces shall be provided in accordance with the following schedule: Use Spaces Required …… (n)Intensive rRetail establishments One space for each two hundred square feet of floor area. (o) Extensive retail establishments Bulky commodity sales establishments such as household furniture, mattresses, appliances, carpeting and floor coverings One space for each five hundred square feet of floor area. …… 15-35.020 - General requirements and regulations for off-street parking spaces. … (h)Location of Parking: In all districts except a C-H district, the off-street parking spaces prescribed in Section 15-35.030 shall be located on the same site as the use for which the spaces are required, or on an adjacent site or a site separated only by an alley 37 from the use for which the spaces are required. In a C-H district, the off-street parking spaces prescribed in Section 15-35.030 may be located within three hundred feet of the use for which the spaces are required, measured by the shortest route to be used for pedestrian access on or off site as permitted in Section 15-35.035. … (k)Surplus parking in C-H district: Notwithstanding any other provision of this Code, for applications deemed complete after March 1, 2006, no off-street parking shall be required of any new, altered, or enlarged site or structure in any C-H district until such time as a total of forty-one thousand eight hundred fifty square feet of gross floor area beyond that existing on March 1, 2006 ("surplus floor area") has been constructed or otherwise allocated as set forth below in the C-H districts. This provision shall be administered as follows: (1)Allocation procedure: Surplus floor area shall be allocated on a first-come, first-served basis, based on the date that the application submittal is deemed complete by the Community Development Department; (2)New site or structure: The amount to be deducted from the surplus floor area for a new site or structure shall be the gross floor area calculated using the methodology for determining gross floor area in subsection (e) of this Section; (3)Alteration that increases floor area: The amount to be deducted from the surplus floor area for an alteration to an existing site or structure that increases the gross floor area of that site or structure shall be the difference between the new gross floor area and the existing gross floor area determined in accordance with subsection (e) of this Section; (4)Change in use that does not increase floor area: The amount to be deducted from the surplus floor area for a change in use to an existing site or structure that does not increase the gross floor area of that site or structure shall be determined as follows: The number of parking spaces required for the change in use, as determined by the off-street parking space requirements prescribed in Section 15-35.030, shall be multiplied by four hundred fifty square feet to determine the "changed use area". The number of parking spaces allocated to the prior use shall be multiplied by four hundred fifty square feet to determine the existing parking credit. The amount to be deducted from the surplus floor area shall be the changed use area minus the existing parking credit. For example: If a change in use requires four parking spaces, then the changed use area is equal to one thousand eight hundred square feet. If the previous use required one parking space, then existing parking credit is four hundred fifty square feet. The surplus floor area to be deducted would be one thousand three hundred fifty square feet; (5)Exception for parking districts: Notwithstanding subsection (4), above, no deduction from the surplus floor area shall be made or required for any change in use or alteration to an existing site or structure within a City parking district that does not increase the gross floor area of that site or structure; (6)Removal of allocation: Allocation of surplus floor area to an application shall be removed at such time as the application is denied or withdrawn and, for applications that are approved, upon the expiration of that approval. If an 38 application is modified by the applicant or the approval in a manner that changes the gross floor area associated with the application, the allocation shall be adjusted accordingly; (7)Allocation monitoring: The Community Development Department shall monitor and maintain an account showing the amount of surplus floor area that has been allocated pursuant to this Section and the amount that remains to be allocated; and (8)Projects in excess of available allocation: Any proposed new, altered, or enlarged site or structure in any C-H district that would add more gross floor area than the remaining surplus floor area shall comply with the off-street parking requirements set forth in subsection (a) of this Section and elsewhere in this Code as to the excess floor area unless the applicant applies for and pays the costs of a parking study to be completed by the City Traffic Engineer and that study is approved by the Planning Commission and determines that excess parking capacity is available in the C-H districts and recommends that the amount of surplus floor area be increased at least by an amount that would accommodate the proposed new, altered, or enlarged site or structure. 15-35.035 - Parking ratios for off-street parking and loading facilities Schedule of off-street parking spaces for C-H District. (a) Where a site is located within and constitutes a part of a City parking district, the off- street parking requirement for each district shall be as follows, regardless of the particular category of use or uses occupying the site Off-street parking spaces shall be provided in accordance with the following schedule: District Use Spaces Required No. 1 Restaurants/Bars/ Wine Tasting One space for each 473.5 75 square feet of floor area. No. 2 Retail Establishments/Office/ Personal Service One space for each 380 350 square feet of floor area. No. 3 Other Land Uses One space for each 350 square feet of floor area, plus any additional square footage allowed on the site as a result of the acquisition of development rights created by the City upon formation of Parking District No. 3.Subject to Section 15-35.030. No. 4 One space for each 380 square feet of floor area. 39 (b)Any application for an intensification in use resulting in an increase of required parking that cannot be provided on site may be approved by the Planning Commission with a conditional use permit. (1)Application for a conditional use permit must be supported by documentation that any proposed alternative use of parking, valet parking, or parking agreement will not effectively result in any other use providing fewer off-street parking spaces than required under this Article. An applicant will need to demonstrate adequate parking mitigation through either alternative use of parking, valet parking, or parking agreements with other business owners who have available on-site parking. The Planning Commission may require the following prior to issuance of a conditional use permit: i)Submission of a parking plan by parties to a proposed alternative/valet parking plan, which shall describe the users and their times of operation; (ii)Written agreements between the parties setting forth the terms and conditions under which the off-street parking spaces will be operated. (iii)Written maintenance agreements; and (iv)Other documents or commitments, including recordation of such documents, deemed necessary by the Planning Commission. (2)For applications that cannot provide adequate parking mitigation, the following additional findings are required to approve a conditional use permit: (i)That the proposed project will advance the vision reflected in one or more of the goals identified for the Village in the Saratoga Village section of the Land Use Element of the General Plan; (ii)That the demand placed on the City’s public parking supply in the Village will not have an unreasonable impact on the Village at large; and (iii)That the benefit of the proposed project, measured against those goals and policies established in the General Plan and the Village Design Guidelines, outweighs the impact on parking resources. 40 SARATOGA CITY COUNCIL MEETING DATE: December 5, 2018 DEPARTMENT: Finance & Administrative Services PREPARED BY: Dennis Jaw, Finance Manager SUBJECT: Annual Audit Reports RECOMMENDED ACTION: 1. Review and accept the following annual audit reports for Fiscal Year 2017/18; A. Comprehensive Annual Financial Report (CAFR) B. Transportation Development Act Audit Report (MTC Grants) C. Single Audit Report D. Appropriation Limit Report (Gann, Fiscal Year 2018/19) E. SAS 114 Report F. SAS 112 Report G. State Controller’s Office Financial Transaction Report Summary BACKGROUND: Under various State and Federal laws, the City’s financial statements are to be audited annually by external auditors who are Certified Public Accountants (CPA) and independent of City functions. The primary purpose of a financial audit is for an external financial professional to assess and subsequently render an opinion on whether the City’s financial statement reports are presented fairly and in conformity to applicable generally accepted accounting standards and are free from material misstatement. To comply, the City contracts with a CPA firm licensed by the State of California to perform the various required financial audits: the annual Financial Audit; a Single Audit on federal grant awards, when applicable; a California Transportation Development Act (TDA) audit; and a Gann Appropriations Limit agreed-upon procedures engagement. The audits are performed in accordance with Government Auditing Standards, which require the auditors to plan and perform the audits to obtain reasonable assurance as to whether the financial statements are free of material misstatements. In June of 1999 the Governmental Accounting Standards Board issued Statement 34 (commonly known as GASB 34), Basic Financial Statements—and Management’s Discussion and Analysis—for State and Local Governments, which greatly expanded and changed financial reporting requirements for state and local governments reporting in conformity with generally accepted accounting principles (GAAP). The City’s primary financial statement report conforms to this format known as a Comprehensive Annual Financial Report (CAFR). Subsequent GASB Statements are incorporated into the document when applicable. To ensure the report meets the standards for excellence requirements, the CAFR is then submitted to the Government Finance Officers Association (GFOA) financial reporting review program each year. Financial reporting information and presentation standards must be met to receive the award. 41 Chavan & Associates, LLP (C&A) was contracted to perform the City’s annual audit through the Fiscal Year 2018/19 audit. To prepare for the audit each year, City staff completes the year-end closing procedures and compiles the financial data and schedules to present the City of Saratoga’s financial position, results of operations, and economic condition for the prior fiscal year ended June 30th. The Fiscal Year 2017/18 CAFR received an unmodified opinion from the City’s auditors. An unmodified opinion indicates that the financial data of the City is presented fairly according to general accounting principles. The Transportation Development Act Audit Report also received an unmodified opinion. The Single Audit and Appropriation Limit Report audits are tested for compliance only; no opinion is issued on these reports. The four required reports are included for Council review as Attachments A, B, C, and D. To communicate audit process matters to Council, auditors report on their audit responsibilities, their assessment of the City’s internal controls, and significant findings or issues they encountered during the audit, as directed by the Auditing Standards Board under Statement of Auditing Standards 114 (SAS 114). Our auditors reviewed the City’s internal controls and found no reportable material weaknesses. This report is included as Attachment E. To communicate the auditor’s assessment of the risk of material misstatement to Council, auditors report on their evaluation of the severity of any internal control deficiencies identified during the audit, as directed by the Auditing Standards Board under Statement of Auditing Standards 112 (SAS 112). For FY 2017/18 no material deficiencies were identified. This report is included as Attachment F. The City Auditor discussed the annual financial audit and CAFR with the Finance Committee at the September 27, 2018 meeting. The completed CAFR was provided to the Finance Committee for review at the November 29, 2018 meeting. In accordance with Government Code 53891, each city is required to furnish to the State Controller’s Office a report of all financial transactions of the city no later than seven months after the close of the fiscal year and, in accordance with Government Code section 40804, publish a summary of its financial transactions filed with the State Controller’s Office. This summary is included as Attachment G. The City will apply for the Government Finance Officers Association (GFOA), Certificate of Achievement for Excellence in Financial Reporting to ensure the City’s financial reports once again meet high standards in governmental accounting and financial reporting. Saratoga received the GFOA award for last year’s (FY 2016/17) report for the 24rd straight year. The award certificate is included in the CAFR report on page 15. Staff will inform Council of the award status for this year’s report once notified. ATTACHMENTS: Attachment A – FY 2017/18 CAFR Document Attachment B – FY 2017/18 Transportation Development Act Report Attachment C – FY 2017/18 Single Audit Report Attachment D – FY 2018/19 Gann Appropriation Limit Report Attachment E – FY 2017/18 SAS 114 Report (Internal Controls) Attachment F – FY 2017/18 SAS 112 Report (Management Letter) Attachment G – State Controller’s Office Financial Transaction Report Summary 42 C ITY OF California Comprehensive Annual Financial Report For Fiscal Year Ended June 30, 2018 Attachment A 43 Hakone Japanese Gardens & Estate Located just outside Saratoga’s downtown village, on Big Basin Way 44 Saratoga, California Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2018 City Council Mary-Lynne Bernald ................................................................................................... Mayor Manny Cappello ................................................................................................. Vice-Mayor Howard Miller ............................................................................................ Council Member Emily Lo .................................................................................................... Council Member Rishi Kumar ............................................................................................... Council Member Presented under the direction of: James Lindsay, City Manager Finance & Administrative Services Department 45 This page is intentionally blank. 46 CITY OF SARATOGA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2018 5 TABLE OF C ONTENTS I NTRODUCTORY SECTION Letter of Transmittal ......................................................................................................... 9 GFOA Certificate of Achievement for Excellence in Financial Reporting ......................... 15 Principal Officers of the City .......................................................................................... 16 Organization Chart ......................................................................................................... 17 F INANCIAL SECTION Independent Auditors ’ Report ........................................................................................... 20 Management’s Discussion and Analysis (Required Supplementary Information) ............. 22 Basic Financial Statements: Government-Wide Financial Statements Statement of Net Position .......................................................................................... 38 Statement of Activities and Changes in Net Position .................................................. 39 Fund Financial Statements Governmental Funds: Balance Sheet ........................................................................................................... 40 Reconciliation of the Government Funds Balance Sheet to the Government-Wide Financial Statement of Net Position ............................... 41 Statement of Revenues, Expenditures and Changes in Fund Balances ......................... 4 2 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances to the Government-Wide Statement of Activities and Changes in Net Position ............................................. 4 3 Proprietary Funds: Statement of Net Position .......................................................................................... 4 4 Statement of Revenues, Expenses, and Changes in Fund Net Position ......................... 45 Statement of Cash Flows ........................................................................................... 46 Basic Financial Statement Notes: Notes to the Basic Financial Statements ..................................................................... 47 Required Supplementary Information Budgetary Information .............................................................................................. 78 Modified Approach for City Streets Infrastructure Capital Assets ............................... 8 0 Pension Information .................................................................................................. 8 2 47 CITY OF SARATOGA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2018 6 TABLE OF C ONTENTS CONTINUED S UPPLEMENTARY I NFORMATION: Non-Major Governmental Funds Combining Balance Sheets ....................................................................................... 87 Combining Statement of Revenues, Expenditures and Changes in Fund Balances ........ 88 Combining Statement of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual: Capital Improvements .......................................................................................... 89 Landscape & Lighting Districts Special Revenue Funds........................................ 90 Library Bond Debt Service Fund .......................................................................... 91 Internal Service Funds Combining Statement of Net Position ........................................................................ 94 Combining Statement of Revenues, Expenses, and Change in Fund Balance ............... 96 Combining Statement of Cash Flows ......................................................................... 98 Capital Assets Used in the Operation of Governmental Funds Comparative Schedule by Source ............................................................................. 103 Schedule by Function and Activity .......................................................................... 104 Schedule of Changes by Function and Activity ........................................................ 106 Statistical Section (Unaudited) Net Position by Component ..................................................................................... 110 Changes in Net Position .......................................................................................... 112 Fund Balance of Governmental Funds ...................................................................... 114 Governmental Activities Tax Revenues by Source ................................................... 1 16 Changes in Fund Balances of Governmental Funds .................................................. 1 18 Property Tax Rates - Direct and Overlapping Governments ...................................... 1 20 Assessed Value of Taxable Property ........................................................................ 1 22 Principal Property Taxpayers ................................................................................... 1 24 Property Tax Levies and Collections........................................................................ 1 25 Ratios of Outstanding Debt by Type ........................................................................ 126 Ratios of General Bonded Debt Outstanding ............................................................ 128 Legal Debt Margin Information ............................................................................... 1 30 Direct and Overlapping Governmental Activities Debt ............................................. 1 32 Demographic and Economic Statistics ..................................................................... 1 33 Principal Employers ............................................................................................... 1 34 Full-Time Equivalent City Government Employees by Function ............................... 1 36 Operating Indicators by Function ............................................................................. 138 Capital Asset Statistics by Function ......................................................................... 1 40 48 7 INTRODUCTORY SECTION 49 8 This page is intentionally blank. 50 9 C ITY OF S ARATOGA C ITY H ALL 13777 F RUITVALE A VENUE S ARATOGA, C ALIFORNIA 95070 (408) 868-1200 December 5, 2018 Honorable Mayor, City Council, and Citizens of the City of Saratoga, California The Comprehensive Annual Financial Report (CAFR) of the City of Saratoga for the year ended June 30, 2018 is hereby submitted in accordance with mandated statutes. These statutes require that the City of Saratoga issue a report on its financial position and activity, and that an independent firm of certified public accountants audits the report. This annual report was prepared in accordance with accounting principles generally accepted in the United States of America. City Management is responsible for both the accuracy of the data and the completeness and fairness of the presentation, including all disclosures. To provide a reasonable basis for making these representations, the City has established internal controls to provide reasonable, rather than absolute, assurance that the financial statements will be free of material misstatement. To the best of our knowledge and belief, the enclosed data is accurate in all material respects and reported in a manner designed to present fairly the financial position and results of operations of the City’s various funds. This report intends to present the reader with a comprehensive view of the City’s financial position and the results of its operations for the fiscal year ending June 30, 2018, along with additional disclosures and financial information designed to enable the reader to gain an understanding of the City’s financial activities. The report was prepared as prescribed in Governmental Accounting Standards Board (GASB) Statement No. 34, Basic Financial Statements and Management’s Discussions and Analysis for State and Local Governments. To facilitate the public’s understanding and usefulness of the City of Saratoga’s financial statements, GASB Statement 34 requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (MD&A). The design of this formal letter of transmittal is to complement the MD&A and should be read in conjunction with it. Unaudited sections of this document are presented to supplement the basic financial statements. While not audited, the supplemental information is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for operational, economic, and historical context. THE REPORTING ENTITY AND ITS SERVICES The City of Saratoga (City), incorporated in 1956, is located 40 miles south of San Francisco in the Santa Clara Valley. The City currently covers a land area of approximately 12 square miles and contains a population of 31,435 as of January 1, 2018, as reported by the California Department of Finance. The City is a general law city of the State of California and operates under a council-manager form of government. Policymaking and legislative authority are vested in the City Council, which consists of a Mayor, Vice Mayor, and three additional Council members. City Council members are elected at-large for staggered four- 51 10 year terms. The Mayor is selected annually by the City Council. The City Council is responsible for, among other things, passing ordinances, adopting the budget, appointing members to the City’s six advisory commissions and hiring the City Manager and City Attorney. The City Manager is responsible for implementing the policies and ordinances of the City Council and overseeing the daily operations of the City. The City provides a range of services including public safety, development regulation, public works, community and recreation activities and events, and general administrative functions. As a minimal service city, operations are supplemented with service contracts. Contracted services include, but are not limited to: public safety; infrastructure maintenance; engineering services; legal services; and recreation activities. The City is also committed to citizen participation in the evaluation and enhancement of services. Saratoga residents who wish to assist the City Council in forming government policy may do so by serving on an advisory commission. The commissions act in an advisory capacity to the City Council, and are comprised of the Heritage Preservation Commission, Library Commission, Parks and Recreation Commission, Planning Commission, Traffic Safety Commission, and Youth Commission. The financial reporting entity (the City) includes all the fund activity of the primary government, as well as all of its component units. Component units are legally separated entities for which the City is fully accountable. The City does not currently report any Component Units. Blended component units, although legally separate entities, are in substance part of the City’s operations and data from these units are combined with data of the City. Accordingly, the operations of the Landscape and Lighting Districts are reported in the City’s financial statements. ECONOMIC CONDITIONS AND OUTLOOK Saratoga is viewed as a desirable place to live in Silicon Valley due to its highly rated schools, beautiful neighborhoods nestled in the foothills at the western edge of the valley, and close proximity to many businesses associated with the high technology industry. Saratoga is predominantly a residential community with limited commercial or industrial activity within City boundaries. In general, the City is fiscally protected by the stability of its tax revenues. As is typical for California cities, the City of Saratoga’s largest funding sources are property tax, franchise fees, sales tax, and development fees and permits. It should be noted that while development fees are a significant funding source, expense related to the intake of this fee-based revenue more than offsets the revenue received. Property Tax Property tax assessments represent the largest source of revenue for the City. Historically, the City, along with the neighboring cities of Cupertino, Los Altos Hills, and Monte Sereno, received less than the minimum 7% allocation provided for under State law due to special legislation enacted 30 years ago. Throughout the years, the Cities have launched collaborative lobbying efforts to introduce and pass legislation that would treat the four Cities as equal to the other no/low tax Cities, and receive the minimum 7% of the property tax collected in the respective Cities. SB 107, enacted in September 2015, restored the final portion of the 7% minimum property tax allocation under a five-year phase-in plan; meaning the City will finally be fully funded in Fiscal Year 2019/20. Franchise Fees Franchise Fees are assessments on a number of utility services including gas, electricity, water, cable, and solid waste. The assessments are determined by easement formulas or a percentage of service costs, and are a pass-through fee collected by the service companies and subsequently remitted to the City. With most of 52 11 these services considered necessities in an urban setting, there is little fluctuation in the revenue stream. However, cable fee revenue grew with the use of internet services, and over the last several years, solid waste franchise fee revenue increased with the rise in service charges. Both of these fees are expected to grow in a more flattened trajectory in the future. Sales Tax With Saratoga primarily a residential community with limited retail sources, Sales Tax revenue is small in comparison to other cities of similar size. In an average year, the City receives approximately $1 million in Sales Tax, which is derived primarily from restaurants and gas stations. Although spending habits are migrating towards online purchases, Sales Tax revenue is anticipated to remain fairly steady due to the in- person or immediate need for the types of basic goods and services purchased in Saratoga. Development Fees Development fee revenue is derived from services related to planning reviews, planning applications, building plan reviews, engineering reviews, building inspections, and all permits, fees and costs associated with performing these activities. These regulatory services ensure compliance with all applicable laws, and the health and safety of the community. Although the entire community benefits from an enforced regulatory program, the service requestor initiates the development change and benefits the most from it. Therefore, the service requestor should pay most, if not all, of the costs. While the financial strength of the Saratoga community has insulated this revenue source from minor economic fluctuations in the past, the recession years have proven that development activity does correlate with strong economic ebbs and flows. Fiscal Outlook For Saratoga, these main funding sources continue to be stable and reliable. For the past six fiscal years, Saratoga’s revenue has increased at a steady pace through a recovery being led by the Silicon Valley’s strong housing and labor markets. As a result of increasing housing prices, turnover, and remodeling activity, development fee revenues have returned to pre-recession levels. In Fiscal Year 2017/18, licenses and permits revenues increased by 51.5% over the previous year, primarily due to updates in Saratoga’s fee schedule and increased permit activity. In addition, $100,000 of development fees continues to be directed to fund long-term planning services. Although California’s economy has fully recovered from the “Great Recession,” economists expect that another downturn in employment and real estate values is inevitable. However, with lessons learned, both the State and the City are better prepared with long-term fiscal plans and “rainy day” reserve funds to weather any future downturns. The City has placed a long-term emphasis on developing careful and thoughtful budget and fiscal policies to ensure financial stability in present and future years. FINANCIAL INFORMATION AND MAJOR INITIATIVES Financial Controls City Management is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the City are protected from loss, theft, or misuse, and to ensure that adequate accounting data is compiled to allow for the preparation of financial statements in conformity with generally accepted accounting principles. The internal control structure is designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that: (1) the cost of a control should not exceed benefits likely to be derived, and (2) the valuation of costs and benefits requires estimates and judgments by management. 53 12 As a recipient of federal, state and local financial assistance, the City is also responsible for guaranteeing that an adequate internal control structure is in place to ensure and document compliance with applicable laws and regulations related to these programs. This internal control structure is subject to periodic evaluation by City Management. For cash management, the City practices a passive approach to investments and maintains flexibility by managing a pooled cash system. Under the pooled cash concept, the City invests the cash of all funds with maturities planned to coincide with cash needs. Idle cash is invested in certain eligible securities as constrained by law and further limited by the City’s investment policy. The goals of the City’s investment policy are safety, liquidity, and yield. Cash management is tracked by fund and reconciled monthly. In addition, the City maintains extensive budgetary controls. The objective of these controls is to ensure compliance with legal provisions embodied in the annual appropriated budget approved by the City Council. Activities of the General Fund, Special Revenue Funds, Capital Projects Funds and Debt Service Funds are included in the annual appropriation. The level of budgetary control (i.e., the level at which expenditures cannot exceed the appropriated amount) is at the fund level. The City also maintains an encumbrance accounting system as complementary method of maintaining budgetary control. Encumbrances lapse at year-end with the exception of amounts reserved for multiple-year Capital Improvement Projects. At the end of each fiscal year, the departments review outstanding encumbrances of a material nature, and if deemed critical, make recommendations to the City Council to take action by Resolution to re-appropriate these funds into the following year’s budget. Major Initiatives The Fiscal Year 2017/18 budget was designed to enhance the quality of life for all Saratoga residents by focusing on the City Council’s priorities and enhancing community enrichment. The Budget continued to address the City’s Unfunded Accrued Liability (UAL) by making an additional $581,559 payment over the minimum required by CalPERS to reduce the outstanding liability even further. Streets are one of the most visible and fundamental services provided by the City as they are used daily by residents going to work, school, or completing everyday errands. Consequently, improving the conditions of our local roads has been a top budget priority with the City Council supporting $2 million for roadway resurfacing and restoration in Fiscal Year 2017/18. This is consistent with the Council’s strategic goal of maintaining the City’s infrastructure in a safe, sustainable, and cost-effective manner. Senior mobility is a growing challenge in Saratoga and throughout the County. A number of specific needs for seniors were identified through the Saratoga Senior Taxi Pilot Program that was funded and completed in Fiscal Year 2016/17. Two of the biggest needs identified were (1) a common information source or concierge service to assist seniors with existing transportation options and services, and (2) a reliable door-to- door transportation service that can accommodate the unique needs of seniors. The Council committed to a second pilot program for Fiscal Year 2017/18 to address these specific needs and is in discussion with Santa Clara County, the Valley Transportation Authority, neighboring West Valley cities, the Saratoga Area Senior Coordinating Council, and West Valley Community Services to identify collaborative solutions. The City Council has also emphasized continued priorities in public safety and communications, combined with additional priorities in public art and building strong neighborhood connections, which all are significant community enhancements. With an increasing number of initiatives and growing communication demands, staff levels in the City Manager’s Office was adjusted in Fiscal Year 2017/18 to include a new Deputy City Manager position. This administrative support is critical to the success of these initiatives. 54 13 INDEPENDENT AUDIT The City engaged Chavan & Associates, LLP to express an opinion on the financial statements based on their audit. The audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Generally accepted auditing standards set forth in the General Accounting Office’s Government Auditing Standards were used by the auditors in conducting the engagement. The City’s Annual Financial Report received an unmodified (clean) opinion from the auditors. The Independent Auditors’ Report is presented as the first component of the financial section of this report. In addition to meeting the requirements set forth in statutes, the audit was also designed to meet the requirements of the federal Single Audit Act of 1984, as amended, and the related U.S. Office of Management and Budget’s Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. The City’s federal financial assistance program also received an unqualified (clean) opinion from the auditors. Awards The Government Finance Officers Association (GFOA) of the United States and Canada awarded a Certificate of Achievement to the City for its Excellence in Financial Reporting on the CAFR for the fiscal year ended June 30, 2017. In order to be awarded a Certificate of Achievement, the City published an easily readable and efficiently organized financial report. This report satisfied both generally accepted accounting principles and applicable legal requirements. The Certificate of Achievement is valid for a period of one year. We believe our current CAFR continues to meet the Certificate of Achievement program’s requirements, and plan on submitting it to the GFOA to determine its eligibility for another certificate. ACKNOWLEDGEMENTS This CAFR represents the culmination of numerous hours of hard work expended by many individuals in the Finance & Administrative Services Department. In particular, we would like to express our appreciation to Dennis Jaw, Finance Manager for his preparation of this annual financial report, and to our supporting staff members: Ann Xu, Accountant; Karen Caselli, Lead Accounting Technician; Julie Ingraham and Gina Scott, Accounting Technicians for their assistance with the audit and exemplary services throughout the year. Furthermore, we would like to thank Chavan & Associates, LLP Certified Public Accountants for their helpful assistance in the preparation of this report. Finally, we would like to give credit to the City Council for their ongoing interest and support in planning, conducting and advising on the operations of the City in a responsible and representative manner. Respectfully submitted, James Lindsay Mary Furey City Manager Finance and Administrative Services Director 55 14 This page is intentionally blank. 56 15 Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to City of Saratoga California For its Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2017 Executive Director/CEO 57 16 CITY OF SARATOGA ELECTED OFFICIALS AND ADMINISTRATIVE PERSONNEL As of June 30, 2018 CITY COUNCIL Mary-Lynne Bernald - Mayor Manny Cappello – Vice-Mayor Howard Miller Emily Lo Rishi Kumar CITY STAFF James Lindsay – City Manager Crystal Bothelio – Deputy City Manager Debbie Bretschneider – Interim City Clerk Mary Furey – Administrative Services Director Debbie Pedro – Community Development Director John Cherbone – Public Works Director Michael Taylor – Recreation & Facilities Director CITY ATTORNEY Richard S. Taylor – Shute, Mihaly & Weinberger INDEPENDENT AUDITORS Chavan & Associates, LLP Certified Public Accountants 58 17 City of Saratoga - Organization Chart FY 2017/18 City AttorneyCity Manager Community Development Department Community Development Director Parks Division 1 Manager -Parks 2 Park Maint. Leadworker 5 Park Maint. Workers .50 Office Specialist Information Technology Division 1 IT Administrator 1 IT Technician Finance & Administrative Services Department Finance & Administrative Services Director Recreation & Facilities Department Recreation & Facilities Director Public Works Department Public Works Director Streets and Fleet Division 1 Manager -Streets and Fleet 2 Street Maint. Leadworker 4 Street Maint. Workers .50 Office Specialist Facilities Division 1 Facility Maint.Manager 1 Facility Maint. Leadworker 1 Facility Maint. Workers .60 Facility Coordinator Building Division 1 Sr. Building Inspector 2 Building Inspectors 1 Plan Check Engineer 1 Permit Technician 1 Office Specialist Citizen Advisory Commissions & Committees Citizens of Saratoga Elected City Council Human Resources Division 1 HR Manager .75 HR Technician City Manager's Department City Manager Planning Division 2 Senior Planner 1 Planners 1 Arborist 1 Office Specialist 1 Code Complaince Officer Engineering Division 1 Sr. Civil Engineer 1 Engineer .90 Administrative Analyst .75 Office Specialist Finance Services Division 1 Finance Manager .90 Accountant 3 Accounting Technicians Recreation Services Division 1.90 Recreation Supervisor .85 Recreation Coordinators 1 Office Specialist City Manager's Office 1 Deputy City Manager 1 City Clerk 1 Admin Anal;yst .90 Executive Assistanr 59 18 This page is intentionally blank. 60 19 FINANCIAL SECTION 61 20 INDEPENDENT AUDITORS’ REPORT To the Honorable Mayor and Members of the City Council of the City of Saratoga Saratoga, California Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the City of Saratoga (the “City"), as of and for the year ended June 30, 2018, and the related notes to the financial statements, which collectively comprise City’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements The City’s management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America, the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the City’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the City of Saratoga, as of June 30, 2018, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. 62 21 Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and other required supplementary information, as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Supplementary Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s financial statements as a whole. The introductory section, combining individual non- major fund statements and schedules, and statistical section, as listed in the table of contents, are presented for purposes of additional analysis and are not a required part of the financial statements. The combining individual non-major fund statements and schedules have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 18, 2018 on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance. November 12, 2018 San Jose, California 63 CITY OF SARATOGA MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30, 2018 22 INTRODUCTION The Management’s Discussion and Analysis (MD&A) is a required section of the City’s Comprehensive Annual Financial Report (CAFR), as shown in the overview below. The purpose of the MD&A is to present discussion and analysis of the City’s financial performance during the fiscal year that ended on June 30, 2018. This report will (1) focus on significant financial issues, (2) provide an overview of the City’s financial activity, (3) identify changes in the City’s financial position, (4) identify any individual fund issues or concerns, and (5) provide descriptions of significant asset and debt activity. This information, presented in conjunction with the annual Transmittal Letter and Basic Financial Statements is intended to provide a comprehensive understanding of the City’s operations and financial standing. Required Components of the Annual Financial Report FISCAL YEAR 2017/18 FINANCIAL HIGHLIGHTS • Total net position, or the City's assets plus deferred outflow of resources ($153.1 million) less its liabilities plus deferred inflow of resources ($23.8 million), was $129.3 million as of June 30, 2018. This is an increase of $2.3 million over the prior fiscal year, which is primarily due to an increase in key revenues combined with a decrease in expenses. • The City’s Net Pension Liability is $7.6 million. This is an increase of $1.2 million over the prior fiscal year, primarily due to a decrease in the assumed discount rate used to calculate pension assets. • Net Position is comprised of $113.1 million for investment in capital assets, net of depreciation and related debt, $2.6 million restricted for specific purposes, and $13.7 million in Unrestricted Net Position (page 38). • Total City-wide revenues of $26.2 million consists of $19.7 million in general revenue and $6.5 million in program revenue (page 39). • City expenses total $23.9 million (page 39). Management’s Discussion & Analysis Government-Wide Financial Statements Fund Financial Statements Notes to the Financial Statements Basic Financial Statements 64 CITY OF SARATOGA MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30, 2018 23 • The Governmental Funds fund balances total $19.0 million, with $13.1 million in the General Fund, $3.5 million in the Capital Improvement Funds, and $2.4 million in the Other Governmental Funds. This represents an increase of $0.9 million from the prior year (page 40). • General Fund revenues total $23.0 million, while General Fund expenditures total $19.4 million (page 42). THE BASIC FINANCIAL STATEMENTS The Basic Financial Statements are comprised of 1) Government-Wide (City-wide) Financial Statements, and; 2) Fund Financial Statements. These two sets of financial statements provide the reader two different perspectives of the City's financial activities and financial position. Government-Wide Financial Statements provide a longer-term view of the City's activities as a whole and are comprised of the Statement of Net Position and the Statement of Activities. The Statement of Net Position provides summary level information about the financial position of the City, including all its capital assets and long-term liabilities on a full accrual basis, similar to that used by corporations. The Statement of Activities provides summary level information about the City's revenues and expenses, also on a full accrual basis, with the emphasis on measuring net revenues and/or expenses for each of the City's programs. The Statement of Activities illustrates the change in Net Position for the fiscal year. City financial activities are required to be grouped as either government activities or business-type activities. The amounts in the Statement of Net Position and the Statement of Activities are required to be separated into governmental activities or business-type activities in order to distinguish between the two types of activities. In the case of the City of Saratoga, there are no business-type activities as of June 30, 2018. Fund Financial Statements report the City's operations in more detail than Government-Wide statements and focus primarily on the short-term activities of the City's General Fund and other major funds. The Fund Financial Statements measure current revenues and expenditures and fund balances; they exclude capital assets, long-term debt, and other long-term amounts. Major funds account for the major financial activities of the City and are presented individually, while the activities of non-major funds are presented in summary with subordinate schedules presenting the detail for each of these other funds in the Supplementary Information section. Major funds are explained below. The Government-Wide Financial Statements Government-Wide financial statements are prepared on the accrual basis, which means they measure the flow of all economic resources of the City as a whole. The Statement of Net Position and the Statement of Activities present information about the following: Governmental Activities - All of the City's basic services are considered to be governmental activities, including general government, community development, public safety, transportation, and, culture and leisure. These services are supported by general City revenues such as taxes, and by specific program revenues such as development and recreation program fees. Business-Type Activities - This category includes enterprise activities such as water, sewer, and utilities. Unlike governmental services, these activities are meant to be fully supported by charges paid by users, based on the services used. The City of Saratoga currently does not have any business-type activities. 65 CITY OF SARATOGA MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30, 2018 24 Fund Financial Statements A fund represents a grouping of related accounts and is used to maintain control over resources that are segregated for specific activities or objectives. The City, like other local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Fund financial statements provide detailed information about each of the City's most significant funds, called major funds. The concept of major funds, and the determination of which funds are classified as major funds, was established by GASB Statement 34 and replaces the concept of combining like funds and presenting them in total. Instead, each major fund is presented individually, with all non-major funds summarized and presented in a single column. Subordinate schedules present the detail of these non-major funds. Major funds present the major activities of the City for the fiscal year, and may change from year to year as a result of changes in the pattern of the City's activities. The City's funds are segregated into three types: governmental funds, proprietary funds, and fiduciary funds. Governmental Funds - The City's basic services are reported in governmental funds, which focus on how money flows into and out of those funds and the balances available at year-end. Financial statements are prepared on the modified accrual basis, which means they measure only current financial resources and uses. Carrying amounts for capital assets and other long-lived assets, along with long-term liabilities are not presented on the balance sheet in the governmental fund financial statements. Unlike the Government-Wide financial statements, Governmental Fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating the City's near-term financing requirements. Proprietary Funds – Internal service funds are an accounting device used to accumulate and allocate costs internally among the City’s various functions. The City uses internal service funds to account for liability/risk management, worker’s compensation, office equipment support services, information technology services, vehicle and building maintenance, and vehicle and information technology equipment replacement. Because internal service funds primarily benefit governmental functions, they have been included with the governmental activities in the Government-Wide financial statements. Fiduciary Funds – These funds account for assets held by the City in a trustee capacity or as an agent for individuals, private organizations, other governmental units, and/or other funds. Fiduciary funds are not reflected in the government-wide financial statements because these resources are not available to support the City's programs. The City does not have any fiduciary funds as of June 30, 2018. NOTES TO THE FINANCIAL STATEMENTS Notes to the Financial Statements provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes can be found immediately following the fund financial statements. 