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Home My WebLink About2016-02-24 E-PACKETATTACHMENT 1 PENINSULA CLEAN ENERGY ORDINANCE ORDINANCE NO. _________ CITY COUNCIL, CITY OF SOUTH SAN FRANCISCO STATE OF CALIFORNIA AN ORDINANCE AUTHORIZING THE IMPLEMENTATION OF A COMMUNITY CHOICE AGGREGATION PROGRAM IN SOUTH SAN FRANCISCO BY AND THROUGH A JOINT EXERCISE OF POWERS AGREEMENT WITH THE PENINSULA CLEAN ENERGY AUTHORITY _______________________________________________ WHEREAS, the County of San Mateo prepared a Feasibility Study for a community choice aggregation (“CCA”) program in San Mateo County with the cooperation of the cities under the provisions of the Public Utilities Code section 366.2. The Feasibility Study shows that implementing a community choice aggregation program would provide multiple benefits, including: •Providing customers a choice of power providers; •Increasing local control and involvement in and collaboration on energy rates and other energy-related matters; •Providing more stable long-term electric rates that are competitive with those provided by the incumbent utility; •Reducing greenhouse gas emissions arising from electricity use within San Mateo County; •Increasing local renewable generation capacity; •Increasing energy conservation and efficiency projects and programs; •Increasing regional energy self-sufficiency; •Improving the local economy resulting from the implementation of local renewable and energy conservation and efficiency projects; and WHEREAS, the City Council of the City of South San Francisco (“City”) has directed staff to bring for its approval a Joint Exercise of Powers Agreement whereby the City will join the Peninsula Clean Energy Authority (“Authority”). Under the Joint Powers Agreements, cities and towns within San Mateo County may participate in the Peninsula Clean Energy CCA program by adopting the resolution and ordinance required by Public Utilities Code section 366.2. Cities and towns choosing to participate in the CCA program will have membership on the Board of Directors of the Authority as provided in the Joint Powers Agreement; and WHEREAS, the Authority will enter into Agreements with electric power suppliers and other service providers, and based upon those Agreements the Authority will be able to provide power to residents and business at rates that are competitive with those of the incumbent utility. Once the California Public Utilities Commission approves the implementation plan created by the Authority, the Authority will provide service to customers within the unincorporated area of San Mateo County and within the jurisdiction of those cities who have chosen to participate in the CCA program; and 1 WHEREAS, under Public Utilities Code section 366.2, customers have the right to opt- out of a CCA program and continue to receive service from the incumbent utility. Customers who wish to continue to receive service from the incumbent utility will be able to do so; and WHEREAS, on January 27, 2016, the City Council held a study session, and on February 10, 2016, the City Council held a public meeting on the ordinance, at which both meetings interested persons had an opportunity to testify either in support or opposition to implementation of the Peninsula Clean Energy CCA program in the City. WHEREAS, this ordinance is exempt from the requirements of the California Environmental Quality Act (CEQA) pursuant to the CEQA Guidelines, as it is not a “project” as it has no potential to result in a direct or reasonably foreseeable indirect physical change to the environment. (14 Cal. Code Regs. § 15378(a)). Further, the ordinance is exempt from CEQA as there is no possibility that the ordinance or its implementation would have a significant effect on the environment. (14 Cal. Code Regs. § 15061(b)(3)). The ordinance is also categorically exempt because it is an action taken by a regulatory agency to assume the maintenance, restoration, enhancement, or protection of the environment. (14 Cal. Code Regs. § 15308). The City’s Economic and Community Development Department shall cause a Notice of Exemption to be filed as authorized by CEQA and the CEQA Guidelines. NOW, THEREFORE, the City Council of the City of South San Francisco does hereby ORDAIN as follows: SECTION 1. FINDINGS. The City Council of the City of South San Francisco has investigated options to provide electric services to customers within the City with the intent of achieving greater local control and involvement over the provision of electric services, competitive electric rates, the development of clean, local, renewable energy projects, reduced greenhouse