66 CITY OF SARATOGA MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30, 2018 25 REQUIRED SUPPLEMENTARY INFORMATION Required supplementary information, other than presented in this MD&A, follows the Notes Section and includes a budgetary comparison for the General Fund as presented in the Governmental Fund Financial Statements, and information on the modified approach for city streets and infrastructure. SUPPLEMENTARY INFORMATION Combining and individual fund statements and schedules are included to provide additional information on non-major governmental funds including special revenue, debt service, and capital project funds, as well as proprietary internal service fund information and uses of capital assets. An un-audited statistical section provides historical and current data on financial trends, revenue and debt capacity, demographic and economic information, and operating information. GOVERNMENT-WIDE FINANCIAL ANALYSIS Net Position serves over time as an indicator of the City's financial position. The City's Total Net Position increased $2,287,798 from $127,054,194 in Fiscal Year 2016/17 to $129,341,992 in Fiscal Year 2017/18. The primary reason for the increase in net position is an increase in key revenues combined with an overall decrease in expenses. The net pension liability increased $1,221,142 as a result of CalPERS’ lowering of the assumed discount rate in determining plan assets. The most significant portion of the City's Net Position ($113,052,916 or 87.4%) accounts for its investment in capital assets, (e.g., land, buildings, general government infrastructure, equipment, etc.) less any related debt used to acquire those assets that are still outstanding. These capital assets represent infrastructure which provides services to the citizens, consequently, these assets are not available for future spending. Of the City’s Net position, $2,596,277 or 2.0% is subject to external restrictions on how the funding may be used. Within the restricted Net Position total, $1,385,339 is for Landscape & Lighting districts, $997,756 is for repayment of long-term debt, and $213,182 is for environmental services. The remaining balance of $13,692,799, or 10.6% of the City's Net Position, is unrestricted and may be used to meet the City's ongoing obligations to citizens and creditors. 67 CITY OF SARATOGA MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30, 2018 26 Governmental Activities 2018 2017 Assets Current assets 26,959,576$ 25,253,696$ Capital assets 122,459,410 121,154,015 Total Assets 149,418,986 146,407,711 Deferred Outflow of Resources Deferred Outflow 3,711,379 2,931,316 Total Deferred Outflow of Resources 3,711,379 2,931,316 Liabilities Current liabilities 5,608,315 4,977,344 Long-term liabilities 16,635,186 15,921,773 Total Liabilities 22,243,501 20,899,117 Deferred Inflow of Resources Deferred Inflow 1,544,871 1,385,717 Total Deferred Inflow of Resources 1,544,871 1,385,717 Net Position Net investment in capital assets 113,052,916 111,240,629 Restricted for environmental services 213,182 263,182 Restricted for special assessment funds 1,385,339 1,152,869 Restricted for debt service 997,756 959,322 Unrestricted 13,692,799 13,438,191 Total Net Position 129,341,992$ 127,054,194$ Net Position 68 CITY OF SARATOGA MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30, 2018 27 Governmental Activities Increase Functions/Programs 2018 2017 (Decrease) Program Revenues Charges for services 6,174,109$ 6,143,525$ 30,584$ Operating grants and contributions 90,257 223,319 (133,062) Capital grants and contributions 218,756 1,062,479 (843,723) Total Program Revenues 6,483,122 7,429,323 (946,201) General Revenues Property taxes 14,123,801 12,263,575 1,860,226 Sales taxes 1,124,647 1,185,035 (60,389) Local taxes 960,363 857,050 103,313 Franchise taxes 2,166,165 2,170,870 (4,705) Motor vehicle in-lieu 16,091 13,538 2,553 Intergovernmental revenues 801,748 588,719 213,029 Investment earnings 318,699 124,679 194,020 Other revenues 212,543 200,597 11,946 Total General Revenues 19,724,056 17,404,063 2,319,993 Expenses General and intergovernmental services 6,009,582 6,449,934 (440,352) Public safety 5,728,276 5,443,759 284,517 Public works 7,942,898 9,164,282 (1,221,384) Community services 1,594,469 1,557,673 36,796 Community development services 2,285,452 2,905,718 (620,266) Interest on long-term debt (unallocated)358,703 366,948 (8,245) Total Expenses 23,919,380 25,888,313 (1,968,933)$ Increase / (Decrease) in Net Position 2,287,798 (1,054,924) 3,342,722 Net Position, Beginning of Year 127,054,194 128,109,118 (1,054,924) Net Position, End of Year 129,341,992$ 127,054,194$ 2,287,798$ Statement of Changes in Net Position As shown in the above Statement of Changes in Net Position schedule, program revenues decreased by $946,201 from the prior fiscal year for governmental activities. General revenues increased by $2,319,993 from the prior year. This resulted in a total increase in revenues of $1,373,792. Expenses decreased by $1,968,933 from the prior year due to capital outlay activity along with an increase in capitalized infrastructure. With total program and general revenues for Fiscal Year 2017/18 at $26,207,178 and total expenses at $23,919,380, the net activity resulted in an increase in Net Position of $2,287,798. An analysis and graphical representation of the changes in revenues and expenditures by type of significant events follows: 69 CITY OF SARATOGA MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30, 2018 28 Revenues For Fiscal Year 2017/18, the growth in property tax revenues reflect the ongoing strength of the San Francisco Bay Area economy. The increase in Capital Grants revenue offset the decrease in Charges for Services revenue, as there was a significant increase in activity for grant-funded Public Works and Community Services capital projects. Increase in Revenues General Revenues increased by $2,319,853 from the prior year. The most significant changes include: • Property Tax revenue increased $1,860,226 over the prior year. Of this amount, $876,771 is due to a correction in the categorization of bond assessments for the 2011 Library Bond, which was previously included as a Charge for Service. The remainder of the increase is due to the continuing demand for housing in the region, which has resulted in higher assessed valuations of property within the City upon turnover, plus the incremental TEA increase in the property tax allocation percentage. • Intergovernmental revenue increased $213,029 primarily due to increased Gas Tax and Road Repair and Accountability Act of 2017 revenues. Program Revenues decreased by $946,201 from the prior year. The most significant changes include: • Capital Grants & Contributions decreased $843,723 from the prior year due to a significant reduction in grant reimbursed capital project activity. • Charges for Services increased by $30,584 from the prior year. However, the actual increase in this category is $907,355, primarily due to fee adjustments related to Public Works and Community Development activities. This was mostly offset by the recategorization of bond assessments referenced above. 70 CITY OF SARATOGA MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30, 2018 29 Expenses Fiscal Year 2017/18 expenses decreased by $1,968,933. The balance of the decrease is primarily due to capital outlay activity along with an increase in capitalized infrastructure. Compared to the prior year, the GASB 68 pension expense adjustment decreased expenses by $848,196. This adjustment is broken down as follows: Increase 2018 2017 (Decrease) General and intergovernmental services 394,051 633,993 (239,942) Public works 522,948 870,234 (347,286) Community services 111,074 228,113 (117,039) Community development services 193,068 336,999 (143,931) Total Adjustment 1,221,141$ 2,069,339$ (848,198)$ Share of Net Pension Liability Adjustment The following analysis includes the Net Pension Liability (NPL) adjustment decreases listed above: • Public Works decreased by $1,221,384 ($874,098 net of NPL adjustment, listed in above table) primarily due to capital outlay activity along with an increase in capitalized infrastructure • Public Safety increased by $284,517 due to increases in sheriff contract costs. • General Services decreased by $440,352 ($200,410 net of NPL adjustment) primarily due to the absence of election costs, as well as a reduction of legal expenses and spending from the discretionary fund, which will be carried over to Fiscal Year 2018/19. 71 CITY OF SARATOGA MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30, 2018 30 • Community Services increased by $36,796 ($153,835 net of NPL adjustment) primarily due to cost of living adjustments in salaries and benefits and building maintenance costs. • Community Development decreased by $620,266 ($476,335 net of NPL adjustment) primarily due to position vacancies and capital outlay activity. MAJOR AND OTHER GOVERNMENTAL FUNDS: CHANGE IN FUND BALANCE A summary of the changes in fund balance of the Major Funds and Other Governmental Funds is presented below: Other Capital Governmental General Improvement Funds Total Revenues 22,970,108$ 1,768,383$ 1,642,114$ Total Expenditures 19,389,791 4,747,375 1,371,210 Revenues Over (Under) Expenditures 3,580,317 (2,978,992) 270,904 Transfers in 442,198 2,954,909 - Transfers out (1,872,909) (1,524,198) - Net change in fund balances 2,149,606 (1,548,281) 270,904 Beginning of year 10,984,311 5,085,307 2,112,191 End of year 13,133,917$ 3,537,026$ 2,383,095$ Major Funds The General Fund and the Capital Improvement Funds are listed as Major Funds in Fiscal Year 2017/18. The Other Governmental Funds include thirty Landscape and Lighting Districts and Storm Drain funds (presented as one combined fund in the financials) and the Library Bond Debt Service Fund. The total net change from fiscal year transactions, including Major Funds and Other Governmental Funds, was an increase of $872,230. General Fund As shown in the Major Funds table above, the net change in the General Fund's ending fund balance is an increase of $2,149,606. This is a result of the net operating revenues exceeding net operating expenditures. General Fund revenue increased from the prior year for a net revenue gain of $1,857,696. This is primarily due to significant increases in property tax ($959,589) as a result of the strength of the housing market, and Licenses and Permits ($749,172), which was the effect of increases in certain Public Works and Community Development fees. General Fund revenue budgets are conservatively based upon prior year experience and revenue specific information. Expenses are budgeted at anticipated program needs at not-to-exceed projected funding levels. However, the City has opted to commit additional funding towards the Unfunded Accrued Liability, or UAL, related to pensions. In Fiscal Year 2017/18, the City Council directed staff to make a $750,000 payment towards the UAL. This payment is in excess of the required minimum contribution amount required, thereby reducing the actual liability. As of June 30, 2018, the Net Pension Liability, or NPL, is approximately 72 CITY OF SARATOGA MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30, 2018 31 $7.6 million. This is an increase of $1.2 million over the prior fiscal year, primarily due to a decrease in the assumed discount rate used to calculate pension assets. Capital Improvement Project Fund As shown in the table on the previous page, the net decrease of $1,548,281 in the Capital Improvement Funds occurred as additional progress was made on various capital projects, particularly for Annual Roadway Improvements and Prospect Road Improvements. Other Governmental Funds Of the net $270,904 increase in Other Governmental Funds, the collective 30 Landscaping & Lighting District and Storm Drain funds comprise $232,470 of the total. The Library Bond debt service fund accounts for the remaining $38,434 of the increase. Both net gains represent a small excess of revenue over operating expenditures in the normal course of operations. GENERAL FUND – BUDGETARY HIGHLIGHTS Changes from the City's General Fund original budget to the final budget are detailed in the Required Supplementary Information Section along with a comparison to actual activity for the fiscal year. Changes to the City's budget that increase or decrease appropriations in a fund must be approved by a resolution of the City Council. Modifications to the budget that are a realignment of fiscal activities with no impact to the fund's bottom line may be approved by the City Manager. Significant changes from the City’s original budget to the final budget are summarized as follows: Revenues and Transfers In The General Fund adopted and final revenue budget was $20,777,773 as shown in the schedule below: Adopted to Final Budget Fiscal Year Ended June 30, 2018 += Adopted Budget Final Budget Adjustments Budget Revenues 20,777,773$ - 20,777,773$ Transfers in -$ 32,000 32,000$ The Transfers in budget adjustment in the amount of $32,000 was due to the return of funds from the capital projects fund which was no longer required for the Magical Bridge Playground project. Actual transfers into the General Fund in Fiscal Year 2017/18 was $442,198. The excess is due to the City’s policy to return unused capital project funds to the General Fund when a project is deemed completed or cancelled. 73 CITY OF SARATOGA MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30, 2018 32 Expenses and Transfers Out The final General Fund expense budget was $20,406,745 and final transfers out at $1,872,909, as shown in the schedule below: Adopted to Final Budget Fiscal Year Ended June 30, 2018 += Adopted Budget Final Budget Adjustments Budget Expenses 20,438,825$ (32,080) 20,406,745$ Transfers out 1,530,000$ 342,909 1,872,909$ During the fiscal year, adjustments to the expense budget of ($32,080) were due to a reallocation of certain salary expenses to other funds. Transfers out were increased by $342,909 to fund various additional capital projects, including the Guava/Fredricksburg Crossing and General Plan Update projects. The original budgeted amount of $1,530,000 for transfers from the General Fund to the Capital Improvement funds were allocated as follows: $1,034,000 for street, sidewalk, and storm drain repair; $420,000 for park and trail improvements; and $76,000 for various administrative projects. CAPITAL ASSETS The City of Saratoga elected to use the "Modified Approach" as defined by GASB Statement No. 34 for infrastructure reporting in which eligible infrastructure capital assets are not required to be depreciated if the following requirements are met: • The City manages the assets using an asset management system which requires that the City (1) perform an up-to-date inventory; (2) perform condition assessments and summarize the results using a measurement scale; and (3) estimate the annual amount to preserve the assets at the established condition assessment level. • The City documents that the eligible infrastructure capital assets are being preserved approximately at or above the established and disclosed condition assessment level. City policy is to achieve a Pavement Condition Index (PCI) average rating of 70 for all streets, at minimum. As of May 31, 2018, the City’s overall rating was estimated to be 68 with 0% of streets rated as Excellent, 80% of streets rated as “Very Good” to "Good," 10% of streets rated “Poor,” and 10% of streets rated as "Very Poor." While the City Council continues to review infrastructure investment strategies, the City anticipates that the 2018 Pavement Management Project, which was not completed as of the date of the report, will bring the average PCI rating up to the target of 70. Overall, the City spent $5,314,971 to maintain and preserve eligible infrastructure assets during Fiscal Year 2017/18. It was estimated in the most recent pavement study that the five-year (2017-2021) cost to maintain street infrastructure would be $21,700,000. The amount that the City spent is reasonably in-line with this estimate. For more detailed information on Capital Assets activity, please refer to Note 4 in the section entitled "Notes to the Basic Financial Statements" and Note 2 in the "Required Supplementary Section." The latest assessment study was conducted in 2016. 74 CITY OF SARATOGA MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30, 2018 33 As reflected in the following schedule, the City has $122,459,410 invested in a variety of capital assets as of June 30, 2018. This represents an increase of $1,305,395, or 1.08% from the prior year. Governmental Activities 2018 2017 Land 15,591,925$ 15,591,925$ Building and structures 15,695,317 15,919,233 Machinery and equipment 1,129,549 1,039,184 Infrastructure 83,067,805 80,453,463 Construction in progress 6,974,814 8,150,210 Total Capital Assets, Net of Depreciation 122,459,410$ 121,154,015$ Capital Assets at Year End Net of Depreciation The following reconciliation summarizes the changes in Capital Assets. Balance Balance June 30, 2017 Additions Retirements Reclassification June 30, 2018 Land 15,591,925$ -$ -$ -$ 15,591,925$ Building and structures 25,986,754 493,441 - - 26,480,195 Machinery and equipment 3,174,008 331,879 - - 3,505,887 Infrastructure 107,491,011 3,879,008 - - 111,370,019 Construction in progress 8,150,211 3,326,801 - (4,502,198) 6,974,814 Depreciation (39,239,894) (2,223,536) - - (41,463,430) Total Capital Assets, Net of Depreciation 121,154,015$ 5,807,593$ -$ (4,502,198)$ 122,459,410$ Changes in Capital Assets Major capital projects in progress during Fiscal Year 2017/18 included the following expenditures: • Highway 9 Improvements - $152,788 • Prospect/Saratoga OBAG Improvements - $2,217,437 • Hakone Gardens Koi Pond Improvements - $224,980 • Village Sidewalk Improvements - $279,268 • Electric Vehicle (EV) Fast-Charge Station - $63,051 Additional information on Capital Assets is included in Note 4 to the financial statements. 75 CITY OF SARATOGA MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30, 2018 34 DEBT AND OTHER LONG-TERM OBLIGATION ADMINISTRATION The net change in outstanding obligations for the City of Saratoga is a decrease of $483,734. Total long term bonded debt, net of premium decreased by $506,892. Outstanding compensated absences increased by $23,158. Governmental Activities 2018 2017 2011 General obligation bond 9,100,000$ 9,585,000$ Net original issue premuim 306,494$ 328,386 Compensated absences 695,123$ 671,965 Total Outstanding long-term obligations 10,101,617$ 10,585,351$ Outstanding Long-Term Obligation at Year End The current portion of long-term debt ($500,000 for the refunded 2011 General Obligation Bonds for Fiscal Year 2018/19) and $21,892 of amortized net original premium are classified as a current liability in the City's Statement of Net Position. General Obligation Bonds On July 14, 2011 the City refunded the 2001 General Obligation Bonds and, in their place, issued 2011 General Obligation Bonds for $11,995,000. Interest rates on the bonds range from 2.0% to 4.0%, and the final payment is due August 1, 2031. Principal of $485,000 and interest of $356,810 were paid during the fiscal year. Compensated Absences Compensated absences are accrued liabilities for vested and unpaid vacation and sick pay. The compensated absences balance increased during the fiscal year by $23,158 due to a decrease in use of paid time-off. An estimated current liability of $501,287 is anticipated for the next fiscal year. Additional information on outstanding obligations can be found in Note 5 to the financial statements. ECONOMIC FACTORS The following economic indicators from Fiscal Year 2017/18 were taken into account when developing the budget for Fiscal Year 2018/19. • Taxable assessed value of property was $14.4 billion, an increase of 5.7% from the previous fiscal year. • The unemployment rate for the City was 2.8% versus 2.7% from the previous year. This compares favorably with the County rate of 4.0% and the State rate of 4.2%. • Per capita income was $82,633, an increase of 6.4% from the previous year. General Fund revenues available for appropriation in Fiscal Year 2018/19 are $22.3 million, an increase of $1.5 million over the final 2017/18 budget amount of $20.8 million. Property taxes, benefiting from the rise in assessed valuation, lead this increase. The additional revenues will be used to accomplish the major initiatives outlined in the letter of transmittal. 76 CITY OF SARATOGA MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30, 2018 35 General Fund expenses available for appropriation in Fiscal Year 2018/19 are $22.0 million, an increase of $1.6 million over the final Fiscal Year 2017/18 budget amount of $20.4 million. Increases are anticipated in salaries and benefits due to cost-of-living adjustments. Increases will also be seen in contract services related to public safety. The budget will continue to address the City’s standing policy of reducing long-term liabilities related to pension obligations by increasing the UAL payment by an additional $250,000, up to a total of $1 million, and building reserves to weather future downturns in the economy. As for the City’s capital budget, the focus continues to be on improving local roads. A total of $1.8 million is allocated for street repair and resurfacing and sidewalks, curbs and storm drains. Additionally, $525,000 is allocated to improve the infrastructure of the City’s parks, trails, grounds, and medians. OUTLOOK The City maintains a strong financial position. Services have been restored to pre-recessionary levels. The lessons learned from the “Great Recession” have led to a focus on long-term financial planning that will help the City through the next economic downturn with hopefully little impact to service levels. In the meantime, the City will continue to address its liabilities, deferred maintenance on infrastructure and facilities, and explore ways in which the City can refine Saratoga and make it an even better place for the people who live, work, and visit the community. REQUEST FOR FINANCIAL INFORMATION This financial report is designed to provide a general overview of the City of Saratoga's finances for all of Saratoga's residents, taxpayers, customers, investors, and creditors. This financial report seeks to demonstrate the City's accountability for the money it receives. Questions concerning any of the information provided in this report or requests for additional information should be addressed to the Administrative Services Department, 13777 Fruitvale Avenue, Saratoga, California 95070. 77 CITY OF SARATOGA STATEMENT OF NET POSITION JUNE 30, 2018 36 This page is intentionally blank. 78 CITY OF SARATOGA STATEMENT OF NET POSITION JUNE 30, 2018 37 BASIC FINANCIAL STATEMENTS 79 CITY OF SARATOGA STATEMENT OF NET POSITION JUNE 30, 2018 38 Primary Government Governmental Activities ASSETS Current Assets: Cash and investments 23,773,159$ Restricted cash and investments 2,414,665 Receivables: Accounts 771,752 Total Current Assets 26,959,576 Noncurrent Assets: Capital Assets: Non-depreciable 75,230,409 Depreciable, net 47,229,001 Total Capital Assets 122,459,410 Total Noncurrent Assets 122,459,410 Total Assets 149,418,986 DEFERRED OUTFLOW OF RESOURCES Contribution and adjustments related to pension liability 3,711,379 Total Deferred Outflow of Resources 3,711,379 LIABILITIES Current Liabilities: Accounts payable 1,299,998$ Accrued payroll 166,464 Interest payable 148,671 Deposits payable 2,657,034 Claims payable 76,001 Long-term obligations - due within one year 1,023,179 Total Current Liabilities 5,608,315 Noncurrent Liabilities: Net pension liabilty 7,556,748 Long-term obligations - due in more than one year 9,078,438 Total Noncurrent Liabilities 16,635,186 Total Liabilities 22,243,502 DEFERRED INFLOW OF RESOURCES Adjustments related to pension liability 1,522,918 Unavailable revenue 21,953 Total Deferred Inflow of Resources 1,544,871 Net Position Net investment in capital assets 113,052,916 Restricted for: Environmental funds 213,182 Special assessment funds 1,385,339 Debt service 997,756 Total Restricted 2,596,277 Unrestricted 13,692,799 Total Net Position 129,341,992$ The accompanying notes are an integral part of these financial statements 80 CITY OF SARATOGA STATEMENT OF ACTIVITIES AND CHANGES IN NET POSITION FOR THE FISCAL YEAR ENDED JUNE 30, 2018 39 Net (Expense) Revenue and Changes in Program Revenues Net Position Primary Operating Capital Government Charges for Grants and Grants and Governmental Functions/Programs Expenses Services Contributions Contributions Total Activities Primary Government: Governmental Activities: General and intergovtl services 6,009,582$ 152,287$ -$ -$ 152,287$ (5,857,296)$ Public safety 5,728,276 367,857 88,392 - 456,249 (5,272,027) Public works 7,942,898 2,396,644 1,865 179,291 2,577,800 (5,365,098) Community services 1,594,469 914,312 - 39,465 953,777 (640,692) Community development services 2,285,452 2,343,010 - - 2,343,010 57,557 Interest on long-term debt (unall.)358,703 - - - - (358,703) Total 23,919,380$ 6,174,109$ 90,257$ 218,756$ 6,483,122$ (17,436,258)$ General Revenues: Taxes Property taxes 14,123,801$ Sales taxes 1,124,647 Local taxes 960,363 Franchise taxes 2,166,165 Motor vehicle-in-lieu 16,091 Total taxes 18,391,066 Intergovernmental 801,748 Investment earnings 318,699 Other revenues 212,543 Total General Revenues 19,724,056 Change in Net Position 2,287,798 Net Position - Beginning of Year 127,054,194 Net Position - End of Year 129,341,992$ The accompanying notes are an integral part of these financial statements 81 CITY OF SARATOGA GOVERNMENTAL FUNDS – BALANCE SHEET JUNE 30, 2018 40 Other Total Capital Governmental Governmental General Improvement Funds Funds ASSETS Cash and investments 16,266,560$ 3,877,937$ -$ 20,144,497$ Restricted cash and investments 2,414,665 2,414,665 Receivables: Accounts 505,435 255,057 3,810 764,302 Interest - - - - Total assets 16,771,995 4,132,994 2,418,475 23,323,464 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable 590,511$ 594,445$ 35,380$ 1,220,336$ Accrued payroll 131,611 1,523 - 133,134 Deposits payable 2,657,034 - - 2,657,034 Other payable 236,969 - - 236,969 Total liabilities 3,616,125 595,968 35,380 4,247,473 DEFERRED INFLOW OF RESOURCES Unavailable Revenue 21,953 - - 21,953 Total deferred outflow of resources 21,953$ -$ -$ 21,953$ Fund Balances: Restricted: Environmental services 213,182 - - 213,182 Special assessment funds - - 1,385,339 1,385,339 Debt service - - 997,756 997,756 Committed: Capital improvement program - 3,537,026 - 3,537,026 Hillside stability 1,000,000 - - 1,000,000 Assigned: Future capital & efficiency 1,349,623 - - 1,349,623 Carryforwards 155,264 - - 155,264 Facility replacement 2,200,000 - - 2,200,000 Unassigned: Working capital 1,000,000 - - 1,000,000 Fiscal stabilization 3,150,000 - - 3,150,000 Compensated absences 231,708 - - 231,708 Development services - - - - Other unassigned 3,834,140 - - 3,834,140 Total fund balances 13,133,917 3,537,026 2,383,095 19,054,038 Total liabilities and fund balances 16,771,995$ 4,132,994$ 2,418,475$ 23,323,464$ The accompanying notes are an integral part of these financial statements Major Funds 82 CITY OF SARATOGA RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION JUNE 30, 2018 41 Total Fund Balances - Total Governmental Funds 19,054,038$ Amounts reported for governmental activities in the statement of net position were different because: Capital assets used in governmental activities were not current financial resources. Therefore, they were not reported in the Governmental Funds Balance Sheet. The capital assets were adjusted as follows: Non-depreciable capital assets 75,230,409 Depreciable capital assets, net 46,817,836 Total Capital Assets 122,048,245 Interest payable on long-term debt did not require current financial resources. Therefore, interest payable was not reported as a liability in Governmental Funds Balance Sheet.(148,671) Internal service funds are used by management to charge the costs of office stores, vehicle and equipment maintenance and replacement, information services and replacement, building maintenance, risk management, and workers compensation. The assets and liabilities of the internal service funds are included in the governmental activities in the statement of net position 3,858,284 Deferred outflow of resources are transactions that have already taken place but are not ready to be recognized on the financial statements as expenses Changes of Assumptions 1,899,044 Differences between Projected and Actual Investment Earnings 464,937 Differences between employer's contributions and proportionate share 57,947 Pension Contributions Made Subsequent to Measurement Date 1,289,450 3,711,377 Long-term obligations were not due and payable in the current period. Therefore, they were not reported in the Governmental Funds Balance Sheet. The long-term liabilities were adjusted as follows: General obligation bonds (9,100,000) Net Pension Liability (7,556,748) Compensated absences (695,123) Net original issue premium (306,494) Total Long-Term Obligations (17,658,366) Deferred inflow of resources are transactions that have already taken place but are not ready to be recognized on the financial statements as revenues Differences between Expected and Actual Experience (220,810) Change in employer's proportion (1,302,108) (1,522,918) Net Position of Governmental Activities 129,341,992$ The accompanying notes are an integral part of these financial statements 83 CITY OF SARATOGA STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE FOR THE YEAR ENDED JUNE 30, 2018 42 Other Total Capital Governmental Governmental General Improvement Funds Funds REVENUES: Property taxes 12,963,531$ -$ 283,499$ 13,247,030$ Special assessments - - 1,332,739 1,332,739 Sales taxes 1,124,647 - - 1,124,647 Other local taxes 960,363 - - 960,363 Licenses & permits 2,204,627 472,075 - 2,676,702 Fines & forfeiture 110,190 17,145 - 127,335 Intergovernmental - Federal 1,865 179,291 - 181,156 Intergovernmental - State 459,016 794,071 - 1,253,087 Intergovernmental - Other 96,144 39,465 - 135,609 Franchise fees 2,166,165 - - 2,166,165 Use of money and property 716,090 37,237 25,878 779,205 Other revenue 2,167,470 229,099 (2) 2,396,567 Total revenues 22,970,108 1,768,383 1,642,114 26,380,605 EXPENDITURES: Current: General and intergovernmental services 4,585,147 - - 4,585,147 Public safety 5,705,157 - - 5,705,157 Public works 5,560,509 - 524,475 6,084,984 Community services 1,292,453 - - 1,292,453 Community development services 2,246,525 - - 2,246,525 Capital outlay - 4,747,375 - 4,747,375 Debt service: Principal - - 485,000 485,000 Interest and fiscal charges - - 361,735 361,735 Total expenditures 19,389,791 4,747,375 1,371,210 25,508,376 REVENUES OVER (UNDER) EXPENDITURES 3,580,317 (2,978,992) 270,904 872,229 OTHER FINANCING SOURCES (USES): Transfers in 442,198 2,954,909 - 3,397,107 Transfers out (1,872,909) (1,524,198) - (3,397,107) Total other financing sources (uses)(1,430,711) 1,430,711 - - Net change in fund balances 2,149,606 (1,548,281) 270,904 872,229 FUND BALANCES: Beginning of year 10,984,311 5,085,307 2,112,191 18,181,809 End of year 13,133,917$ 3,537,026$ 2,383,095 19,054,038$ The accompanying notes are an integral part of these financial statements. Major Funds 84 CITY OF SARATOGA RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE TO THE GOVERNMENT-WIDE STATEMENT OF ACTIVITIES AND CHANGES IN NET POSITION FOR THE FISCAL YEAR ENDED JUNE 30, 2018 43 Net Change in Fund Balances - Total Governmental Funds 872,229$ Amounts reported for governmental activities in the Statement of Activities and Changes in Net Position were different because: Governmental Funds report capital outlay as expenditures. However, in the Government-Wide Statement of Activities and Changes in Net Position, the cost of those assets was allocated over their estimated useful lives as depreciation expense. This is the amount of capital assets recorded in the current period.3,326,802 Depreciation expense on capital assets was reported in the Government-Wide Statement of Activities and Changes in Net Position, but it did not require the use of current financial resources. Therefore, depreciation expense was not reported as expenditures in the Governmental Funds.(2,072,258) Internal service funds are used by management to charge the costs of office stores, vehicle and equipment maintenance and replacement, information services and replacement, building maintenance, risk management, and workers' compensation. The net revenue or excess expenses of the internal service funds is reported with government activities.250,395 GASB 68 Adjustments to pension expense Change in net pension liability - current year (1,221,142) Amortization of changes in deferred outflows 782,209 Amortization of changes in deferred inflows (137,203) Adjustments to pension expense as a result of GASB 68 (576,136) Long-term compensated absences and claims payables were reported in the Government-Wide Statement of Activities and Changes in Net Position, but they did not require the use of current financial resources. Therefore, long-term compensated absences and claims payable were not reported as expenditures in governmental funds. Compensated absences (23,158) Repayment of bond principal was an expenditure in governmental funds, but the repayment reduced long-term liabilities in the Government-Wide Statement of Net Position. Long-term debt repayments 485,000 Revenues resulting from the refunding of outstanding debt are not available to pay current-period expenditures and therefore, are revenue in the funds. Net original issue premium 21,892 Interest expense on long-term debt was reported in the Government-Wide Statement of Activities and Changes in Net Position, but it did not require the use of current financial resources. Therefore, interest expense was not reported as expenditures in governmental funds. The following amount represented the change in accrued interest from prior year.3,032 Change in Net Position of Governmental Activities 2,287,798$ The accompanying notes are an integral part of these financial statements 85 CITY OF SARATOGA STATEMENT OF NET POSITION PROPRIETARY FUNDS JUNE 30, 2018 44 Governmental Activities - Internal Service Funds ASSETS Current assets: Cash and investments 3,628,662$ Accounts receivable 7,450 Total current assets 3,636,112 Noncurrent assets: Capital assets: Machinery and equipment 1,421,442 Less: accumulated depreciation (1,010,277) Total capital assets (net of accumulated depreciation) 411,165 Total assets 4,047,277 LIABILITIES Liabilities: Current liabilities: Accounts payable 79,662$ Accrued payroll 33,330 Other payables 76,001 Total current liabilities 188,993 NET POSITION Net investment in capital assets 411,165 Unrestricted 3,447,119 Total net position 3,858,284$ The accompanying notes are an integral part of these financial statements 86 CITY OF SARATOGA STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION PROPRIETARY FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2018 45 Governmental Activities - Internal Service Funds Operating revenues: Charges for services 2,850,000$ Other operating revenues 75,592 Total operating revenues 2,925,592 Operating expenses: Cost of services 2,523,920 Depreciation 151,277 Total operating expenses 2,675,197 Operating income (loss)250,395 Transfers in - Change in net position 250,395 Total net position - beginning 3,607,889 Total net position - ending 3,858,284$ The accompanying notes are an integral part of these financial statements 87 CITY OF SARATOGA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2018 46 Governmental Activities - Internal Service Funds Cash flows from operating activities: Receipts from customers and users 2,919,556$ Payments to suppliers (1,584,497) Payments to employees (892,223) Net cash provided (used) by operating activities 442,836 Cash flows from capital activities: Acquisition of capital assets (202,128) Net cash provided for the acquisition of capital assets (202,128) Net increase in cash and cash equivalents 240,708 Cash and cash equivalents, beginning of year 3,387,954 Cash and cash equivalents, ending of year 3,628,662$ Reconciliation of operating income to net cash provided by operating activities: Operating income (loss)250,395$ Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation 151,277 Change in operating assets and liabilities: Accounts receivables (6,034) Accounts payable 11,846 Claims payable 34,998 Accrued payroll 354 Net cash provided (used) by operating activities 442,836$ The accompanying notes are an integral part of these financial statements 88 CITY OF SARATOGA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2018 47 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The basic financial statements of the City of Saratoga, California (the City) have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to governmental agencies. The Governmental Accounting Standards Boards (GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The more significant of the City's accounting policies are described below. A. Financial Reporting Entity The City was incorporated as a municipal corporation in 1956 under the general laws of the State of California, with a population of 31,435 at June 30, 2018. The City is a largely residential community located in the foothills of the Santa Cruz Mountains. The City operates under the Council-Manager form of government, with five-elected Council members served by a full-time City Manager and staff. At June 30, 2018, the City's staff was comprised of 59 full- time or part-time employees, and numerous part-time temporary and seasonal employees. Staff is responsible for the following City services: • Public Safety - The City provides around-the-clock police services under a contract with the Santa Clara County Sheriff's offices. Emergency management and Fire services are provided by a special district. Code enforcement and inspection services are provided by City employees. • Public Works/Maintenance - The City builds and maintains its parks, streets, curbs, gutters, and related public property with a force of 21 employees. Major projects may be contracted out to reduce costs. • Community Development - Zoning administration, plan checking and advance planning services are provided by 12 employees. • Culture, Recreation and Community Support services are provided by a total of 9 employees. • General Government services are provided by a total of 15 employees. As required by GAAP, these basic financial statements present the City and its component units, entities for which the City is considered to be financially accountable. The City Council acts as the governing board. In addition, the City staff performs all administrative and accounting functions for these entities and these entities provide their services entirely to the City. Blended component units, although legally separate entities, are, in substance, part of the City's operations and data from these units are combined with data of the City. Discretely presented component units, on the other hand, are reported in a separate column in the government-wide financial statements to emphasize their legal separation from the City. Each blended component unit has a June 30 year-end. The City has no discretely presented component units. The following entity is reported as blended component unit: Landscape & Lighting District - The Landscape & Lighting District (the District) was established in 1980 for the levy and the collection of assessments upon the several lots or parcels of land in the District, and for the construction or installation of improvements and maintenance. The District is reported as a blended component unit of the City because it has the same Governing Board as the City. The activity for 89 CITY OF SARATOGA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2018 48 the District has been included in the accompanying basic financial statements and no separate financial statements are issued. B. Basis of Accounting and Measurement Focus 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 with a separate set of self-balancing accounts that comprise of its assets, liabilities, fund equity, revenues, and expenditures or expenses, as appropriate. Governmental 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. Government-Wide Financial Statements The City's government-wide financial statements include a Statement of Net Position and a Statement of Activities and Changes in Net Position. These statements present summaries of governmental activities for the City. Fiduciary activities of the City are not included in these statements. These statements are presented on an "economic resources" measurement focus and the accrual basis of accounting. Accordingly, all of the City's assets and liabilities, including capital assets, as well as infrastructure assets, long-term liabilities, and deferred inflows and outflows of resources are included in the accompanying Statement of Net Position. The Statement of Activities presents changes in net position. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred. Certain types of transactions are reported as program revenues for the City in three categories: • Charges for services • Operating grants and contributions • Capital grants and contributions Certain eliminations have been made as prescribed by GASB Statement No. 34 in regards to inter-fund activities, payables, and receivables. All internal balances in the Statement of Net Position have been eliminated. The following inter-fund activities have been eliminated: • Transfers in/Transfers out • Internal Service Fund charges • Landscape and Lighting District Service Fees Deferred Outflow of Resources and Deferred Inflow of Resources Deferred outflow of resources is a consumption of net position by the City that is applicable to a future reporting period, such as deferred charges. Deferred inflow of resources is an acquisition of net position by the City that is applicable to a future reporting period, such as unavailable revenue and advance collections. 90 CITY OF SARATOGA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2018 49 Governmental Fund Financial Statements Governmental fund financial statements include a Balance Sheet and a Statement of Revenues, Expenditures and Changes in Fund Balances for all major governmental funds and aggregated non-major funds. An accompanying schedule is presented to reconcile and explain the differences in net position as presented in these statements to the net position presented in the government -wide financial statements. The City has presented all major funds that met the applicable criteria. The following funds are major funds: General Fund The General Fund is used to account for all of the general resources of the City not specifically levied or collected for other City funds and the related expenditures. The General Fund accounts for all financial resources of the City which are not accounted for in another fund. Capital Improvement Capital Projects Fund This fund accounts for resources used for the major capital acquisition and construction activities. All governmental funds are accounted for on a spending or "current financial resources" measurement focus and the modified accrual basis of accounting. Accordingly, only current assets, deferred outflows of resources, current liabilities and deferred inflows of resources are included on the balance sheets. The Statement of Revenues, Expenditures and Changes in Fund Balances present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets. Under the modified accrual basis of accounting, revenues are recognized in the accounting period in which they become both measurable and available to finance expenditures of the current period. Accordingly, revenues are recorded when received in cash, except that revenues subject to accrual (up to 45 days after year-end) are recognized when due. The primary revenue sources, which have been treated as susceptible to accrual by the City, are property tax, sales tax, special assessments, intergovernmental revenues, other taxes, interest revenue, rental revenue and certain charges for services. Fines, forfeitures, licenses and permits and parking meter revenues are not susceptible to accrual because they are usually not measurable until received in cash. Expenditures are recorded in the accounting period in which the related fund liability is incurred. Unearned revenues arise when potential revenues do not meet both the "measurable" and "available" criteria for recognition in the current period. Unearned revenues also arise when the government receives resources before it has a legal claim to them, as when grant monies are received prior to incurring qualifying expenditures. In subsequent periods when both revenue recognition criteria are met or when the government has a legal claim to the resources, the unearned revenue is removed from the combined balance sheet and revenue is recognized. Reconciliation of the Fund Financial Statements to the Government-Wide Financial Statements is provided to explain the differences created by the integrated approach of GASB Statement No. 34. Proprietary Funds The City’s internal service funds are proprietary funds. In the fund financial statements, proprietary funds are presented using the accrual basis of accounting. Revenues are recognized when they are earned and expenses are recognized when the related goods or services are delivered. In the fund financial statements, proprietary funds are presented using the “economic resources measurement focus”. This means all assets and liabilities (whether current or noncurrent) associated with their activities are included 91 CITY OF SARATOGA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2018 50 on their balance sheets. Proprietary fund type operating statements present increases (revenues) and decreases (expenses) in total net position. Proprietary fund operating revenues, such as charges for services, result from exchange transactions associated with principal activity of the fund. Exchange transactions are those in which each party receives and gives up essentially equal value. Non-operating revenues, such as subsidies, taxes, and investment earnings result from non-exchange transactions or ancillary activities. Amounts paid to acquire capital assets are capitalized as assets in the internal service funds financial statements. Internal service funds account for charges to City departments for services provided, on a cost reimbursement basis, in the following areas: general liability, workers’ compensation, office support, information technology services, vehicle maintenance, building maintenance, equipment replacement, and information technology replacement. Fiduciary Fund Financial Statements During Fiscal Year 2017/18 the City has no fiduciary responsibility as prior reported agency funds have been transferred to other outside government agencies. C. Cash, Cash Equivalents and Investments The City pools its available cash for investment purposes. The City's cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term investments with original maturity of three months or less from the date of acquisition. Cash and cash equivalents are combined with investments and displayed as Cash and Investments. Deposit and Investment Risk Disclosures - In accordance with GASB Statement No. 40, Deposit and Investment Disclosures (Amendment of GASB Statement No. 3), certain disclosure requirements, if applicable, for Deposits and Investment Risks in the following areas: • Interest Rate Risk • Credit Risk ▬ Overall ▬ Custodial Credit Risk ▬ Concentrations of Credit Risk • Foreign Currency Risk Other disclosures are specified including use of certain methods to present deposits and investments, highly sensitive investments, credit quality at year-end and other disclosures. The City participates in an investment pool managed by the State of California titled Local Agency Investment Fund (LAIF), which has invested a portion of the pool funds in Structured Notes and Asset Backed Securities. LAIF's investments are subject to credit risk with the full faith and credit of the State of California collateralizing these investments. In addition, these Structured Notes and Asset-Backed Securities are subject to market risk as to change in interest rates. 92 CITY OF SARATOGA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2018 51 D. Inter-fund Transactions Inter-fund services provided and used are accounted for as revenue, expenditures or expenses, as appropriate. Transactions that constitute reimbursements to a fund for expenditures/expenses initially made from it that are properly applicable to another fund are recorded as expenditures/expenses in the reimbursed fund. All other inter-fund transfers are reported as transfers. E. Capital Assets Capital assets, including land, buildings, improvements, furniture, equipment and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), are reported in the applicable governmental activities in the government-wide financial statements. Capital assets were recorded at historical cost or estimated historical cost if actual cost was not available. Donated capital assets, donated works of art and similar items, and capital assets received in service concession agreement are reported at acquisition value. City policy has set the capitalization threshold for reporting capital assets at $10,000. The City has chosen the Modified Approach for reporting the streets subsystem of infrastructure capital assets. Depreciation is recorded on a straight-line basis over the useful lives of the assets as follows: Buildings and structures 40 Years Machinery and equipment 5 to 10 Years Infrastructure 15 to 50 Years In June 1999, GASB issued Statement No. 34 Basic Financial Statements – and Management’s Discussion and Analysis – for State and Local Governments which requires the inclusion of infrastructure capital assets in local governments' basic financial statements. In accordance with Statement No. 34, the City has included the value of all infrastructure assets in its basic financial statements. The City defines infrastructure as the basic physical assets that allow the City to function, which includes the street system, park and recreation lands and improvements system; storm water conveyance and drainage system, buildings combined with site amenities such as parking and landscaping areas used by the City in the conduct of its business. Each major infrastructure system can be divided into subsystems. For example, the street system can be subdivided into pavement, curb and gutters, sidewalks, medians, streetlights, traffic control devices (signs, signals and pavement markings), landscaping and land. These subsystems were not delineated in the basic financial statements. The appropriate operating department maintains information regarding the subsystems. The City elected to use the Modified Approach as defined by GASB Statement No. 34 for infrastructure reporting of its streets, concrete and asphalt pavements. The City commissioned a physical assessment of the streets condition as of June 30, 2016. This condition assessment was performed in 2017. A Pavement Condition Index (PCI) was assigned to each street segment. The index is expressed in a continuous scale from 0 to 100, where 0 is assigned to the least acceptable physical condition and 100 is assigned to segments of street that have the physical characteristics of a new street. 93 CITY OF SARATOGA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2018 52 The following conditions were defined: Condition Rating Excellent 80 - 100 Very Good 70 - 79 Good 50 - 69 Poor 25 - 49 Very Poor 0 - 24 The City's policy relative to maintaining the street assets is to achieve an average rating of 70 for all street segments. This acceptable rating allows minor cracking and raveling of the pavement along with minor roughness that could be noticeable to drivers traveling at the posted speeds. For all other infrastructure systems, the City elected to use the Basic Approach as defined by GASB Statement No. 34 for infrastructure reporting. An appraisal determined the original cost, which is defined as the actual cost to acquire new property in accordance with market prices at the time of first construction/acquisition. Original costs were developed in one of three ways: 1) historical records; 2) standard unit costs appropriate for the construction/acquisition date; or 3) present cost indexed by a reciprocal factor of the price increase from the construction/acquisition date to the current date. The accumulated depreciation, defined as the total depreciation from the date of construction/acquisition to the current date on a straight line, unrecovered cost method was computed using industry accepted life expectancies for each infrastructure subsystem. The book value was then computed by deducting the accumulated depreciation from the original cost. F. Interest Payable In the government-wide financial statements, interest payable of long-term debt is recognized as an incurred liability for governmental fund types. The City has not allocated the interest on long-term debt to departments. In the fund financial statements, governmental fund types do not recognize the interest payable when the liability is incurred. Interest on long-term debt is recorded in the fund statements when payment is made. G. Claims Payable The City records a liability to reflect an actuarial estimate of ultimate uninsured losses for both general liability claims (including property damage claims) and workers' compensation claims. The estimated liability for workers' compensation claims and general liability claims includes "incurred but not reported" (IBNR) claims. There is no fixed payment schedule to pay these liabilities. 94 CITY OF SARATOGA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2018 53 H. Compensated Absences In the government-wide financial statements, compensated absences are recorded as incurred and the related expenses and liabilities are reported. In the fund financial statements, compensated absences are recorded as expenditures in the years paid, as it is the City's policy to liquidate any unpaid compensated absences at June 30 from future resources, rather than currently available financial resources. Only the amounts which become due at June 30 are reported in the fund financial statements as a liability. I. Long- Term Obligations In the government-wide financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are reported as deferred charges and amortized over the term of the related debt. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financial sources. Premiums received on debt issuance are reported as other financing sources while discounts on debt issuance reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. J. Fund Balances In February 2009, the Governmental Accounting Standards Board (GASB) issued Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions. This standard left unchanged the total amount reported as fund balance, but substantially altered the categories and terminology used to describe its components. Rather than focus on financial resources available for appropriation, the new categories focus on “the extent for which the government is bound to honor constraints in the specific purposes for which amounts in the reserve can be spent”. The components of fund balance are now categorized as follows: “non-spendable fund balance”, resources that are inherently non-spendable from the vantage point of the current period; “restricted fund balance”, resources that are subject to enforceable legal restrictions; “committed fund balance”, resources whose specified use is constrained by limitations the government entity imposes upon itself through formal action at its highest level of decision making and remains binding unless removed in the same manner; “assigned fund balance”, resources that reflects a government’s intended general use of resources, such intent would have to be established at either the highest level of decision making, by a body, or an official designated for that purpose; and “unassigned fund balance”, net resources in excess of what can properly be classified in one of the other four categories. Currently, the City’s fund balance reserves fall into one of the four spendable categories; restricted, committed, assigned, or unassigned fund balance. 95 CITY OF SARATOGA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2018 54 The City maintains three restricted fund balances constrained by external legal restrictions that can be spent only for the stipulated purposes. Restrictions may effectively be changed or lifted only with the consent of resource providers. These fund balances are: • Special Assessments Fund Balance – collectively represents year-end fund balances of thirty Landscape & Lighting and Storm Drain districts which use is restricted to the individual district. • Environmental Services Fund Balance – represents surcharges collected on solid waste bills for use as supplemental funding of Environmental Services program fees for household hazardous waste fees, storm drain, street sweeping, and other pollution mitigation expenses related to integrated waste programs and storm water management. These funds are used to supplement environmental expenditures by using $50,000 per year. • Debt Service Fund Balance – represents funding collected for and use in the City’s general obligation bond debt. The committed category, in which fund balance is constrained by limitations that the government imposes upon itself at its highest level of decision making by formal vote on a resolution of the City Council, and remains binding unless removed in the same manner, includes the following: • Capital Improvement Program (CIP) Fund Balance – represents the collective balance of funding appropriated for specific capital improvement projects. Capital Projects are funded through direct revenues or budgeted transfers for improvement work within the following program funds: Streets, Park & Trail, Facility, or Administrative & Technology Improvements. • Hillside Stability - funding set aside for use either in emergency repairs or high-cost and non- routine mitigation of hillside or landslide projects. In the assigned category, fund balance reflects an intended use as established by Council that is neither restricted nor committed. Use of Assigned Fund Balance is approved by formal vote of the Council or official authorized to assign amounts to a specific purpose, either through specific action, fund balance policy, or through budget direction and approval. This category includes the following reserves: • Future Capital & Efficiency Funding - represents General Fund funding set aside for capital and/or efficiency projects but not yet committed for a specific improvement project. • Facility Replacement Reserve – represents accumulated funding for the future replacement, major rehabilitation, or new construction of City-owned facilities. This funding is to be used for funding the construction or provide for the services of related debt, but is not yet committed for a specific improvement project. • Carryforward – represents either prior-year funds designated for one-time operational activities not yet completed by year-end, or to carryforward prior-year funding for specific activities as directed by Council. Carryover funds are appropriated for use in the following fiscal year. The Unassigned Fund Balance category represents funding which may be held for specific types of uses or stabilization purposes, but is not yet directed to be used for a specific purpose. Reserve amounts are 96 CITY OF SARATOGA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2018 55 determined by, and align with, fund policy direction. The General Fund is the only fund that reports a positive unassigned fund balance. • Working Capital Reserve – Council policy is to maintain $1,000,000 to meet cash flow requirements. As of June 30, 2018, the Working Capital Reserve balance is $1,000,000. • Fiscal Stabilization Reserve – Council policy is to maintain $2,500,000 for use by Council direction in case of disasters, emergencies, and economic downturns. As of June 30, 2018, the Fiscal Stabilization Reserve balance is $3,150,000. • Development Services Reserve– represents reserve funds collected for development services to be used to support multi-year funding levels for zoning administration, inspection services, and development regulation programs during periods where expenditures exceed revenues. In Fiscal Year 2017/18, this reserve was integrated with the Fiscal Stabilization Reserve. • Compensated Absences Reserve – represents reserve funding for employee payout compensation equal to one-third of the annual liability balance. This funding level is anticipated to be the maximum potential payout in excess of budgeted salary in a fiscal year. • Other Unassigned Fund Balance – represents funding not yet appropriated or assigned for use. Council policy is to maintain a minimum of $500,000 in unassigned funds as a buffer for unplanned expenditures or revenue shortfalls. Flow Assumption / Spending Order Policy – When expenditures are incurred for purposes for which both restricted and unrestricted fund balance is available, the City considers restricted funds to be spent first. When expenditures are incurred for which committed, assigned, or unassigned fund balances are available, the City considers amounts to be spent first out of committed funds, then assigned funds, and finally unassigned funds, as needed, unless the City Council has directed otherwise. K. Net Position In the government-wide financial statements, net position is classified in the following categories: • Net Investment in Capital Assets – This amount consists of capital assets net of accumulated depreciation and reduced by outstanding debt that attributed to the acquisition, construction, or improvement of the assets. In addition, deferred outflows of resources and deferred inflows of resources that are attributable to the acquisition, construction, or improvement of those assets or related debt also are included in the net investment in capital assets component of net position. • Restricted Net Position – This amount is restricted by external creditors, grantors, contributors, or laws or regulations of other governments. • Unrestricted Net Position – This amount is all net position that does not meet the definition of "invested in capital assets, net of related debt" or "restricted net position." 97 CITY OF SARATOGA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2018 56 L. Use of Restricted/Unrestricted Net Position When an expense is incurred for purposes for which both restricted and unrestricted net positions are available, the City's policy is to apply restricted net position first. M. Property Tax and Special Assessments County tax assessments include secured and unsecured property taxes and special assessments. "Unsecured" refers to taxes on personal property. These tax assessments are secured by liens on the property being taxed. Revenue is recognized in the period for which the tax and assessment is levied. The County of Santa Clara levies, bills and collects property taxes for the City, the County remits the entire amount levied and handles all delinquencies, retaining interest and penalties. Secured and unsecured property taxes are levied on January 1. Secured property tax is due in two installments on November 1 and February 1, and becomes a lien on those dates. It becomes delinquent on December 10 and April 10, respectively. Unsecured property tax is due on July 1 and becomes delinquent on August 31. N. Use of Estimates The preparation of basic financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. O. Subsequent Events Management has reviewed subsequent events and transactions that occurred after the date of the financial statements through the date of issuance. The financial statements include all events or transactions, including estimates, required to be recognized in accordance with generally accepted accounting principles. The following non-recognized events, which had no effect on the financial statements presented in this report, provide evidence about conditions that did not exist at June 30, 2018 but arose subsequent to that date: a) West Valley Clean Water Program. The Cities of Campbell, Monte Sereno, Saratoga and the Town of Los Gatos, representing the West Valley Communities, joined together to create West Valley Clean Water Program (WVCWP) in 1994. Together they work to control discharge of polluted stormwater into local creeks and the San Francisco Bay. Their mission is to: • Reduce pollutants in stormwater and discharges from storm drains into creeks • Maximize the effectiveness of pollution prevention efforts and work toward repair of impaired waters 98 CITY OF SARATOGA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2018 57 • Help the four West Valley Communities meet State Water Resources Control Board & Federal Clean Water Act goals for clean and healthy local water bodies In late 2017, after notification from West Valley Sanitation District that the District would no longer be involved in or provide fiscal agent services for WVCWP after June 30, 2018, the four agencies decided to establish the operation as a legal entity by entering into a Joint Powers Agreement, consistent with what the agencies had already set up for the West Valley Solid Waste Management oversight activities. With this action, the West Valley Clean Water Program is now overseen by the same Board that includes Council representation from each of the four municipalities. The Clean Water Program’s dedicated program staff and contractors carry out the day-to-day operations. The JPA also collaborates with Santa Clara Valley Urban Runoff Pollution Prevention Program, West Valley Sanitation District, and the Santa Clara County Fire District in their operational activities. With the loss of West Valley Sanitation functioning as the fiscal agent for the group, the four cities determined one of the cities would take on this role. Effective July 1, 2018, the City of Saratoga began performing these duties, which are limited to payroll and vendor payment functions, in addition to financial reporting. The City does not oversee operational aspects of the WVCWP and is acting only in a fiduciary function b) Arrowhead Bond. The Arrowhead Community Facilities District encompasses 39 homes located along the hillside between Rolling Hills Road and Blue Hills Lane, off of Prospect Road. Since 1951, this neighborhood has operated its own private water company (Arrowhead Cooperative Company Inc., aka ACCI). Over the years the number of Arrowhead Cooperative residents and water service meters have increased, to the extent that the water system infrastructure is no longer sufficient for water and fire protection needs. The potential of the fire danger situation prompted the Arrowhead Board to ask the City for assistance to issue a bond for the purpose of financing improvements to the water system. On October 17, 2018, the City Council authorized the issuance of the Saratoga Community Facilities District 2016-1 (Arrowhead Project) Special Tax Bonds, Series 2018, with the issue date of November 1, 2018. Debt service on the Special Tax Bond is payable only from special taxes levied annually on taxable properties within the CFD in the manner set forth in the Rate and Method of Apportionment (RMA) approved by the Council in connection with the formation of the District. The 2018 Bonds will not have any impact on the City’s General Fund, and these special financing district bonds are not assets or liabilities of the City for financial statement purposes. P. New GASB Pronouncements A. Implemented New Accounting Pronouncements GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions. The provisions in Statement 75 are effective for the fiscal year ended June 30, 2018. The primary objective of this Statement is to improve accounting and financial reporting by state and local governments for postemployment benefits other than pensions (other postemployment benefits or OPEB). It also improves information provided by state and local governmental employers about financial support for OPEB that is provided by other entities. This Statement replaces the requirements of Statements No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions, as amended, and No. 57, OPEB Measurements by 99 CITY OF SARATOGA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2018 58 Agent Employers and Agent Multiple-Employer Plans, for OPEB. Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans, establishes new accounting and financial reporting requirements for OPEB plans. The scope of this Statement addresses accounting and financial reporting for OPEB that is provided to the employees of state and local government employers. This Statement establishes standards for recognizing and measuring liabilities, deferred outflows of resources, deferred inflows of resources, and expense/expenditures. For defined benefit OPEB, this Statement identifies the methods and assumptions that are required to be used to project benefit payments, discount projected benefit payments to their actuarial present value, and attribute that present value to periods of employee service. Note disclosure and required supplementary information requirements about defined benefit OPEB also are addressed. In addition, this Statement details the recognition and disclosure requirements for employers with payables to defined benefit OPEB plans that are administered through trusts that meet the specified criteria and for employers whose employees are provided with defined contribution OPEB. This Statement also addresses certain circumstances in which a non-employer entity provides financial support for OPEB of employees of another entity. In this Statement, distinctions are made regarding the particular requirements depending upon whether the OPEB plans through which the benefits are provided are administered through trusts that meet the following criteria: • Contributions from employers and non-employer contributing entities to the OPEB plan and earnings on those contributions are irrevocable. • OPEB plan assets are dedicated to providing OPEB to plan members in accordance with the benefit terms. • OPEB plan assets are legally protected from the creditors of employers, non-employer contributing entities, the OPEB plan administrator, and the plan members. This statement did not have an impact on the City of Saratoga’s financial statements as the City does not offer other postemployment benefits to its employees. GASB Statement No. 86, Certain Debt Extinguishment Issues. The primary objective of this Statement is to improve consistency in accounting and financial reporting for in-substance defeasance of debt by providing guidance for transactions in which cash and other monetary assets acquired with only existing resources—resources other than the proceeds of refunding debt—are placed in an irrevocable trust for the sole purpose of extinguishing debt. This Statement also improves accounting and financial reporting for prepaid insurance on debt that is extinguished and notes to financial statements for debt that is defeased in substance. The requirements of this Statement are effective for financial statements for periods beginning after June 15, 2017. Earlier application is encouraged. This statement did not have an impact on the City’s financial statements. B. Upcoming Accounting and Reporting Changes GASB Statement No. 83, Certain Asset Retirement Obligations. Issue date: 11/16. Effective date: The requirements of this Statement will take effect for financial statements for periods beginning after December 15, 2018. Earlier application is encouraged. This Statement addresses accounting and financial reporting for certain asset retirement obligations (AROs). An ARO is a legally enforceable liability associated with the retirement of a tangible capital asset. A government that has legal 100 CITY OF SARATOGA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2018 59 obligations to perform future asset retirement activities related to its tangible capital assets should recognize a liability based on the guidance in this Statement. Earlier application is encouraged. The City of Saratoga does not believe that this statement will have a significant impact on the City’s financial statements. GASB Statement No. 84, Fiduciary Activities Issue date: 01/16. Effective date: The requirements of this Statement will take effect for financial statements for periods beginning after December 15, 2018. Earlier application is encouraged. The objective of this Statement is to improve guidance regarding the identification of fiduciary activities for accounting and financial reporting purposes and how those activities should be reported. This Statement establishes criteria for identifying fiduciary activities of all state and local governments. The focus of the criteria generally is on (1) whether a government is controlling the assets of the fiduciary activity and (2) the beneficiaries with whom a fiduciary relationship exists. Separate criteria are included to identify fiduciary component units and postemployment benefit arrangements that are fiduciary activities. This statement does not impact the City of Saratoga’s Fiscal Year 2017/18 financial statements. However, future financial statements will be evaluated for impacts to ensure proper compliance. GASB Statement No. 87, Leases. Issue date: 06/17. Effective date: The requirements of this Statement will take effect for financial statements for periods beginning after December 15, 2019. The primary objective of this Statement is to increase the usefulness of governments’ financial statement by requiring recognition of certain lease assets and liabilities for leases that previously were classified as operating leases and recognized as inflows of resources or outflows of resources based on the payment provisions of the contract. It establishes a single model for lease accounting based on the foundational principle that leases are financings of the right to use an underlying asset. Under this Statement, a lessee is required to recognize a lease liability and an intangible right-to-use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources, thereby enhancing the relevance and consistency of information about governments’ leasing activities. Earlier application is encouraged. The City of Saratoga is currently evaluating the impact of this Statement on the City of Saratoga’s financial statements and ensuring the required data will be available for disclosure. GASB Statement No. 88, Certain Disclosures Related to Debt, Including Direct Borrowings and Direct Placements This Statement addresses additional information to be disclosed in the notes to the financial statements regarding debt, including unused lines of credit; assets pledged as collateral for the debt; and terms specified in debt agreements related to significant events of default with finance-related consequences, significant termination events with finance-related consequences, and significant subjective acceleration clauses. The requirements of this Statement are effective for financial statements for periods beginning after June 15, 2018. Earlier application is encouraged. The City of Saratoga does not believe this statement will have a significant impact on the City’s financial statements. 101 CITY OF SARATOGA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2018 60 GASB Statement No. 89, Accounting for Interest Cost Incurred Before the End of the Construction Period This Statement addresses interest costs incurred before the end of a construction period be recognized as an expense in the period in which the cost is incurred for financial statements prepared using the economic resources measurement focus. As a result, interest cost incurred before the end of a construction period will not be included in the historical cost of a capital asset reported in a business- type activity or enterprise fund. The requirements of this Statement are effective for financial statements for periods beginning after December 15, 2019. Earlier application is encouraged. The City of Saratoga does not believe this statement will have a significant impact on the City’s financial statements. Q. Pensions For purposes of measuring the net pension liability and deferred outflows/inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the City of Saratoga’s California Public Employees’ Retirement System (CalPERS) plans (Plans) and additions to/deductions from the Plans’ fiduciary net position have been determined on the same basis as they are reported by CalPERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. 102 CITY OF SARATOGA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2018 61 NOTE 2 - CASH AND INVESTMENTS The City maintains a cash and investment pool, which includes cash balances and authorized investments of all funds, which the City Treasurer invests to enhance interest earnings. The pooled interest earned is allocated to the funds based on average month-end cash and investment balances in these funds. The City has the following cash and investments at June 30, 2018: Statement of Net Position Governmental Activities Cash and investments 26,187,824$ The City's Cash and Investments at June 30, 2018, in more detail: Cash and cash equivalents: Petty cash 1,300$ Demand deposits 624,525 Total Cash and Cash Equivalents 625,825 Investments: Local Agency Investment Fund (LAIF)25,561,999 Total Cash and Investments 26,187,824$ A. Cash Deposits The carrying amounts of the City's cash deposits were $624,525 at June 30, 2018. Bank balances before reconciling items were $759,997 at that date due to deposits in transit and outstanding checks. The total amount was collateralized or insured with securities held by the pledging financial institutions. The California Government Code requires California banks and savings and loan associations to secure the City's cash deposits by pledging securities as collateral. This Code states that collateral pledged in this manner shall have the effect of perfecting a security interest, and places the City ahead of general creditors of the institution. The market value of pledged securities must equal at least 110 percent of the City's cash deposits. California law also allows institutions to secure City deposits by pledging first trust deed mortgage notes that have a value of 150 percent of the City's total cash deposits. The City has waived the collateral requirements for cash deposits which are fully insured to $250,000 by the Federal Deposit Insurance Corporation (FDIC). Other accounts are insured up to $250,000 per custodian within agency. The City follows the practice of pooling cash and investments of all funds, except for funds required to be held by fiscal agents under the provisions of bond indentures. Interest income from cash and investments with fiscal agents is credited directly to the related fund. 103 CITY OF SARATOGA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2018 62 B. Investments Under the provisions of the City's investment policy, and in accordance with California Government Code, the following investments are authorized: • Securities of the U.S. Government or its agencies. • Certificates of Deposit (or Time Deposits) placed with commercial banks and/or savings and loan companies. • Negotiable Certificates of Deposit. • California Local Agency Investment Fund. • Investment-grade obligations of State, local governments or public authorities. • Money market mutual funds. • Passbook savings account and demand deposits. Investments are recorded at fair value in accordance with GASB Statement No. 72, Fair Value Measurement and Application. Accordingly, the change in fair value of investments is recognized as an increase or decrease to investment assets and investment income. This statement changed the definition of fair value and is effective for periods beginning after June 15, 2015. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction. In determining this amount, three valuation techniques are available: • Market approach - This approach uses prices generated for identical or similar assets or liabilities. The most common example is an investment in a public security traded in an active exchange such as the NYSE. • Cost approach - This technique determines the amount required to replace the current asset. This approach may be ideal for valuing donations of capital assets or historical treasures. • Income approach - This approach converts future amounts (such as cash flows) into a current discounted amount. Each of these valuation techniques requires inputs to calculate a fair value. Observable inputs have been maximized in fair value measures, and unobservable inputs have been minimized. GASB 72 established a hierarchy of inputs to the valuation techniques above. This hierarchy has three levels: • Level 1 inputs are quoted prices in active markets for identical assets or liabilities. • Level 2 inputs are quoted market prices for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other than quoted prices that are not observable. • Level 3 inputs are unobservable inputs, such as a property valuation or an appraisal. 104 CITY OF SARATOGA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2018 63 C. External Investment Pool The City's investments with LAIF at June 30, 2018, include a portion of the pool funds invested in Structured Notes and Asset-Backed Securities. These investments include the following: • Structured Notes - debt securities (other than asset-backed securities) whose cash flow characteristics (coupon rate, redemption amount, or stated maturity) depend upon one or more indices and/or that have embedded forwards or options. • Asset-Backed Securities - the bulk of which are mortgage-backed securities, entitle their purchasers to receive a share of the cash flows from a pool of assets such as principal and interest repayments from a pool of mortgages (such as CMO's) or credit card receivables. LAIF is overseen by the Local Agency Investment Advisory Board, which consists of five members, in accordance with State statute. The approved investments policy is listed on the LAIF website, located at http://www.treasurer.ca.gov/pmia-laif/ . As of June 30, 2018, the City had $25,609,746 invested in LAIF. In accordance with GASB 72, a fair value factor of 0.998126869 was used to calculate the fair value of the investments in LAIF. GASB Statement No. 72, Fair Measure Value and Application requires investments held primarily for the purpose of income or profit and has a present service capacity based solely on its ability to generate cash or to be sold to generate cash to be measured at their fair value. D. Risk Disclosures Interest Rate Risk Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the term of an investment’s maturity, the greater the sensitivity to changes in market interest rates. Although the City’s investment policy allows for a broad range of investment instruments with varying terms of maturity, investments are limited to the Local Agency Investment Fund (LAIF) which is managed by the State Treasurer Office and overseen by the Pooled Money Investment Board, the State Treasurer investment committee, and a Local Agency Advisory Board. Included in LAIF’s investment portfolio are U.S. Treasuries, Federal Agency obligations, time deposits, negotiable certificates of deposits, commercial paper, corporate bonds, and security loans. Funds are available for withdrawal on demand and are recorded on an amortized cost basis. At June 30, 2018, these investments had a weighted average maturity of 194 days. The City had the following invested in LAIF: Investment Maturities in Years Fair Less Than Value One Year State of California - Local Agency Investment Fund (LAIF)25,561,999$ 25,561,999$ 105 CITY OF SARATOGA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2018 64 Credit Risk As of June 30, 2018, the City's investments in external investment pools are unrated. The City only invests in LAIF, therefore has no other policy relating to the credit risk of investments. Custodial Credit Risk For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty, the City will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The City did not hold any securities through investment counterparties at the year ended June 30, 2018. NOTE 3 - FUND FINANCIAL STATEMENTS INTERFUND TRANSACTIONS Transfers In/Out Transfers for the year ended June 30, 2018 were as follows: Transfer in Transfer out Amount Capital Improvement Fund General Fund 1,872,909$ 1,872,909 Capital Improvement Fund Capital Improvement Fund 1,082,000 General Fund Capital Improvement Fund 442,198 1,524,198 Total 3,397,107$ The Capital Improvement Funds received monies from the General Fund adopted in the Budget in the amount of $1,872,909. Of this amount, $1,194,000 was allocated for street, sidewalk, and storm drain repair, $545,000 for park and trail improvements, and $133,909 for various administrative projects. $1,082,942 was transferred between CIP projects and $442,198 was transferred to the General Fund from closed CIP projects during the fiscal year. 106 CITY OF SARATOGA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2018 65 NOTE 4 - CAPITAL ASSETS Capital asset activity for the year ended June 30, 2018 is illustrated in the following table: Primary Government Balance Balance July 1, 2016 Additions Retirements Reclassifications June 30, 2017 Governmental activities: Capital assets, not being depreciated: Land and land improvements 15,591,925$ -$ -$ -$ 15,591,925 Construction in progress 8,150,210$ 3,326,801$ -$ (4,502,198)$ 6,974,814 Infrastructure: Street pavement system 51,619,838$ 1,043,832$ -$ -$ 52,663,670 Total capital assets, not being depreciated 75,361,974$ 4,370,633$ -$ (4,502,198)$ 75,230,409 Capital assets, being depreciated: Buildings and structures 25,986,754$ 493,441$ -$ -$ 26,480,195 Machinery and equipment Governmental funds 1,954,697$ 129,750$ -$ -$ 2,084,447 Internal service funds 1,219,313$ 202,129$ -$ -$ 1,421,441 Infrastructure: Bridges 1,563,654$ -$ -$ -$ 1,563,654 Signs and lights 1,835,143$ 628,533$ -$ -$ 2,463,676 Drainage system 40,100,053$ 40,000$ -$ -$ 40,140,053 Sidewalks 12,372,322$ 2,166,642$ -$ -$ 14,538,964 Total capital assets, being depreciated 85,031,936$ 3,660,495$ -$ -$ 88,692,431 Accumulated depreciation: Buildings and structures (10,067,521)$ (717,358)$ -$ -$ (10,784,879) Machinery and equipment Governmental funds (1,275,827)$ (90,236)$ -$ -$ (1,366,063) Internal service funds (858,999)$ (151,278)$ -$ -$ (1,010,276) Infrastructure: Bridges (1,139,760)$ (19,883)$ -$ -$ (1,159,643) Signs and lights (1,245,294)$ (76,297)$ -$ -$ (1,321,592) Drainage system (17,939,375)$ (802,401)$ -$ -$ (18,741,776) Sidewalks (6,713,118)$ (366,083)$ -$ -$ (7,079,201) Total accumulated depreciation (39,239,895)$ (2,223,536)$ -$ -$ (41,463,430) Total capital assets, being depreciated, net 45,792,041$ 1,436,960$ -$ -$ 47,229,001 Governmental activities capital assets, net 121,154,015$ 5,807,593$ -$ (4,502,198)$ 122,459,410 In accordance with GASB Statement No. 34, the City has reported all capital assets including infrastructure in the Government-Wide Statement of Net Position. The City elected to use the "Modified Approach" as defined by GASB Statement No. 34 for infrastructure reporting for its pavement system. As a result, no accumulated depreciation or depreciation expense has been recorded for this system. A more detailed discussion of the "Modified Approach" is presented in the Required Supplementary Information section of this report. All other capital assets including other infrastructure systems were reported using the Basic Approach whereby accumulated depreciation and depreciation expense have been recorded. 107 CITY OF SARATOGA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2018 66 NOTE 5 – LONG-TERM OBLIGATIONS A summary of the City's long-term obligations transactions for the year ended June 30, 2018, is presented below: Classification Balance Balance Due Within Due In More Description July 1, 2017 Additions Retirements June 30, 2018 One Year Than One Year General Obligation Bonds: 2011 Library bonds 9,585,000 - (485,000) 9,100,000 500,000 8,600,000 Net original issue premium 328,386 - (21,892) 306,494 21,892 284,602 Compensated absences 671,965 23,158 - 695,123 501,287 193,836 Total 10,585,351$ 23,158$ (506,892)$ 10,101,617$ 1,023,179$ 9,078,438$ General Obligation 2011 Library Bonds - Original Issue $11,995,000 On July 14, 2011, the City issued General Obligation Bonds Series 2011 in the amount of $11,995,000. The bonds were issued to fully refund the General Obligation 2001 Library Bonds. The bonds are payable from and secured by certain property taxes within the City. Interest on the bonds ranges from 2.0 percent to 4.0 percent and is payable on February 1 and August 1 of each year, commencing February 1, 2012. Principal is due annually beginning on August 1, 2012, in amounts ranging from $455,000 to $790,000, with a final payment on August 1, 2031 of $820,000. The bonds maturing on or before August 1, 2021 are not subject to redemption prior to their respective stated maturity dates. Bonds maturing on or after August 1, 2022 are subject to redemption prior to their respective stated maturity dates at the option of the city at the principal amount of the bonds called for redemption, together with interest accrued thereon to the date of redemption, without premium. The annual debt service requirements on these bonds are as follows: Year Ended Principal Interest Total 2019 500,000$ 339,535$ 839,535$ 2020 525,000 319,035 844,035 2021 545,000 297,635 842,635 2022 565,000 278,260 843,260 2023 580,000 258,185 838,185 2024-2028 3,285,000 928,608 4,213,608 2029-2032 3,100,000 254,000 3,354,000 Total 9,100,000$ 2,675,258$ 11,775,258$ Compensated Absences The City's liability for vested and unpaid compensated absences (accrued vacation and sick pay) has been accrued and amounts to $695,123 at June 30, 2018. The compensated absences liability will generally be liquidated through the General Fund. 108 CITY OF SARATOGA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2018 67 NOTE 6 - RISK MANAGEMENT The City participates in the following public entity risk pools: PLAN Joint Powers Authority - The City was a member of the Association of Bay Area Government (ABAG) Pooled Liability Assurance Network (PLAN), a self-insurance program pool since it was established in 1986. Following a merge with the Metropolitan Transportation Commission (MTC), ABAG eliminated the risk management pool oversight services to better align their charter of service. ABAG PLAN provided general liability, auto, property insurance, and risk management services to 28 cities within the Bay Area. Following the merger and elimination of ABAG PLAN, the 28 agency members joined together and formed a Joint Powers Authority (JPA) and contracted with Bickmore Risk Services for administrative support. Each member chooses a self-insured retention (SIR) ranging from $25,000 to $250,000, which is reflected in premium rates. The insurance pool pays claims up to a limit of $5 million. To extend this protection, the association purchases another $25 million of excess insurance coverage for a total of $30 million per occurrence limit. Coverage provides protection for Bodily Injury, Property Damage, Personal Injury, and Public Officials Errors and Omissions claims, and minimizes the City’s exposure to losses as a result of City policy or actions. The City’s annual premium allows for a self-coverage retention level of $25,000 per occurrence. The City continues to submit claim information to a third party administrator (TPA), York Insurance Services Group. York’s staff follows up with other parties and insurance firms, acting as the City’s insurance agent. In addition to insurance, PLAN JPA provides a variety of risk management services, including policy guidance to effectively identify, analyze, and minimize risks, guidance and training to promote best practices, and grant incentives for safety programs. PLAN Workers' Compensation Shared Agency Risk Pool (SHARP) – covers workers' compensation coverage up to $250,000 and excess coverage provides an employer liability limit of $5 million per occurrence, and workers’ compensation per occurrence limit to $100 million. The City has no deductible for these claims. During the fiscal year ended June 30, 2018, the City contributed $141,633 for current year coverage. The City's contribution equals the ratio of the City's payroll to the total payrolls of all entities participating in the same layer of each program, in each program year. Actual surpluses or losses are shared according to a formula developed from overall loss costs and spread to member entities on a percentage basis after a retrospective rating. There have been no significant reductions of insurance settlements that exceeded insurance coverage for the past three years. 109 CITY OF SARATOGA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2018 68 The workers’ compensation and general liability claims payable of $76,001 reported at June 30, 2018, is based on the requirements of GASB Statement No. 10, which requires that a liability for claims be reported if information prior to the issuance of the basic financial statements indicates that it is probable that a liability has incurred at the date of the basic financial statements and the amount of the loss can be reasonably estimated. Changes in the claims payable amounts were as follows: The General Fund has been used in the prior years to liquidate the liability for claims and judgments. Year Ended Year Ended June 30, 2018 June 30, 2017 Claims payable, beginning of year 41,003$ 58,963$ Fiscal year claims and changes in estimates 34,998 (17,960) Claims payments - - Claims payable, end of year 76,001$ 41,003$ Each risk pool is governed by a board consisting of representatives from member municipalities. The board controls the operations of each risk pool, including selection of management and approval of operating budgets, independent of any influence by member municipalities beyond their representation on the Board. Audited financial information for each risk pool may be obtained from Bickmore at 1750 Creekside Oaks Dr., Ste. 200, Sacramento, California 95833. NOTE 7 - RETIREMENT PLANS Defined Benefit Pension Plan Plan Description – All CalPERS qualified employees are eligible to participate in the City’s Miscellaneous Employee Pension Plan (the Plan), a cost-sharing multiple-employer defined benefit pension plan administered by the California Public Employees’ Retirement System (CalPERS). CalPERS act as a common investment and administrative agent for participating public entities within the State of California. Benefit provisions and all other requirements are established by State statute and City ordinance. CalPERS issues publicly available reports that include a full description of the pension plans regarding benefit provisions, assumptions and membership information that can be found on the CalPERS website or copies of these reports may be obtained from their Executive Office located at 400 P Street, Sacramento, California 95811. 110 CITY OF SARATOGA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2018 69 Benefits Provided – CalPERS provides service retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members who must be public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of full time employment. Members with five years of total service are eligible to retire at age 55. All members are eligible for non-duty disability benefits after 10 years of service. Death benefits include the 1959 Survivor Benefit and the Optional Settlement 2 Death Benefit. The cost of living adjustments for the Plan are applied as specified by the Public Employee’s Retirement Law. The Plan’s provisions and benefits in effect at June 30, 2018, are summarized as follows: New Employees Tier 1 Tier 2 PEPRA Hire Date Hired before May 12, 2012 Hired on or after May 12, 2012 Hired on or after January 1, 2013 Benefit formula 2% @ 55 2% @ 60 2% @ 62 Benefit vesting schedule 5 Years 5 Years 5 Years Benefit payments Monthly for Life Monthly for Life Monthly for Life Retirement age 55 60 62 Monthly benefits as a % of eligible compensation 2.0%2.0%2.0% Required employee contribution rates 8%7%6.5% Required employer contribution rates 9.60%7.81%6.93% Classic Employees Employees Covered – At June 30, 2018, the following employees were covered by the benefit terms for the Plan: Miscellaneous Active 59 Transferred 42 Separated 35 Retired 118 Total 254 Contributions – Section 20814(c) of California Public Employees’ Retirement Law requires that the employer contribution rates for all public employers are determined on an annual basis by an 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 year, with an additional amount to finance any unfunded accrued liability. The City is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. For the year ended June 30, 2018, the employer contributions, including the UAL payment of $750,000, recognized as part of pension expense for the Plan were as follows: Miscellaneous Contributions - employer $ 1,289,450 111 CITY OF SARATOGA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2018 70 Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions - As of June 30, 2018, the City reported net pension liabilities for its proportionate share of the net pension liability of the Plan as follows: Miscellaneous $ 7,556,748 Proportionate Share of Net Pension Liability/(Asset) The City’s net pension liability for the Plan is measured as the proportionate share of the Plan’s net pension liability. The net pension liability of the Plan is measured at June 30, 2018, 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, 2017 rolled forward to June 30, 2018 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 the contributions to the pension plan relative to the projected contributions of all participating employers, actuarially determined. The City’s proportionate share of the net pension liability for the Plan as of June 30, 2017 and 2018 was as follows: Miscellaneous Proportion - June 30, 2017 0.18238% Proportion - June 30, 2018 0.19170% Change - Increase/(Decrease)0.00932% For the year ended June 30, 2018, the City recognized pension expense of $1,189,677. At June 30, 2018, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Outflows of Resources Deferred Inflows of Resources Changes of Assumptions 1,899,044$ -$ Differences between Expected and Actual Experience - 220,810 Differences between Projected and Actual Investment Earnings 464,937 - Differences between Employer's Contributions and Proportionate Share of Contributions 57,947 - Change in Employer's Proportion - 1,302,108 Pension Contributions Made Subsequent to Measurement Date 1,289,450 - Total 3,711,378$ 1,522,918$ The City reported $1,289,450 as deferred outflows of resources related to contributions subsequent to the measurement date that will be recognized as a reduction of the net pension liability in the year ended June 30, 2018. 112 CITY OF SARATOGA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2018 71 Other amounts reported as deferred outflows and deferred inflows of resources related to pensions will be recognized as pension expense as follows: (201,841)$ 879,023 497,871 (276,042) - - 899,011$ Thereafter Total Deferred Outflows/ (Inflows) of Resources 2019 2020 2021 2022 2023 Fiscal Year Ending June 30: Actuarial Assumptions – The total pension liabilities in the June 30, 2016 actuarial valuations were determined using the following actuarial assumptions: Valuation Date June 30, 2016 Measurement Date June 30, 2017 Actuarial Cost Method Entry-Age Normal Cost Method Actuarial Assumptions: Discount Rate 7.15% Inflation 2.75% Payroll Growth 3.00% Projected Salary Increase (1) Investment Rate of Return 7.5% (2) Mortality (3) (1) Varies by age and service (2) Net of pension plan investment expenses, including inflation (3) Derived using CalPERS' membership data for all funds 113 CITY OF SARATOGA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2018 72 The underlying mortality assumptions and all other actuarial assumptions used in the June 30, 2016 valuation were based on the results of a January 2014 Actuarial Experience Study for the period 1997 to 2011. Further details of the Experience Study can be found on the CalPERS website. Discount Rate – The discount rate used to measure the total pension liability was 7.15 percent for the Plan. To determine whether the municipal bond rate should be used in the calculation of a discount rate for the Plan, CalPERS stress tested plans that would most likely result in a discount rate that would be different from the actuarially assumed discount rate. Based on the testing, none of the tested plans ran out of assets. Therefore, the current 7.15 percent discount rate is adequate and the use of the municipal bond rate calculation is not necessary. The long term expected discount rate of 7.15 percent will be applied to all plan in the Public Employees’ Retirement Fund (PERF). The stress test results are presented in the detailed report called “GASB Crossover Testing Report” that can be obtained from the CalPERS website. According to Paragraph 30 of Statement 68, the long-term discount rate should be determined without reduction for pension plan administrative expense. The 7.15 percent investment return assumption used in this accounting valuation is net of administrative expenses. Administrative expenses are assumed to be 15 basis points. Using this lower discount rate has resulted in a slightly higher Total Pension Liability and Net Pension Liability. CalPERS checked the materiality threshold for the difference in calculation and did not find it to be a material difference. In determining the long-term expected rate of return, CalPERS took into account both short-term and long-term market return expectations as well as the expected pension fund cash flows. Using historical returns of all the funds’ asset classes, expected compound returns were calculated over the short-term (first 10 years) and the long-term (11-60 years) using a building-block approach. Using the expected nominal returns for both short-term and long-term, the present value of benefits was calculated for each fund. The expected rate of return was set by calculating the single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated using both short-term and long- term returns. The expected rate of return was then set equivalent to the single equivalent rate calculated above and rounded down to the nearest one quarter of one percent. 