gas emissions, and the wider implementation of energy conservation and efficiency projects and programs; and hereby finds and declares as follows: SECTION 2. RECITALS. The above recitations are true and correct and material to this Ordinance. SECTION 3. AUTHORIZATION TO IMPLEMENT A COMMUNITY CHOICE AGGREGATION PROGRAM. Based upon the forgoing, and in order to provide business and residents within the City of South San Francisco with a choice of power providers and with the benefits described above, the City Council of the City of South San Francisco ordains that it shall implement a community choice aggregation program within its jurisdiction by participating as a group with the County of San Mateo and other cities and towns as described above in the Community Choice Aggregation program of the Peninsula Clean Energy Authority, as generally described in the Joint Exercise of Powers Agreement. SECTION 4. SEVERABILITY If any provision of this Ordinance or the application thereof to any person or 2 circumstance is held invalid or unconstitutional, the remainder of this Ordinance, including the application of such part or provision to other persons or circumstances, shall not be affected thereby and shall continue in full force and effect. To this end, provisions of this Ordinance are severable. The City Council of the City of South San Francisco hereby declares that it would have passed each section, subsection, subdivision, paragraph, sentence, clause, or phrase hereof irrespective of the fact that any one or more sections, subsections, subdivisions, paragraphs, sentences, clauses, or phrases be held unconstitutional, invalid, or unenforceable. SECTION 5. PUBLICATION AND EFFECTIVE DATE. Pursuant to the provisions of Government Code Section 36933, a summary of this Ordinance shall be prepared by the City Attorney. At least five (5) days prior to the Council meeting at which this Ordinance is scheduled to be adopted, the City Clerk shall (1) publish the Summary, and (2) post in the City Clerk’s Office a certified copy of this Ordinance. Within fifteen (15) days after the adoption of this Ordinance, the City Clerk shall (1) publish the summary, and (2) post in the City Clerk’s Office a certified copy of the full text of this Ordinance along with the names of those City Council members voting for and against this Ordinance or otherwise voting. This Ordinance shall become effective thirty (30) days from and after its adoption. Introduced at a regular meeting of the City Council of the City of South San Francisco held on the 10th day of February, 2016. Adopted as an Ordinance of the City of South San Francisco at a regular meeting of the City Council held on the 24th day of February, 2016, by the following vote: AYES: ___________________________________________________________ NOES: __________________________________________________________ ABSTAIN: _______________________________________________________ ABSENT: ________________________________________________________ Attest: ________________________________ City Clerk As Mayor of the City of South San Francisco, I do hereby approve the foregoing ordinance this 24th day of February, 2016. _______________________ Mark Addiego, Mayor 3 Staff Report DATE: February 24, 2016 TO: Mayor, Vice Mayor, and Councilmembers FROM: Alex Greenwood, Director of Economic and Community Development SUBJECT: ADOPTION OF AN ORDINANCE AMENDING THE SOUTH SAN FRANCISCO MUNICIPAL CODE CHAPTER 20.270 (“EL CAMINO REAL/CHESTNUT AVENUE AREA PLAN DISTRICT”) TO MAKE CHANGES TO THE LAND USE REGULATIONS AND DEVELOPMENT STANDARDS; CHAPTER 20.280 (“DOWNTOWN STATION AREA SPECIFIC PLAN DISTRICT”) TO MAKE CHANGES TO THE LAND USE REGULATIONS AND DEVELOPMENT STANDARDS; CHAPTER 20.490 (“USE PERMITS”) TO CLARIFY CONDITIONAL USE PERMIT REVIEW AUTHORITY; AND CHAPTER 20.570 (“APPEALS AND CALLS FOR REVIEW”) TO MODIFY CALL FOR REVIEW AUTHORITY FOR THE CITY COUNCIL FOR PLANNING COMMISSION REVIEWED PROJECTS RECOMMENDATION It is recommended that the City Council take the following action: 1. Waive reading and adopt an Ordinance making findings and approving Zoning Amendment ZA15-0009 amending the Zoning Ordinance Chapter 20.270 to make changes to land use regulations and development regulations of the El Camino Real/Chestnut Avenue Area Plan District; Chapter 20.280 to make changes to the land use regulations and development standards of the Downtown Station Area Specific Plan District; Chapter 20.490 to clarify Use Permit authority; and Chapter 20.570 to revise call for review authority for the City Council for Planning Commission reviewed projects. BACKGROUND/DISCUSSION