114 CITY OF SARATOGA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2018 73 The table below reflects the long-term expected real rate of return by asset class. The rate of return was calculated using the capital market assumptions applied to determine the discount rate and asset allocation. These rates of return are net of administrative expenses. New Strategic Real Return Real Return Asset Class Allocation Years 1 - 10 (a)Years 11+ (b) Global Equity 47.00%4.90%5.38% Fixed Income 19.00%0.80%2.27% Inflation Sensitive 6.00%0.60%1.39% Private Equity 12.00%6.60%6.63% Real Estate 11.00%2.80%5.21% Infrastructure and Forestland 3.00%3.90%5.36% Liquidity 2.00%-0.40%-0.90% Total 100.00% (a) An expected inflation of 2.5% used for this period. (b) An expected inflation of 3.0% used for this period. Sensitivity of the Proportionate Share of the Net Pension Liability to Changes in the Discount Rate – The following presents the City’s proportionate share of the net pension liability for the Plan, calculated using the discount rate for the Plan, as well as what the City’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage point lower or 1- percentage point higher than the current rate: Miscellaneous 1% Decrease 6.15% Net Pension Liability $ 14,333,257 Current Discount Rate 7.15% Net Pension Liability $ 7,556,748 1% Increase 8.15% Net Pension Liability $ 1,944,321 Pension Plan Fiduciary Net Position – Detailed information about each pension plan’s fiduciary net position is available in the separately issued CalPERS financial reports. 115 CITY OF SARATOGA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2018 74 NOTE 8 - NET POSITION A. Net Investment in Capital Assets As of June 30, 2018, the net investment in capital assets consisted of the following: Capital assets, net 122,459,410$ 2011 general obligation library bonds (9,100,000) Net original issue premium (306,494) Net investment in capital assets 113,052,916$ B. Restricted Net Position As of June 30, 2018, the restricted net position consisted of the following: Environmental Special Debt Services Assessments Service Total Restricted Net Position 213,182$ 1,385,339$ 997,756$ 2,596,277$ Restricted For NOTE 9 - JOINT POWERS AGREEMENTS The City is a member of several Joint Power Agreements, as follows: The Santa Clara County Valley Transportation Authority (VTA) consists of various cities in the San Francisco Bay area. The Transportation Authority was formed in 1985, by a joint exercise of powers agreement between the County of Santa Clara and the cities of Santa Clara County for the purpose of financing highway capital improvements within the County to serve transportation needs. Financial statements may be obtained from the Traffic Authority at 1754 Technology Drive, Suite 224, San Jose, California 95110. The West Valley Solid Waste Management Joint Powers Authority consists of the West Valley cities of Campbell, Los Gatos, Monte Sereno, and Saratoga. The JPA was formed to coordinate efforts in carrying out solid waste collection and disposal activities, and in meeting the mandates of AB939, the States’ Integrated Waste Management Act. The Silicon Valley Regional Interoperability Authority (SVRIA) consists of Silicon Valley agencies formed to coordinate the design and implementation of an interoperable public safety communication system. The Santa Clara County Library System JPA consists of various member agencies as a policy making and governing body of the County’s library system. The Silicon Valley Clean Energy Authority (SVCEA) consists of various Silicon Valley agencies formed to address climate change by reducing energy related greenhouse gas emissions and securing energy supply and price stability, energy efficiencies and local economic benefits. 116 CITY OF SARATOGA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2018 75 These JPA's are governed by boards consisting of representatives from their members. The boards control the operations of each JPA, including selection of management and approval of operating budgets, independent of any influence by its members beyond their representation on the board. NOTE 10 - EXCESS EXPENDITURES OVER APPROPRIATIONS There was no excess of expenditures over appropriations in individual funds during Fiscal Year 2017/18. NOTE 11 - COMMITMENTS AND CONTINGENCIES A. Lawsuits The City is presently involved in certain matters of litigation that have arisen in the normal course of conducting City business. City management believes, based upon consultation with the City Attorney, that these cases, in the aggregate, are not expected to result in a material adverse financial impact on the City. Additionally, City management believes that the City's insurance programs are sufficient to cover any potential losses should an unfavorable outcome materialize. B. Federal and State Grant Programs The City participates in Federal and State grant programs. These programs are audited by the City's independent accountants in accordance with the provisions of the Federal Single Audit Act Amendments of 1996 and applicable State requirements. For Federal programs, the City reached the level of qualifying cost during the current fiscal year, so a single audit was required. Expenditures which may be disallowed, if any, by the granting agencies, cannot be determined at this time. The City expects such amounts, if any, to be immaterial. C. Commitments The City had several outstanding contracts or planned construction projects as of June 30, 2018 totaling $4.6 million. Of this amount, $3.4 million was committed to Wattis Construction Company for the Prospect Road Improvement Project. In the opinion of City management, there were no additional outstanding matters that would have a significant effect on the financial position of the funds of the City as of June 30, 2018. NOTE 12 – TAX ABATEMENT DISCLOSURES A. Williamson Act and Mills Act The City enters into property tax abatement agreements with local property owners under the California Land Conservation Act of 1965, commonly referred to as the Williamson Act. Under the Act, local entities may lower property tax assessments on private parcels that have been restricted to agricultural or open space land use. 117 CITY OF SARATOGA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2018 76 The Mills Act is a state law allowing cities to enter into contracts with the owners of historic structures. Such contracts require a reduction of property taxes in exchange for the continued preservation of the property. Property taxes are recalculated using a formula in the Mills Act and Revenue and Taxation Code. For the fiscal year ended June 30, 2018, the City abated property taxes totaling $73,794 under these programs. 118 77 REQUIRED SUPPLEMENTARY INFORMATION 119 CITY OF SARATOGA REQUIRED SUPPLEMENTARY INFORMATION FOR THE YEAR ENDED JUNE 30, 2018 78 NOTE 1 - BUDGETARY INFORMATION The following is the budget comparison schedules for General Fund. Variance with Final Budget Budgeted Amounts Actual Positive Original Final Amounts (Negative) REVENUES: Property taxes 12,110,800$ 12,110,800$ 12,963,531$ 852,731$ Sales taxes 1,150,000 1,150,000 1,124,647 (25,353) Other local taxes 820,000 820,000 960,363 140,363 Licenses & permits 1,389,700 1,389,700 2,204,627 814,927 Fines & forfeitures 138,750 138,750 110,190 (28,560) Intergovernmental - Fed - - 1,865 1,865 Intergovernmental - State 337,000 337,000 459,016 122,016 Intergovernmental - Other 35,000 35,000 96,144 61,144 Franchise fees 2,165,000 2,165,000 2,166,165 1,165 Use of money & property 611,302 611,302 716,090 104,788 Other revenue 2,020,221 2,020,221 2,167,470 147,249 Total revenues 20,777,773 20,777,773 22,970,108 2,192,335 EXPENDITURES: Current: General and intergovernmental services 5,168,807 5,072,257 4,585,147 487,110 Public safety 5,666,241 5,671,061 5,705,157 (34,096) Public works 5,652,424 5,703,339 5,560,509 142,830 Community services 1,491,777 1,497,947 1,292,453 205,494 Community development services 2,459,577 2,462,142 2,246,525 215,617 Capital outlay - - - - Total expenditures 20,438,825 20,406,745 19,389,791 1,016,954 REVENUES OVER (UNDER) EXPENDITURES 338,948 371,028 3,580,317 3,209,289 OTHER FINANCING SOURCES (USES): Transfers in - 32,000 442,198 410,198 Transfers out (1,530,000) (1,872,909) (1,872,909) - Total other financing sources (uses)(1,530,000) (1,840,909) (1,430,711) 410,198 Net change in fund balances (1,191,052)$ (1,469,881)$ 2,149,606 3,619,487$ FUND BALANCES: Beginning of year 10,984,311 End of year 13,133,917$ 120 CITY OF SARATOGA REQUIRED SUPPLEMENTARY INFORMATION FOR THE YEAR ENDED JUNE 30, 2018 79 Through the budget, the City Council sets the direction of the City, allocates its resources and establishes its priorities. The Annual Operating and Capital Budgets assure the efficient and effective uses of the City's economic resources, as well as establishing that the highest priority objectives are accomplished. The annual budgets are adopted for the period of July 1 to June 30, and prepared to accurately and openly communicate service and infrastructure priorities to the community, businesses, vendors, employees, and other public agencies. The Annual Operating Budget is developed on a program basis for all funds with fund level authority. It establishes the foundation of effective financial planning by providing resource planning, performance measures and controls that permit the evaluation and adjustment of the City's performance. The City adopts an annual budget for the capital projects as part of adopting the five-year Capital Improvement Plan. The annual capital budget is adopted on a project-by-project basis. The City follows these procedures in establishing the budgetary data reflected in the basic financial statements: a. The City Manager submits to the City Council a proposed operating budget for the fiscal year commencing the following July 1. The operating and capital budgets include proposed expenditures and the means of financing them. b. Public hearings are conducted to obtain taxpayer comments. c. The budgets are legally enacted through the passage of a resolution. d. For the Operating Budget, the City Manager may authorize transfers of budget amounts within a fund. However, any revisions that increase the total budgeted expenditures of any fund must be approved by the City Council. Expenditures may not legally exceed budgeted appropriations at the fund level without City Council approval. e. As Capital Projects are adopted on a project basis, the City Council must approve increases or decreases of budgeted amounts or changes in project scope. Upon project completion, immaterial amounts are transferred to ongoing maintenance projects within the capital program. If remaining project funds are material, the project balance is brought back to Council for approval to transfer. f. Formal budgetary integration in the form of legally adopted budgets is employed as a management control device for all funds. Budgets are adopted on a basis consistent with generally accepted accounting principles. Budgeted expenditures reported are as amended by supplemental appropriations of the City Council. Encumbrance accounting, under which purchase orders, contracts, and other commitments for the expenditure of monies are recorded in order to reserve that portion of the applicable appropriation, is employed as an extension of formal budgetary integration in the General, Special Revenue, Internal Service, and Capital funds. Unexpended and unencumbered appropriations automatically lapse at the end of the fiscal year. 121 CITY OF SARATOGA REQUIRED SUPPLEMENTARY INFORMATION FOR THE YEAR ENDED JUNE 30, 2018 80 NOTE 2 - MODIFIED APPROACH FOR CITY STREETS INFRASTRUCTURE CAPITAL ASSETS In accordance with GASB Statement No. 34, the City is required to account for and report infrastructure capital assets. The City defines infrastructure as the basic physical assets that allow the City to function and those resources utilized primarily by the public which provide future economic benefits for a minimum of two years. Infrastructure can be defined as assets that are immovable and of value only to the government. Major infrastructure includes the street system, park and recreation lands and improvements; storm water conveyance and drainage systems, and buildings combined with site amenities such as parking and landscaping areas used by the City in the conduct of its business. Each major infrastructure system can be divided into subsystems. For example, the street system can be divided into concrete and asphalt pavements, concrete curb and gutters, sidewalks, medians, streetlights, traffic control devices (signs, signals and pavement markings), landscaping and land. Subsystem detail is not presented in these basic financial statements; however, the City maintains detailed information on these subsystems. The City has elected to use the "Modified Approach" as defined by GASB Statement No. 34 for infrastructure reporting for its Streets Pavement System. Under GASB Statement No. 34, eligible infrastructure capital assets are not required to be depreciated under the following requirements: • The City manages the eligible infrastructure capital assets using an asset management system with characteristics of (1) an up-to-date inventory; (2) perform condition assessments and summarize the results using a measurement scale; and (3) estimate annual amount to maintain and preserve at the established condition assessment level. • The City documents that the eligible infrastructure capital assets are being preserved approximately at or above the established and disclosed condition assessment level. The City commissioned a physical assessment of the streets conditions with the final report received April 15, 2017. The study assists the City by providing current inspection data used to evaluate current pavement condition. This helps to maintain a City-defined desirable level of pavement performance while optimizing the expenditure of limited fiscal resources. The entire pavement network within the City is composed of approximately 141.1 centerline miles of paved surfaces. The City’s road system can be grouped by function class and includes 24.2 centerline miles of arterial, 23.2 centerline miles of collector, and 93.7 miles as residential. To determine the City’s street condition, a visual survey of all pavement segments is conducted to assess the existing surface condition of each of the individual pavement segments. Upon completion of the study, a Pavement Condition Index (PCI) is calculated for each segment in the City's pavement network to reflect the overall pavement condition. Rating between 0 and 100, a PCI of 0 would correspond to a badly deteriorated pavement with virtually no remaining life. A PCI of 100 would correspond to a pavement with proper engineering design and construction at the beginning of its life cycle. 122 CITY OF SARATOGA REQUIRED SUPPLEMENTARY INFORMATION FOR THE YEAR ENDED JUNE 30, 2018 81 The following conditions were defined: Condition Rating Excellent 80 - 100 Very Good 70 - 79 Good 50 - 69 Poor 25 - 49 Very Poor 0 - 24 The City's policy is to achieve an average rating of 70 for all streets, which is a very good rating. This rating allows minor cracking and raveling of the pavement along with minor roughness that could be noticeable to drivers traveling at the posted speeds. As of May 31, 2018, the City's street system was rated at an estimated PCI index of 68 on average with the detail condition as follows: Percent of Condition Streets Very Good 59% Good 21% Poor 10% Very Poor 10% The City expended $3,932,377 on street maintenance for the year ended June 30, 2018. These projects include resurfacing, safety improvements, sidewalks, curbs and gutters, storm drain improvements, beautification projects, and various other routine maintenance projects help to delay deterioration and beautify the City’s roadway system. Council has established a goal for a minimum of $2,000,000 be budgeted for the CIP Streets program on an annual basis. $12,795,856 is budgeted for various projects in the five-year CIP cycle beginning Fiscal Year 2018/19. A schedule of estimated annual amount calculated to maintain and preserve its streets at the current level compared to actual expenditures for street maintenance for the last ten years is presented below: Funded By Fiscal Actual Other Gas Tax Total PCI Year Budget Expenditures Sources Fund Funded Index 2008/09 2,680,504 1,574,485 1,148,650 425,835 1,574,485 70 2009/10 1,811,130 771,386 575,710 195,676 771,386 70 2010/11 4,770,782 1,847,221 1,449,686 397,535 1,847,221 76 2011/12 4,683,078 2,856,603 1,622,401 1,234,202 2,856,603 76 2012/13 4,826,265 2,417,444 1,660,028 757,416 2,417,444 76 2013/14 11,191,684 2,079,413 1,651,156 428,256 2,079,413 69 2014/15 10,799,852 2,261,620 1,275,681 985,939 2,261,620 69 2015/16 11,176,888 1,397,415 1,001,104 396,311 1,397,415 69 2016/17 12,006,796 2,772,821 1,927,723 845,098 2,772,821 71 2017/18 12,732,676 3,932,377 3,767,550 164,828 3,932,377 68 123 CITY OF SARATOGA REQUIRED SUPPLEMENTARY INFORMATION FOR THE YEAR ENDED JUNE 30, 2018 82 As of June 2018, approximately 20 percent of the City's streets were rated below the average standard of “Good.” The City will continue to rehabilitate these segments of the streets. Total deficiencies (deferred maintenance) identified in the Pavement Management System Report at the end of a five-year period (2018-2022) will amount to approximately $21,700,000 for all streets and are expected to be rehabilitated with a minimum annual budget of $2,000,000. NOTE 3 – PENSION INFORMATION Schedule of Contributions - Pension Plans Last Ten Fiscal Years Miscellaneous Plan Plan Measurement Date 2017 2016 2015 2014 Fiscal Year Ended 2018 2017 2016 2015 Contractually Required Contributions 1,289,450$ 1,016,197$ 1,109,589$ 4,203,599$ Contributions in Relation to Contractually Required Contributions 1,289,450 1,016,197 1,109,589 4,203,599 Contribution Deficiency (Excess)-$ -$ -$ -$ Covered Payroll 5,692,653$ 5,908,831$ 6,335,330$ 4,856,304$ Contributions as a Percentage of Covered Payroll 22.65%17.20%17.51%86.56% Notes to Schedule: Valuation Date:June 30, 2016 Assumptions Used:Entry Age Method used for Actuarial Cost Method Level Percentage of Payroll and Direct Rate Smoothing 3.8 Years Remaining Amortization Period Inflation Assumed at 2.75% Investment Rate of Returns set at 7.5% CalPERS mortality table using 20 years of membership data for all funds ** Fiscal year 2015 was the first year of implementation, therefore only four years are shown. 124 CITY OF SARATOGA REQUIRED SUPPLEMENTARY INFORMATION FOR THE YEAR ENDED JUNE 30, 2018 83 Schedule of Proportionate Share of Net Pension Liability Last 10 Fiscal Years Miscellaneous Plan Plan Measurement Date 2017 2016 2015 2014 Fiscal Year Ended 2018 2017 2016 2015 Proportion of Net Pension Liability 0.19170%0.18238%0.15551%0.28104% Proportionate Share of Net Pension Liability 7,556,748$ 6,335,606$ 4,266,268$ 6,945,916$ Covered Payroll 5,908,831$ 6,335,330$ 4,856,304$ 4,714,858$ Proportionate Share of NPL as a % of Covered Payroll 127.89%100.00%87.85%147.32% Plan's Fiduciary Net Position as a % of the TPL 84.66%85.60%90.63%572.20% ** Fiscal year 2015 was the first year of implementation, therefore only four years are shown. 125 84 This page is intentionally blank 126 85 SUPPLEMENTARY INFORMATION 127 86 NONMAJOR GOVERNMENTAL FUNDS Special Revenue Funds Landscape & Lighting District and Storm Drain Funds – These funds account for revenues and expenditures associated with maintaining the City’s 30 Landscape and Lighting and Storm Drain districts which were approved by consent of property owners living along or within the boundaries of the Districts. Debt Service Fund Library Bond - Santa Clara County general obligation bond tax revenues are accumulated in this fund to pay annual principal and interest payments on the refunded 2011 Library Improvement Bond. 128 CITY OF SARATOGA COMBINING BALANCE SHEETS NONMAJOR GOVERNMENTAL FUNDS JUNE 30, 2018 87 Special Revenue Debt Service Lighting and Total Landscaping Other Assessment Library Governmental District Bond Funds ASSETS Cash and investments 1,419,963$ 994,702$ 2,414,665$ Receivables: Accounts 756 3,054 3,810 Total assets 1,420,719$ 997,756$ 2,418,475$ LIABILITIES AND FUND BALANCES Liabilities: Accounts payable 35,380$ -$ 35,380$ Total liabilities 35,380 - 35,380 Fund Balances: Restricted: Special revenue funds 1,385,339 - 1,385,339 Debt service - 997,756 997,756 Total fund balances 1,385,339 997,756 2,383,095 Total liabilities and fund balances 1,420,719$ 997,756$ 2,418,475$ 129 CITY OF SARATOGA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2018 88 Special Debt Revenue Service Lighting and Total Landscaping Other Assessment Library Governmental District Bond Funds REVENUES: Property taxes 283,499$ -$ 283,499$ Special assessment 455,968 876,771 1,332,739 Use of money and property 17,480 8,398 25,878 Other revenue (2) - (2) Total revenues 756,945 885,169 1,642,114 EXPENDITURES: Current: General and ingov't services Public works 524,475 - 524,475 Debt service: Principal - 485,000 485,000 Interest and fiscal charges - 361,735 361,735 Total expenditures 524,475 846,735 1,371,210 REVENUES OVER (UNDER) EXPENDITURES 232,470 38,434 270,904 OTHER FINANCING SOURCES (USES): Transfers in - - - Transfers out - - - Total other financing sources (uses)- - - Net change in fund balances 232,470 38,434 270,904 FUND BALANCES: Beginning of year 1,152,870 959,322 2,112,191 End of year 1,385,339$ 997,756$ 2,383,095$ 130 CITY OF SARATOGA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL CAPITAL IMPROVEMENT FOR THE YEAR ENDED JUNE 30, 2018 89 Variance with Final Budget Budgeted Amounts Actual Positive Original Final Amounts (Negative) REVENUES: Licenses & permits 451,300$ 451,300$ 472,075$ 20,775$ Fines & forfeitures - - 17,145 17,145 Intergovermental - Federal 5,863,169 5,863,169 179,291 (5,683,878) Intergovermental - State 893,308 893,308 794,071 (99,237) Intergovermental - Other 1,748,242 1,748,242 39,465 (1,708,777) Use of money and property 35,000 35,000 37,237 2,237 Other revenue 343,387 572,891 229,099 (343,792) Total revenues 9,334,405 9,563,909 1,768,383 (7,795,526) EXPENDITURES: Capital outlay 15,906,345 16,418,758 4,747,375 11,671,383 Total expenditures 15,906,345 16,418,758 4,747,375 11,671,383 REVENUES OVER (UNDER) EXPENDITURES (6,571,939) (6,854,848) (2,978,992) 3,875,856 OTHER FINANCING SOURCES (USES): Transfers in 1,530,000 2,954,909 2,954,909 - Transfers out - (1,114,000) (1,524,198) (410,198) Total other financing sources (uses)1,530,000 1,840,909 1,430,711 (410,198) Net change in fund balances (5,041,939)$ (5,013,939)$ (1,548,281) 3,465,658$ FUND BALANCES: Beginning of year 5,085,307 End of year 3,537,026$ 131 CITY OF SARATOGA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL LANDSCAPE & LIGHTING DISTRICT SPECIAL REVENUE FUND FOR THE YEAR ENDED JUNE 30, 2018 90 Variance with Final Budget Budgeted Amounts Actual Positive Original Final Amounts (Negative) REVENUES: Property taxes 231,007$ 231,007$ 283,499$ 52,492$ Special assessments 419,755 460,860 455,968 (4,893) Use of money and property 4,856 4,856 17,480 12,624 Other revenue - 25,000 (2) (25,002) Total revenues 655,618 721,723 756,945 35,222 EXPENDITURES: Current: Public works 732,855 798,960 524,475 274,485 Total expenditures 732,855 798,960 524,475 274,485 REVENUES OVER (UNDER) EXPENDITURES (77,237) (77,237) 232,470 309,707 OTHER FINANCING SOURCES (USES): Transfers in - - - - Transfers out - - - - Total other financing sources (uses)- - - - Net change in fund balances (77,237)$ (77,237)$ 232,470 309,707$ FUND BALANCES: Beginning of year 1,152,869 End of year 1,385,339$ 132 CITY OF SARATOGA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL LIBRARY BOND DEBT SERVICE FUND FOR THE YEAR ENDED JUNE 30, 2018 91 Variance with Final Budget Budgeted Amounts Actual Positive Original Final Amounts (Negative) REVENUES: Special assessments 815,000$ 815,000$ 876,771$ 61,771$ Use of money and property 2,700 2,700 8,398 5,698 Total revenues 817,700 817,700 885,169 67,469 EXPENDITURES: Debt service: General and ingov't services Principal 485,000 485,000 485,000 - Interest and fiscal charges 362,310 362,310 361,735 575 Total expenditures 847,310 847,310 846,735 575 REVENUES OVER (UNDER) EXPENDITURES (29,610) (29,610) 38,434 68,044 Net change in fund balances (29,610)$ (29,610)$ 38,434 68,044$ FUND BALANCES: Beginning of year 959,322 End of year 997,756$ 133 92 This page is intentionally blank 134 93 INTERNAL SERVICE FUNDS Liability/Risk Management Insurance Fund – Accounts for insurance premiums, self-insurance portion of claims, and administrative cost associated with settling claims. Charges made to operating departments are based on liability risk and claim occurrence history. Worker’s Compensation Fund – Accounts for insurance premiums, self-insured portion of claims, and administrative costs associated with settling claims. Charges made to operating departments are based on liability risk and claim occurrence history. Office Support Fund - Photocopy equipment, postage and bulk mail meter expenses are controlled at one source point and expended to the departments as goods or services are utilized. Information Technology Services Fund – Supports the delivery of technology-based services and infrastructure, including desktop support, network systems, technology upgrades and initiatives, community systems, and associated information technology equipment. Vehicle & Equipment Maintenance Fund – Accounts for the cost of operating and maintaining automotive equipment used for service operations in various City departments. Building Maintenance Fund – Accounts for operating costs associated with building maintenance. Expenses include custodial supplies and services, maintenance and repair, utilities, and staffing costs. Vehicle & Equipment Replacement Fund – Established to accumulate funding for the replacement of vehicles and equipment. Replacement costs are charged to program over the asset’s life span, reflective of usage. Information Technology Equipment Replacement Fund – Established to accumulate funding for the replacement of information technology equipment. Replacement costs are charged to departments over the asset’s lifespan, reflective of usage. Facility Furniture, Fixtures & Equipment Replacement Fund – Established to accumulate funding for the replacement furniture, fixtures and equipment within city facilities. Replacement costs are charged to programs based on that program’s share of asset use over the asset’s lifespan, reflective of usage. 135 CITY OF SARATOGA INTERNAL SERVICE FUNDS COMBINING STATEMENT OF NET POSITION JUNE 30, 2018 94 Liability /Information Risk Workers'Office Technology Management Compensation Support Services ASSETS Current assets: Cash and investments 635,636$ 294,807$ 117,461$ 384,099$ Accounts receivable - 6,411 - 1,039 Total current assets 635,636 301,218 117,461 385,138 Noncurrent assets: Capital assets: Machinery and equipment - - - - Less: accumulated depreciation - - - - Total capital assets (net of accumulated depreciation) - - - - Total assets 635,636 301,218 117,461 385,138 LIABILITIES Liabilities: Current liabilities: Accounts payable 2,606 2,622 497 10,088 Accrued payroll 3,122 1,222 - 10,786 Claims payable 76,001 - - - Total current liabilities 81,729 3,844 497 20,874 NET POSITION Investment in capital assets - - - - Unrestricted 553,907 297,374 116,964 364,264 Total net position 553,907$ 297,374$ 116,964$ 364,264$ 136 95 Information Building Vehicle Vehicle Technology Furniture & and Equipment Building and Equipment Equipment Fixtures Maintenance Maintenance Replacement Replacement Replacement Total 246,738$ 560,963$ 521,478$ 446,666$ 420,814$ 3,628,662$ - - - - - 7,450 246,738 560,963 521,478 446,666 420,814 3,636,112 - - 1,310,977 110,465 - 1,421,442 - - (901,834) (108,442) - (1,010,277) - - 409,142 2,023 - 411,165 246,738 560,963 930,620 448,689 420,814 4,047,277 6,988 30,394 3,530 22,937 - 79,662 3,417 14,783 - - - 33,330 - - - - - 76,001 10,405 45,177 3,530 22,937 - 188,993 - - 409,142 2,023 - 411,165 236,333 515,786 517,948 423,729 420,814 3,447,119 236,333$ 515,786$ 927,090$ 425,752$ 420,814$ 3,858,284$ 137 CITY OF SARATOGA INTERNAL SERVICE FUNDS COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET POSITION FOR THE YEAR ENDED JUNE 30, 2018 96 Liability /Information Risk Workers'Office Technology Management Compensation Support Services Operating revenues: Charges for services 350,000$ 175,000$ 50,000$ 575,000$ Other operating revenues 9,588 10,934 8,249 13,531 Total operating revenues 359,588 185,934 58,249 588,531 Operating expenses: Cost of services 310,160 182,612 51,090 532,339 Administration - - - - Depreciation - - - - Total operating expenses 310,160 182,612 51,090 532,339 Operating income 49,428 3,322 7,159 56,192 Transfers in - - - - Change in net position 49,428 3,322 7,159 56,192 Total net position - beginning 504,479 294,052 109,805 308,072 Total net position - ending 553,907$ 297,374$ 116,964$ 364,264$ 138 97 Information Building Vehicle Vehicle Technology Furniture & and Equipment Building and Equipment Equipment Fixtures Maintenance Maintenance Replacement Replacement Replacement Total 275,000$ 925,000$ 150,000$ 150,000$ 200,000$ 2,850,000$ - 5,760 27,530 - - 75,592 275,000 930,760 177,530 150,000 200,000 2,925,592 215,576 869,578 43,441 41,569 277,555 2,523,920 - - - - - - - - 147,233 4,044 - 151,277 215,576 869,578 190,674 45,613 277,555 2,675,197 59,424 61,182 (13,144) 104,387 (77,555) 250,395 - - - - - - 59,424 61,182 (13,144) 104,387 (77,555) 250,395 176,909 454,604 940,234 321,365 498,369 3,607,889 236,333$ 515,786$ 927,090$ 425,752$ 420,814$ 3,858,284$ 139 CITY OF SARATOGA INTERNAL SERVICE FUNDS COMBINING STATEMENT OF CASH FLOWS FOR THE YEAR ENDED JUNE 30, 2018 98 Liability /Information Risk Workers'Office Technology Management Compensation Support Services Cash flows from operating activities: Receipts from customers and users 359,588$ 179,522$ 58,249$ 588,097$ Payments to suppliers (189,774) (149,094) (51,811) (234,620) Payments to employees (84,636) (31,446) - (289,979) Net cash provided by operating activities 85,178 (1,018) 6,438 63,498 Cash flows from capital activities: Acquisition of capital assets - - - - Net cash used for acquisition of capital assets - - - - Net increase (decrease) in cash and cash equivalents 85,178 (1,018) 6,438 63,498 Cash and cash equivalents, beginning of year 550,458 295,825 111,023 320,601 Cash and cash equivalents, ending of year 635,636$ 294,807$ 117,461$ 384,099$ Reconciliation of operating income to net cash provided by operating activities: Operating income (loss)49,428$ 3,322$ 7,159$ 56,192$ Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation - - - - Change in operating assets and liabilities: Accounts receivables - (6,411) - (434) Accounts payable 557 1,987 (721) 6,731 Claims payable 34,998 - - - Accrued payroll 195 84 - 1,009 Net cash provided (used) by operating activities 85,178$ (1,018)$ 6,438$ 63,498$ 140 99 Information Building Vehicle Vehicle Technology Furniture & and Equipment Building and Equipment Equipment Fixtures Maintenance Maintenance Replacement Replacement Replacement Total 275,000$ 931,570$ 177,530$ 150,000$ 200,000$ 2,919,556$ (139,820) (463,680) (55,208) (21,188) (279,302) (1,584,497) (89,708) (396,454) - - - (892,223) 45,472 71,436 122,322 128,812 (79,302) 442,836 - - (202,128) - - (202,128) - - (202,128) - - (202,128) 45,472 71,436 (79,806) 128,812 (79,302) 240,708 201,266 489,527 601,284 317,854 500,116 3,387,954 246,738$ 560,963$ 521,478$ 446,666$ 420,814$ 3,628,662$ 59,424$ 61,182$ (13,144)$ 104,387$ (77,555)$ 250,395$ - - 147,233 4,044 - 151,277 - 811 - - - (6,034) (14,057) 10,482 (11,767) 20,381 (1,747) 11,846 - - - - - 34,998 105 (1,039) - - - 354 45,472$ 71,436$ 122,322$ 128,812$ (79,302)$ 442,836$ 141 100 This page is intentionally blank 142 101 CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS 143 102 This page is intentionally blank 144 CITY OF SARATOGA CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS COMPARATIVE SCHEDULE BY SOURCE JUNE 30, 2018 AND 2017 103 2018 2017 Governmental Funds Capital Assets: Land and land improvements 15,591,925$ 15,591,925$ Buildings and structures 26,480,196 25,986,754 Machinery and equipment 2,084,447 1,954,696 Infrastructure 111,370,017 107,491,009 Construction in progress 6,974,813 8,150,210 Total Governmental Funds Capital Assets 162,501,398 159,174,594 Accumulated depreciation (40,453,154) (38,380,896) Total Governmental Funds Capital Assets, Net 122,048,244$ 120,793,698$ Investments in Governmental Funds Capital Assets by Source: General Fund 115,212,479$ 115,212,479$ Special revenue funds 960,972 960,970 Capital projects funds 45,480,598 42,153,797 Donations 847,348 847,348 Accumulated depreciation (40,453,154) (38,380,896) Total Governmental Funds Capital Assets 122,048,244$ 120,793,698$ 1 This schedule presents only the capital asset balances related to governmental funds. Accordingly the capital assets reported in internal service funds are excluded from the above amounts. Generally, the capital assets of internal service funds are included as governmental activities in the statement of net position. 145 CITY OF SARATOGA CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS SCHEDULE BY FUNCTION AND ACTIVITY1 JUNE 30, 2018 104 Land Buildings and Land and Improvements Structures Function and Activity General and intergovernmental services: Management services -$ 564,632$ Administrative services - 521,073 Intergovernmental services 118,184 3,138,641 Total General and Intergovernmental Services:118,184 4,224,346 Public safety: Police services - - Code enforcement - - Total Public Safety:- - Public works: Streets and sidewalks 835,155 62,921 Parks/open space 4,718,585 3,275,380 Total Public Works:5,553,740 3,338,301 Community services 8,177,538 4,602,650 Community development services 1,742,463 14,314,899 Total Governmental Funds Capital Assets 15,591,925 26,480,196 Accumulated depreciation - (10,784,879) Total Governmental Funds Capital Assets, Net 15,591,925$ 15,695,317$ 1 This schedule presents only the capital asset balances related to governmental funds. Accordingly the capital assets reported in internal service funds are excluded form the above amounts. Generally, the capital assets of internal service funds are included as governmental activities in the statement of net position. 146 105 Machinery Construction and in Equipment Infrastructure Progress Total 624,241$ -$ 73,051$ 1,261,924$ 140,332 - - 661,405 22,225 - - 3,279,050 786,798 - 73,051 5,202,379 15,434 - - 15,434 7,548 - - 7,548 22,982 - - 22,982 315,276 111,242,780 4,302,629 116,758,761 151,110 - 2,427,386 10,572,461 466,386 111,242,780 6,730,015 127,331,222 791,649 127,237 139,130 13,838,204 16,632 - 32,617 16,106,611 2,084,447 111,370,017 6,974,813 162,501,398 (1,366,063) (28,302,212) - (40,453,154) 718,384$ 83,067,805$ 6,974,813$ 122,048,244$ 147 CITY OF SARATOGA CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS SCHEDULE OF CHANGE BY FUNCTION AND ACTIVITY JUNE 30, 2018 106 Governmental Governmental Funds Capital Funds Capital Assets Assets July 1, 2017 Additions Deletions June 30, 2018 Function and Activity General and intergovernmental services: Management services 1,197,156$ 64,768$ -$ 1,261,924$ Administrative services 661,405 - - 661,405$ Intergovernmental services 3,279,050 - - 3,279,050$ Total General and Intergovernmental Services:5,137,611 64,768 - 5,202,379$ Public safety: Police services 15,434 - - 15,434$ Code enforcement 7,548 - - 7,548$ Total Public Safety:22,982 - - 22,982$ Public works: Streets and sidewalks 114,018,187 6,619,580 (3,879,007) 116,758,760$ Parks/open space 10,197,247 678,666 (303,452) 10,572,461$ Total Public Works:124,215,434 7,298,246 (4,182,459) 127,331,221$ Community services 13,696,956 460,988 (319,739) 13,838,205$ Community development services 16,101,611 5,000 - 16,106,611$ Total Governmental Funds Capital Assets 159,174,594 7,829,002 (4,502,198) 162,501,398$ Accumulated depreciation (38,380,896) (2,072,258) - (40,453,154)$ Total Governmental Funds Capital Assets, Net 120,793,698$ 5,756,744$ (4,502,198)$ 122,048,244$ 1 This schedule presents only the capital asset balances related to governmental funds. Accordingly the capital assets reported in internal service funds are excluded form the above amounts. Generally, the capital assets of internal service funds are included as governmental activities in the statement of net position. 148 107 STATISTICAL SECTION 149 108 This page is intentionally blank 150 109 This part of the City of Saratoga's comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures and required supplementary information says about the government's overall financial health. Contents Page Financial Trends These schedules contain trend information to help the reader understand how the government's financial performance and well being have changed over time. 110-115 Revenue Capacity These schedules contain information to help the reader assess the government’s most significant local revenue source; property tax. 116-125 Debt Capacity These schedules present information to help the reader assess the affordability of the government's current levels of outstanding debt and the government's ability to issue additional debt in the future. 126-132 Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment within which the government's financial activities take place. 133-134 Operating Information These schedules contain service and infrastructure data to help the reader understand how the information in the government's financial report relates to the services the government provides and the activities it performs. 136-141 The City of Saratoga implemented GASB Statement No. 34 in Fiscal Year 2001/02; schedules presenting government-wide information include information beginning in that year. The City of Saratoga implemented GASB Statement No. 44 in Fiscal Year 2007/08; newly required schedules presenting information in the Statistical Section include the earliest available information. 151 CITY OF SARATOGA NET POSITION BY COMPONENT LAST TEN YEARS (ACCRUAL BASIS OF ACCOUNTING) 110 (amounts expressed in thousands) 2009 2010 2011 2012 Primary government Governmental activities Net investment in capital assets 108,818$ 108,966$ 110,016$ 111,201$ Restricted 5,281 5,519 5,830 1,938 Unrestricted 8,759 8,533 7,964 12,248 Total primary government 122,858$ 123,018$ 123,810$ 125,387$ Source: CAFR Fiscal Year $95,000 $100,000 $105,000 $110,000 $115,000 $120,000 $125,000 $130,000 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Net Position by Component Net investment in capital assets Restricted Unrestricted 152 111 2013 2014 2015 2016 2017 2018 112,353$ 112,116$ 112,092$ 112,030$ 111,241$ 113,053$ 1,971 2,045 2,138 2,242 2,375 2,596 13,357 15,095 6,691 13,837 13,438 13,693 127,681$ 129,256$ 120,921$ 128,109$ 127,054$ 129,342$ 153 CITY OF SARATOGA CHANGES IN NET POSITION LAST TEN YEARS (MODIFIED ACCRUAL BASIS OF ACCOUNTING) 112 (amounts expressed in thousands) 2009 2010 2011 2012 Expenses: Governmental activities: General and intergovernmental services 5,595$ 3,729$ 4,368$ 3,486$ Public safety 4,211 4,339 4,457 4,300 Public works 7,643 6,535 6,645 9,121 Community services 1,634 1,711 1,846 1,996 Community development services 2,000 1,751 1,839 1,553 Interest on long-term debt (unallocated)697 677 656 453 Total governmental activities expenses 21,780 18,742 19,811 20,909 Program revenues: Charges for services: General and intergovernmental services 133 125 171 140 Public safety 520 425 561 594 Public works 2,379 2,535 2,771 2,079 Community services 935 917 1,020 890 Community development services 1,802 1,586 1,734 1,923 Operating grants and contributions 228 275 401 1,319 Capital grants and contributions 339 674 1,221 2,337 Total governmental activates program revenues 6,336 6,537 7,879 9,282 Net (expense) revenue and change in net position (15,444) (12,205) (11,932) (11,627) General revenue and other changes in net assets Taxes: Property taxes 8,336 8,371 8,199 8,457 Sales taxes 1,043 955 991 1,101 Local taxes 663 560 632 683 Franchise taxes 1,657 1,664 1,821 1,852 Motor vehicle in-lieu 116 101 146 16 Total Taxes 11,815 11,651 11,789 12,109 Intergovernmental 474 522 773 910 Investment earnings 397 101 65 67 Other revenues 148 91 97 118 Total general revenues 12,834 12,365 12,724 13,204 Change in net position (2,610) 160 792 1,577 Net position - beginning of year 125,468 122,858 123,018 123,810 GASB 68 adjustment - - - - Net position - beginning of year, as adjusted 125,468 122,858 123,018 123,810 Net position - end of year 122,858$ 123,018$ 123,810$ 125,387$ Source: CAFR Fiscal Year 154 113 2013 2014 2015 2016 2017 2018 4,143$ 4,522$ 7,566$ 5,143$ 6,450$ 6,010$ 4,382 4,491 4,850 4,787 5,444 5,728 6,922 7,379 6,273 6,181 9,164 7,943 1,804 1,586 1,589 1,582 1,557 1,594 1,713 2,179 1,962 2,012 2,906 2,285 410 400 391 381 367 359 19,374 20,557 22,631 20,086 25,888 23,919 102 120 122 98 153 152 607 330 354 310 327 368 3,316 2,768 2,474 3,004 2,462 2,397 946 958 952 1,114 1,071 914 2,184 2,220 2,234 2,397 2,127 2,343 75 117 107 165 223 90 599 808 785 183 1,062 219 7,829 7,321 7,028 7,271 7,425 6,483 (11,545) (13,236) (15,603) (12,815) (18,463) (17,436) 9,153 9,737 10,669 11,549 12,264 14,124 1,051 941 1,224 1,189 1,185 1,125 769 822 866 898 857 960 1,920 1,949 2,070 2,069 2,171 2,166 16 14 13 12 13 16 12,909 13,463 14,842 15,717 16,490 18,391 766 981 1,023 718 589 802 51 62 67 101 124 319 113 305 237 273 205 212 13,839 14,811 16,169 16,809 17,408 19,724 2,294 1,575 566 3,994 (1,055) 2,288 125,387 127,681 129,256 120,921 128,109 127,054 - - (8,901) 3,193 - - 125,387 127,681 120,355 124,114 128,109 127,054 127,681$ 129,256$ 120,921$ 128,109$ 127,054$ 129,342$ 155 CITY OF SARATOGA FUND BALANCES OF GOVERNMENTAL FUNDS LAST TEN YEARS (MODIFIED ACCRUAL BASIS OF ACCOUNTING) 114 (amounts expressed in thousands) 2009 2010 2011 2012 General fund: Restricted 613$ 563$ 513$ 513$ Committed 550 300 500 600 Assigned 322 196 667 3,161 Unassigned 6,744 6,952 5,804 4,655 Total general fund 8,229$ 8,011$ 7,484$ 8,929$ All other governmental funds: Restricted Special revenue funds 484$ 569$ 504$ 563$ Debt service 931 893 851 862 Committed Capital project funds 3,866 4,057 4,475 3,544 Total all other governmental funds 5,281$ 5,519$ 5,830$ 4,969$ Source: CAFR Fiscal Year Balances prior to fiscal year 2011 have been updated to conform with GASB 54 requirements $- $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 General - Restricted General - Committed General - Assigned General - Unassigned Debt Service Special Revenue Capital Projects Fund Balances of Governmental Funds 2009 2010 2011 2012 2013 2014 2015 2012 2017 2018 156 115 2013 2014 2015 2016 2017 2018 463$ 413$ 363$ 313$ 263$ 213$ 675 993 1,000 1,000 790 1,000 792 2,648 2,854 2,672 3,272 3,705 7,989 7,782 5,589 6,655 6,659 8,216 9,919$ 11,836$ 9,806$ 10,640$ 10,984$ 13,134$ 622$ 734$ 868$ 1,006$ 1,153$ 1,385$ 886 898 907 923 959 998 3,420 3,126 3,859 4,716 5,085 3,537 4,928$ 4,758$ 5,634$ 6,645$ 7,197$ 5,920$ 157 CITY OF SARATOGA GOVERNMENTAL ACTIVITIES TAX REVENUES BY SOURCE LAST TEN YEARS (ACCRUAL BASIS OF ACCOUNTING) 116 (amounts expressed in thousands) 2009 2010 2011 2012 Tax revenues: Property taxes 8,336$ 8,371$ 8,199$ 8,457$ Special assessments 1,368 1,247 1,255 1,243 Sales taxes 1,043 955 991 1,101 Local taxes 663 560 632 683 Franchise taxes 1,657 1,664 1,821 1,852 Motor vehicle in-lieu 116 101 146 16 Total tax revenues 13,183$ 12,898$ 13,044$ 13,352$ Source: CAFR Fiscal Year $- $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 Property taxes Special assessments Sales taxes Local taxes Franchise taxes Motor vehicle in- lieu Tax Revenues by Source 2009 2010 2011 2012 2013 2014 2015 2012 2017 2018 158 117 2013 2014 2015 2016 2017 2018 9,153$ 9,737$ 10,669$ 11,549$ 12,264$ 13,247$ 1,185 1,207 1,220 1,222 1,270 1,333 1,051 941 1,224 1,189 1,185 1,125 769 822 866 898 857 960 1,920 2,024 2,069 2,068 2,171 2,166 16 14 13 12 14 16 14,094$ 14,745$ 16,061$ 16,938$ 17,761$ 18,847$ 159 CITY OF SARATOGA CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS LAST TEN YEARS (MODIFIED ACCRUAL BASIS OF ACCOUNTING) 118 (amounts expressed in thousands) 2009 2010 2011 2012 Revenues: Property taxes 8,335$ 8,371$ 8,199$ 8,457$ Special assessments 1,368 1,247 1,255 1,243 Sales taxes 1,043 954 991 1,101 Other local taxes 663 560 632 683 Licenses and permits 1,460 1,489 1,950 1,728 Fines and forfeitures 360 359 285 234 Intergovernmental - federal - 430 1,033 1,915 Intergovernmental - state 1,283 1,258 1,480 1,728 Intergovernmental - other 290 258 337 73 Franchise fees 1,657 1,664 1,821 1,852 Use of money any property 794 595 550 589 Other revenues 1,966 1,794 2,169 2,199 Total tax revenues 19,219 18,979 20,702 21,802 Expenditures: Current: General and intergovernmental services 3,330 3,102 3,524 3,145 Public safety 4,206 4,349 4,467 4,310 Public works 4,700 4,730 4,717 4,751 Community services 1,424 1,223 1,322 1,269 Community development services 2,450 2,111 2,193 1,888 Capital outlay 4,060 2,584 3,704 5,179 Debt service: Principal 310 330 350 370 Interest and fiscal charges 705 685 665 551 Total expenditures 21,185 19,114 20,942 21,463 Excess of revenues (1,966) (135) (240) 339 Other financing sources (uses): Transfers in 2,043 1,172 1,725 510 Transfers out (2,043) (1,017) (1,700) (485) Total other financing sources (uses)- 155 25 25 Net change in fund balances (1,966)$ 19$ (215)$ 364$ Debt as a percentage of noncapital expenditures 4.89%5.80%5.56%4.68% Fiscal Year 160 CITY OF SARATOGA CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS LAST TEN YEARS (MODIFIED ACCRUAL BASIS OF ACCOUNTING) 119 2013 2014 2015 2016 2017 2018 9,153$ 9,737$ 10,669$ 11,549$ 12,264$ 13,247$ 1,185 1,207 1,220 1,222 1,270 1,333 1,051 941 1,224 1,189 1,185 1,125 769 823 866 898 857 960 2,177 2,023 1,613 2,216 1,908 2,677 199 196 175 248 171 127 975 796 651 158 954 181 1,142 1,410 1,538 1,182 1,053 1,253 269 129 97 76 222 136 1,920 1,949 2,070 2,068 2,171 2,166 527 521 557 647 651 779 2,421 2,547 2,589 2,709 2,203 2,397 21,788 22,279 23,269 24,162 24,909 26,381 3,269 3,247 6,624 4,246 4,372 4,585 4,392 4,491 4,860 5,226 5,444 5,705 4,966 5,243 5,381 5,701 6,002 6,085 1,318 1,383 1,328 1,475 1,573 1,292 2,047 2,182 2,087 2,193 2,324 2,247 3,979 3,096 3,253 2,591 3,450 4,747 - 455 485 495 500 475 485 414 405 395 385 373 362 20,840 20,532 24,423 22,317 24,013 25,508 948 1,747 (1,154) 1,845 896 873 510 1,291 785 1,768 3,580 3,397 (485) (1,291) (785) (1,768) (3,580) (3,397) 25 220 - - - - 973$ 1,967$ (1,154)$ 1,845$ 896$ 873$ 5.04%4.47%3.92%4.21%3.63%3.82% 161 CITY OF SARATOGA PROPERTY TAX RATES – DIRECT AND OVERLAPPING GOVERNMENTS LAST TEN YEARS 120 (Property Tax Rates per $100 of Assessed Value) 2009 2010 2011 2012 General 1.0000 1.0000 1.0000 1.0000 County Retirement Levy 0.0388 0.0388 0.0388 0.0388 County Library 0.0024 0.0024 0.0024 0.0024 City of Saratoga 0.0104 0.0094 0.0094 0.0088 1.0516 1.0506 1.0506 1.0500 Campbell School District 0.0524 0.0285 0.0249 0.0283 County Bond 2008 Hospital - 0.0122 0.0095 0.0047 Co. Housing Bond 2016 - - - - Campbell Elementary 2002 - 0.0267 0.0298 0.0266 Campbell Elementary 2010 - - 0.0005 0.0003 Campbell Elementary 2016 - - - - Campbell Union High 1999 0.0299 0.0183 0.0196 0.0186 Campbell Union High 2006 - 0.0131 0.0131 0.0156 Campbell Union High 2016 - - - - West Valley Community College District 2004 0.0032 0.0140 0.0139 0.0137 West Valley Community College District 2012 - - - - Cupertino Elementary School District 0.0306 - - - Moreland Elementary School District 0.0565 - - - Saratoga School District 0.0363 - - - Campbell Union High School District 0.0299 - - - Fremont Union High School District 0.0339 - - - Los Gatos-Saratoga Joint Union High School District 0.0330 - - - Foothill-DeAnza Community College District 0.0123 - - - Saratoga Fire District 0.0053 - - - Santa Clara Valley Water District - State Water Project 0.0059 0.0071 0.0070 0.0063 Santa Clara Valley Water District - Zone W-1 0.0002 0.0003 0.0002 0.0001 Mid Peninsula Open Space 2014 - - - - 0.3294 0.1202 0.1185 0.1142 Total Tax Rate 1.3810 1.1708 1.1691 1.1642 Source: Muniservices, LLC Fiscal Year 162 121 2013 2014 2015 2016 2017 2018 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 0.0388 0.0388 0.0388 0.0388 0.0388 0.0388 0.0024 0.0024 0.0024 0.0024 0.0024 0.0024 0.0080 0.0074 0.0070 0.0065 0.0060 0.0056 1.0492 1.0486 1.0482 1.0477 1.0472 1.0468 0.0246 0.0264 0.0235 0.0220 0.0294 0.0244 0.0051 0.0035 0.0091 0.0088 0.0086 0.0082 - - - - - 0.0127 0.0220 0.0288 0.0172 0.0196 0.0258 0.0148 0.0086 - 0.0145 0.0136 - 0.0158 - - - - - 0.0122 0.0165 0.0134 0.0130 0.0119 0.0126 0.0120 0.0160 0.0156 0.0154 0.0138 0.0126 0.0119 - - - - - 0.0280 0.0139 0.0125 0.0101 0.0118 0.0096 0.0096 0.0150 0.0130 0.0019 0.0114 0.0100 0.0104 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 0.0069 0.0070 0.0065 0.0057 0.0086 0.0062 - - - - - - - - - 0.0008 0.0006 0.0009 0.1286 0.1202 0.1112 0.1194 0.1178 0.1671 1.1778 1.1688 1.1594 1.1671 1.1650 1.2139 163 CITY OF SARATOGA ASSESSED VALUE OF TAXABLE PROPERTY LAST TEN YEARS 122 (amounts expressed in thousands) Fiscal Year Total Ended Residential Commercial Industrial Other Unsecured Assessed June 30 Property Property Property Property Property Property 2009 9,605,309 213,951 9,467 223,190 43,933 10,095,850 2010 9,724,687 120,769 9,656 327,898 58,210 10,241,220 2011 9,639,782 107,269 9,633 323,881 57,172 10,137,737 2012 9,834,082 111,232 9,706 323,563 55,535 10,334,118 2013 10,312,597 112,875 11,455 335,765 62,378 10,835,070 2014 11,158,775 113,915 11,684 352,830 59,684 11,696,888 2015 11,775,973 117,466 11,737 361,202 56,354 12,322,732 2016 12,581,463 134,321 11,143 397,318 50,193 13,174,438 2017 13,227,811 141,391 10,245 426,257 45,838 13,851,542 2018 14,000,116 154,592 10,449 440,188 39,751 14,645,096 Source:Santa Clara County Assessor data, MuniServices, LLC $- $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 $14,000,000 $16,000,000 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Total Assessed Property Unsecured Other Industrial Commercial Residential 164 123 Total Less:Total Taxable Direct Tax Exempt Assessed Tax Real Property Value Rate (161,488) 9,934,362 1.0516 (230,127) 10,011,093 1.0506 (230,477) 9,907,260 1.0506 (230,868) 10,103,250 1.0476 (233,895) 10,601,175 1.0492 (238,683) 11,458,205 1.0486 (242,724) 12,080,008 1.0482 (232,693) 12,941,745 1.0477 (232,279) 13,619,263 1.1650 (244,172) 14,400,924 1.2139 165 CITY OF SARATOGA PRINCIPAL PROPERTY TAXPAYERS CURRENT YEAR AND NINE YEARS AGO JUNE 30, 2018 124 (amounts expressed in thousands) % of Total % of Total Taxable Taxable Taxable Taxable Assessed Assessed Assessed Assessed Taxpayer Value Rank Value Value Rank Value Humboldt Fields LLC 45,000$ 1 0.31% SHP Quito Village LLC 34,519 2 0.24% San Jose Water Works 23,844 3 0.17%13,190 6 0.13% Keller Trustee 16,801 4 0.12% House Trustee 15,865 5 0.11%14,346 5 0.15% Osheanic Capital LLC 13,659 6 0.09% Stormin Norman, LLC 13,369 7 0.09% HJJ, LLC 13,127 8 0.09% Summerhill Saratoga Front LLC 12,364 9 0.09% Paramount Venture LLC 12,240 10 0.08% Cupertino Village Ass LLC 34,205 1 0.35% Quito Village Associates LLC 18,012 2 0.18% Gregpenn Properties, LLC 16,970 3 0.17% Sobrato Trustee 15,040 4 0.15% Luczo Trustee 10,608 7 0.11% Argonaut Assoc LLC 10,304 8 0.10% Krishnamurthi Ashok 10,234 9 0.10% Coyote Properties IV LLC 10,043 10 0.10% Top Ten Total Assessed Value 200,788$ 1.4%152,952$ 1.5% City Total Assessed Value 14,400,924$ 9,877,380$ Source: Santa Clara County Assessor data, MuniServices, LLC 2018 2009 166 CITY OF SARATOGA PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN YEARS 125 Fiscal Year Total Tax Collections in Ended Levy for Subsequent June 30 Fiscal Year Amount Percentage Years Amount Percentage 2009 8,332,184 8,332,184 100.0%- 8,332,184 100.0% 2010 8,371,396 8,371,396 100.0%- 8,371,396 100.0% 2011 8,199,341 8,199,341 100.0%- 8,199,341 100.0% 2012 8,456,687 8,456,687 100.0%- 8,456,687 100.0% 2013 9,152,865 9,152,865 100.0%- 9,152,865 100.0% 2014 9,737,144 9,737,144 100.0%- 9,737,144 100.0% 2015 10,669,281 10,669,281 100.0%- 10,669,281 100.0% 2016 11,549,213 11,549,213 100.0%- 11,549,213 100.0% 2017 12,263,575 12,263,575 100.0%- 12,263,575 100.0% 2018 13,247,030 13,247,030 100.0%- 13,247,030 100.0% Source: City of Saratoga Collected within the Fiscal Year of the Levy Total Collections to Date 167 CITY OF SARATOGA RATIOS OF OUTSTANDING DEBT BY TYPE LAST TEN YEARS 126 (amounts expressed in thousands, except per capita amounts) 2009 2010 2011 2012 Governmental activities General obligation bonds 13,285$ 12,955$ 12,605$ 11,995$ Net original issue premium - - - 438 Total primary government 13,285$ 12,955$ 12,605$ 12,433$ Percentage of Personal Income1 0.76%0.54%0.57%0.57% Per capita2 419 405 417 409 Source: CAFR 1US Census Bureau, adjusted for inflation, MuniServices LLC 2Population information from California State Controller's Office Fiscal Year 168 127 2013 2014 2015 2016 2017 2018 11,540$ 11,055$ 10,560$ 10,060$ 9,585$ 9,100$ 416 394 372 350 328 306 11,956$ 11,449$ 10,932$ 10,410$ 9,913$ 9,406$ 0.53%0.49%0.47%0.45%0.40%0.35% 389 371 355 344 324 299 169 CITY OF SARATOGA RATIOS OF GENERAL BONDED DEBT OUTSTANDING LAST TEN YEARS 128 (amounts expressed in thousands, except per capita amounts) 2009 2010 2011 2012 General obligation bonds 13,285$ 12,955$ 12,605$ 11,995$ Net original issue premium - - - 438 Less: Amount available in debt service fund (926) (890) (848) (860) Total primary government 12,359$ 12,065$ 11,757$ 11,135$ Percentage of actual taxable value of property 0.12%0.12%0.12%0.11% Per capita1 390 377 389 367 Source: CAFR 1Population information from California State Controller's Office Fiscal Year 170 129 2013 2014 2015 2016 2017 2018 11,540$ 11,055$ 10,560$ 10,060$ 9,585$ 9,100$ 416 394 372 350 328 306$ (885) (898) (906) (923) (959) (998) 11,071$ 10,551$ 10,026$ 9,487$ 8,954$ 8,408$ 0.10%0.09%0.08%0.07%0.07%0.06% 361 342 326 314 293 267 171 CITY OF SARATOGA LEGAL DEBT MARGIN INFORMATION LAST TEN YEARS 130 (amounts expressed in thousands) 2009 2010 2011 2012 Debt Limit 1,514,378$ 1,536,183$ 1,520,660$ 1,550,118$ Total net debt applicable to limit 12,359 12,065 11,757 11,135 Legal debt margin 1,502,019$ 1,524,118$ 1,508,903$ 1,538,983$ Total net debt applicable to the limit as a percentage of debt limit 0.82%0.79%0.77%0.72% Legal debt margin calculation Assessed value 9,934,362$ 10,011,093$ 9,907,259$ 10,103,250$ Add back: exempt real property 161,488 230,127 230,477 230,868 Total assessed value 10,095,850$ 10,241,220$ 10,137,736$ 10,334,118$ Debt limit (15% of total assessed value)1,514,378$ 1,536,183$ 1,520,660$ 1,550,118$ Debt applicable to limit: General obligation bonds 13,285$ 12,955$ 12,605$ 11,995$ Net original issue premium - - - 438 Less: Amount available in debt service fund (926) (890) (848) (860) Total net debt applicable to limit 12,359$ 12,065$ 11,757$ 11,135$ Legal debt margin 1,502,019$ 1,524,118$ 1,508,903$ 1,538,983$ Source: CAFR Fiscal Year 172 131 2013 2014 2015 2016 2017 2018 1,625,261$ 1,754,233$ 1,848,410$ 1,976,166$ 2,077,731$ 2,196,764$ 10,655 10,157 9,654 9,137 8,626 8,102 1,614,606$ 1,744,076$ 1,838,756$ 1,967,029$ 2,069,105$ 2,188,662$ 0.66%0.58%0.52%0.46%0.42%0.37% 10,601,175$ 11,458,205$ 12,080,008$ 12,941,745$ 13,619,263$ 14,400,924$ 233,895 236,683 242,724 232,693 232,279 244,172 10,835,070$ 11,694,888$ 12,322,732$ 13,174,438$ 13,851,542$ 14,645,096$ 1,625,261$ 1,754,233$ 1,848,410$ 1,976,166$ 2,077,731$ 2,196,764$ 11,540$ 11,055$ 10,560$ 10,060$ 9,585$ 9,100$ 416 394 372 350 328 306$ (885) (898) (906) (923) (959) (998)$ 10,655$ 10,157$ 9,654$ 9,137$ 8,626$ 8,102$ 1,614,606$ 1,744,076$ 1,838,756$ 1,967,029$ 2,069,105$ 2,188,662$ 173 CITY OF SARATOGA DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT 132 (amount expressed in thousands) Estimated Estimated Share of Debt Percentage Overlapping Outstanding Applicable 1 Debt Direct Debt: City of Saratoga 9,100$ 100.000%9,100$ Total Direct Debt 9,100 Overlapping Tax and Assessment Debt: Santa Clara County 1,012,400 3.213%32,528 Foothill-De Anza Community College District 633,998 1.471%9,326 West Valley Community College District 495,110 9.361%46,347 Campbell Union High School District 210,265 5.628%11,834 Fremont Union High School District 433,280 3.290%14,255 Los Gatos-Saratoga Joint Union High School District 105,845 38.488%40,738 Campbell Union School District 176,095 6.884%12,122 Cupertino Union School District 270,529 5.701%15,423 Moreland School District 107,897 13.040%14,070 Saratoga Union School District 25,834 86.492%22,344 Saratoga Fire Protection District 2,951 97.653%2,882 Midpeninsula Regional Open Space District 93,350 5.443%5,081 Santa Clara Valley Water District Benefit Assessment 82,285 3.213%2,644 Total Overlapping Tax and Assessment Debt 229,594 Overlapping General Fund Debt: Santa Clara County General Fund Obligations 590,243$ 3.213%18,965$ Santa Clara County Pension Obligations 357,547 3.213%11,488 Santa Clara County Board of Education Certificates of Participation 4,985 3.213%160 Santa Clara County Vector Control District Certificates of Participation 2,470 3.213%79 Foothill-De Anza Community College District Certificates of Participation 28,804 1.471%424 West Valley-Mission College District General Fund Obligations 63,060 9.361%5,903 Campbell Union High School District Certificates of Participation 10,000 5.628%563 Los Gatos-Saratoga Joint Union High School District Certificates of Participation 4,424 38.488%1,703 Campbell Union High School District Certificates of Participation 2,895 6.884%199 Saratoga Union School District Certificates of Participation 3,905 86.492%3,378 Midpeninsula Open Space Park District General Fund Obligations 123,041 5.443%6,697 Total Overlapping General Fund Debt 49,559 Total Overlapping Tax & Assessment and General Fund Debt 279,153 Combined Total Debt2 288,253$ 1Percentage of overlapping agency's assessed valuation located within boundaries of the city. 2Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and tax allocation bonds and non-bonded capital lease obligations. Source: Muniservices, LLC 174 CITY OF SARATOGA DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN YEARS 133 Personal Per Capita Fiscal City Income Personal Labor Unemployment Year Population1 (in thousands)2 Income 2 Force 3 Rate 3 2009 31,679 1,747,699 55,169 13,300 6.0% 2010 31,997 2,401,151 75,043 13,200 5.6% 2011 30,195 2,211,963 73,256 13,400 5.0% 2012 30,363 2,119,463 69,804 14,000 4.4% 2013 30,706 2,179,904 70,993 13,900 4.2% 2014 30,887 2,243,458 72,634 14,200 3.4% 2015 30,799 2,248,481 73,005 15,100 2.7% 2016 30,219 2,239,926 74,123 14,700 2.9% 2017 30,569 2,374,919 77,690 14,600 2.7% 2018 31,435 2,597,561 82,633 15,000 2.8% Source:1Popluaton information from California State Controller's Office 2US Census Data, adjusted for inflation, MuniServices LLC 3EDD Labor Market Information Division, MuniServices LLC 10,000 15,000 20,000 25,000 30,000 35,000 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Labor Force vs. Population Population Labor Forc 175 CITY OF SARATOGA PRINCIPAL EMPLOYERS CURRENT YEAR AND NINE YEARS AGO AT JUNE 30, 2018 134 Percentage Percentage of Total City of Total City Employer Employees Rank Employment Employees Rank Employment West Valley Community College 445 1 2.97%- Saratoga Retirement Community 295 2 1.97%- Saratoga Union School District 288 3 1.92%- Sub-Acute Saratoga Hospital 166 4 1.11%- Saratoga High School 133 5 0.89%- Our Lady Fatima Villa 123 6 0.82%- Prospect High School 100 7 0.67%- Safeway 80 8 0.53%65 2 0.52% City of Saratoga 56 9 0.37%- Saratoga Country Club 55 10 0.37%65 2 0.52% Gene's Fine Foods 85 1 0.68% Windmere SVP 27 4 0.22% Longs Drugs 20 5 0.16% Classic Car Wash 20 6 0.16% Harmonie European Day Spa 20 7 0.16% Hinshaw, Draa & Marsh 20 8 0.16% Jakes of Saratoga 20 9 0.16% Bella Saratoga 18 10 0.14% Total Top 10 Employers 1,741 11.6%360 2.9% Total City Employment1 15,000 12,500 1EDD Labor Market Information Division, MuniServices LLC 2018 2009 176 135 This page is intentionally blank 177 CITY OF SARATOGA FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION LAST TEN FISCAL YEARS 136 2009 2010 2011 2012 Function General government 12.00 11.75 11.45 10.80 Public works 21.75 21.75 21.65 21.55 Community development 14.00 12.00 12.00 12.00 Parks and recreation 10.60 9.35 9.50 9.50 Total 58.35 54.85 54.60 53.85 Source: City of Saratoga Budget Document Fiscal Year - 10 20 30 40 50 60 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Full -Time Equivalents Parks & Rec Comm Deve Public works General gov' 178 137 2013 2014 2015 2016 2017 2018 10.90 13.65 13.70 13.70 13.65 14.55 20.65 20.75 20.65 20.65 20.65 21.15 11.00 12.00 12.00 12.00 12.00 12.50 9.60 9.60 9.55 9.55 8.35 8.30 52.15 56.00 55.90 55.90 54.65 56.50 179 CITY OF SARATOGA OPERATING INDICATORS BY FUNCTION LAST TEN FISCAL YEARS 138 2009 2010 2011 2012 Function Part 1 crimes1 282 173 373 287 Total incidents 41,384 39,942 41,642 35,664 Police reports 1,949 1,273 1,549 1,329 Public Works Street resurfacing (miles)6 3 - 6 Street lights repaired 25 24 25 41 Potholes filled (sq. ft.)10,000 10,000 11,000 10,000 Community Development Total permit valuation ($000)61,117 44,658 50,936 59,675 Parks and Recreation Classes, trips (enrollment) community events 4,698 4,366 6,135 5,479 Adult Exercise (e.g. JS Dance. Jazzerxcise)515 545 661 647 Sports programs (e.g. Adult basketball, softball)459 423 - - Preschool programs (enrollment)171 161 142 132 Staffed Day/summer camps (enrollment)225 331 326 - Teen/youth council (enrollment)419 2,110 1,323 787 1Part 1 Crimes are the following as reported to DOJ: homicide, rape, robbery, burglary, assault, theft, auto theft, and arson. Source: City of Saratoga various records Fiscal Year 180 139 2013 2014 2015 2016 2017 2018 277 408 315 463 301 190 40,141 41,228 40,695 39,213 38,893 32,222 1,106 978 917 1,334 1,295 927 6.2 4.3 2.5 15.2 0 - 29 34 39 33 37 15 12,060 11,000 10,500 21,010 13,000 9,000 79,896 79,702 89,929 75,599 106,631 128,062 5,365 6,235 8,390 5,898 5,081 5,769 1,663 2,173 1,650 2,099 2,824 2,082 - - - - - - 188 274 186 180 221 224 45 160 90 172 71 129 605 673 747 848 1,049 927 181 CITY OF SARATOGA CAPITAL ASSET STATISTICS BY FUNCTION LAST TEN FISCAL YEARS 140 2009 2010 2011 2012 Function Public safety Police Station - - - - Fire Station Saratoga Fire District 1 1 1 1 Central Fire District 1 1 1 1 Public Works Street Miles - Private 14 14 14 14 Street Miles - Public 140 140 140 140 West Valley Sanitation District Number of Connections 8,683 8,687 8,664 8,679 Length of Sewer Lines 127 127 127 127 Cupertino Valley Sanitation District Number of Connections 2,938 2,949 2,954 2,959 Length of Sewer Lines 37 37 37 37 Parks and Recreation Parks Acreage 84 84 84 84 Parks 15 15 15 15 Source: City of Saratoga various records Fiscal Year 182 141 2013 2014 2015 2016 2017 2018 - - - - - - 1 1 1 1 1 1 1 1 1 1 1 1 14 14.5 14.5 14.5 14.5 14.5 141 142 142 142 142 142 8,821 8,919 8,402 8,488 8,563 8,602 127 127 128 129 126 126 2,961 2,963 2,963 2,999 3,000 3,000 37 37 37 37 37 37 84 84 84 148 148 148 15 15 15 16 16 16 183 CITY OF SARATOGA, CALIFORNIA SARATOGA AVE PATHWAY PROJECT METROPOLITAN TRANSPORTATION COMMISSION TRANSPORTATION DEVELOPMENT ACT ARTICLE 3 FUNDS For the Year ended June 30, 2018 * * * CHAVAN & ASSOCIATES, LLP CERTIFIED PUBLIC ACCOUNTANTS 1475 SARATOGA AVE., SUITE 180 SAN JOSE, CA 95129 Attachment B 184 CITY OF SARATOGA, CALIFORNIA SARATOGA AVE PATHWAY PROJECT Metropolitan Transportation Commission Transportation Development Act Article 3 Funds FOR THE YEAR ENDED JUNE 30, 2018 TABLE OF CONTENTS PAGE NO. INDEPENDENT AUDITOR’S REPORT .............................................................................................. 1 - 2 STATEMENT OF GRANT REVENUES AND EXPENDITURES ............................................................ 3 NOTES TO PROJECT FINANCIAL STATEMENT ............................................................................... 4 INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS AND THE TRANSPORTATION DEVELOPMENT ACT ........................................................................ 5 - 6 185 Page | 1 1475 Saratoga Ave, Suite 180, San Jose, CA 95129 Tel: 408-217-8749 • E-Fax: 408-872-4159 info@cnallp.com • www.cnallp.com INDEPENDENT AUDITOR’S REPORT To the Honorable Mayor and Members of the City Council of the City of Saratoga Saratoga, California Report on the Financial Statements We have audited the accompanying statement of grant revenues and expenditures for the Saratoga Ave Pathway Project (the “Project”) grant of the City of Saratoga (the “City"), as of and for the year ended June 30, 2018, and the related notes to the financial statement, which comprises the City’s statement of grant revenues and expenditures for the Saratoga Ave Pathway Project. Management’s Responsibility for the Financial Statements The City’s management is responsible for the preparation and fair presentation of its financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express opinions on the Project’s financial statement based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America, the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, and the Transportation Development Act Guidebook issued by the State of California, Department of Transportation. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statement. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statement, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the City’s preparation and fair presentation of the financial statement in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statement. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. 186 Page | 2 1475 Saratoga Ave, Suite 180, San Jose, CA 95129 Tel: 408-217-8749 • E-Fax: 408-872-4159 info@cnallp.com • www.cnallp.com Opinion In our opinion, the financial statement referred to above presents fairly, in all material respects, the respective financial position of the grant revenues and expenditures for the Project of the City of Saratoga, as of June 30, 2018, in accordance with accounting principles generally accepted in the United States of America. Other Information The accompanying statement was prepared to present the grant revenues and expenditures pursuant to the grant above and described in the notes and is not intended to be a complete presentation of the City’s revenues and expenditures. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 8, 2018 on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance. November 8, 2018 San Jose, California 187 CITY OF SARATOGA, CALIFORNIA SARATOGA AVE PATHWAY PROJECT Metropolitan Transportation Commission Transportation Development Act Article 3 Funds STATEMENT OF GRANT REVENUES AND EXPENDITURES FOR THE YEAR ENDED JUNE 30, 2018 The notes to the project financial statement are an integral part of this statement. - 3 - Revenues: Grant revenues 40,480$ Expenditures: Contractual Services 26,749 Excess of Grant Revenues over Expenditures 13,731 Beginning Grant Balance 50,261 Ending Grant Balance 63,992$ 188 CITY OF SARATOGA, CALIFORNIA SARATOGA AVE PATHWAY PROJECT Metropolitan Transportation Commission Transportation Development Act Article 3 Funds NOTES TO PROJECT FINANCIAL STATEMENT FOR THE YEAR ENDED JUNE 30, 2018 - 4 - SUMMARY OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES Description of Reporting Entity The statement represents the grant revenues and expenditures of City of Saratoga (the “City”), Saratoga Ave Pathway Project (the “Project”) under the Transportation Development Act (“TDA”) Article 3 Pedestrian/bicycle project funding for the year ended June 30, 2018. The Project was funded by TDA grants which are administered by Metropolitan Transportation Commission (“MTC”). The accompanying statement of grant revenues and expenditures presents only the portion reimbursable activities of the Project and is not intended to present the financial position and result of operation of the City in conformity with accounting principles generally accepted in the United States of America. Description of Grant The TDA Article 3 funds were made available to the City for the funding of projects exclusively for the benefit and use of pedestrians and bicyclists. It is mandated through the Public Utilities Code Section 99200 et seq. The Metropolitan Transportation Commission, as the regional transportation planning agency for the San Francisco Bay region, has adopted MTC Resolution No. 3620, Revised, entitled “Transportation Development Act, Article 3, Pedestrian/Bicycle Projects,” which delineates procedures and criteria for submission of request for the allocation of TDA Article 3 funding. A description of the significant accounting policies employed in the preparation of the accompanying statement follows: Statement of Grant Revenues and Expenditures The statement of grant revenues and expenditures presents the eligible costs charged to the Project grant by the City and the revenues received in reimbursement of those costs by MTC. Basis of Accounting Basis of accounting refers to when revenues and expenditures are recognized in the accounts and reported in the statement. Basis of accounting relates to the timi ng of the measurements made, regardless of the measurement focus applied. The City used the modified accrual basis of accounting. Revenues are recognized when collection of the amounts can be reasonably estimated to be received in the near future. Expenditures are generally recognized in the period in which goods and services are received or a liability is incurred. 189 Page | 5 1475 Saratoga Ave, Suite 180, San Jose, CA 95129 Tel: 408-217-8749 • E-Fax: 408-872-4159 info@cnallp.com • www.cnallp.com INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS AND THE TRANSPORTATION DEVELOPMENT ACT To the Honorable Mayor and Members of the City Council of the City of Saratoga Saratoga, California We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the Statement of Grant Revenues and Expenditures for the Saratoga Ave Pathway Project (the “Project”) grant of the City of Saratoga (the “City”) as of and for the year ended June 30, 2018, and the related notes to the financial statement, which comprises City’s statement of grant revenues and expenditures for the Saratoga Ave Pathway Project , and have issued our report thereon dated November 8, 2018. Internal Control over Financial Reporting Management is responsible for establishing and maintaining effective internal control over financial reporting. In planning and performing our audit of the Project’s financial statement, we considered th e City’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statement, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Compliance and Other Matters As part of obtaining reasonable assurance about whether the Project’s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, including the applicable statutes, rules and regulations of the Transportation Development Act, including section 6666 of Title 21, of the California Code of 190 Page | 6 1475 Saratoga Ave, Suite 180, San Jose, CA 95129 Tel: 408-217-8749 • E-Fax: 408-872-4159 info@cnallp.com • www.cnallp.com Regulations, and the allocation instructions and resolutions of the Metropolitan Transportation Commission, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards or the Transportation Development Act. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compl iance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. November 8, 2018 San Jose, California 191 CHAVAN & ASSOCIATES, LLP CERTIFIED PUBLIC ACCOUNTANTS 1475 SARATOGA AVE., SUITE 180 SAN JOSE, CA 95129 CITY OF SARATOGA, CALIFORNIA SINGLE AUDIT REPORT FOR THE YEAR ENDED JUNE 30, 2018 Attachment C 192 CITY OF SARATOGA, CALIFORNIA SINGLE AUDIT REPORT TABLE OF CONTENTS JUNE 30, 2018 PAGE NO. Independent Auditor’s Report on Compliance for Each Major Federal Program; Report on Internal Control Over Compliance; and Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance....................... 1 - 3 Schedule of Expenditures of Federal Awards ...................................................................... 4 Notes to Schedule of Expenditures of Federal Awards ....................................................... 5 Schedule of Findings and Questioned Costs: Section I - Summary of Auditor’s Results ..................................................................... 6 Section II - Financial Statement Findings ...................................................................... 7 Section III - Federal Awards Findings and Questioned Costs ...................................... 7 Summary Schedule of Prior Year Findings ......................................................................... 8 Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statement Performed in Accordance with Government Auditing Standards ................................. 9 - 10 193 Page | 1 1475 Saratoga Ave, Suite 180, San Jose, CA 95129 Tel: 408-217-8749 • E-Fax: 408-872-4159 info@cnallp.com • www.cnallp.com INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM; REPORT ON INTERNAL CONTROL OVER COMPLIANCE; AND REPORT ON SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS REQUIRED BY THE UNIFORM GUIDANCE To the Honorable Mayor and Members of the City Council of the City of Saratoga Saratoga, California Report on Compliance for Each Major Federal Program We have audited the City of Saratoga’s (the City) compliance with the types of compliance requirements described in OMB Compliance Supplement that could have a direct and material effect on each of the City’s major federal programs for the year ended June 30, 2018. The City’s major federal programs are identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs. Management’s Responsibility Management is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs. Auditor’s Responsibility Our responsibility is to express an opinion on compliance for each of the City’s major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the City’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of the City’s compliance. Opinion on Each Major Federal Program In our opinion, the City complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2018. 194 Page | 2 1475 Saratoga Ave, Suite 180, San Jose, CA 95129 Tel: 408-217-8749 • E-Fax: 408-872-4159 info@cnallp.com • www.cnallp.com Report on Internal Control over Compliance Management of the City is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the City’s internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federa l program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal con trol over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to iden tify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance We have audited the financial statements of the City as of and for the year ended June 30, 2018, and have issued our report thereon dated November 8, 2018, which contained an unmodified opinion on those financial statements. Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by the Uniform Guidance and is not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other a dditional procedures in 195 Page | 3 1475 Saratoga Ave, Suite 180, San Jose, CA 95129 Tel: 408-217-8749 • E-Fax: 408-872-4159 info@cnallp.com • www.cnallp.com accordance with auditing standards generally accepted in the United States of America. In our opinion, the schedule of expenditures of federal awards is fairly stated in all material respects in relation to the financial statements as a whole. November 8, 2018 San Jose, California 196 CITY OF SARATOGA, CALIFORNIA SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE FISCAL YEAR ENDED JUNE 30, 2018 The accompanying notes are an integral part of this financial statement 4 Agency or Federal Catalog Pass Through Federal Federal Grantor/Pass-Through Grantor/Program Title Number (CFDA) Number Expenditures U.S. DEPARTMENT OF TRANSPORTATION Passed Through California Department of Transportation Highway 9 Safety Improvement - Construction Phase IV 20.205 (1)HSIPL-5332(021) 133,873$ Prospect Road Improvements 20.205 (1)CML-5332(022) 2,188,522 Village Phase II Construction 20.205 (1)CML-5332(019) 74,991 4th Street Bridge 20.205 (1)CML-5332(020)1,258 Quito Bridge Phase II - ROW 20.205 (1)BRLS-5332(004) 22,266 Total U.S Department of Transportation (Highway Planning and Construction Cluster)2,420,910 U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT Passed Through County of Santa Clara CDBG - Senior Center Restroom ADA Upgrades 14.218 SCC 9,715 TOTAL EXPENDITURES OF FFEDERAL AWARDS 2,430,625$ (1)Audited as major program Note: There were no federal grants passed through to subreceipients. 197 CITY OF SARATOGA, CALIFORNIA NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE FISCAL YEAR ENDED JUNE 30, 2018 5 Note 1. Basis of Presentation The accompanying schedule of expenditures of federal awards (the schedule) includes the federal grant activity of the City of Saratoga (the City) under programs of the federal government for the year ended June 30, 2018. The information in this schedule is presented in accordance with the requirements of the Office of Management and Budget Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Regulations, Cost Principles, and Audit Requirements for Federal Awards . Because the schedule presents only a selected portion of the operations of the City, it is not intended to and does not present the financial position, changes in net position, or cash flows of the City. Note 2. Summary of Significant Accounting Policies Expenditures reported on the schedule are reported on the modified accrual basis of accounting. Such expenditures are recognized following the cost principles contained in Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Regulations, Cost Principles, and Audit Requirements for Federal Awards, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Negative amounts shown on the schedule represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. Pass-through entity identifying numbers are presented where available. The City has elected not to use the 10 percent de minimus indirect cost rate as allowed under Uniform Guidance. Note 3. Relationship to the Basic Financial Statements The amounts reported in the accompanying schedule agree, in all material respects, to amounts reported within the City’s financial statements. Federal award revenues are reported principally in the City’s financial statements as intergovernmental revenues. Note 4. Relationship to Federal Financial Reports Amounts reported in the accompanying schedule agree or can be reconciled with the amounts reported or to be reported in the federal financial reports. Note 5. Pass-Through Entities’ Identifying Number When federal awards were received from a pass-through entity, the Schedule of Expenditures of Federal Awards shows, if available, the identifying number assigned by the pass -through entity. When no identifying number is shown, the City has determined that no identifying number is assigned for the program or the City was unable to obtain an identifying number from the pass-through entity. 198 CITY OF SARATOGA, CALIFORNIA SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE FISCAL YEAR ENDED JUNE 30, 2018 6 Section I - Summary of Auditor's Results Financial Statements Type of auditor's report issued Internal control over financial reporting: Material weaknesses?Yes x No Significant deficiencies identified not considered to be material weaknesses? Yes x No Non-compliance material to financial statements noted?Yes x No Federal Awards Internal control over major programs: Material weaknesses?Yes x No Significant deficiencies identified not considered to be material weaknesses?Yes x No Type of auditor's report issued on compliance over major programs Any audit findings disclosed that are required to be reported in accordance with 2 CFR 200.516(a)Yes x No Identification of Major Programs: CFDA Numbers Name of Federal Program Highway Planning and Construction Dollar threshold used to distinguish between type A and type B programs: Auditee qualified as low risk auditee?Yes x No Unmodified Unmodified 20.205 750,000$ 199 CITY OF SARATOGA, CALIFORNIA SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE FISCAL YEAR ENDED JUNE 30, 2018 7 Section II - Financial Statement Findings No findings noted. Section III - Federal Award Findings and Questioned Costs No findings noted. 200 CITY OF SARATOGA, CALIFORNIA SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS FOR THE FISCAL YEAR ENDED JUNE 30, 2018 8 Section II - Financial Statement Findings No findings noted. Section III - Federal Award Findings and Questioned Costs No findings noted. 201 Page | 9 1475 Saratoga Ave, Suite 180, San Jose, CA 95129 Tel: 408-217-8749 • E-Fax: 408-872-4159 info@cnallp.com • www.cnallp.com INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the Honorable Mayor and Members of the City Council of the City of Saratoga Saratoga, California We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the City of Saratoga (the “City”) as of and for the year ended June 30, 2018, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements, and have issued our report thereon dated November 8, 2018. Internal Control over Financial Reporting Management is responsible for establishing and maintaining effective internal control over financial reporting. In planning and performing our audit of the financial statements, we considered the City’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effect iveness of the City’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable pos sibility that a material misstatement of the City’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Compliance and Other Matters As part of obtaining reasonable assurance about whether the City’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and 202 Page | 10 1475 Saratoga Ave, Suite 180, San Jose, CA 95129 Tel: 408-217-8749 • E-Fax: 408-872-4159 info@cnallp.com • www.cnallp.com material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. November 8, 2018 San Jose, California 203 CITY OF SARATOGA, CALIFORNIA APPROPRIATIONS LIMIT SCHEDULE AND INDEPENDENT ACCOUNTANT’S REPORT For the Year Ending June 30, 2019 * * * CHAVAN & ASSOCIATES, LLP CERTIFIED PUBLIC ACCOUNTANTS 1475 SARATOGA AVE. SUITE 180 SAN JOSE, CA 95129 Attachment D 204 CITY OF SARATOGA, CALIFORNIA APPROPRIATIONS LIMIT SCHEDULE AND INDEPENDENT ACCOUNTANT’S REPORT FOR THE YEAR ENDING JUNE 30, 2019 TABLE OF CONTENTS PAGE NO. INDEPENDENT ACCOUNTANT’S REPORT............................................................................ 1 - 2 APPROPRIATIONS LIMIT SCHEDULE .................................................................................. 3 NOTES TO THE APPROPRIATIONS LIMIT SCHEDULE ........................................................... 4 205 Page | 1 1475 Saratoga Ave, Suite 180, San Jose, CA 95129 Tel: 408-217-8749 • E-Fax: 408-872-4159 info@cnallp.com • www.cnallp.com INDEPENDENT ACCOUNTANTS’ REPORT ON AGREED-UPON PROCEDURES APPLIED TO APPROPRIATIONS LIMIT UNDER ARTICLE XIIIB OF THE CALIFORNIA CONSTITUTION To the Honorable Mayor and Members of the City Council of the City of Saratoga Saratoga, California We have performed the procedures enumerated below to the accompanying Appropriations Limit Schedule of the City of Saratoga, (the City), for the year ending June 30, 2019. These procedures, which were agreed to by the City and the League of California Cities (as presented in the publication entitled Agreed Upon Procedures Applied to the Appropriations Limitation Prescribed by Article XIII-B of the California Constitution) were performed solely to assist the City in meeting the requirements of Section 1.5 of Article XIIIB of the California Constitution. The City management is responsible for the Appropriations Limit Schedule. This agreed upon procedures engagement was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. The sufficiency of the procedures is solely the responsibility of those parties specified in this report. Consequently, we make no representation regarding the sufficiency of the procedures described below either for the purpose for which this report has been requested or for any other purpose. The procedures performed and our findings were as follows: 1. We obtained completed worksheets used by the City to calculate its appropriation limit for the fiscal year ending June 30, 2019, and determined that the limit and annual adjustment factors were adopted by resolution of the City Council. We also determined that the population and inflation options were selected by a recorded vote of the City Council. Findings: No exceptions were noted as a result of our procedures. 2. For the accompanying Appropriations Limit Schedule, we added the prior year’s limit to the total adjustments and agreed the resulting amount to the current year’s limit. Findings: No exceptions were noted as a result of our procedures. 3. We agreed the current year information presented in the accompanying Appropriation Limit Schedule to corresponding information in worksheets used by the City. Finding: No exceptions were noted as result of our procedures. 4. We agreed the prior year appropriations limit in the accompanying Appropriation Limit Schedule to the corresponding information in worksheets used by the City. Finding: No exceptions were noted as a result of our procedures. 206 Page | 2 1475 Saratoga Ave, Suite 180, San Jose, CA 95129 Tel: 408-217-8749 • E-Fax: 408-872-4159 info@cnallp.com • www.cnallp.com We were not engaged and did not conduct an examination, the objective of which would be the expression of an opinion on the accompanying Appropriations Limit Schedule. Accordingly, we do not express such an opinion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you. No procedures have been performed with respect to the determination of the appropriation limit for the base year, as defined by Article XIII-B of the California Constitution. This report is intended solely for the use of the City Council and management of the City and is not intended to be and should not be used by anyone other than these specified parties. However, this report is a matter of public record and its distribution is not limited. November 13, 2018 San Jose, California 207 CITY OF SARATOGA, CALIFORNIA APPROPRIATIONS LIMIT SCHEDULE FOR THE YEAR ENDING JUNE 30, 2019 3 Amount Source A. Appropriations limit for the year ended June 30, 2018 42,441,645$ Prior Year Schedule B. Calculation Factors: 1. Population increase % 1.0099 1)State Department of Finance 2. Inflation increase % 1.0367 State Department of Finance 3. Total adjustment factor % 1.0470 B1 x B2 C. Annual adjustment Increase 1,993,204 [(B3-1)A)] D. Other Adjustments: Loss responsibility (-) - N/A Transfers to private (-) - N/A Transfers to fees (-) - N/A Assumed responsibility (+) - N/A E. Total Adjustments 1,993,204 (C+D) F. Appropriations limit for the year ending June 30, 2019 44,434,849$ (A+E) 1) Greater of population increase % for: City of Saratoga 1.0052 Santa Clara County 1.0099 208 CITY OF SARATOGA, CALIFORNIA NOTES TO THE APPROPRIATIONS LIMIT SCHEDULE FOR THE YEAR ENDING JUNE 30, 2019 4 1. PURPOSE OF LIMITED PROCEDURES REVIEW Under Article XIIIB of the California Constitution (the Gann Spending Limitations Initiative), California governmental agencies are restricted as to the amount of annual appropriations from proceeds of taxes. Effective for years beginning on or after July 1, 1990, under Section 1.5 of Article XIIB, the annual calculation of the appropriation limit is subject to a limited procedures review in connection with the annual audit. 2. METHOD OF CALCULATION Under Section 10.5 of Article XIIIB, for fiscal years beginning on or after July, 1990, the appropriations limit is required to be calculated based on the limit for the fiscal year 1986-87, adjusted for the inflation and population factors discussed in Notes 3 and 4 below. 3. INFLATION FACTORS A California governmental agency may adjust its appropriations limit by either the annual percentage change in the 4th quarter per capita personal income (which percentage is supplied by the State Department of Finance) or the percentage change in the local assessment roll from the preceding year due to the change of local nonresidential construction. The factor adopted by the City for the year 2018-19 represents the annual percentage change in the per capita personal income. 4. POPULATION FACTORS A California governmental agency may adjust its appropriations limit by either the annual percentage change of the jurisdiction’s own population or the annual percentage change in population of the county where the jurisdiction is located. The factor adopted by the City for the year 2018-19 represents the annual percentage change in population for the County. 5. OTHER ADJUSTMENTS A California government agency may be required to adjust its appropriations limit when certain events occur, such as the transfer of responsibility for municipal services to, or from, another government agency or private entity. The City had no such adjustment for the year ending June 30, 2019. 209 Page | 1 1475 Saratoga Ave, Suite 180, San Jose, CA 95129 Tel: 408-217-8749 • E-Fax: 408-872-4159 info@cnallp.com • www.cnallp.com To the City Council City of Saratoga We have audited the basic financial statements of the City of Saratoga as of and for the year ended June 30, 2018, and have issued our report thereon dated November 12, 2018. Professional standards require that we advise you of the following matters relating to our audit. Our Responsibility under Generally Accepted Auditing Standards and Government Auditing Standards As communicated in our engagement letter, our responsibility, as described by professional standards, is to form and express an opinion(s) about whether the financial statements that have been prepared by management with your oversight are presented fairly, in all material respects, in conformity with accounting principles generally accepted in the United States of America. Our audit of the financial statements does not relieve you or management of your respective responsibilities. Our responsibility, as prescribed by professional standards, is to plan and perform our audit to obtain reasonable, rather than absolute, assurance about whether the financial statements are free of material misstatement. An audit of financial statements includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control over financial reporting. Accordingly, as part of our audit, we considered the internal control of the City of Saratoga solely for the purpose of determining our audit procedures and not to provide any assurance concerning such internal control. We are also responsible for communicating significant matters related to the audit that are, in our professional judgment, relevant to your responsibilities in overseeing the financial reporting process. However, we are not required to design procedures for the purpose of identifying other matters to communicate to you. Other Information in Documents Containing Audited Financial Statements Pursuant to professional standards, our responsibility as auditors for other information in documents containing City of Saratoga’s audited financial statements does not extend beyond the financial information identified in the audit report, and we are not required to perform any procedures to corroborate such other information. Our responsibility also includes communicating to you any information which we believe is a material misstatement of fact. Nothing came to our attention that caused us to believe that such information, or its manner of presentation, is materially inconsistent with the information, or manner of its presentation, appearing in the financial statements. Attachment E 210 Page | 2 1475 Saratoga Ave, Suite 180, San Jose, CA 95129 Tel: 408-217-8749 • E-Fax: 408-872-4159 info@cnallp.com • www.cnallp.com Planned Scope and Timing of the Audit We conducted our audit consistent with the planned scope and timing we previously communicated to management. Qualitative Aspects of the Entity’s Significant Accounting Practices Significant Accounting Policies Management has the responsibility to select and use appropriate accounting policies. A summary of the significant accounting policies adopted by the City of Saratoga is included in Note 1 to the financial statements. Other than implimentation of GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions, there have been no initial selection of accounting policies and no changes in significant accounting policies or their application during June 30, 2018. No matters have come to our attention that would require us, under professional standards, to inform you about (1) the methods used to account for significant unusual transactions and (2) the effect of significant accounting policies in controversial or emerging areas for which there is a lack of authoritative guidance or consensus. Significant Accounting Estimates Accounting estimates are an integral part of the financial statements prepared by management and are based on management’s current judgments. Those judgments are normally based on knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ markedly from management’s current judgments. The most sensitive accounting estimates affecting the financial statements include accumulated depreciation related to capital assets and unfunded liabilities and expenses based on assumptions in actuarial studies performed on defined benefit pension plans (GASB 68 and GASB 75). We evaluated the key factors and assumptions used to develop the identified estimates and determined that it is reasonable in relation to the basic financial statements taken as a whole and in relation to the applicable opinion units. Financial Statement Disclosures Certain financial statement disclosures involve significant judgment and are particularly sensitive because of their significance to financial statement users. The most sensitive disclosures affecting City of Saratoga’s financial statements relate to: cash and investments, capital assets, long-term obligations and defined benefit pension plans. Significant Difficulties Encountered during the Audit We encountered no significant difficulties in dealing with management relating to the performance of the audit. 211 Page | 3 1475 Saratoga Ave, Suite 180, San Jose, CA 95129 Tel: 408-217-8749 • E-Fax: 408-872-4159 info@cnallp.com • www.cnallp.com Uncorrected and Corrected Misstatements For purposes of this communication, professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that we believe are trivial, and communicate them to the appropriate level of management. None of the misstatements identified by us as a result of our audit procedures and corrected by management were material, either individually or in the aggregate, to the financial statements taken as a whole or applicable opinion units. In addition, professional standards require us to communicate to you all material, corrected misstatements that were brought to the attention of management as a result of our audit procedures. There were no material, corrected misstatements noted during the audit. Disagreements with Management For purposes of this letter, professional standards define a disagreement with management as a matter, whether or not resolved to our satisfaction, concerning a financial accounting, reporting, or auditing matter, which could be significant to the City of Saratoga’s financial statements or the auditor’s report. No such disagreements arose during the course of the audit. Representations Requested from Management We have requested certain written representations from management, which are included in a separate letter dated November 12, 2018. Management’s Consultations with Other Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters. Management informed us that, and to our knowledge, there were no consultations with other accountants regarding auditing and accounting matters. Other Significant Findings or Issues In the normal course of our professional association with the City of Saratoga, we generally discuss a variety of matters, including the application of accounting principles and auditing standards, operating and regulatory conditions affecting the entity, and operational plans and strategies that may affect the risks of material misstatement. None of the matters discussed resulted in a condition to our retention as the City of Saratoga’s auditors. This report is intended solely for the information and use of the Board and management of the City of Saratoga and is not intended to be and should not be used by anyone other than these specified parties. November 12, 2018 San Jose, California 212 Page | 1 1475 Saratoga Ave, Suite 180, San Jose, CA 95129 Tel: 408-217-8749 • E-Fax: 408-872-4159 info@cnallp.com • www.cnallp.com City of Saratoga 13777 Fruitvale Ave, Saratoga, CA 95070 Introduction and Internal Controls In planning and performing our audit of the basic financial statements of the City of Saratoga, as of and for the year ended June 30, 2018, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, we considered City of Saratoga’s internal control over financial reporting (internal control) as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we do not express an opinion on the effectiveness of City of Saratoga’s internal control over financial reporting. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the City’s financial statements will not be prevented, or detected and corrected on a timely basis. Our consideration of internal control was for the limited purpose described in the first paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Upcoming Accounting Pronouncements The following is a summary of new accounting pronouncements from the Governmental Accounting Standards Board: GASB Statement No. 83, Certain Asset Retirement Obligations. - This Statement addresses accounting and financial reporting for certain asset retirement obligations (AROs). An ARO is a legally enforceable liability associated with the retirement of a tangible capital asset. A government that has legal obligations to perform future asset retirement activities related to its tangible capital assets should recognize a liability based on the guidance in this Statement. The requirements of this Statement are effective for financial statements for periods beginning after June 15, 2018. Earlier application is encouraged. The City doesn’t believe this statement will have a significant impact on the City’s financial statements. Attachment F 213 Page | 2 1475 Saratoga Ave, Suite 180, San Jose, CA 95129 Tel: 408-217-8749 • E-Fax: 408-872-4159 info@cnallp.com • www.cnallp.com GASB Statement No. 84, Fiduciary Activities. - The objective of this Statement is to improve guidance regarding the identification of fiduciary activities for accounting and financial reporting purposes and how those activities should be reported. This Statement establishes criteria for identifying fiduciary activities of all state and local governments. The focus of the criteria generally is on (1) whether a government is controlling the assets of the fiduciary activity and (2) the beneficiaries with whom a fiduciary relationship exists. Separate criteria are included to identify fiduciary component units and postemployment benefit arrangements that are fiduciary activities. The requirements of this Statement are effective for financial statements for periods beginning after December 15, 2018. Earlier application is encouraged. The City doesn’t believe this statement will have a significant impact on the City’s financial statements. GASB issued Statement No. 87, Leases. - The objective of this statement is to better meet the information needs of financial statement users by improving accounting and financial reporting for leases by governments. This statement increases the usefulness of governments’ financial statements by requiring recognition of certain lease assets and liabilities for leases that previously were classified as operating leases and recognized as inflows of resources or outflows of resources based on the payment provisions of the contract. It establishes a single model for lease accounting based on the foundational principle that leases are financings of the right to use an underlying asset. Under this statement, a lessee is required to recognize a lease liability and an intangible right-to-use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources, thereby enhancing the relevance and consistency of information about governments’ leasing activities. The requirements of this statement are effective for BAWSCA’s fiscal year ending June 30, 2021. The City doesn’t believe this statement will have a significant impact on the City’s financial statements. GASB Statement No. 88, Certain Disclosures Related to Debt, Including Direct Borrowings and Direct Placements. - This Statement addresses additional information to be disclosed in the notes to the financial statements regarding debt, including unused lines of credit; assets pledged as collateral for the debt; and terms specified in debt agreements related to significant events of default with finance-related consequences, significant termination events with finance-related consequences, and significant subjective acceleration clauses. The requirements of this Statement are effective for financial statements for periods beginning after June 15, 2018. Earlier application is encouraged. The City doesn’t believe this statement will have a significant impact on the City’s financial statements. 