The City Council previously waived reading and introduced the following ordinance. The ordinance is now ready for adoption. AN ORDINANCE AMENDING THE SOUTH SAN FRANCISCO MUNICIPAL CODE CHAPTER 20.270 (“EL CAMINO REAL/CHESTNUT AVENUE AREA PLAN DISTRICT”) TO MAKE CHANGES TO THE LAND USE REGULATIONS AND DEVELOPMENT STANDARDS; CHAPTER 20.280 (“DOWNTOWN STATION AREA SPECIFIC PLAN DISTRICT”) TO MAKE CHANGES TO THE LAND USE REGULATIONS AND DEVELOPMENT ORDINANCE NO. ________ CITY COUNCIL, CITY OF SOUTH SAN FRANCISCO STATE OF CALIFORNIA AN ORDINANCE AMENDING THE SOUTH SAN FRANCISCO MUNICIPAL CODE CHAPTER 20.270 (“EL CAMINO REAL/CHESTNUT AVENUE AREA PLAN DISTRICT”) TO MAKE CHANGES TO THE LAND USE REGULATIONS AND DEVELOPMENT STANDARDS; CHAPTER 20.280 (“DOWNTOWN STATION AREA SPECIFIC PLAN DISTRICT”) TO MAKE CHANGES TO THE LAND USE REGULATIONS AND DEVELOPMENT STANDARDS; CHAPTER 20.490 (“USE PERMITS”) TO CLARIFY CONDITIONAL USE PERMIT REVIEW AUTHORITY; AND CHAPTER 20.570 (“APPEALS AND CALLS FOR REVIEW”) TO MODIFY CALL FOR REVIEW AUTHORITY FOR THE CITY COUNCIL FOR PLANNING COMMISSION REVIEWED PROJECTS WHEREAS, on January 28, 2015 the City Council for the City of South San Francisco considered and adopted the Downtown Station Area Specific Plan (“DSASP”) and associated Draft and Final Environmental Impact Reports; and WHEREAS, since the time of adoption, minor revisions to the adopted zoning to implement the DSASP have been identified to clarify development regulations; and WHEREAS, the City Council has also expressed a desire to have discretionary review authority for new downtown development projects; and WHEREAS, consistent with this new authority in the DSASP area, staff has recommended that similar review authority also be provided for the El Camino Real/Chestnut Avenue Area Plan District (“ECR/CH Plan”); and WHEREAS, providing the City Council with final review authority will assure that new developments are consistent with the DSASP and ECR/CH Plan, community priorities, and City Council preferences to ensure civic-wide benefits for existing and future residents; and WHEREAS, the City has prepared a Zoning Amendment (“Amendment”) to the City’s Zoning Ordinance, including refinements to Chapter 20.270 for the El Camino Real/Chestnut Avenue Area Plan District, 20.280 for the Downtown Station Area Specific Plan District, clarifications to Chapter 20.490 for Use Permit authority, and modifications to Chapter 20.570 to provide the City Council with revised appeal authority for Planning Commission reviewed projects; and WHEREAS, these Amendments are consistent with the previous preparation, circulation, consideration, and adoption of the ECR/CH Plan EIR and DSASP EIR in accordance with the California Environmental Quality Act, Public Resources Code Sections 21000, et seq. (“CEQA”), in which both EIR s analyzed the environmental impacts of adopting the Plans and associated Zoning Ordinance amendments and concluded that adoption of the Plans could have 1 significant effects on the environment because some of the impacts required to be analyzed under CEQA would exceed established thresholds of significance; and WHEREAS, the City Council adopted the ECR/CH Plan EIR and a Statement of Overriding Considerations that evaluated the benefits of the ECR/CH Plan against its unavoidable impacts on May 25, 2011; and WHEREAS, the City Council adopted the DSASP EIR and a Statement of Overriding Considerations that evaluated the benefits of the DSASP against its unavoidable impacts on January 28, 2015; and WHEREAS, the Zoning Ordinance was adopted after preparation, circulation, consideration, and adoption of an Initial Study/Negative Declaration (“IS/ND”) in accordance with the California Environmental Quality Act, Public Resources Code Sections 21000, et seq. (“CEQA”), in which the IS/ND analyzed the environmental impacts of adopting the Zoning Ordinance and concluded that adoption of the Zoning Ordinance could not have a significant effect on the environment because none of the impacts required to be analyzed under CEQA would exceed established thresholds of significance; and WHEREAS, the refinements, clarifications, and/or corrections set forth in this Amendment, as they relate to development regulations within the DSASP area and review authority for the City Council in the ECR/CH and DSASP Plan, and broader City Council call for review authority over Planning Commission reviewed projects are minor in nature, the adoption of which would not result in any new significant environmental effects or a substantial increase in the severity of any previously identified effects beyond those disclosed and