214 Page | 3 1475 Saratoga Ave, Suite 180, San Jose, CA 95129 Tel: 408-217-8749 • E-Fax: 408-872-4159 info@cnallp.com • www.cnallp.com GASB Statement No. 89, Accounting for Interest Cost Incurred Before the End of the a Construction Period. - This Statement addresses interest costs incurred before the end of a construction period be recognized as an expense in the period in which the cost is incurred for financial statements prepared using the economic resources measurement focus. As a result, interest cost incurred before the end of a construction period will not be included in the historical cost of a capital asset reported in a business-type activity or enterprise fund. The requirements of this Statement are effective for financial statements for periods beginning after December 15, 2019. Earlier application is encouraged. The City doesn’t believe this statement will have a significant impact on the City’s financial statements. Purpose of Communication The purpose of this communication, which is an integral part of our audit, is to describe, for management and those charged with governance, the scope of our testing of internal control and the results of that testing, and communicate additional information that may be relevant to future City decision making. Accordingly, this communication is not intended to be and should not be used for any other purpose. November 12, 2018 San Jose, California 215 Net Total Expenditures/ Functional Total (Excess) Revenues Expenditures Revenues Functional Revenues and Expenditures1 General Government 271,946$ 4,416,579$ (4,144,633)$ Public Safety 411,332 5,705,157 (5,293,825) Transportation 2,307,478 6,076,982 (3,769,504) Community Development 3,286,307 3,495,226 (208,919) Health 211,088 756,377 (545,289) Culture & Leisure 1,807,819 5,058,055 (3,250,236) Total 8,295,970$ 25,508,376$ (17,212,406)$ General Revenues1 Taxes 17,552,355$ Licenses and Permits 11,275 Revenue from Use of Money & Property 329,360 Intergovernmental - State 58,194 Other Revenue 133,451 Total General Revenues 18,084,635$ Excess/(Deficiency) of Internal Service Charges over Expenses 250,395 Excess/(Deficiency) of Revenue over Net Expenditures 1,122,624 Beginning Fund Balance 21,789,699 Adjustments: Prior period adjustment - Ending Fund Balance 22,912,323$ 1The Consolidated Statement of Revenues, Expenditures, and Change in Fund Balance is required to be submitted to the State Controller's Office annually. The term "General Revenues" are those revenues of the city that cannot be associated with a specific expenditure function. "Functional Revenues" are those revenues that can be associated with and allocated to one or more expenditure functions. General Revenues Attachment G Consolidated Statement of Revenues, Expenditures, and Changes in Fund Balance All Government Funds For the Year Ended June 30, 2018 (Audited) Functional Revenues and Expenditures 216 SARATOGA CITY COUNCIL MEETING DATE:December 5, 2018 DEPARTMENT:City Attorney PREPARED BY:Richard Taylor, City Attorney SUBJECT:Annual Code Update for 2018 RECOMMENDED ACTION: Waive the second reading and adopt the attached ordinance updating various provisions of the City Code. DISCUSSION: At its November 21, 2018 meeting, the City Council conducted a public hearing on the attached ordinance regarding the annual code update. The City Council waived the first reading and introduced the ordinance at the meeting and directed that the ordinance be placed on the consent calendar for approval at the next regular meeting. ATTACHMENTS: Attachment 1 –Annual Code Update Ordinance 1064863.1 217 ORDINANCE NO. _____ ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SARATOGA AMENDING CITY CODE ARTICLES 7-15 (WEED ABATEMENT);7-20 (DANGEROUS DOGS); 10- 15, -20 (ENCROACHMENTS ON CITY PROPERTY); 15-15 (AP/OS: AGRICULTURAL PRESERVE OVERLAY DISTRICT); AND SECTIONS 2-05.030 (ADMINISTRATIVE APPEALS); 2-10.10 (COUNCIL MEETING DATES); 2-15.040 (PLANNING COMMISSION MEETING DATES); 15-06.21 (DEFINITION OF FENCE); 15-06.280 (DEFINITION OF FLOOR AREA); 15-06.825 (DEFINITION OF WINERY); 15-12.030 (CONDITIONAL USES IN R-1 SINGLE FAMILY RESIDENTIAL DISTRICT); 15- 29.010 (SWIMMING POOL FENCES); 15-50.020(P) (NATIVE TREE DEFINITIONS); AND 17-05.010 (CONSTRUCTION DEBRIS RECYCLING). The City Council of the City of Saratoga finds that: 1. The City Code of the City of Saratoga requires periodic updates to reflects changes in law, provide clarification to the community, and provide for improved customer service and administration of City business. 2. The City Council referred the amendments to Saratoga Municipal Code Chapters 7 and 15 in this ordinance to the Planning Commission and the Planning Commission held a hearing on those amendments on September 26 and November 14, 2018. Following consideration of all testimony and written materials, the Planning on November 14 2018 recommended that the City Council adopt the amendments to Chapter 15 set forth herein. 3. The City Council of the City of Saratoga held a duly noticed public hearing on November 21, 2018, and after considering all testimony and written materials provided in connection with that hearing introduced this ordinance and waived the reading thereof. Therefore, the City Council of the City of Saratoga hereby ordains as follows: Section 1.Adoption. The Saratoga City Code is hereby amended as set forth in Exhibit A. Section 2.Severance Clause. The City Council declares that each section, sub-section, paragraph, sub-paragraph, sentence, clause and phrase of this ordinance is severable and independent of every other section, sub-section, paragraph, sub-paragraph, sentence, clause and phrase of this ordinance. If any section, sub-section, paragraph, sub-paragraph, sentence, clause or phrase of this ordinance is held invalid, the City Council declares that it would have adopted the remaining provisions of this ordinance irrespective of the portion held invalid, and further declares its express intent that the remaining portions of this ordinance should remain in effect after the invalid portion has been eliminated. Section 3. California Environmental Quality Act 218 The proposed amendments and additions to the City Code are Categorically Exempt from the California Environmental Quality Act (CEQA) pursuant to CEQA Guideline section 15061(b)(3). CEQA applies only to projects which have the potential of causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA. In this circumstance the amendments to the existing City Code and related sections and additions of provisions and reference appendices to the existing Code; the amendments and additions would have a de minimis impact on the environment. Section 4. Publication. A summary of this ordinance shall be published in a newspaper of general circulation of the City of Saratoga within fifteen days after its adoption. Following a duly noticed public hearing the foregoing ordinance was introduced at the regular meeting of the City Council of the City of Saratoga held on the21stday of November, 2018and was adopted by the following vote on December 5, 2018. COUNCIL MEMBERS: AYES: NOES: ABSENT: ABSTAIN: SIGNED: Mary-Lynne Bernald MAYOR, CITY OF SARATOGA, CALIFORNIA ATTEST: DATE: Debbie Bretschneider INTERIM CITY CLERK APPROVED AS TO FORM: DATE: Richard Taylor, CITY ATTORNEY 219 2018 Annual Code Update - Page 3 Exhibit A - 2018 Saratoga Municipal Code Update The provisions of the Saratoga Municipal Code set forth below are amended or adopted as follows: Text added to existing provisions is shown in bold double-underlined text (example) and text to be deleted in shown in strikethrough (example). Text in italics is explanatory and is not an amendment to the Code except in cases where it directs renumbering of subsections not otherwise amended. 1.Administration 2-05.030 – Administrative Appeals (a) Right to appeal. Except where an appeals procedure is otherwise specifically set forth in this Code, any interested person objecting to the whole or any portion of an administrative determination or decision made by a commission, committee or an official of the City, where such determination or decision involves the exercise of administrative discretion or personal judgment pursuant to any of the provisions of this Code, may appeal to the City Council by filing with the City Clerk a notice of appeal clearly identifying the determination or decision from which the appeal is taken and stating the grounds for the appeal. Decisions pertaining to implementation of the California Environmental Quality Act may be appealed only in accordance with the Local CEQA Guidelines of the City of Saratoga. A The notice of appeal shall be accompanied by the payment of a filing fee in such amount as established from time to time by resolution of the City Council. [No changes to subsections (b) through (i).] 2-10.010 - Regular meetings. The regular meetings of the City Council shall be held on the first and third Wednesdays of each month except for the first Wednesday of January unless such day is a holiday, in which case the meeting may be held on such business day as designated by the City Council or the meeting may be cancelled. The time of such meeting shall be 7:00 P.M., provided, however, that the City Council may meet in closed session or with Commissions and community groups, and conduct study sessions as part of the regular meeting prior to 7:00 P.M. The place shall be at City Hall in the Saratoga City Council Chambers at 13777 Fruitvale Avenue, Saratoga, California unless otherwise specified on the agenda for the meeting. Any regular meeting may be rescheduled or cancelled by action of the City Council at a regular or special meeting preceding the meeting to be rescheduled or cancelled. 2-15.040 - Regular meetings. The regular meetings of the Planning Commission shall be held on the second and fourthWednesday of each month unless such day is a holiday, in which case the meeting may be held on such business day as designated by the Planning Commission or the meeting may be cancelled. The time of such 220 2018 Annual Code Update - Page 4 meeting shall be 7:00 P.M., subject to modificationby the Planning Commission, and the place shall be at City Hall in the Saratoga City Council Chambers. Any regular meeting may be cancelled by the Planning Commission upon announcement of such cancellation at the regular meeting preceding the meeting to be cancelled. 2. Weed Abatement 7-15 – Weed and Rubbish Abatement 7-15.010 - Authority for Article. This Article is adopted pursuant to Sections 39501 and 39502 of the Government Code. It is intended as an alternative to the procedure set forth in Article 2 of Chapter 13, Division 3 of Title 4 of the Government Code (commencing with Section 39560). The City may proceed under this Article or said Article 2 of the Government Code, or both. All references to actions by the City Manager or the City herein also include, respectively, the Manager’s and City’s designees. 7-15.020 - Delegation of enforcement authority to County; Enforcement Officer defined. (a) Except as otherwise expressly provided in this Article, the duty and authority to enforce the provisions of this Article are hereby delegated to the County, to be performed in accordance with the terms of such contract for weed abatement services as may be executed from time to time between the City and the County. In the event such contract is terminated, the delegation of authority granted herein shall automatically expire. (b) The term "Enforcement Officer," as used in this Article, means the person or persons duly authorized by the County to administer and enforce the provisions of this Article. If the County at any time ceases to render weed abatement services for the City, the Enforcement Officer shall be such person as designated by the City Council. 7-15.030 020 - "Weeds" defined. The term "weeds," as used in this Article, shall include, without limitation, any of the following: (a) Weeds which bear seeds of a downy or wingy nature; (b) Sagebrush, chaparral, and any other brush or weeds which attain such large growth as to become, when dry, a fire menace; (c) Weeds which are otherwise noxious or dangerous; (d) Poison oak and poison ivy when the conditions of growth are such as to constitute a menace to the public health; (e) Dry grass, stubble, brush, litter, or other flammable material which endangers the public safety by creating a fire hazard. 221 2018 Annual Code Update - Page 5 7-15.040 030 - Public nuisance and abatement requirements. Each of the following are hereby declared to be a public nuisance and shall be abated by the owner of the property, who is hereby required to remove or destroy such weeds, rubbish, refuse, dirt, obstructions and any other dangerous materials, as hereafter described, from his or her property, and from the abutting street or streets adjoining such property within the extended lot lines thereof, to the centerline of such street or streets: (a) All weeds, rubbish, refuse, dirt or other obstructions located or growing on the right-of- way of any public street or street offered for dedication to the public, and any sidewalk, curb, gutter, parkway, driveway, private road or right-of-way furnishing access to any building or structure, or alley within the City; (b) Except as set forth in subparagraph (c) of this Section below, all All weeds, rubbish, refuse, and other materials dangerous to neighboring property or the health or welfare of residents in the vicinity, which are growing or located within one hundred feet of any building, fence, structure or property line , regardless of whether or not the same be growing or located on the same lot, site or parcel on which the building, fence or other structure is located, in all zoning districts in the City except as set forth in Paragraph (c) of this Section. (c) In an A, HR, R-OS HC-RD, NHR or R-1-40,000 zoning district in the City, all weeds, rubbish and refuse which are growing or located on any unsubdivided lands, or on any site or parcel of land of an area parcel or parcels in excess of one acre in single ownership, which are within one hundred feet of any building or structure, or within thirty feet of any right-of-way line of a public street or within thirty feet of the property line of the parcel(s), site, or lot in question. In addition, on any parcel or parcels in excess of five acres in single ownership, there shall be established 30 foot fuel breaks cleared of flammable violation dividing the parcel or parcels into segments of five acres or less. It is the intention of this provision to permit the retention of natural growth on larger parcels of land in the lesser developed areas of the City, but at the same time, to provide reasonable regulations for the prevention of sweeping fires in such areas. 7-15.050 040 - Declaration of nuisance and order to abate; public hearing by City Council. (a) The Enforcement Officer City Manager shall furnish annually to the City Council a report of those properties on which any weeds, rubbish, refuse, dirt, obstructions or other dangerous materials have been found to exist in violation of this Article. The City Council shall review such report at a public hearing and upon the close of the public hearing make any changes therein it deems necessary or proper and. Upon approval of the report as submitted or modified, the City Council shall, by resolution, declare a public nuisance to exist upon the properties described in the report and order abatement of the nuisance. 7-15.060 - Notice to abate; public hearing by City Council. 222 2018 Annual Code Update - Page 6 (ab) At least 10 calendar days prior to the public hearing, Tthe Enforcement Officer City Manager shall send to the owner of each property on which a nuisance has been found declared by the City Council to exist, at his the owner’s address as shown on the latest available equalized assessment roll, a notice to informing the owner of the nuisance and directing abatement abate such of the nuisance within the time specified in the notice which shall be not less than thirty 10 days after the date on which the notice is mailed. A copy of the notice shall also be published once in a newspaper having general circulation in the City and posted at a conspicuous location in City Hall. The notice to abate shall also advise the property owner of the following: (1) The date, time, location of the City Council public hearing; (2) That upon failure by the owner to abate the nuisance within the specified time, the property will be declared a public nuisance and the weeds, rubbish, or other materials will be removed by the County City; (23) That all fees and abatement costs incurred by the County, together with an administrative fee in the amount set forth in the notice, shall be charged to the owner; (34) That nonpayment of the fees and abatement costs and the administrative fee will result in the same being levied as a special assessment against the property, to be collected at the same time and in the same manner as ordinary real estate taxes; (4) That any person objecting to the declaration of nuisance or the proposed abatement thereof may present such objections at a the public hearing to be conducted by the City Council at the time and place indicated in the notice. (b c) The City Council shall conduct a public hearing on the proposed nuisance declaration and abatement order at the time and place designated in the notice and shall hear and determine consider any objections by the owners of properties on which a nuisance has been found. The City Council shall make any changes in the declaration and order it deems necessary or proper, after which the Council shall by resolution confirm the declaration and order as submitted or modified.declared to exist. The Council may sustain or overrule such objections and shall notify both the owner and the Enforcement Officer of its decision within ten days after the conclusion of the public hearing. The decision by the Council shall be final. 7-15.070 050 - Abatement by County. Upon any failure by the property owner to remove or abate the a nuisance listed in the declaration and order within the time specified in the notice given pursuant to Subsection 7- 15.05060(a), and provided the declaration of nuisance and order to abate the same has not been rescinded by the City Council at the hearing conducted pursuant to Subsection 7-15.060(b), the City Manager Enforcement Officer shall, without further order or notice, cause the nuisance to be abated, and for such purpose, the Enforcement Officer City and his its agents, employees and contractors are authorized to enter upon the property where such nuisance exists. Nothing herein 223 2018 Annual Code Update - Page 7 shall prevent the property owner from himself abating such nuisance, so long as all weeds, rubbish, refuse, dirt, obstructions and dangerous materials have been completely removed or destroyed prior to the arrival of the Enforcement Officer or his representatives City’s designees to remove the same. 7-15.080 060 - Account of costs and billing. The Enforcement Officer City shall keep an account of fees and the costs of abating such nuisance upon each separate lot or parcel of land and shall send a bill for the same, including the administrative fee, to the property owner by mail, to the address or addresses to which the original notice of abatement had previously been sent, which bill shall specify on the face thereof that, in the event of the failure of the full payment of the same within fifteen thirty days from date of mailing, the amounts set forth in such bill, together with administration costs, will become a lien against the land and shall constitute a special assessment and be collected at the same time and in the same manner as general municipal taxes of the City, and a hearing on such assessment and any objections thereto will be held by the City Council at the time and place indicated in the billing, and that no other or further notice will be given of such assessment and hearing other than as set forth on the face of the billing. 7-15.090 070 - Assessment report and hearing. The Enforcement Officer shall submit a The City Manager shall submit a report to the City Council of all unpaid bills for weed abatement costs and fees expenses and administration costs, and a list of the parcels to be assessed for the such expenses and costs and fees. The Council shall conduct a public hearing on the report, at which time any property owner may object to any matter contained in the report. No notice need be given of such hearing other than the notice contained in the billing previously sent to the property owner in accordance with Section 7- 15.080060. The City Council shall review the report, hear and determine any objections thereto, and make any changes therein it deems necessary or proper, after which the Council shall by resolution confirm the report and assessment as submitted or modified. The decision by the Council shall be final. 7-15.100 080 - Levy and collection of special assessment. The cost of abating the nuisance upon the property described in the Enforcement Officer's assessment report, together with the administrative applicable fees thereon, as finally confirmed by the City Council, shall constitute a special assessment against each respective lot or parcel of land, and after thus made and confirmed, shall constitute a lien on such property for the amount of such assessment until paid. A certified copy of the assessment shall be filed with the County Tax Collector, who shall enter the amounts of such assessments against the respective lots or parcels of land on the County tax roll upon which general municipal taxes are to be collected, and the amount of each such assessment shall be collected at the same time and in the same manner as ordinary municipal taxes, and shall be subject to the same interest and penalties, and the same procedures for sale in case of delinquency. All laws and ordinances heretofore or hereafter made applicable to the levy, collection and enforcement of City taxes are hereby made applicable to such special assessments. 224 2018 Annual Code Update - Page 8 7-15.110 090 - Summary abatement. Nothing contained in this Article shall prevent the Enforcement Officer City from abating any weed or rubbish nuisance summarily, without notice to the property owner, pursuant to Article 3- 20 of this Code where an immediate hazard to the public health, safety or welfare is found by the Enforcement Officer to exist upon any real property in the City. In such event, the collection of abatement costs and levy of the same as a special assessment shall be conducted in accordance with the procedure set forth in Article 3-20 of this Code. 7-15.120 100 - Violations of Article; penalties. The violation of any provision contained in this Article shall constitute an infraction, subject to the penalties as set forth in Chapter 3 of this Code. 3. Dangerous Dogs Regulations 7-20.110 – Impoundment. [No changes in subsections (a) through (f)] (g) Disposition of impounded animal. Any animal impounded and not (1) redeemed or (2) subject to a request for a hearing pursuant to Section 3-10.050 of the City Code appealing a decision that the animal may not be redeemed, within the state-mandated holding period and in the manner specified in this Article may be disposed of by the Animal Control Officer or the shelter where such animal is confined; provided, however, any animal that has been determined by a veterinarian licensed by the State or other qualified person to be diseased or injured to the extent that emergency veterinary care will not alleviate its suffering shall be destroyed in a humane manner as soon as possible, and in such event, the Animal Control Officer shall not be required to give the notice described in subsection (b) of this Section. An animal in good health and temperament shall be made available for adoption or release to a humane society or other society incorporated and organized for the prevention of cruelty to animals qualifying under Corporations Code Section 14500 and following and deemed satisfactory by the Animal Control Officer in his or her sole discretion. [No changes in subsection (h).] 7-20.120 - Hearings. (a) Request for hearing on determinations pursuant to this Article.regarding impounded animal.Except where notice is not required to be given to an owner under any provision in this Article, any owner of an animal that is the subject of an order or determination pursuant to this Article, or any Any owner of an impounded animal who wishes to challenge a determination that an impounded animal may not be redeemed or the conditions imposed on redemption, may file an appealby shallpersonally delivering or mailing a written request for a hearing and the required 225 2018 Annual Code Update - Page 9 appeal fee to the Saratoga City Clerk pursuant to Section 3-10.050 of the City Code. Failure to file with the City Clerk a written request for a hearing pursuant to Section 3-10.050 of the City Code within the state-mandated holding periodwill forfeit all rights of ownership and control of the animal to the City of Saratoga, notwithstanding any other appeal period set forth in this Code. Upon such forfeiture, the Animal Control Officer shall determine the final disposition of the impounded animal in accordance with the law. (b) Request for hearing on other determinations pursuant to this Article. Any owner of an animal that is the subject of an order or determination pursuant to this Article other than those described in subsection (a), above, may appeal such order or determination by personally delivering or mailinga written request for a hearing within the time period required by Section 3-10.050 of the City Code. [Subsections (c) through (f) shall be renumbered as (b) through (e) respectively.] 7-20.145 – Dangerous Dogs. [No changes in subsections (a) and (b).] (c)Registration and Tagging Requirement. Once the Dangerous Dog determination has been made by the Animal Control Officer, the owner(s) shall be required to register such dog with San Jose Animal Control Care & Services (SJACS) and SJACS shall issue a metal tag identifying the dangerous dog. Each dog shall be required to wear the tag at all times. (d)Notification Requirement. After a dangerous dog determination has been made by the Animal Control Officer, a one-time notification shall be made to neighbors residing or owning property within five hundred (500’) of the boundaries of the property at which the dangerous dog is located. (ce) Dangerous dog maintenance requirements. [No changes in subdivisions (1) through (5).] (6) Behavior modification.Within thirty (30) days from the date of the Dangerous Dog designation, the The owner of the dangerous dog shall register for and participate in obedience training or other training or treatment by an animal behaviorist or trainer that is pre-approved by the Animal Control Officer. No more than six (6) months from the date of the Dangerous Dog designation, the owner of the dog shall provide the Animal Control Officer with documentation of completion of such training or treatment. An extension of up to six (6) months for completing the training or treatment may be granted by the Animal Control Officer.be required to consult with and retain an animal behaviorist or trainer to make reasonable effort to modify and correct the dog's behavior to prevent future incidents of dangerous behavior. [No changes in subdivision (7).] 226 2018 Annual Code Update - Page 10 (df) Requirement for inspection. The Animal Control Officer shall conduct annual home inspections every six (6) months for the duration of the 36-month dangerous dog designation,to determine compliance with the requirements for dangerous dog maintenance. The inspection shall be subject to any fee for such inspection set forth in the schedule of fees adopted by resolution of the City Council. [Subsections (e) through (g) are renumbered (g) through (i) respectively.] 4.Repeal of Article 10-15 (Pipes, Drains and Conduits Along, Under or Across Streets) 10-15 – Pipes, drains and conduits along, under or across streets 10-15.010 - Permit required. (a) No person or agency, whether public or private, shall construct or install any pipe, drain or conduit along, under or across any street, road or highway in the City or make any excavation or cut therein for such purpose without first obtaining a permit to do so from the Maintenance Director in the manner provided in this Article. (b) The provisions of this Article shall apply to all public utilities, including, but not limited to, any company providing water, electricity, gas or telephone service. 10-15.020 - Application for permit; deposit to performance of work. (a) Any person or agency, whether public or private, desiring to construct or install any pipe, drain or conduit along, under or across any street, road or highway in the City shall file an application for a permit with the Maintenance Director on such form as he may prescribe. The application shall be accompanied by the payment of a filing fee in such amount as established from time to time by resolution of the City Council. (b) As a condition for issuance of a permit, the Maintenance Director shall require the posting of a cash or surety bond payable to the City or other security satisfactory to the Director in an amount which, in the opinion of the Director, will be sufficient to cover the total cost of the contemplated work. Notwithstanding the foregoing, the Maintenance Director may, in his discretion, waive the requirement of a bond, letter of credit or other security set forth herein where the pipe, drain or conduit will be constructed or installed by a public agency or public utility corporation. 10-15.030 - Compliance with specifications. Each pipe, drain or conduit along, under or across any street, road, or highway in the City shall be constructed or installed and such street, road or highway shall be restored in the manner specified in this Article. All such work shall be performed under the supervision and to the satisfaction of the Maintenance Director. 10-15.040 - Excavation requirements. 227 2018 Annual Code Update - Page 11 (a) Excavation of trenches adjacent to the existing pavement shall be conducted on one side of the pavement at a time. No excavation shall be started on the opposite side until the trench first excavated has been filled, compacted and surfaced as required in this Article. (b) No more trenches shall be opened than can be properly and completely backfilled in one day. No more than seven hundred feet of trench shall be open at any time on any project, unless otherwise authorized by the Maintenance Director. (c) One traffic lane shall be kept open and in safe condition at all times. Adequate warning and regulatory signs and other safety measures shall be taken at all times to protect the public who may be present in the area where work is being performed. Complete closure of all traffic lanes may be made at the discretion of and in accordance with plans for detours approved by the Maintenance Director. Twenty-four hours' advance notice shall be filed with the Maintenance Director and City communications departments, stating the road to be closed, the limits and approximate duration of closure. Such agencies shall also be notified immediately upon reopening of the road. (d) The Maintenance Director shall be supplied at all times with the names and telephone numbers of at least two persons in charge of or responsible for the work subject to the permit who can be reached for emergency work twenty-four hours a day, seven days a week. (e) Written permission from the Maintenance Director shall be required for excavations made between November first and March first. (f) The Maintenance Director shall be notified at least forty-eight hours prior to the commencement of any excavation work along, under or across any street, road or highway in the City. 10-15.050 - Backfill requirements. (a) Backfill in all trenches shall be made by mechanical tamping or jetting, as specified by the Maintenance Director. Compaction shall be attained by any type of mechanical tamper capable of meeting the compaction requirements. Backfill shall be compacted in lifts of a thickness designated by the Maintenance Director and dependent upon the type of soil and mechanical tamper used. A relative compaction of ninety percent shall be obtained on all backfill below two feet of finished grade. A relative compaction of ninety-five percent shall be required in the top two feet of trench within the roadway section. Relative compaction shall be based on the "Five Layer Method" as outlined in the State standard specifications. (b) No jetting shall be allowed within two feet of the surface. Untreated base material conforming to the current State standard specifications, except as modified under the untreated base requirements set forth in Section 10-15.070, shall be placed along the entire trench section with a minimum thickness of twelve inches. (c) The City reserves the right to make as many compaction tests as it deems necessary in order to meet compaction requirements. The costs of such tests shall be borne by the person performing the excavation in, along and across the highway. Prior to laying the armor coat or plant mix surfacing 228 2018 Annual Code Update - Page 12 pavement, as the case may be, a tack coat of SC-1 road oil shall be applied to the surface of the existing trench prior to paving, the rate of applicationto be determined by the Maintenance Director. An asphaltic emulsion tack coat may be substituted for the SC-1 road oil at the discretion of the Director. (d) On completion of the backfill and prior to placing the pavement in the trench section, the pavement adjacent to the work shall be thoroughly cleaned to the satisfaction of the Maintenance Director. A power broom shall be used if so required by the Director. 10-15.060 - Restoration of pavement. (a) Where it is necessary to remove existing high type classes of pavement, such as Portland cement concrete, asphaltic concrete, plant mix surfacing or oil macadam, such pavement shall be restored to its condition as to line, grade, type and depth as existed prior to excavation. Hot plant mix surfacing pavement conforming to the current requirements of the State standard specifications may be substituted for existing asphaltic concrete, plant mix surfacing or oil macadam pavement. The type of plant mix surfacing shall be determined by the Maintenance Director. (b) When a satisfactory permanent repavement of an excavation cannot be made, the Maintenance Director shall require a temporary pavement consisting of thirteen inches of compacted untreated base material and two inches of cold plant mix surfacing meeting the surface of existing pavement and sealed with asphaltic emulsion seal coat. The temporary type of pavement is to remain in place and shall be maintained until compaction requirements can be met. The temporary pavement shall then be removed to a minimum depth of three inches below the existing surface, and the pavement replaced with three inches of hot plant mix surfacing, the surfacing to be feathered out over the existing pavement to prevent surface water from entering the excavated trench section. The extent of the feathered section shall be determined by the Maintenance Director. The pavement surface shall then be sealed with asphaltic emulsion seal coat. Where the depth of the existing higher type classes of pavement exceeds three inches in thickness, and where the existing imported base material exceeds twelve inches in thickness, the depth shall be restored in kind, with untreated base material and hot plant mix surfacing. Existing Portland cement concrete pavement shall be restored in kindin all cases where Portland cement concrete pavement now exists. (c) Roads and highways consisting of existing single and double seal coat or armor coat type of pavement will require a temporary pavement restoration consisting of twelve inches (compacted) of untreated base material and an application of single seal coat using one-half inch No. 4 crushed screenings. Depending on weather conditions, two inches of cold plant mix surfacing may be substituted for a temporary single seal pavement. After a period of from sixty to ninety days, a permanent pavement of single seal coat placed over the temporary single seal coat pavement, conforming to the current requirements of the State standard specifications shall be applied to the surface, the extent of such pavement overlapping the existing trench to be determined by the Maintenance Director. Only crushed granite screenings or equivalent shall be used in all temporary and permanent pavement restoration. A double seal coat may be applied immediately if trench compaction meets the requirements of this Article. 229 2018 Annual Code Update - Page 13 (d) When a single operation, consisting of crossing the pavement (not confined to a continuous project parallel to and following the general alignment of the road) is proposed on roads of high classification, it shall be necessary to bore pipe or jack a casing enclosing the pipe underneath the pavement. If it is proved to the satisfaction of the Maintenance Director that it is not feasible or practical to jack or bore underneath the pavement, the pavement may be cut and restored with twelve inches of compacted untreated base material, six inches of Class "A" concrete keyed five inches outside the edge of the trench on each side and followed by three inches of hot plant mix surfacing and sealed with asphaltic emulsion seal coat. Excavations may be backfilled with sand and pavement replaced in kind when specifically authorized by the Maintenance Director. 10-15.070 - Untreated base requirements. Untreated base shall be placed in all trench excavations accessible to vehicular traffic. Untreated base material shall conform to current State standard specifications, except that one and one-half inch maximum size aggregate shall comply with the following standards: (a) R-Value ..... 68 minimum (b) Sand equivalent ..... 30 minimum -or- Sand equivalent ..... 25 minimum and plasticity index 6 maximum or plasticity index times percent passing #200 sieve, not to exceed 75 with a P.I. of 7.5 maximum. 10-15.080 - Field inspections. (a) Prior to the issuance of any permit under this Article, the Maintenance Director may conduct a field inspection or require that a field inspection report be submitted by the applicant containing such information as the Director may specify. (b) During the course of the work and following completion thereof, the Maintenance Director may conduct such inspections as he deems necessary or appropriate. (c) The cost of all field inspections performed by or on behalf of the City and the preparation of any inspection reports shall be paid by the applicant. 10-15.090 - Miscellaneous requirements. (a) Property owners shall be protected from any damage to property and dust nuisance. A water wagon shall be made available on demand of the Maintenance Director. (b) No work shall be deemed completed until final written approval thereof is issued by the Maintenance Director. (c) The permittee shall indemnify, defend and hold the City and its officers, officials, boards, commissions, employees and volunteers harmless from and against any and all claims, demands, actions, expenses or liabilities arising out of or in any manner relating to the excavation, construction 230 2018 Annual Code Update - Page 14 or restoration activity conducted by the permittee or any failure by the permittee to comply with any terms or conditions of the permit or any provisions of this Article. (d) As a condition for the issuance and continuation of a permit, the permittee shall furnish to the City, at the permittee's own cost and expense, a policy or policies of liability and other insurance coverage as may be required under the applicable insurance standards of the City, as established from time to time by resolution of the City Council. Such policy or policies shall be maintained in full force and effect in accordance with said insurance standards for as long as the permit remains issued and outstanding. Notwithstanding the foregoing, the Maintenance Director may waive the requirement of a liability insurance policy where the permit is issued to a public agency or public utility corporation. (e) The Maintenance Director shall require the permittee to guaranty that all construction, installation and restoration work performed under the permit shall be free of defects in material or workmanship for a period of one year from the date of final approval by the City. 10-15.100 - Correction of deficiencies; emergency. (a) In the event of any failure by the permittee to perform and complete all work in accordance with the plans and specifications approved by the Maintenance Director and in accordance with the provisions of this Article and any conditions as may be contained in the permit, such deficiencies shall be corrected within ten days after written notice from the Maintenance Director to do so. If all deficiencies are not corrected within ten days, or such additional period of time as may be granted by the Maintenance Director in his sole discretion, the Maintenance Director may perform the corrective work, or cause the same to be performed, and all costs and expenses as may be incurred in connection therewith shall be the obligation of the permittee and shall be paid to the City immediately upon demand. The Maintenance Director may resort to any security deposited with the City pursuant to Subsection 10-15.020(b) for the payment of such costs. (b) The Maintenance Director may, without prior notice to the permittee, perform any emergency work requiring immediate attention which the permittee has failed or is unable to complete. The costs of such work shall be the obligation of the permittee. 10-15.110 - Removal or relocation of existing facilities. (a) Whenever, by reason of any construction, reconstruction or repair work being conducted by the City upon any street, road, highway or other public property, a removal or relocation of any pipe, drain or conduit is required, the person or agency, whether public or private, who owns or maintains such pipe, drain or conduit shall cause such removal or relocation to be made without expense to the City. Any such removal or relocation shall be subject to the permit and other requirements of this Article. This Section is specifically intended to include, without in any way limiting the same, all drainage, flood control, sanitary, sanitation, sewer, public service and water districts, all public utilities and all persons or agencies operating pursuant to any franchise granted by the City. (b) Within thirty days after written notice by the City to any person or agency required by this Section to remove or relocatesuch facilities, such person or agency shall obtain the necessary permit 231 2018 Annual Code Update - Page 15 under this Article and commence the removal or relocation of such facilities and diligently proceed to complete the same, and in default thereof, the City may cause the work of removal or relocation to be done, and the cost and expense thereof to the City shall be a charge against the person or agency so defaulting, collectible in a civil suit in the name of the City. 5. Redraft of Article 10-20 - Encroachments on City Property Article 10-20 - Encroachments 10-20.010 - Definitions. For the purposes of this Article, the following words and phrases shall have the meaning respectively ascribed to them in this Section: (a) Encroachment means any excavation,structure, object or improvement of any kind or character whatsoever, placed, erected or constructed, either in, under or over any public street, including, without limiting the foregoing, any pipe, drain or conduit under or across any street, road or highway, or any advertising sign or device on or extending over any part of a public street. (b) Public street means all or any part of the entire width of right of way of a public street in the City or of any unaccepted street offered for dedication to the City, whether or not such entire area is actually used or improved for street purposes. (c)Person means any natural person or other entity with capacity to take action recognized by law including, but not limited to, an agency, public utility, firm, association, organization, partnership, trust, corporation or company. 10-20.020 - Unauthorized encroachments; declaration of public nuisance. (a) No excavation or encroachment shall be created, erected, constructed, placed or permitted to remain contrary to the provisions of this Article or any other provision of this Code. The existence of any such encroachment is hereby declared to constitute a public nuisance. (b) Any person causing, creating, erecting, constructing, placing or permitting an excavation or encroachment contrary to the provisions of this Article or any other provision of this Code shall be guilty of an infraction. Such person shall remove or abate the encroachment at his sole expense within ten days after a notice or citationfrom the City to do so. If the encroachment is not removed, it may be removed or otherwise abated by the City in accordance with the procedures set forth in Chapter 3 of this Code. 10-20.030 - Conformity with standards. All permitted encroachments under this Article shall be constructed or maintained to the standards and specifications as established by the City Engineer. 232 2018 Annual Code Update - Page 16 10-20.040 - Maintenance and repair. Unless otherwise specifically set forth in the permit issued under this Article, each permitted encroachment shall be kept in maintenance and repair by the permittee at his sole cost and expense. Upon the failure of the permittee to maintain or repair an encroachment after ten days' written notice to do so from the City, such permit shall automatically be revoked without notice, and the provisions of Section 10-20.020 shall otherwise be applicable thereto. If, however, in the opinion of the Maintenance Director, it is for the better interest of the City to maintain such encroachment rather than to remove or abate it, the cost of maintenance shall be a covered liability under the permittee's bond. 10-20.050 - Permit required. Except as provided in Section 10-20.04060, no person shall do or cause to be done any of the following acts without first obtaining a written permit therefor from the City: (a) Make any opening or excavation for any purpose Causing, creating, erecting, constructing, placing or permitting an encroachment on a public street. (b) Place, erect or construct any encroachment in or on a public street. (c) Permit the continuation thereof, perpetuate, change,or renew any encroachment presently existing on a public street, which encroachment does not have a permit therefor in accord with the terms of this Article or any other provision of this Code or other ordinance of the City requiring permits. 10-20.04060 - Exceptions. (a) Where the encroachment consists of the construction or maintenance of any pipe, drain or conduit, or any cut or excavation therefor, the same, rather than being subject to the permit required under this Article, shall instead be subject to the permit and other requirements of Article 10-15. (b) No encroachment permit under this Article shall be required for any of the following: (1)(a)The installation of aboveground utilities for electricity, telephone or cable television service. (2)(b)The temporary storage of building equipment and materials, in conformity Article 16-15 of this Code.with the latest edition of the Uniform Building Code adopted by the City. (3)(c)The planting or placing of lawns, plants, shrubs, trees, temporary fences and other removable landscaping by the owner of the underlying fee within the unimproved portions of a street right of way but to the rear of any curb and gutter. Such landscaping shall be at the risk of the contiguousowner and shall be removed by such owner from such right of way upon ten days' written notice from the City. Failure to so remove shall make the encroachment and the such contiguous owner subject to the provisions of Section 10-20.020. 233 2018 Annual Code Update - Page 17 (4)(d)Encroachments shown on a subdivision or parcel map or building site plan which are approved by the City Council as part of the final map or final building site approval. 10-20.05070 - Authority to issue permits. The Public Works Director City Engineeris authorized to issue encroachment permits pursuant to this Article. Encroachment permits are not a matter of right but are a matter of grace only. 10-20.06080 - Application for permit;fees;bonds. (a) Application for an encroachment permit shall be filed with the Public Works Director City Engineer, on such form as the Director hemay prescribe. The application shall be accompanied by the payment of a filing fee in such amount as established from time to time by resolution of the City Council. (b) The application shall be accompanied by the payment of a filing in the amount necessary for full recovery of the City’s actual costs, including without limitation, City staff time for processing, field marking, engineering, submittals, specifications, shop drawings, and inspection. All permit fees must be paid prior to the issuance of any encroachment permit. All applicable permit fees, including those for the issuance of a permit and for the benefit of maintaining an encroachment in the public right-of-way, shall be established by resolution of the City Council. (b)(c)As a condition for issuance of the permit, the applicant may be required to post a cash or surety bond payable to the City, conditioned on the proper compliance with all of the terms of the permit and this Article. The bond shall be in such amount as the Public Works Director City Engineer deems sufficient to cover the cost to complete and maintain the encroachment or to remove the same and restore the public right-of-way to its original condition, whichever cost is greater. (c) Encroachment permits are not a matter of right but are a matter of grace only. 10-20.070 - Additional conditions and requirements of permit. (a)The Public Works Director shall require the permittee exercise reasonable care in all work authorized under a permit, including designing, constructing, maintenance, operations, post-construction inspections, and best practices for stormwater management. All permits shall provide that nearby property owners be protected from any damage to property and dust nuisance. (b)An encroachment permit may contain such additional conditions as in the opinion of the Public Works Director appear reasonably necessary to insure proper installation, completion and maintenance of the encroachment and the protection of the public health, safety and welfare. 234 2018 Annual Code Update - Page 18 (c)The Public Works Director shall require the permittee to guaranty that all construction, installation and restoration work performed under a permit shall be free of defects in material or workmanship for a period of one year from the date of final approval by the City. The Director may, at the Director’s discretion, require that a final inspection be made to insure the work was conducted in compliance with the terms of the permit. 10-20.08090 - Indemnification of City; liability. (a) No encroachment permit shall be issued until the applicant has executed a written agreement in form and content approved by the City Attorney to defend, indemnify and hold the City and its officers, officials, boards, commissions, employees and volunteers harmless from and against any and all claims, demands, actions, expenses or liabilities arising or resulting from the doing or refraining from doing any act permitted by such permit, or the failure to comply with any terms or conditions of such permit, or arising or resulting in any manner from the erection or construction of such encroachment. (b) As a condition for the issuance and continuation of an encroachment permit, the Public Works Director will City Engineer mayrequire the applicant to furnish, at the applicant's own cost and expense, a policy of liability insurance providing coverage in accordance with the applicable insurance standards of the City, as established from time to time by resolution of the City Council. Such insurance coverage shall be maintained in full force and effect in accordance with said insurance standards for as long as a the permit remains issued and outstanding. Notwithstanding the foregoing, the Public Works Director may waive the liability insurance requirement when the Director determines that the risks associated with the proposed encroachment are negligible. 