analyzed in the EIRs adopted for both the ECR/CH and DSASP Plan or the IS/ND prepared for the Zoning Ordinance Update, nor do the refinements, clarifications, and/or corrections constitute a change in the project or change in circumstances that would require additional environmental review. NOW, THEREFORE, BE IT ORDAINED that based on the entirety of the Record before it, as described below, the City Council of the City of South San Francisco does hereby ORDAIN as follows: SECTION I. FINDINGS. Based on the entirety of the record as described above, the City Council for the City of South San Francisco hereby makes the following findings: 2 I. General Findings 1. The foregoing recitals are true and correct and made a part of this Ordinance. 2. The Record for these proceedings, and upon which this Ordinance is based, includes without limitation, Federal and State law; the California Environmental Quality Act (Public Resources Code §§ 21000, et seq. (“CEQA”)) and the CEQA Guidelines (14 California Code of Regulations § 15000, et seq.); the South San Francisco General Plan and General Plan EIR, including all amendments and updates thereto; the South San Francisco Municipal Code; the adopted South San Francisco Downtown Station Area Specific Plan, prepared by BMS Design Group; the South San Francisco Downtown Station Area Specific Plan EIR, including the Draft and Final EIR, and all appendices thereto; the adopted El Camino Real/Chestnut Avenue Area Plan, prepared by Dyett and Bhatia; the El Camino Real/Chestnut Avenue Area Plan EIR, including the Draft and Final EIR, and all appendices thereto; all reports, minutes, and public testimony submitted as part of the Planning Commission’s duly noticed September 17, 2015 meeting; all reports, minutes, and public testimony submitted as part of the Planning Commission’s duly noticed December 17, 2015 meeting; all reports, minutes, and public testimony submitted as part of the City Council’s duly noticed October 28, 2015 study session meeting; and all reports, minutes, and public testimony submitted as part of the City Council’s duly noticed February 10, 2016 meeting; and any other evidence (within the meaning of Public Resources Code §21080(e) and §21082.2) 3. The refinements, clarifications, and/or corrections set forth in this Amendment, as they relate to development regulations within the DSASP area and ECR/CH Plan areas, and the revisions to the Use Permit review authority and the Appeals and Calls for Review chapter, are minor in nature, the adoption of which would not result in any new significant environmental effects or a substantial increase in the severity of any previously identified effects beyond those disclosed and analyzed in the EIRs adopted for both the DSASP and ECR/CH Plan on January 28, 2015, and May 25, 2011, respectively or the IS/ND prepared for the Zoning Ordinance Update, nor do the refinements, clarifications, and/or corrections constitute a change in the project or change in circumstances that would require additional environmental review. 4. The documents and other material constituting the record for these proceedings are located at the Planning Division for the City of South San Francisco, 315 Maple Avenue, South San Francisco, CA 94080, and in the custody of Chief Planner, Sailesh Mehra. II. Zoning Text Amendment Findings 1. As described in Section II, adoption of the proposed Zoning Ordinance Amendments will include revisions to Title 20 of the South San Francisco Municipal Code, to reflect minor changes to the Downtown Station Area Specific Plan District (SSFMC 20.280), modify the land use regulations and development standards for new development projects within the Downtown Station Area Specific Plan District and El Camino Real/Chestnut Avenue Area 3 Plan District (SSFMC 20.270), clarify Use Permit authority (SSFMC 20.490), and modify the appeals and call up process for development projects (SSFMC 20.570). 2. The proposed Zoning Ordinance Amendments are consistent with the General Plan because the Ordinance Amendments will continue to reinforce many of the General Plan policies related to land use, specifically pedestrian-friendly mixed-use, infill development, and improved linkages to a transit center as defined in the General Plan. Further, the Zoning Ordinance Amendments do not conflict with any specific plans, and will remain consistent with the City’s overall vision for community development, economic vitality, and redevelopment in the downtown and along the El Camino Real and Chestnut Avenue corridors. None of the new or revised definitions, tables, figures and land uses will conflict with or