10-20.090 - Permit effective date; commencement of work; expiration of permit. (a)The permittee must obtain all licenses and other permits and pay all required permit fees before an encroachment permit is effective; this includes any approval required under Chapter 15 of this Code. (b)An encroachment permit is null and void if work pursuant to the permit is not commenced within 180 days after the date the permit is issued. A permit may be extended or renewed through the Public Works Director assuming there have been no material changes in the circumstances in effect at the time the permit was issued. (c)Each permit shall specify its end date; permits that fail to do so shall have a default duration of one year from the date of issuance. Each permit shall be null and void after that date, or any extension thereof, unless a permit is terminated sooner by discontinuance of the use or removal of the encroachment for which a permit was issued. This subsection does not apply to permits for encroachments specified as continuing, which shall be considered to be of indeterminate duration. 10-20.100 - Conformity with specifications and standards. 235 2018 Annual Code Update - Page 19 All encroachments shall be constructed and maintained to the standards and specifications set forth in the permit. 10-20.100 - Additional conditions of permit. In addition to any conditions specifically required under the provisions of this Article, encroachment permits may contain such additional conditions as in the opinion of the City Engineer appear reasonably necessary to insure proper installation, completion and maintenance of the encroachment and the protection of the public health, safety and welfare. 10-20.110 - Field Inspections. (a) Prior to the issuance of any encroachment permit, the Public Works Director may conduct a field inspection or require that a field inspection report be submitted by the applicant containing such information as the Director may specify. (b) Following issuance of an encroachment permit and during the course of the work and following completion thereof, the Public Works Director may conduct or require the permittee to conduct such inspections as the Director deems necessary or appropriate to protect the public health, safety, and welfare. (c) The cost of all field inspections performed by or on behalf of the City and the preparation of any inspection reports shall be paid by the applicant/permittee. 10-20.110 - Revocation of permit; removal of encroachment. (a) Encroachment permits are revocable licenses, and may be revoked at any time on ten days' written notice from the City Engineer. (b) Upon revocation of an encroachment permit, the permittee shall remove such encroachment at his sole expense, and all the provisions of Section 10-20.020 shall become applicable to the permittee. 10-20.120 - Correction of deficiencies; emergency. (a) In the event of any failure by the permittee to perform and complete all work in accordance with the plans and specifications in the encroachment permit, such deficiencies shall be corrected within ten days after written notice from the Public Works Director to do so. If all deficiencies are not corrected within ten days, or such additional period of time as may be granted by the Public Works Director in the Director’s sole discretion, the City may perform the corrective work, or cause the same to be performed, and all costs and expenses as may be incurred in connection therewith shall be the obligation of the permittee and shall be paid to the City immediately upon demand. The Director may resort to any security deposited with the City pursuant to Subsection 10-20.060(c) for the payment of such costs. (b) The Public Works Director may, without prior notice to the permittee, perform any emergency work requiring immediate attention which the permittee has failed or is unable to 236 2018 Annual Code Update - Page 20 complete, including backfill and repaving work. The costs of such work shall be the obligation of the permittee. 10-20.130 - Maintenance and repair. Unless otherwise specifically set forth in the permit therefore, each encroachment shall be kept in maintenance and repair by the permittee at the permittee’s sole cost and expense. Upon the failure of the permittee to maintain or repair an encroachment after ten days' written notice to do so from the City, such permit shall automatically be revoked withoutfurther notice, and the provisions of Section 10-20.020 shall be applicable thereto. If, however, in the opinion of the Public Works Director, it is in the interest of the City to maintain such encroachment rather than to remove or abate it, the cost of maintenance shall be the responsibility of the permittee and a covered liability under the permittee's bond. 10-20.140 – Suspension or revocation of permit; removal or relocation of encroachment. (a) Any permit issued pursuant to this Article may be suspended or revoked by the Director of Public Works where it is found that: (1) The permittee has violated any provision of this Article, the encroachment permit, any other City permit, or any agreement entered into with the City related to a permit; or (2) The permittee has failed to pay any required fees, or to post or maintain any bond or insurance required by this Article; or (3) The encroachment for which a permit was granted adversely affects the safety, capacity or integrity of the City’s right-of-way; or (4) A material misrepresentation was made in the application for a permit; or (5) The relocation or removal of the encroachment is necessary to complete a City project. (b) Upon revocation of an encroachment permit, the permittee shall remove such encroachment at the permittee’s sole expense, and all the provisions of Section 10-20.020 shall become applicable to the permittee. 6.Zoning Regulation Definitions 15-06.261 - Fence. "Fence" means any structural device forming a physical barrier by means of glass, wood, masonry, metal, chain, brick, stake, plastic, concrete block, wrought iron, wire, or other similar materials.A a wall, other than a wall of a building or a retaining wall, is considered a fence. 15-06.280 - Floor area. 237 2018 Annual Code Update - Page 21 "Floor area" means the total enclosed, habitable or accessible floor space of all floors of a building where the interior height of the area is equal to or greater than five feet. The term "enclosed," as used in this Section, means a structure or area with a roof and with three or more walls, or an equivalent percentage of enclosure. The term "roof," as used in this Section, means a covering of any solid material over at least seventy-five percent of the area. Floor area is measured to the outside surfaces of exterior walls. In the case of a sloped ceiling or ground surface, the floor area shall be measured to the point at which the interior height is less than five feet. Pursuant to the foregoing, floor area may include halls, stairways, elevator shafts, ducts, service and mechanical equipment rooms, underfloor areas, porches, verandas and similar building elements, garages, attics, basements,crawl spaces and accessory structures. Floor area does not include interior courts, which are areas surrounded on all sides by habitable space but which do not have a roof, as defined in this Section. 15-06.725 – Winery. “Winery” means a commercial agricultural facility primarily used for the fermenting and processing of fruit juice into wine. Processing can include wholesale sales, crushing, fermenting, blending, aging, storage, bottling, administrative office functions for the winery and warehousing. Special events, retail sales and tasting rooms may be permitted as part of the winery operations. 7. Conditional Uses Reference 15-12.030 – Conditional uses. The following conditional uses may be allowed in the R-1 districts, upon the granting of a use permit pursuant to Article 15-55 or Article 15-56 of this Chapter: (a) Accessory structures and uses located on the same site as a conditional use. (b) Community facilities. (c) Institutional facilities. (d) Police and fire stations and other public buildings, structures and facilities. (e) Religious and charitable institutions. (f) Nursing homes and day care facilities, in excess of six persons being cared for at the facility. (g) Public utility and public service pumping stations, power stations, drainage ways and structures, storage tanks and transmission lines. 238 2018 Annual Code Update - Page 22 (h) Recreational courts, to be used solely by persons resident on the site and their guests, where the lot is located in an R-1 district that is combined with a P-C district or is part of a planned residential development. (i) Boarding stables and communitystables, subject to the regulations prescribed in Section 7- 20.220 of this Code. (j) Model homes utilized in connection with the sale of new single-family dwellings in a subdivision, located upon a lot within the same subdivision or, in the discretion of the Planning Commission, upon a lot within another subdivision developed by the applicant, for such period of time as determined by the Planning Commission, not to exceed an initial term of one year and not exceeding a term of one year for each extension thereof. (k) Cemeteries. 8. Agricultural Preserves Article 15-15 - AP/OS: AGRICULTURAL PRESERVES OPEN SPACE OVERLAY DISTRICT 15-15.010 - Purposes of Article. In addition to the objectives set forth in Section 15-05.020, the City establishes agricultural preserves to/open space overlay district is included in the Zoning Ordinance to achieve the following purposes: (a) To satisfy legal requirements with respect to the zoning classification designation of land on which Williamson Act contracts may be executed and renewed, thereby encouraging and preserving such contracts in accordance with the policies set forth in the General Plan. (b) To implement the open space element of the General Plan. 15-15.020 - Definitions. In addition to the definitions set forth in Article 15-06, all of which are applicable to this Article, the following definitions shall also apply to certain terms used herein: (a) Williamson Act means the California Land Conservation Act of 1965, as set forth in Chapter 7 (commencing with Section 51200) of Part 1, Division 1, Title 5 of the Government Code. (b) Williamson Act contract means an agreement between the City and the landowner executed pursuant to the Williamson Act and the rules and regulations adopted by the City for the conduct of proceedings thereunder. (c) Agricultural preserve means a parcel or area of land that is (1) devoted to either agricultural use, recreational use, open space use or any combination of such uses, as defined in Section 51201 of the Williamson Act and (2) designated by the City Council in accordance with the City’s Procedures for Initiating, Filing and Processing Requests to Establish Agricultural Preserves. 239 2018 Annual Code Update - Page 23 (d) Open spacemeans a parcel or area of land whichis essentially unimproved and devoted to open space, as defined in Section 65560(b) of the Government Code. (e) AP/OS overlaymeans the agricultural preserve/open space overlay district established by this Article. (f) Underlying zoning means the zoning classification of a parcel or area of land in an agricultural preserve the absence of the AP/OS overlay district. 15-15.030 - Establishment of AP/OS overlay district. An agricultural preserve/open space overlay district is hereby established upon all parcels or areas of land designated "AP/OS Overlay" on the overlay zoning map approved as part of this Article and such lands are hereby designated as agricultural preserves and open space lands, all such lands being subject to Williamson Act contracts as of the effective date of this Article. 15-15.040 - Permitted uses. Each parcel or area of land designated as an agricultural preserve within the AP/OS overlay district shall be used only for the purposes expressly permitted under the terms of the Williamson Act contract applicable to such land. 15-15.050040 -Termination of agricultural preserve overlay. Upon the effective date of any expiration or termination of a Williamson Act contract covering any parcel or area of land designated as an agricultural preserve within the AP/OS overlay district, such land shall automatically be terminated as an agricultural preserve removed from the AP/OS overlay districtand shall thereafter be regulated classifiedsolely according to the underlying zoning for such land. Nothing herein shall prevent the subsequent execution of a new Williamson Act contract pertaining to such land, in which event the land shall again be designated as an agricultural preserve included within the AP/OS overlay district. 15-15.060050 -Status of existing Williamson Act contracts. This Article shall not constitute or be interpreted as causing any alteration, amendment or impairment of any Williamson Act contract which has not expired or been terminated as of the effective date of this Article, and all such contracts are hereby ratified, acknowledged and confirmed by the City and declared to be in full force and effect. In addition, amend section 15-10.010 as follows: 15-10.010 - Designation of districts. The districts established by this Chapter are depicted on the Zoning Map and are described as follows: (a) A: Agricultural district. (b) R-1: Single-family residential districts, consisting of: 240 2018 Annual Code Update - Page 24 R-1-40,000 district R-1-20,000 district R-1-15,000 district R-1-12,500 district R-1-10,000 district (c) HR: Hillside residential district. (d) R-OS: Residential open space district. (e) AP/OS: Agricultural preserve/open space overlay district. [No changes in the remainder of the section except that (f) through (m) are redesignated as (e) through (l) respectively.] 9.Fence Regulation Restrictions 15-29.010 - Height restrictions. (a) General regulations. A building permit shall be required for any solid fence more than six feet in height. Height maximums and permitted materials for fences shall be as follows: (1) Solid fences.Except as otherwise specified in this Article, no solid fence shall exceed six feet in height. However, up to two feet of lattice (or similar material) that is at least twenty-five percent open to the passage of light and air may be added to the top of a solid fence. A solid fence taller than six feet shall not be permitted unless approved by the Planning Commission through the exception process detailed in Section 15-29.080 15.29.090, or approved by the Community Development Director pursuant to Sections 15-29.030, 15-29.040, or 15-29.050 of this Chapter. (2)Open fences. Except as otherwise specified in this Article, open fencing, such as wrought iron, wire material, split rail, chain link, or other similar fencing shall not exceed eight feet in height. With the exception of chain link fencing, open fencing shall have openings sufficient to allow the unobstructed passage of a sphere having a diameter of four inches. For chain link fencing, the opening shall be two inches at minimum and no slats are allowed in any opening. [No changes in subsections (b) through (j)] (k) Swimming pool fences. Fences required for swimming pools are governed by the California Building Code City Code Sections 16-75.010 and City Code Section 15-29.020(e). (l) Retaining walls. No retaining wall shall exceed five feet in height. Notwithstanding the foregoing, no retaining wall located in a front or exterior side setback area shall exceed three feet in height 241 2018 Annual Code Update - Page 25 10.Tree Regulations 15-50.020 - Definitions. For the purposes of this Article, the following words and phrases shall have the meanings respectively ascribed to them by this Section, unless the context or the provision clearly requires otherwise: [No changes in subsections (a) through (o).] (p) Native tree means Ccoast Llive Ooak (Quercus agrifolia), Vvalley Ooak (Quercus lobata), Tan Oak tanoak (Lithocarpus Notholithocarpus densiflorus), Bblack Ooak (Quercus kelloggii), Bblue Ooak (Quercus douglasii), Sscrub Ooak (Quercus dumosa), Bbig Lleaf Mmaple (Acer macrophylhlum), California Bbuckeye (Aesculus californica), Douglas fir (Pseudotsuga menziesii) and Ccoast Rredwood (Sequoia sempervirens). [No changes in subsections (q) through (cc).] 11.Construction Debris Recycling 17-05.010 - Greenhouse gas reduction policies. The list below provides a reference to Sections of the City of Saratoga Municipal Code seeking to reduce emissions of greenhouse gases, together with a brief description of each Section. Nothing in this section shall change the meaning of the code sections summarized below and the full text of each section shall apply regardless of the summary below. [No changes in subsections (a) through (q).] (r) 16-72 CALGreen sections 4.408, 5.408, 301.1.1, and 301.3 Construction and demolition debris. Requires a recycling plan for construction and demolition debris for new buildings, residential additions or alterations that increase the buildings area, volume, or size, and non-residential additions and alterations that require a permit.projects with more than two thousand five hundred square feet of floor space. Plans must divert at least sixty-five fifty percent of waste from landfills, and are documented, approved, and overseen by City staff. [No changes to subsection (s).] 1055723.7 242 SARATOGA CITY COUNCIL MEETING DATE:December 5, 2018 DEPARTMENT:Public Works PREPARED BY:Emma Burkhalter, Assistant Engineer SUBJECT:Offer to Dedicate Easement for Storm Drainage and Control from Boguslaw and Barbara Marcinkowski to the City of Saratoga RECOMMENDED ACTION: 1.Adopt Resolution accepting Offer to Dedicate Easement for Storm Drainage and Control from Boguslaw Marcinkowski, trustee of the Boguslaw J. Marcinkowski Revocable Trust,(“Marcinkowski”) to the City of Saratoga for a Storm Drainage and Retention System at 21143 Chadwick Court, City of Saratoga (APN 503-15-042). 2.Adopt Resolution Vacating Public Service Easement currently held by the City of Saratoga. BACKGROUND: In March 2000, a landslide occurred at the Marcinkowski property and the property of Ranjit Pancholy and Jaya Pancholy (“Pancholy”). At the time of the landslide, the City of Saratoga had accepted a drainage easement that was supposed to contain the storm drain on the Marcinkowski property. As a result of the landslide, both the Marcinkowski and Pancholy property incurred damage. In 2001, the City of Saratoga was named as a defendant in litigation related to the storm drain running from Chadwick Court across the Marcinkowski property, APN 503-15-042. Per the 2001 Mutual Release and Settlement Agreement, Marcinkowski agreed to repair damages resulting from the landslide and related failures, including reconstruction of a storm drain system located on the Marcinkowski property. As part of the Settlement Agreement, upon completion of the repair, Marcinkowski was required to offer to dedicate a new storm drainage easement to the City of Saratoga. The new Easement replaces the previous storm drain easement, which Staff recommends the City Council vacate as part of this action. Once the Offer of Dedication is accepted, the City will assume ownership and will be responsible for maintenance of all Storm Drainage, Retention and Control System improvements on the easement portion of the Marcinkowski property. Marcinkowski has provided the City with a letter stating he performed all the required inspections including one final full maintenance performed on July 24, 2018. The inspection 243 performed by Public Works Department confirmed the system is in satisfactory condition. In addition, a final inspection has been completed by the City geotechnical consultant to verify there are no visible signs of slope instability. It is therefore recommended the City accept the Easement for Storm Drainage and Control and assume the storm water system maintenance per the settlement agreement and concurrently vacate the prior easement which is no longer needed. FISCAL STATEMENT: Maintenance of the storm water system within the easement will be added to the annual Citywide storm drain system maintenance cost. ADVERTISING, NOTICING AND PUBLIC CONTACT: Pursuant to Streets and Highways Code section 8322, notice of the hearing on the proposed Resolution of the City Council of the City of Saratoga Vacating a Public Service Easement published for at least two successive weeks prior to the hearing in a daily, semiweekly, or weekly newspaper published and circulated in the City of Saratoga. ATTACHMENTS: Attachment A – Resolution Accepting Offer to Dedicate Easement Attachment B – Offer of Dedication Attachment C – Certificate of Acceptance Attachment D – Resolution Vacating Public Service Easement Attachment E – Tract Map No. 7770 244 RESOLUTION NO. _____ A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SARATOGA TO ACCEPT AN OFFER TO DEDICATE TO THE CITY OF SARATOGA AN EASEMENT FOR STORM DRAINAGE AND CONTROL FROM BOGUSLAW MARCINKOWSKI APN 503-15-042 WHEREAS, as a result of litigation including, among others, the City of Saratoga and Boguslaw Marcinkowski, trustee of the Boguslaw J. Marcinkowski Revocable Trust (hereinafter “Marcinkowski”), the City of Saratoga entered into a Settlement Agreement in September 2001, regarding Storm Drainage and Control running from Chadwick Court across the property commonly known as Lot 7, Tract No. 7770 Chadwick Place, map filed on October 14, 1988, Map Book 592, Pages 1, 2, and 3, Santa Clara County Records, APN 503-15-042, Saratoga, California (“Marcinkowski Property”); and WHEREAS, the Settlement Agreement required Marcinkowski to provide adequate infrastructure for Storm Drainage and Control related to the Marcinkowski Property including, but not limited to, the repair of the existing landslide by construction of a geogrid repair or the installation of rip rap to stabilize the upper portions of the failed slope, and reconstruction and extension of the storm drain pipe, which work has been completed; and WHEREAS, the Settlement Agreement required the City of Saratoga to accept an Offer of Dedication of Easement from Marcinkowski for a drainage easement related to the storm drainage infrastructure upon completion by Marcinkowski of all work required pursuant to the Settlement Agreement and after Marcinkowski provided the City of Saratoga with a survey of the “as built” location of the storm drainage infrastructure and appropriate deed agreements; and WHEREAS, a final inspection has been completed by the City geotechnical consultant and Marcinkowski has performed one final full maintenance of the storm drain and provided a maintenance report to the satisfaction of Public Works; and WHEREAS, the City Council desires to accept and authorize the recordation of the “Offer to Dedicate Easement for Storm Drainage, Retention and Control Improvements and System” for the property referenced above and located in the City of Saratoga and more fully described in Exhibit A attached thereto; and NOW, THEREFORE BE IT RESOLVED,by the City Council of the City of Saratoga as follows: 1. The City Council hereby accepts the “Offer of Dedication of Easement for Storm Drainage, Retention and Control Improvements and System,” attached hereto as Exhibit A. 2. The City Manager of the City of Saratoga is hereby authorized to execute the Certificate of Acceptance attached as Exhibit B on behalf of the City and to record the “Offer of Dedication of Easement for Storm Drainage, Retention and Control Improvements and System” and Certificate of Acceptance thereof. 245 3. This action is categorically exempt from CEQA pursuant to CEQA Guidelines sections 15303 (small facilities) and 15061(b)(3), which provides that CEQA applies only to projects which have the potential to cause a significant effect on the environment and where, as here, it can be seen with certainty that there is no reasonable possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA. The above and foregoing resolution was passed and adopted at a regular meeting of the Saratoga City Council held on the 5 th day of December, 2018 by the following vote: AYES: NOES: ABSENT: ABSTAIN: Mary-Lynne Bernald, Mayor City of Saratoga ATTEST: Debbie Bretschneider, City Clerk Date 246 247 248 249 250 251 252 253 CERTIFICATE OF ACCEPTANCE THIS IS TO CERTIFY that the interest in real property conveyed by the Deed dated the ______ day of _________________, 2018, from BOGUSLAW MARCINKOWSKI, trustee of the Boguslaw J. Marcinkowski Revocable Trust, to the CITY OF SARATOGA, Santa Clara County, California, organized under the laws of the State of California, is hereby accepted by the CITY OF SARATOGA, pursuant to authorized signature of its City Manager conferred by Resolution No. ______ of the City of Saratoga City Council adopted on the ______ day of _________________, 2018, and the Grantee consents to recordation thereof by its duly authorized officer. Dated: ___________________, 2018. CITY OF SARATOGA ______________________________ James Lindsay, City Manager 254 RESOLUTION NO. ______ A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SARATOGA VACATING A PUBLIC SERVICE EASEMENT WHEREAS, a public service easement for the purposes of a storm drain runs under and/or through the real property commonly known as Lot 7, Tract No. 7770 Chadwick Place, map filed on October 14, 1988, Map Book 592, Page(s) 1, 2, and 3, Santa Clara County Records, APN 503-15-042, Saratoga, California (“Marcinkowski Property”); and WHEREAS, an Owner’s Certificate (Attachment A) for the Marcinkowski Property was recorded on said property on October 14, 1988; and WHEREAS, the Owner’s Certificate dedicated a Public Use Easement (“Storm Drain Easement”) for sanitary sewer and storm drain purposes under, on or over those certain strips of land designated in the Owner’s Certificate and said easement was to be kept free from all buildings and structures of any kind except irrigation systems and appurtenances thereto, and lawful fences; and WHEREAS, as a result of litigation including, among others, the City of Saratoga and Boguslaw Marcinkowski, trustee of the Boguslaw J. Marcinkowski Revocable Trust (“Marcinkowski”), the City of Saratoga entered into a Settlement Agreement in September 2001, regarding Storm Drainage and Control running from Chadwick Court across the Marcinkowski Property; and WHEREAS, as a result of the litigation, the City Council accepted an “Offer of Dedication of Easement for Storm Drainage, Retention and Control Improvements and System” from Marcinkowski on the Marcinkowski Property, which was approved and signed by the Saratoga City Council on December 5, 2018; and WHEREAS, approval of the “Offer of Dedication of Easement for Storm Drainage, Retention and Control Improvements and System” rendered the prior Storm Drain Easement as described in the Owner’s Certificate recorded on October 14, 1988 superfluous; and WHEREAS, a public service easement may be summarily vacated pursuant to Streets and Highways Code Section 8333 if the easement has been superseded by relocation or determined to be excess by the easement holder, and there are no other public facilities located within the easement; and WHEREAS, all legally required notice for Vacating the above described Storm Drain Easement has been given; and WHEREAS, pursuant to Streets and Highways Code section 8336, the City Clerk shall cause a certified copy of this Resolution, attested by the Clerk under seal, to be recorded without acknowledgment, certificate of acknowledgment, or further proof in the office of the recorder of the county in which the property is located, and no fee shall be charged for this recordation. 255 NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Saratoga hereby finds that: 1) The foregoing recitals are true and correct; 2) The October 14, 1988 Storm Drain Easement as described in the Owner’s Certificate (Attachment A) is unnecessary for present or prospective use because it is being replaced by the new Storm Drain Easement as described in the “Offer of Dedication of Easement for Storm Drainage, Retention and Control Improvements and System;” 3) The City hereby vacates the Storm Drain Easement pursuant to Streets and Highways Code section 8335, such that from and after the date this Resolution is recorded, the Marcinkwoski Property Storm Drain Easement identified in the Owner’s Certificate recorded October 14, 1988 no longer constitutes a public service easement; and 4) This action is categorically exempt from CEQA pursuant to CEQA Guidelines sections 15303 (small facilities) and 15061(b)(3), which provides that CEQA applies only to projects which have the potential to cause a significant effect on the environment and where, as here, it can be seen with certainty that there is no reasonable possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA. 5) Pursuant to Streets and Highways Code section 8336, the City Clerk shall cause a certified copy of this Resolution, attested by the Clerk under seal, to be recorded without acknowledgment, certificate of acknowledgment, or further proof in the Office of the Recorder of the County of Santa Clara. The above Resolution was passed and adopted at a regular meeting of the City Council of the City of Saratoga held on the 5th day of December, 2018 by the following vote: AYES: NOES: ABSENT: ABSTAIN: ______________________________ Mary-Lynne Bernald, Mayor ATTEST: ________________________________________________________________ Debbie Bretschneider, City Clerk Date 256 257 258 259 260 SARATOGA CITY COUNCIL MEETING DATE:December 5, 2018 DEPARTMENT:Community Development Department PREPARED BY:Debbie Pedro, Community Development Director SUBJECT:Resolution to Support the Formation of a Regional Housing Needs Allocation Subregion for Santa Clara County RECOMMENDED ACTION: Approve the attached resolution to support the formation of a Regional Housing Needs Allocation (RHNA) subregion. BACKGROUND: On August 15, 2018, the City Council unanimously expressed interest in participating in a RHNA subregion.Pursuant to Government Code §65584.03, local jurisdictions may form a subregion to conduct an allocation process that parallels, but is separate from ABAG’s regional process. This subregional approach increases the potential for local control and may provide cities and the counties more flexibility in distributing housing need allocations among member jurisdictions. DISCUSSION: At their meeting on October 11, 2018, the Cities Association of Santa Clara County (CASCC) unanimously voted to establish a subregion. As a result, the City Council is being asked to adopt a resolution to confirm its non-binding interest to participate in CASCC’s effort to create the RHNA subregion. If the Council adopts a resolution in support of a subregion, staff will provide a copy of the resolution to CSACC and the City Manager will be authorized to enter into discussions regarding the formation of a RHNA subregion for Santa Clara County. ATTACHMENTS: Attachment A -Resolution Attachment B -CASCC RHNA Subregion Report and Attachments dated October 11, 2018 261 RESOLUTION NO. RESOLUTION OF INTENT TO SUPPORT FORMATION OF A HOUSING SUBREGION OF SANTA CLARA COUNTY LOCAL AND COUNTY GOVERNMENTS TO FACILITATE AND IMPLEMENT COUNTYWIDE HOUSING PRODUCTION CONSISTENT WITH THE REGIONAL HOUSING NEEDS ALLOCATION (RHNA) FORMULA CURRENTLY ASSIGNED BY THE ASSOCIATION OF BAY AREA GOVERNMENTS (ABAG) WHEREAS, Housing Element Law (Gov. Code Sections 65580 – 65589.8) provides for a Regional Housing Need Allocation process (RHNA); and WHEREAS,to implement such RHNA process in the San Francisco Bay Area, the State of California has delegated to the Association of Bay Area Governments (ABAG) responsibility to adopt an allocation methodology, then use the adopted methodology to assign to each jurisdiction in the Bay Area the obligation to zone enough housing development capacity to accommodate production of a specific number of housing units during the period from 2023 through 2031; and WHEREAS,Government Code Section 65584.03 provides that certain combinations of local governments may form a subregion to perform RHNA for themselves in order to allocate among themselves the total number of housing units assigned to them collectively by ABAG; and WHEREAS, the City of Saratoga is interested in exploring the formation of a Regional Housing Needs Allocation (RHNA) subregion consistent with the California Government Code Section 65584 et seq and acceptable to the Association of Bay Area Governments (ABAG) and the California Department of Housing and Community Development (HCD) to facilitate collaboration with the county and all cities in the County of Santa Clara, to efficiently and effectively deliver housing production goals; and WHEREAS,the Board of the Cities Association of Santa Clara County has directed the review of the benefits of such a subregion and subsequently representatives of the Cities Association of Santa Clara County (CASCC) have formed a committee to evaluate and make recommendations regarding the importance of and opportunities for success through shared housing strategies which could be facilitated by a subregional effort; and WHEREAS,housing is a countywide challenge, and housing production types, numbers, density, appropriateness and affordability levels can vary in different communities, and the Cities’ recognize all production types are important to the housing supply of the County and its related economic and social health; and WHEREAS,Cities are individually accountable for, and retain full local authority for, identifying sites for housing development and for adopting and implementing housing policies intended to facilitate production of housing to meet local, regional and state policy objectives 262 embodied in the numbers prescribed by ABAG the Sustainable Community Strategy that will be adopted by ABAG and the Metropolitan Transportation Commission (MTC) in 2021; and WHEREAS,through mutual cooperation and planning, the production of these housing units may be enhanced through collective efforts and resources, therefore creating a forum for developing countywide policy consensus on matters related to the Sustainable Community Strategy; NOW, THEREFORE,the City of Saratoga does herebyfind, determine,resolve and order as follows: Section 1:That it is in the best interest of the City to join with other cities in Santa Clara County to explore creation of the RHNA subregion and that by working together to plan for housing growth, the stage is set for implementing housing and more housing will ultimately be built to meet the needs of the entire County and its residents. Section 2:That the City Manager is hereby authorized and directed to enter into discussions regarding the formation of a RHNA subregion and the development of a workplan and budget,and schedule of actionsleading to the countywide, self-administration of the housing needs allocation process, allocating the countywide total housing needs allocation among all the Cities and unincorporated County by consensus; and to bring back a recommendation and resolution for action to join a RHNA subregion, or in the alternative, an explanation detailing the decision not to participate in the RHNA subregion. PASSED AND ADOPTED by the City Council of the City of Saratoga on this 5th day of December 2018 by the following vote: AYES: NOES: ABSENT: ABSTAIN: ____________________________ Mary-Lynne Bernald, Mayor Attest: Debbie Bretschneider, Interim City Clerk 263 Board of Directors Meeting – Agenda Report Meeting Date: October 11, 2018 Subject: 4a RHNA Sub-Region Update Initiated by: Board Priority since 2015 Previous Consideration: discussions in 2015 and June 2018 Fiscal Impact: per the by-laws, any costs associated with creating a sub-region would be shared. The recommendation is for a low-cost approach by accepting ABAG’s methodology, utilizing existing structures (SCCCMA, SCCAPO). Attachments: RHNA Sub-Region Overview Pros/Cons Guiding Principles Resolution By-laws Responses from jurisdictions Summary: As an effort to improve the implementation of housing across the region, the Cities Association continues to address and consider the Regional Housing Needs Allocation (RHNA) sub-region option and providing our cities and the county more flexibility to ensure that the state mandated housing allocations make sense regionally. The board adopted RHNA sub-region as a priority to continue exploration for the next cycle (2023-2031) in which our region can own the responsibility of preparing a sub-regional housing need allocation for the geographic area of Santa Clara County. RHNA is the state mandated process used to identify the total number of housing units that each jurisdiction must accommodate in its Housing Element. For the current cycle (2014-2022) the counties of San Mateo, Napa, and Solano have formed sub-regions. A sub-region is required to meet its statutory requirements in the regional allocation process but it can develop its own methodology, issue draft allocations to member jurisdictions, conduct the revision and appeals processes, and issue final allocations. Generally, the cities and the county within the sub region have more flexibility to ensure that the allocations make sense. Per the Board’s approval in 2015, a Regional Housing Task Force/Subcommittee was formed. Subcommittee is tasked with: a) Developing the framework and process needed to form and implement a Sub-region in Santa Clara County in the next RHNA cycle (2023-2031); and b) Reviewing potential options for further regional response. 264 Recommendation: The Committee is asking the Board to approve and begin formation of a RHNA sub-region. 265 Santa Clara County Regional Housing Needs Allocation (RHNA) Subregion Overview 1 What is a RHNA subregion? (Government Code Section 65584.03) In recognition of the common interests and mutual challenges and opportunities associated with providing housing, two or more contiguous cities and a county may form a subregional entity for the purpose of allocation of the subregion’s existing and projected need for housing among its members in accordance with the allocation methodology established pursuant to Government Code Section 65584.04. All decisions of the subregion shall be approved by vote as provided for in the rules adopted by the local governments comprising the subregion, or shall be approved by vote of the county and the majority of the cities with the majority of population within the county. What are the steps to create a subregion, following the prescribed timelines in State law? 1. Each participating jurisdiction adopts a resolution indicating its commitment to participating in the subregional entity. 2. For Santa Clara County, the subregional entity could be a committee of the Cities Association with participating cities and the County. 3. The Cities Association (or other entity) would enter into an agreement with the Council of Governments (COG, in our case ABAG/MTC) that sets forth the process, timing, and other terms and conditions of the delegation of responsibility by the COG to the subregion. What does the subregion do, following the prescribe timelines in State law? 1. The subregion determines the methodology for allocating housing need to its participating jurisdictions according to State law (or accepts the methodology factors from the COG as a starting point for further distribution), providing opportunity for public comment and modification prior to adoption of the methodology. 2. The COG allocates a share to the subregion based on a proportion consistent with the distribution of households assumed for the comparable time period of the applicable regional transportation plan. 3. The subregion allocates the distribution of the RHNA to the participating jurisdictions according to the adopted methodology, providing an opportunity for public comment and modification prior to finalizing the distribution. What is the estimated cost of a subregion versus typical participation in the RHNA process? Assuming that the subregion does not hire a consultant to create a separate methodology, the costs would be: 1. Administrating and documenting the subregion meetings and decisions; 2. Conducting the required outreach prior to the subregion making its decisions ; 3. Communicating with ABAG/MTC as needed; and 4. Publishing the required notices. The Planning Departments of the participating jurisdictions typically absorb the RHNA evaluation without additional staffing or consultant assistance. 266 Santa Clara County Regional Housing Needs Allocation (RHNA) Subregion Overview 2 What are other activities that the subregion could assume outside of the RHNA process and State law?  Foster collaboration between cities within Santa Clara County o Focus on Measure A implementation o Facilitate an open dialogue between the jurisdictions, public, and interested organizations on housing issues and opportunities o Share best practices regarding rehabilitating existing housing stock, addressing gentrification/displacement, etc.  Work together to obtain and commit more financial resources to affordable housing production o Support for 2018 ballot measure for affordable housing funding o Consider potential legislative efforts to seek meaningful tax credits and other mechanisms 267 SANTA CLARA COUNTY RHNA SUBREGION TASK FORCE PROS & CONS OF RHNA SUBREGION FORMATION Pros Cons Example Creates flexibility & allows cities to trade Distribute the subregion’s numbers or can use ABAG’s distribution Empowers cities to have a say in the regional planning process Self-determination: a city is able to accept or not accept allocation from another city. Allows better alignment between local and regional needs Ability to plan along on transit corridors and near employment. Can find innovative solutions Collective problem-solving which may include negotiating credits and creative financing May facilitate the production of more housing Utilizes economies of scale and eliminates duplication. Siting housing near supportive services. Creates a forum for collaboration that leads to innovative solutions San Mateo County Trade Woodside/Redwood City & Daly City/Colma/County Creates awareness (and healthy competition) Creates a forum to share knowledge and success. When one city is doing the heavy lifting, may encourage other jurisdictions to step up to the plate. If success, may create additional opportunities for collaborative work Success may be housing or spill over to other technical areas (transportation). May use collaboration for legislative advocacy. Better development Cities can work together to build near transit and not 268 SANTA CLARA COUNTY RHNA SUBREGION TASK FORCE PROS & CONS OF RHNA SUBREGION FORMATION necessarily confined by a city boundary. Creates a forum to discuss sharing of planning resources Share resources - - may share in cost to pay consultants for housing element preparation or program ideas (for those who want to share). Time, effort & resources which may end in same result. What if subregion fails to produce a different allocation? Lack of trust for fair and equitable process. Some cities may shirk their responsibility to step up and accept housing. Increases local control Ability to control own numbers and improve county-wide performance. Loss of political distance from MTC and ABAG Pressure on community to produce additional housing. Lack of clarity of the benefits to accept someone’s numbers/housing City worried about allocation dumping Still need to plan for housing for all income levels Can’t go to zero. Every jurisdiction still has an allocation in every income level. No role model No other subregion has such large population variances. Increased use of ADUs ADUs more feasible with cities with large residential lots. 269 SANTA CLARA COUNTY RHNA SUBREGION TASK FORCE GUIDING PRINCIPLES - May 2018 Vision For Santa Clara County and its cities to work collaboratively to produce more housing in the Region. have a unified voice in responding to the area’s housing needs-- a problem that transcends jurisdictional barriers. Benefits 1. By working together to plan for housing growth, the stage is set for implementing housing, and more housing will ultimately be built. 2. Housing will be planned in the right places, near transportation, jobs, and services. 3. Santa Clara County jurisdictions can work together to share resources. 4. Collaboration enables collective advocacy on regional and Statewide issues. 5. Partnership sets the stage for other cooperation, including sharing Housing Element consultants, sharing expertise, analyses, and policies, and potentially enabling a shared review by the California Housing and Community Development (HCD) Department. 6. Collective agreement is reached on strategies and tools to meet the region’s housing need, including the potential for trading RHNA numbers. 7. Greater flexibility. Guiding Principles 1. Conform with all State objectives included in Section 66584(d), including ensuring that the allocation of affordable homes is allocated to all jurisdictions in the region in an equitable manner. 2. Allocate housing growth strategically around major transportation corridors and near employment and services, while respecting infrastructure constraints and the unique natural resources of Santa Clara County. 3. Foster collaboration between jurisdictions and develop collective strategies that provide a framework for addressing housing need, including the potential for resource / housing allocation trade-offs. 4. Facilitate an open dialogue between jurisdictions, the general public, and interested organizations, including transportation agencies and land use bodies. 5. Utilize existing forums for discussion (e.g., Cities Association, City Managers’ Association, SCCAPO, etc.). Keys to Success 1. Taking responsibility for the process and the resulting housing shares. 2. Taking into consideration other communities’ interests as well as your own. 3. Being willing to accept a reasonable housing share, not just the lowest. 4. Being willing to consider negotiating trades. 5. Recognizing that working together locally is better than abdicating the responsibility to the region and the state. 6. Elected leaders in all jurisdictions willing to compromise for regional benefit. 270 RESOLUTION NO. RESOLUTION OF INTENT TO SUPPORT FORMATION OF A HOUSING SUBREGION OF SANTA CLARA COUNTY LOCAL AND COUNTY GOVERNMENTS TO FACILITATE AND IMPLEMENT COUNTYWIDE HOUSING PRODUCTION CONSISTENT WITH THE REGIONAL HOUSING NEEDS ALLOCATION (RHNA) FORMULA CURRENTLY ASSIGNED BY THE ASSOCIATION OF BAY AREA GOVERNMENTS (ABAG) WHEREAS, Housing Element Law (Gov. Code Sections 65580 – 65589.8) provides for a Regional Housing Need Allocation process (RHNA); and WHEREAS, to implement such RHNA process in the San Francisco Bay Area, the State of California has delegated to the Association of Bay Area Governments (ABAG) responsibility to adopt an allocation methodology, then use the adopted methodology to assign to each jurisdiction in the Bay Area the obligation to zone enough housing development capacity to accommodate production of a specific number of housing units during the period from 2021 through 2029; and WHEREAS, Government Code Section 65584.03 provides that certain combinations of local governments may form a subregion to perform RHNA for themselves in order to allocate among themselves the total number of housing units assigned to them collectively by ABAG; and WHEREAS, the City/County of ______________ is interested in exploring the formation of a Regional Housing Needs Allocation (RHNA) subregion consistent with the California Government Code Section 65584 et seq and acceptable to the Association of Bay Area Governments (ABAG) and the California Department of Housing and Community Development (HCD) to facilitate collaboration with the county and all cities in the County of Santa Clara, to efficiently and effectively deliver housing production goals; and WHEREAS, the Board of the Cities Association of Santa Clara County has directed the review of the benefits of such a subregion and subsequently representatives of the Cities Association of Santa Clara County (CASCC) have formed a committee to evaluate and make recommendations regarding the importance of and opportunities for success through shared housing strategies which could be facilitated by a subregional effort; and WHEREAS, housing is a countywide challenge, and housing production types, numbers, density, appropriateness and affordability levels can vary in different communities, and the Cities’ recognize all production types are important to the housing supply of the County and its related economic and social health; and 271 WHEREAS, Cities are individually accountable for, and retain full local authority for, identifying sites for housing development and for adopting and implementing housing policies intended to facilitate production of housing to meet local, regional and state policy objectives embodied in the numbers prescribed by ABAG the Sustainable Community Strategy that will be adopted by ABAG and the Metropolitan Transportation Commission (MTC) in 2021; and WHEREAS; through mutual cooperation and planning, the production of these housing units may be enhanced through collective efforts and resources, therefore creating a forum for developing countywide policy consensus on matters related to the Sustainable Community Strategy; NOW, THEREFORE the City of ____________does hereby find, determine, resolve and order as follows: Section 1: That it is in the best interest of the City to join with other cities in Santa Clara County to explore creation of the RHNA subregion and that by working together to plan for housing growth, the stage is set for implementing housing and more housing will ultimately be built to meet the needs of the entire County and its residents. Section 2: That the City Manager is hereby authorized and directed to enter into discussions regarding the formation of a RHNA subregion and the development of a workplan and budget, and schedule of actions leading to the countywide, self-administration of the housing needs allocation process, allocating the countywide total housing needs allocation among all the Cities and unincorporated County by consensus; and to bring back a recommendation and resolution for action to join a RHNA subregion, or in the alternative, an explanation detailing the decision not to participate in the RHNA subregion. 272 By-laws of the Santa Clara County Subregional RHNA Process PURPOSE & BYLAWS The cities within the County of Santa Clara, and the County of Santa Clara, have adopted resolutions to participate as a Subregion (hereinafter referred to as “Subregion”) in the Regional Housing Needs Allocation (RHNA) Process. The Cities Association of Santa Clara County (hereinafter referred to as “CASCC”) will act as the representative for the Subregion. The Subregion hereby adopts the following bylaws for the purpose of providing for the orderly conduct of its affairs. ARTICLE I NAME The name of the separate entity established by the resolutions is the “Santa Clara County Sub- Regional RHNA Process” and may be referred to as “Subregion”. ARTICLE II PURPOSES Section 1. Subregion shall have the following purposes: (a) Plan, organize, and maintain the work of the Subregion and be responsible for its overall operation; (b) Advise City Managers, City Councils and the Board of Supervisors of all significant activities of the Subregion; (c) Prepare, review, monitor, present to the cities and the County, and facilitate a consensus on the Regional Housing Needs Allocation housing shares for all the cities and the County for the 2021 Housing Element; (d) Submit to the Association of Bay Area Governments (ABAG) for approval the housing shares for Santa Clara County (cities and County). (e) Provide a forum for developing a countywide policy consensus, to the greatest extent possible, on matters related the Sustainable Communities Strategy process of which the Regional Housing Needs Allocation is a part; and a channel for communicating such consensus to the Joint Policy Committee of the Metropolitan Transportation Commission and the Association of Bay Area Governments overseeing the Sustainable Communities Strategy process from time to time when such a consensus is requested or required by the Joint Policy Committee. 273 Section 2. Subregion shall not participate in or endorse any political activity involving any individual candidate for public office. The selection of officers within Article IV herein shall not be considered a political activity subject to this section. ARTICLE III MEMBERS Section 1. The County of Santa Clara and each city which has adopted a resolution of participation shall be members of the Subregion. Section 2. The RHNA Policy Committee (PC) of the Subregion shall consist of a member of the City Council of each participating city to be selected by that city, and one member of the Board of Supervisors to be selected by the Board of Supervisors. Section 3. Each member City Council and the Board of Supervisors may select one alternate member from its body who shall participate when the regular member is absent. Section 4. If both the member and the alternate will be absent, the City or County, respectively, may designate a substitute for that meeting and notify CASCC, in writing, of the designation. Section 5. Any member may withdraw from the Subregion by adopting a resolution and providing a written notice of intention to do so to the chairperson of the PC. The rights and obligations of any such member shall terminate 30 days after acceptance by the PC. Section 6. If any member, or designated representative, fails to attend two consecutive meetings, without notification of the Chairperson or the Executive Director, the Chairperson will notify the City Council or Board of Supervisors to encourage future participation. ARTICLE IV- OFFICERS Section 1. The officers of the PC shall consist of a chairperson and vice chairperson. Section 2. The chairperson and vice chairperson shall be elected by the PC and shall serve at the will of the PC. Section 3. Nomination for officers of the PC shall be made from the floor. Nominations shall be made by voting members of the PC only. Section 4. The chairperson and vice chairperson must be voting members of the PC. Section 5. Nominations and election of the chairperson shall precede nominations and election of the vice chairperson. Voting shall be public. 274 Section 6. The chairperson shall preside at all meetings and may call special meetings when necessary. Section 7. The vice chairperson shall perform the duties of the chairperson in the absence of the chairperson. Section 8. A special election shall be called by the Board of Directors if the chairperson and/or vice chairperson is unable to serve. Section 9. All officers shall serve without compensation. Section 10. The chairperson or vice chairperson may be removed from office at any time by a majority vote of those members present. ARTICLE V STAFF SUPPORT Section 1. The CASCC Executive Director, CASCC staff and contractors shall provide support to the Subregion and all the established committees. Section 2. The PC shall have dealings with staff and contractors through the CASCC Executive Director. Section 3. All participating jurisdictions will share in the cost. ARTICLE VI COMMITTEES/ STAKEHOLDER REVIEW Section 1. The following standing committees shall assist in accomplishing the goals of the SANTA CLARA COUNTY SUB REGIONAL RHNA PROCESS: • RHNA Policy Committee • RHNA Technical Advisory Committee • City Managers Association • City Councils and Board of Supervisors • Association of Bay Area Governments Section 2. RHNA Policy Committee (PC) - 16 Members, one member from each city and the county, composed of elected officials. The primary role is to provide initial policy input to the process, review the RHNA TAC recommendations and adopt a policy consensus for transmittal to the cities and the County for ratification. Section 3. RHNA Technical Advisory Committee (RHNA TAC) - 16 Members - One member from each city and the county. Composed of senior staff technical experts in the field of housing and land use. Member agencies may flexibly assign different technical experts as a function of the 275 subject being discussed. However, it is important that there be good communications between the different representatives such that issues do not need to be repeated or there are no conflicting positions from the representatives. Primary role is technical development of the issues and solutions. Section 4. City Managers Association - Monthly reports will be provided to the City Managers through the City Managers Association. This will allow ongoing input by the City Managers in the process. The final product will be presented to the City Managers for their recommendation to the RHNA PAC for approval of the final product. Primary role of the City Managers is practical assessment of the issues and solutions. Section 5. City Councils/ Board of Supervisors - Primary role is ratification of the RHNA Final Allocation prior to submittal to Association of Bay Area Governments (ABAG). Section 6. Association of Bay Area Governments (ABAG) - Final approval of RHNA Final Allocation. Section 7. An appeals process will be established by the PC in conjunction with ABAG to hear appeals by any cities or the County that disagree with their housing share as allocated by the Subregion. ARTICLE VII MEETINGS Section 1. The PC shall establish by resolution the date, time, and place for regular PC meetings. Section 2. The PC may hold special meetings called in accordance with Article IV, Section 6. Section 3. All meetings of the PC shall be held in accordance with the Brown Act, Government Code section 54950 Ct seq. ARTICLE VIII CONDUCT OF BUSINESS Section 1. A quorum shall consist of at least a majority of the members and shall be required for all meetings of the PC. Section 2. Except as state otherwise in these by-laws, all decisions of the PC shall be by majority vote of those present. Section 3. Adoption of the Final Regional Housing Needs Allocation shall require: 1. consent of a majority of all cities and the County participating in the Subregion, and 2. consent of each jurisdiction that has been allocated a greater share of housing than the ABAG default allocation. 276 Section 4. Upon adoption of the final regional housing numbers, the subregion will share support for outcome and support each other, for example the subregaion releasing a resolution, annual report, and press event. Section 5. Except as provided in these bylaws, or by a majority vote of those present, Roberts Rule of Order Revised shall constitute the parliamentary authority for the PC. Section 6. These by-laws may be amended by a two-thirds majority vote of members present and who represent a majority of all cities and the County. ARTICLE IX OTHER MATTERS Section 1. No member shall receive compensation or reimbursement from PC or CASCC for expenses incurred in attending any meeting or other function. 277 SARATOGA CITY COUNCIL MEETING DATE:December 5, 2018 DEPARTMENT:Finance & Administrative Services PREPARED BY:Mary Furey, Administrative Services Director SUBJECT:Resolution approving the adoption of CalPERS Supplemental Income 457 Plan RECOMMENDED ACTION: Adopt the attached resolution approving CalPERS Supplemental Income 457 Plan as an additional 457 Deferred Compensation plan option. BACKGROUND: In 1978, the City established its first deferred compensation 457 plan for employees. The deferred compensation plan was established to enhance retirement saving options and thereby encourage employees to save for additional retirement security.At that time, National Plan Coordinators (NPC) served as the administrator of the City’s only 457 plan. In 1986, the City brought in ICMA Retirement Corporation as an additional 457 retirement plan option. Over time, the NPC plan was discontinued, leaving ICMA Retirement Corporation’s 457 plan as the only option for City employees. City employees participate in the deferred compensation plan by making contributions through payroll deductions that are forwarded directly to the 457 Plan Administrator. Plan Administrator fees are paid by the employee through a percentage charge of the employee’s investment account. The City is not charged a fee for the service however,as the fiduciary agent of the employee’s deferred compensation plan,the City has an obligation to review the City’s 457 plan and other available options from time to time, which was done over the last few months. Of the plans researched, the CalPERS 457 plan came to the forefront for its efficiency in service cost, educational services, and wide spread use: CalPERS investment service costs ran between .40%-.55%as compared to ICMA-RC investment service costs that ran between .94%-1.73%. The investment fees are significantly lower under the CalPERS 457 Plan because CalPERS manages the investments itself, rather than using layers of financial investment firms as is done by ICMA and other 457 plan Administrators. CalPERS 457 Plan offers participating employees the convenience of available learning resources on their website, and the ability to access their online accounts in the same location as their health and pension benefits, via their my|CalPERS account at https://my.calpers.ca.gov. And lastly, CalPERS 457 Plan is widely used throughout the County. Participants include City of Cupertino, City of Sunnyvale, City of Gilroy, Housing Authority of the County of Santa Clara, Los Gatos-Saratoga Department of Community Education and Recreation, Midpeninsula Regional Open Space District, Cupertino Rancho Rinconada Recreation and Park District, Santa Clara County Law Library, Santa Clara County Schools Insurance Group, Saratoga Fire Protection District, and Silicon Valley Animal Control Authority. 278 While CalPERS 457 offers a less expensive investment plan, the ICMA-RC 457 plan remains a viable plan option as their wide selection of investment choices have provided strong investment returns over the years. With their familiarity and investment results, some employees may prefer to remain with ICMA-RC. ATTACHMENTS: Attachment A – Resolution 279 Attachment A RESOLUTION NO. 18-____ A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SARATOGA APPROVING THE ADOPTION OF CALPERS SUPPLEMENTAL INCOME 457 PLAN WHEREAS, the City of Saratoga desires to establish an additional deferred compensation plan for the benefit of its employees; and WHEREAS, the Board of Administration (the “Board”) of the California Public Employees’ Retirement System (“CalPERS”) has established the CalPERS Supplemental Income 457 Plan (the “CalPERS 457 Plan”) which may be adopted by a governmental employer the employees of which are public employees; and WHEREAS, the City of Saratoga believes that the CalPERS 457 Plan and the investment options available thereunder will provide valuable benefits to its employees; and WHEREAS, the Board has appointed a plan recordkeeper (currently Voya Financial) to perform recordkeeping and administrative services under the CalPERS 457 Plan and to act as the Board’s agent in all matters relating to the administration of the CalPERS 457 Plan. NOW, THEREFORE BE IT RESOLVED,that the City of Saratoga adopt the CalPERS 457 Plan for the benefit of its employees and authorizes and directs the City Manager to execute the agreement on behalf of the City of Saratoga and to provide CalPERS or any successor agent duly appointed by the Board with such information and cooperation as may be needed on an ongoing basis in the administration of the CalPERS 457 Plan. The above and foregoing resolution was passed and adopted at a regular meeting of the Saratoga City Council held on the 5th day of December 2018 by the following vote: AYES: NOES: ABSENT: ABSTAIN: Mary-Lynne Bernald, Mayor ATTEST: DATE: Debbie Bretschneider, Interim City Clerk 280 SARATOGA CITY COUNCIL MEETING DATE:December 5, 2018 DEPARTMENT:City Manager’s Office PREPARED BY:Crystal Bothelio, Deputy City Manager SUBJECT:Acceptance of Public Art RECOMMENDED ACTION: Authorize execution of the attached agreement accepting donation of a painting from artist Pavel Mester and approve placement of the artwork in the Joan Pisani Community Center for a period of at least 1 year. BACKGROUND: At the November 27, 2018 meeting, the Public Art Committee recommended that the City Council authorize execution of an agreement accepting the donation of a mural from the artist, Pavel Mester, and approve placement of the artwork in the Joan Pisani Community Center for a period of at least 1 year, with the understanding that the artwork may be relocated after that time. The artwork would be accompanied by an exhibit card naming that artist and acknowledging the role of the Cal Arte Ensemble and Charles Aznavour in arranging the donation.In accordance with both the City’s Public Art Policy and Donation Policy, City Council action is required for final acceptance of the donated work. Over the course of the last year, the Public Art Committee has had several discussions about the possible artwork donation after learning that Cal Arte Ensemble, the Triton Museum of Art’s ensemble-in-residence, had received a gift from artist Pavel Mester to paint a mural and that Cal Arte Ensemble 281 wished to have the artwork be donated to the City of Saratoga. Since then, the Public Art Committee has considered conceptual designs of the artwork and potential locations. When the artist informed the City that the artwork had been completed, the Public Art Committee reviewed acceptance of the donation and placement of the art in advance of City Council consideration. The name of the artwork is Mikrokozmosz and it is inspired by Robert Schumann’s Piano Quartet in E flat Op. 47, interpreted by Tamami Honma. The painting is comprised of 3 pieces that will be hung side by side. The artist has agreed to use the City’s standard public artwork donation agreement and an initial draft is attached. If approved by the Council, the agreement will be signed by the City Manager and the artist after final details regarding the artwork are included the agreement. ATTACHMENTS: Attachment A – Public Artwork Donation Agreement 1064854.1 282 PUBLIC ARTWORK DONATION AGREEMENT THIS AGREEMENT is made and entered into on date last signed below between the City of Saratoga (“City”), a municipal corporation, and Pavel Mester (“Artist”). 1. Purpose of Agreement Artist, as the sole owner and creator of the artwork entitled “Mikrokozmosz” (“Artwork”), hereby donates the Artwork to the City. Exhibit A to this agreement describes the Artwork and includes a photograph of the Artwork. In consideration of Artist’s donation of the Artwork to City, City agrees to publicly display the Artwork in Joan Pisani Community Center for a period of at least one year and to credit Artist for the loan on a sign posted with the Artwork; the sign will also credit the Cal Arte Foundation and Charles Aznavour for their support in arranging the donation. 2. Artist’s Representations and Warranties a. Artist represents and warrants that Artist is the original and only creator of the Artwork. b. Artist represents and warrants that Artist is the sole owner of the Artwork. Artist further represents and warrants that the Artwork is free and clear of any liens and that there are no outstanding disputes in connection with property rights, intellectual property rights, or any other rights in the Artwork or parts of the Artwork. Artist represents and warrants that Artist is the sole owner of any and all copyrights and other intellectual rights pertaining to the Artwork. c. Artist represents and warrants that the Artwork will not pose a danger to public property, health or safety in view of the possibility of misuse, if such misuse is in a manner that was reasonably foreseeable at any time during the term of this Agreement. d. Artist represents and warrants that general routine maintenance and repair of this Artwork will maintain the Artwork within an acceptable standard of public display. e. Artist represents and warrants that the installation and removal of the Artwork will not unacceptably damage or alter the Artwork. f. If the location specified in section 1, above, is out of doors, Artist represents and warrants that foreseeable exposure to the elements and general wear and tear will cause the Artwork to experience only minor, repairable damage and will not cause the Artwork to fall below an acceptable standard of public display 283 Page 2 of 6 3. Intellectual Property and Publicity Rights a. City’s Intellectual Property License. Artist grants to City, and to City’s agents, authorized contractors and assigns, an unlimited, non-exclusive and irrevocable license to do the following with respect to the Artwork: (1) Use and Display. City may use and display the Artwork. (2) Reproduction and Distribution. City may make and distribute, and authorize the making, display and distribution of, photographs and other two-dimensional reproductions of the Artwork. City may use such reproductions for any City-related purpose, including advertising, educational and promotional materials, brochures, books, flyers, postcards, print, broadcast, film, electronic and multimedia publicity, and catalogues or similar publications. City shall ensure that such reproductions are made in a professional and tasteful manner, in the sole and reasonable judgment of the City. b. Third Party Infringement. The City is not responsible for any third party infringement of any copyright to the Artwork held by Artist and is not responsible for protecting the intellectual property rights of Artist. Artist understands and agrees that the Artwork will be displayed in a public place and may be photographed, filmed, or otherwise recorded for any purpose without any restriction by the City. c. Credit. On each City reproduction of the Artwork, the Artist shall be acknowledged, using designations provided by the Artist, to be the Artist of the Artwork. d. Trademark. In the event that City’s use of the Artwork creates trademark, service mark or trade dress rights in connection with the Artwork, City shall have an exclusive and irrevocable right in such trademark, service mark, or trade dress. e. Alteration. If City alters the Artwork without Artist’s consent in a manner that is prejudicial to Artist’s reputation, Artist retains the right to disclaim authorship of the Artwork. f. Release. Artist hereby releases City from any claims or demands associated with the Artwork including, without limitation, the right of privacy or publicity and Grantee hereby waives any rights arising from the Federal Copyright Act, including, but not limited to the Visual Artists Rights Act, 17 U.S.C §§106A and 113(d)(“VARA”) and from the California Art Preservation Act, Cal. Civil Code §§ 987 and 989 (“CAPA”). g. Resale. If City sells the Artwork, City shall pay to Artist a resale royalty to the 284 Page 3 of 6 extent required by law (e.g. Cal. Civil Code § 986), based upon the sale price of the Artwork. 4. Indemnification Artist shall indemnify, protect, defend and hold harmless the City and its subdivisions, officials, employees and agents from and against all liabilities, obligations, losses, damages, judgments, costs or expenses (including legal fees and costs of investigation) (collectively “Losses”) arising from, in connection with or caused by: (a) any personal injury or property damage caused, directly or indirectly, by any act or omission of Artist and/or Artist’s agents, employees, or assigns; (b) any infringement of patent, copyright, trademark, trade secret or other proprietary right; or (c) any infringement of Artist’s rights under 16 U.S.C. § 106A, 16 U.S.C. § 113, Civil Code §§ 987 et seq, or similar state, federal, or international law. Notwithstanding the foregoing, Artist shall have no obligation under this Section with respect to any Loss that is caused solely by the active negligence or willful misconduct of the City and is not contributed to by any act or omission (including any failure to perform any duty imposed by law) by Artist. Artist acknowledges and agrees that its obligation to defend in this Section: (i) is an immediate obligation, independent of its other obligations hereunder; (ii) applies to any Loss which actually or potentially falls within the scope of this Section, regardless of whether the applicable allegations are or may be groundless, false or fraudulent; and (iii) arises at and continues after the time the Loss is tendered to Artist. 5. Termination of Agreement Prior to the expiration of the display period set forth in Section 1 of this Agreement, the City may decide to remove the Artwork from public display and terminate this Agreement. In that case, the City will remove the Artwork and return it to Artist. City shall provide written notice of the intent to remove the Artwork and terminate the Agreement to the Artist at the address listed in Section 14 of this Agreement. 6. Installation and Removal of Artwork The City will have authority over the installation and removal of the Artwork. The City and Artist have jointly developed a plan for installation of the Artwork in a manner that is cost- effective as well as protective of City property and the Artwork. That plan is attached to this Agreement as Exhibit B. Artist shall take all actions reasonably necessary to facilitate and permit implementation of the plan described in Exhibit B, including making the Artwork available on a timely basis. Artist shall also be solely responsible for any and all activities identified in Exhibit B as being the responsibility of Artist. City shall be solely responsible for removal of the Artwork. If the Artwork can be removed from public display without significant damage to the Artwork or the site where the Artwork is installed, the City shall take reasonable precautions to minimize alteration of the Artwork during removal. If the Artwork cannot be removed from public display without alteration of the Artwork (e.g., it is incorporated into a building), Artist waives any and 285 Page 4 of 6 all such claims, and any rights granted under the Visual Artists Rights Act, the California Art Preservation Act, or similar law, against the City, its agents, officers and employees, for alteration of the Artwork. 7. Donation In accordance with the City’s donation policy, the parties agree that: a. The City will provide Artist with a donation receipt indicating the estimated value of the Artwork within 30 days of receiving the donation. b. Artist’s contribution to the City will be recognized publicly as described above. c. Except as provided in this agreement, the City may use the Artwork in any manner at its sole discretion and Artist has no right or obligation to control City’s use of the donation. d. Artist has not and will not receive any goods or services in exchange for the donation and the City will not grant any extra consideration to the donor in relation to City procurement, regulatory matters, or any other business, services, or operations of the City. e. Artist confirms that this donation is not made at the behest of a City Council Member or of any member of the Planning or Heritage Preservation Commissions or staff of the Community Development Department. 8. Choice of Law & Venue This Agreement shall be governed by the laws of California. The venue for all litigation or other disputes relative to this Agreement shall be the Superior Court for the County of Santa Clara. 9. Captions Section headings are for reference only and shall not be used to interpret this Agreement. 10. Severability If any provision hereof is found to be invalid or unenforceable, such finding shall not affect the validity of any other provision hereof; and such provision shall be enforced to the maximum extent possible so as to effect the intent of the parties. 11. No Waiver Any failure to enforce any right or to require performance of any provision of this Agreement shall not be considered a waiver of such right or performance. 286 Page 5 of 6 12. Entire Agreement This Agreement, including the attached and incorporated exhibits, contains the entire agreement between the parties, and supersedes all other oral or written provisions. 13. Modifications and Amendments No amendment or modification to this Agreement shall be effective unless it is in writing and signed by authorized representatives of each of the parties hereto. 14. Notices Unless otherwise indicated in this Agreement, all written communications sent by the parties may be made by U.S. Mail, e-mail, or fax, and shall be addressed as follows: City City Manager City of Saratoga 13777 Fruitvale Avenue Saratoga, CA 95070 with a copy to (which copy shall not constitute notice): City Clerk City of Saratoga 13777 Fruitvale Avenue Saratoga, CA 95070 Artist Pavel Mester [mailing address to be provided] Each party shall provide the other with written notice of any change in address within thirty (30) days of such change. 15. Binding Effect a. The provisions, covenants, and conditions in this Agreement shall inure to and bind the parties, their legal heirs, representatives, successors, and assigns. b. If City transfers ownership of the Artwork all rights and obligations of City under this Agreement shall be transferred to the successor owner of the Artwork, and said successor owner shall be bound by this Agreement. 16. Power to Execute Agreement. 287 Page 6 of 6 Each individual executing this agreement, on behalf of one of the parties, represents that he or she is duly authorized to sign and deliver the agreement on behalf of such party and that this agreement is binding on such party in accordance with its terms. IN WITNESS WHEREOF, the parties hereto have executed this Agreement by having their signatures affixed below. Artist City of Saratoga ________________________________ Pavel Mester Date: _________________ __________________________________ James Lindsay, City Manager Date: __________________ ATTEST: __________________________ Debbie Bretschneider, Interim City Clerk Date: ____________________ APPROVED AS TO FORM: __________________________ Richard Taylor, City Attorney Date: ____________________ 288 EXHIBIT A Description of Artwork See attached Public Art information sheet. Photo of the work below. Mikrokozmosz (3 panels, 46.8 x 66.2 in each) Pavel Mester Donation arranged by Cal Arte Foundation and Charles Aznavour 289 Exhibit B: Plan for Installation and Removal of Artwork [To be completed] Installation and de-installation (removal) of the Artwork will require the participation and cooperation of the Artist and the City as follows: Responsible Party (check appropriate column) Artist City 1. Transport to site from current location ( ) ( ) 2. Transport from site to new location/storage ( ) ( ) 3. Preparation of anchoring or support ( ) ( ) 4. Placement of anchoring or support ( ) ( ) 5. Removal of anchoring or support ( ) ( ) 6. Movement of Artwork from transport vehicle to display site ( ) ( ) 7. Movement of Artwork from display site to transport vehicle ( ) ( ) 8. Other related costs for installation (specified below) ( ) ( ) 9. Other related costs for de-installation (specified below) ( ) ( ) Note: Those items identified as being the responsibility of the City shall be arranged by the City and the costs covered under the provisions of the Agreement. Those items identified as being the responsibility of the Artist shall be arranged by the Artist, in cooperation with the City and its schedule, at no cost to the City. In accordance with the Agreement, any costs that result from Artist’s deviations from the responsibilities and schedules identified in this plan shall be borne by the Artist. Schedule for Installation Installation (check all that apply) o The Artist will make the Artwork available for pick up at _____________________ (address) by the transporter retained by the City beginning at _________________ (date/time). o The Artist will be at the display site to assist with installation at __________________________ (date/time). o The Artist will arrange in advance with the City for a date and time to install the Artwork. o The Artist will ensure that the Artwork is ready for display no later than _______________ (date). 1064828.2 290 CITY OF SARATOGA PUBLIC ART INFORMATION Page 1 of 4 OBJECT INFORMATION Title of Artwork: Mikrokozmosz Artwork Description: (describe the artwork and (if applicable) the components that comprise the complete installation) Triptych Artwork Provenance: (history of ownership, including dates work was transferred) The artwork of Pavel Mester is a donation to the City of Saratoga arranged with the assistance of the Cal Arte Music Foundation and Charles Aznavour. ARTIST INFORMATION Artist Surname: Mester Given Name: Pavel Birth Date: 06/August/1985 Birth Place: Castrum Novum, Croatia Sex: M Ethnicity: (optional) Homo sapiens Contact Information: (current address, phone number and e -mail) Pavel Mester (painter of this painting) pavel.mester@yahoo.com pmester34@gmail.com Tamami Honma (Cal Arte Music Foundation) tamamihonma@hotmail.com Attach Artist Resume: (curriculum vitae or resume) 1997 – 1st place in international adult art competition, which brought over 400 commissions, alma mater Cambridge University, professors Huxley, Olah, Zao Wou -ki, Rudolf Fila, Földes Imre 291 CITY OF SARATOGA PUBLIC ART INFORMATION Page 2 of 4 Exhibition History of Artist: (list or attach list of all exhibitions by title, date and museum/gallery/other venue name) ARTIST INTENT Statement of Intent: (provide any information about the subject of the work, sources of inspiration, ideas expressed in it or historical value relating to the work. You may attach a separate sheet.) Inspiration is Robert Schumann’s Piano Quartet in E flat Op. 47 interpreted by Tamami Honma Artist Signature and Date certifies that the information provided is accurate and complete: ________________________ _________________ Signature Date Provide photographic documentation of the fabrication and completed artwork for the archive. Digital images are preferred. 292 CITY OF SARATOGA PUBLIC ART TECHNICAL RECORD Page 3 of 4 In the interest of history, as well as for future conservation and restoration, should that become necessary, please complete this Public Art Technical Record. Describe all materials used to create this work of art, providing trade names wherever possible. Full Name of Artist: Pavel Mester Title of Artwork: Mikrokozmosz Date of Execution: Fall 2018 Dimensions: 2A0/3 (3 panels, each 46.8 x 66.2 in.) Artwork Material(s): (list type and brand name for all materials) Egg tempera and pigments on wood Framing Materials and Construction Method : (list type and brand name for all materials) Suggesting: L contra L Technique or Construction Method: (List all architects and fabricators. Attach any warranties or agreements) Basic 293 Page 4 of 4 Finish: (all anti-graffiti/protective coatings, fixative coatings, fire retardant, sprays, etc .) None at the moment. Ideally bullet proof glass or clear transparent matte or semi matte coating with UV filter if possible can be used. Protectiv e coating can be applied after 6-12 months after finishing, to allow proper drying time. The artwork will not self-ignite. Foundation/Installation Method: L contra L: simple hanging on a L shape rail or piece of wood attached to the wall. Maintenance and Care of Artwork: (suggested cleaning agent and procedures; storage recommendations) Lightly clean with duster or soft clean cloth after first 5 years if needed. Placement of Artwork: (cautions regarding sunlight, heat, etc.) No special cautions, the chosen place at Joan Pisani Community Center is ideal, there is no danger of damage by sunlight or heat. (direct sunlight damages most paints, makes most colors/materials fade or oxidize) Handling Instructions: Normal 1064835.1 294 SARATOGA CITY COUNCIL MEETING DATE:December 5, 2018 DEPARTMENT:City Manager’s Office PREPARED BY:Debbie Bretschneider, City Clerk SUBJECT:Review of City Council Assignments RECOMMENDED ACTION: Review the list of City Council assignments and provide direction on changes to items included in the assignments. BACKGROUND: Every December, the City Council reviews assignments and provides direction on changes in two parts. During the first meeting,the City Council reviews the list of assignments and provides direction on assignments that should be added or removed, as well as assignment descriptions. During the second meeting in December, proposed member assignments are presented for City Council consideration and adoption. Each Council Member should submit assignment preferences to the Mayor by Sunday, December 16. Proposed member assignments will be submitted to the City Council as a supplemental attachment after the packet for the December 19, 2018 City Council meeting is published. The Council adopted the Council Assignments in 2017 with Resolution 17-055 but amended the Council Assignments in 2018 with two new assignments. The current assignments list is from Resolution 18-044. The Santa Clara County Clerk of the Board has confirmed that the County of Santa Clara Comprehensive County Expressway Planning Study Policy Advisory Board has been disbanded and so has been taken off the list of Assignment Descriptions. ATTACHMENTS: Attachment A –City Council Assignment Descriptions Attachment B –Current City Council Assignments 295 Saratoga City Council Assignment Descriptions AGENCY ASSIGNMENTS VOTING DESCRIPTION Association of Bay Area Government (ABAG) ABAG is the Regional Planning Agency for the nine County Bay Areas. Executive Board meetings are held quarterly, however a representative appointed by the Santa Clara Cities Association represents Saratoga along with other cities in Santa Clara County. More information: www.abag.ca.gov The annual General Assembly is held in Oakland in the spring (and occasionally also in the fall), date and time to be announced. Cities Association of Santa Clara County Board of Directors The Cities Association serves as a forum for the 15 cities within Santa Clara County to discuss issues of mutual concern. Andi Jordan, Executive Director, staffs the organization. One Council Member represents each city at meetings of the Cities Association. More information: http://citiesassociation.org Contact: Andi Jordan (408) 766-9534 Meetings are held on the second Thursday of every month, except July, at 7:00 p.m. at Sunnyvale City Hall at 456 West Olive Avenue in Sunnyvale. Cities Association of Santa Clara County Legislative Action Committee The Cities Association Legislative Action Committee periodically convenes to consider and act on regional and state-wide issues that are of unique local interest to the cities of Santa Clara County. The membership consists of one representative from each City in the County. More information: http://citiesassociation.org Contact: Andi Jordan (408) 766-9534 The Legislative Action Committee meets prior to the Board of Director’s Meeting, as needed. Cities Association of Santa Clara County City Selection Committee The Cities Association Selection Committee periodically convenes to make appointments to regional and local bodies, pursuant to Government Code 50270-50279.4. Per the Cities Association Bylaws, the members include the Mayor or the Mayor’s designee of each City in the County. More information: http://citiesassociation.org 296 Contact: Andi Jordan (408) 766-9534 The Cities Selection Committee meets prior to the Board of Director’s Meeting, as needed. Hakone Foundation Board The Hakone Foundation is a 501c3 nonprofit that operates Hakone Gardens in Saratoga. In accordance with the City’s lease agreement with the Hakone Foundation, two members of the City Council shall represent the City of Saratoga on the Board of Directors. The two Council Members have the same rights and duties of other members of the Board of Trustees. More information: http://www.hakone.com/about/board-of-trustees.html Contact: Shozo Kagoshima (408) 741-4994 The Board meets quarterly at 7:00 p.m. on the third Thursday of February, May, September, and has special meetings when needed. Meets at Hakone at the Cultural Exchange Center. Hakone Foundation Board & Executive Committee Per the City’s agreement with the Hakone Foundation, the City is entitled to one position on the Executive Committee. The Mayor shall occupy the position, or a Council Member selected by the Mayor may fill the position. Contact: Shozo Kagoshima (408) 741-4994 KSAR Community Access CATV Foundation Board One member of the City Council, along with the City Manager or the City Manager’s designee, represents the City on the Community Access Television Board. Other Board members include representatives from the West Valley-Mission College District Board, one staff member from West Valley College and three public members who must be Saratoga residents and who are selected jointly by the four City and College Board members. The CATV Board establishes policies and priorities for the management and operation of the local community access television station, which are then implemented by the Community Access Coordinator. KSAR is a 501c3 Board. More information: http://www.ksar15.org/home/index.php Contact: David Lee stationmanager@ksar15.org The Board meets on the fourth Wednesday of every other month at 2:30 p.m. at City Hall. Santa Clara County Housing and Community Development Advisory Committee (HCDAC) The HCD Council Committee is comprised of local elected officials who review and recommend policies and priorities concerning the County’s Housing & Community Development, and Community Development Block Grant Programs (CDGB) to the County Board of Supervisors. 297 More information: https://www.sccgov.org/sites/osh/Pages/home.aspx Contact: (408) 441-4323 The Committee meets three times during the Fiscal Year at 2310 North First Street, San Jose. Santa Clara County Library District Joint Powers Authority Board A City Council Member from each city within the Santa Clara County Library District serves on the Library JPA Board. The Library JPA is the policy making and governing body of the County’s library system. More information: http://www.sccl.org/about/governance/jpa-board-meetings Contact: Tracy Ellenberger (408) 293-2326 x3093 The Library JPA meets four times a year in January, April, June, and October on the fourth Thursday at 1:30 pm. at the Santa Clara County Library Services and Support Center, located at 1370 Dell Avenue in Campbell. In June, the meeting is held the first Thursday. Santa Clara Valley Water Commission The Water District’s Water Commission advises the Water District Board on issues related to water supply, flood protection and environmental stewardship. Commission Members include representatives from each of the cities in the County, the Water District, the County, Santa Clara County Open Space Authority, and Midpeninsula Regional Open Space District. More information: http://www.valleywater.org/About/WaterCommission.aspx Contact: Glenna Brambill (408) 630-2408 The Water Commission meets on the 4th Wednesday from 12:00 p.m. - 2:00 p.m., in January, July, and October, except for April, which meets on the 2 nd Wednesday at the District Headquarters located at 5700 Almaden Expressway in San Jose. Lunch is available at 11:30 a.m. Saratoga Area Senior Coordinating Council The Saratoga Area Senior Coordinating Council (SASCC) is a non-profit that operates the Saratoga Senior Center and Adult Care Center. One member of the City Council serves as liaison to the SASCC Board to maintain open communications between the City and SASCC. Contact: Tyler Taylor (408) 868-1257 The Board meets on the fourth Wednesday every of month at 3:00 a.m. at City Hall in the Magnolia Room (except for December). 298 Silicon Valley Clean Energy Authority Board of Directors The purpose of the Board of Directors is to provide policy, administrative, and operational oversight to the Silicon Valley Clean Energy Authority. The membership includes representatives of each of the communities participating in the Silicon Valley Clean Energy Authority. More information: http://www.svcleanenergy.org/ Contact: Andrea Pizano (408)721-5301 x1005 Meetings are held the 2th Wednesday of each month at 7:00 p.m. at the Cupertino Community Hall, 10350 Torre Ave, Cupertino Santa Clara/Santa Cruz Counties Airport/Community Roundtable The overall purpose of the Santa Clara/Santa Cruz Counties Community Roundtable is to continue to foster and enhance this cooperative relationship to develop, evaluate, and implement reasonable and feasible policies, procedures, and mitigation actions that will further reduce the impacts to aircraft noise in neighborhoods and communities in Santa Clara and Santa Cruz Counties. Contact: Andi Jordan (408)766-9534 andi@citiesassociation.org Meetings will be every other month, starting in January 2019. Valley Transportation Authority Policy Advisory Committee The VTA PAC is one of several standing advisory committees to the VTA Board of Directors. Composed of elected official representing each of the cities in the County, the PAC makes recommendations to the VTA Board on issues of transportation planning and programming. More information: http://www.vta.org/get-involved/advisory-committee/policy-advisory-committee- pac Contact: Office of the Board Secretary (408) 321-5680 The VTA PAC generally meets on the second Thursday of the month at the VTA River Oaks Campus at 3331 North First Street, Conf. Room B-104 in San Jose, at 4:00 p.m. or as otherwise posted Valley Transportation Authority State Route 85 Corridor Policy Advisory Board The SR 85 Corridor Policy Advisory Board was established to ensure the stakeholder cities in the SR 85 corridor are involved in the development of existing and potential transportation capital projects along the corridor and can provide input and recommendations to the VTA Board of Directors. More information: http://www.vta.org/Get-Involved/Policy-Advisory-Boards/State-Route-SR-85- Corridor-Policy-Advisory-Board Contact: Office of the Board Secretary (408) 321-5680 299 Meetings are held the 4th Monday of every month at 10 a.m., except Nov. and Dec. which meet on the 3rd Monday at 10 a.m. Meetings are at VTA offices at 3331 N. First St., San Jose or otherwise posted West Valley Clean Water Program Authority The West Valley Clean Water Program (WVCWP) serves as the Stormwater Pollution Prevention Authority for the cities of Campbell, Monte Sereno, Saratoga, and the Town of Los Gatos. More Information: http://www.cleancreeks.org/ Contact: info@cleancreeks.org (408) 354-5385 Meetings are held quarterly and are held at One West Campbell Ave, #H-73, Campbell West Valley Mayors and City Managers Association The West Valley Mayors and Managers Association is a sub-regional grouping of the VTA governance structure. It consists of the Mayors and City Mangers from the cities of Campbell, Cupertino, Monte Sereno, Saratoga and the Town of Los Gatos. It is charged with selecting the VTA Board member representing the above municipalities (for a two-year term). Meetings are monthly, meetings in August and December are usually cancelled. Each city hosts the gathering for a year at a time, rotating in alphabetical order West Valley Sanitation District The West Valley Sanitation District provides wastewater collection and disposal services to Campbell, Monte Sereno, Los Gatos, most of Saratoga, and a portion of unincorporated Santa Clara County. The five-member Board of Directors is composed of one Council Member from each of the four west valley cities and the District 4 Santa Clara County Supervisor. Board members are compensated $100 for each meeting attended. More information: http://www.westvalleysan.org/aboutus/directorsandstaff/directorsandstaff Contact: John Newby (408) 378-2407 The Board meets on the second Wednesday of the month at 6:00 p.m. (unless the Board adopts an alternate schedule) at the District’s Office located at 110 E. Sunnyoaks Avenue in Campbell West Valley Solid Waste Management Authority (WVSWMA) This WVSWMA consists of the west valley cities of Campbell, Los Gatos, Monte Sereno, and Saratoga. The Authority was formed to coordinate efforts in carrying out solid waste collection and disposal activities, and in meeting the mandates of AB939, the States’ Integrated Waste Management Act. The Authority is responsible for establishing collection rates within each city and overseeing both landfill 300 and hauler agreements. The Authority Board is composed of one Council Member from each of the four member agencies. More information: http://www.wvswma.org Contact: Marva Sheehan (925) 977-6961 Meetings are held on the first Thursday of February, May, September, and November at 5:00 p.m. at Monte Sereno City Hall located at 18041 Saratoga Los Gatos Road in Monte Sereno LIAISON ASSIGNMENTS NON-VOTING DESCRIPTION America in Bloom Committee The Saratoga America in Bloom Committee is comprised of residents and volunteers in Saratoga that work on submittal of the Saratoga America in Bloom application, work towards having Saratoga become a member of the America in Bloom Circle of Champions, and host America in Bloom judges. The City Council representative serves as a liaison to maintain open communication with the committee. Meetings are held as needed. Saratoga Chamber of Commerce Board & Destination Saratoga Saratoga Chamber of Commerce promotes local business through a variety of programs and services, including networking, member education, business development, promotion, marketing, and advertising assistance. One member of the City Council serves as liaison to the Chamber of Commerce Board. More information: http://www.saratogachamber Contact: Kelly Medrano (408) 867-0753 Meetings are held on the second Thursday of every month at 4:00 p.m. at the Chamber of Commerce Office. Destination Saratoga promotes Saratoga as a leisure destination, emphasizing its scenic beauty and unique offerings in food, wine, recreation, and leisure. Additionally, Destination Saratoga works toward establishing and maintaining a branding identity for the City of Saratoga. 301 Meetings are held as needed. Saratoga Historical Foundation Board of Directors The Saratoga Historical Foundation in 1962 to promote interest in Saratoga history, research and collect records, pictures, artifacts, and other memorabilia related to local history, and maintain the history for the display and safekeeping of archival material. One member of the City Council serves as a liaison to the Historical Foundation. More information: http://www.saratogahistory.com/ Contact: Annette Stransky (408) 867-7468 Meetings are held on the third Thursday of the month (excluding December and August) from 5:00 – 7:00 p.m. in the Historical Museum. Saratoga Ministerial Association The Saratoga Ministerial Association is comprised of representatives from communities of faith located within the city of Saratoga. The purpose of the group is to build community and support city residents through cooperation and joint activities, including the annual Thanksgiving Day service, summer block parties and other events. One member of the City council serves as liaison to the Ministerial Association. Contact: Eric Swanson sfishrev@gmail.com The group meets monthly on the fourth Wednesday at noon (except in July, August and December). The location rotates among the congregations. Saratoga Sister City Committee Liaison The purpose of the Sister City Committee is to plan and carry out programs and activities, which strengthen Saratoga’s relationship with its sister city, Muko-Shi, in Japan. One member of the City Council serves as liaison to the Sister City Committee. Contact: Peter Marra piero@pacbell.net Meetings are held the first Tuesday of every month at 7:00 p.m. at the Joan Pisani Community Center. COUNCIL COMMITTEES DESCRIPTION Council Finance Committee The Finance Committee reviews and provides recommendations on the City’s financial matters, including the budget, financial policies, and annual audit. 302 More information: http://www.saratoga.ca.us/359/Finance-Committee Contact: Mary Furey (408) 868-1221 Meetings are typically held monthly. Public Art Committee The Public Art Committee is comprised of 2 Council Members. The Committee considers and makes recommendations on opportunities for public art in Saratoga. More information: http://www.saratoga.ca.us/326/Public-Art-Committee Contact: Crystal Bothelio (408) 868-1269 Meetings are held as needed. 303 2018 SARATOGA CITY COUNCIL ASSIGNMENTS Adopted via Resolution No. 18-044 Agency Assignments -Voting Council Member Alternate Association of Bay Area Governments Kumar Lo Cities Association of Santa Clara County Board of Directors Cappello Bernald Cities Association of Santa Clara County –Legislative Action Committee Bernald Cappello Cities Association of Santa Clara County –City Selection Committee Bernald Cappello Hakone Foundation Board Bernald N/A Hakone Foundation Board & Executive Committee Lo N/A KSAR Community Access TV Board Lo Bernald County of Santa Clara Comprehensive County Expressway Planning Study Policy Advisory Board Kumar N/A Santa Clara County Housing and Community Development (HCDAC) Advisory Committee Cappello Bernald Santa Clara County Library Joint Powers Authority Board Lo Kumar Santa Clara/Santa Cruz Airport/Community Roundtable Bernald Miller Santa Clara Valley Water Commission Kumar Miller Saratoga Area Senior Coordinating Council (SASCC)Cappello Bernald Silicon Valley Clean Energy Authority Board of Directors Miller Lo Valley Transportation Authority (VTA) Policy Advisory Committee Miller Kumar VTA State Route 85 Corridor Policy Advisory Board Miller Bernald West Valley Clean Water Program Authority Bernald Lo West Valley Mayors and Managers Association Bernald Cappello West Valley Sanitation District Cappello Bernald West Valley Solid Waste Management Joint Powers Authority Bernald Lo Liaison Assignments -Non-Voting Council Member Alternate America in Bloom Committee Miller Any Member Available Saratoga Chamber of Commerce Board & Destination Saratoga Kumar Lo Saratoga Historical Foundation Bernald Cappello Saratoga Ministerial Association Miller Any Member Available Saratoga Sister City Organization Miller Bernald Council Committee Assignments Council Member 2nd Council Member Council Finance Committee Miller Bernald Public Art Committee Bernald Lo 304