impede achievement of any of the goals, policies, or land use designations established in the General Plan. 3. The areas of the City impacted by the proposed Zoning Ordinance Amendments are suitable for the proposed uses. The Zoning Ordinance Amendments will allow for clarification of development regulations throughout the DSASP area and ECR/CH Plan areas to provide consistency with the DSASP and ECR/CH Plan, community priorities, and City Council preferences to ensure civic-wide benefits for existing and future residents, and a more robust array of development and land uses in the downtown and along the El Camino Real and Chestnut Avenue corridors. Although specific parcels would be affected as part of the Zoning Ordinance Amendments, the impact would be beneficial since property owners would have a wider set of standards to improve or develop upon their property and new zoning regulations would guide the development and performance of properties within the Downtown Station Area Specific Plan. The Zoning Ordinance Amendments are consistent with General Plan policies, specifically those policies related to community development, economic vitality, vibrant walkability, and redevelopment in the downtown and along the El Camino Real and Chestnut Avenue corridors. Modifications to the Use Permits and Appeals and Calls for Review chapters would not affect or change land use citywide and no land use impact is expected. 4. The proposed Zoning Ordinance Amendments are not detrimental to the use of land in any adjacent zone because the Ordinance Amendments would provide for sufficient development, land use, and performance standards related to new development or alteration. More specifically, the Zoning Ordinance Amendments include regulations to allow a wider array of commercial and employment uses within the DSASP area, new development standards for the Linden Community Commercial (LCC) and Linden Neighborhood Commercial (LNC) zoning districts, modifications to storage requirements for new residential development projects, clarifications to Use Permit authority, and provision of a modified call for review authority for the City Council. The proposed Ordinance Amendments will not be detrimental to the public interest, convenience, or welfare of the City or land within the City; instead, the Ordinance amendments will bolster the public interest by ensuring orderly and suitable infill development and design review, as recommended in the General Plan’s land use element and Downtown and El Camino Real planning sub-areas. 4 SECTION II. AMENDMENTS. The City Council hereby amends the following sections of the South San Francisco Municipal Code to read as follows. Sections and subsections that are not amended by this Ordinance are not included below, and shall remain in full force and effect. A. Revise Chapter 20.280 Downtown Station Area Specific Plan District to read as follows: 1. Revise Table 20.280.003 Land Use Regulations to allow Clean Technologies, Handicraft/Custom Manufacturing, and Research and Development use classifications in the following zoning sub-districts: Uses Permitted DTC GAC DRC TO/RD LCC LNC Additional Regulations Employment Use Classifications Clean Technologies MUP P (3) - P MUP MUP Handicraft/Custom Manufacturing MUP P (3) - P MUP MUP Research and Development MUP P (3) - P MUP MUP Limitations: 1. Permitted if existing. New units not allowed. 2. Limited to facilities serving a maximum of 10 victims and may not be located within 300 feet of any other domestic violence shelter. 3. Prohibited on the ground floor except residential uses located south of Baden Avenue, banks and walk-in offices which are subject to approval of a Use Permit. 4. Subject to licensing requirements. 5. Limited to upper stories unless at least 50 percent of the ground floor street frontage is occupied by food service uses. 6. Must be located at least 1,000 feet from any other social service facility. Clinic uses may not occupy the ground floor along Grand Avenue, except on properties located west of Maple Avenue, which are subject to the approval of a conditional use permit. 2. Revise Table 20.280.004-2 Building Form and Location Standards to clarify regulations for the Linden Commercial Corridor (LCC) and Linden Neighborhood Commercial (LNC) zoning sub-districts: Standard DTC GAC DRC TORD LCC LNC Additional Standards Height (ft) Maximum Building Height 85 45-65 (1)(2) 65 FAA allowed 50 50 See Section 20.300 Height and Height Exceptions 5 Minimum Ground Floor Height for non- residential uses 15; 12 min clearance 15; 12 min clearance 15; 12 min clearance 15;12 min clearance 15; 12 min clearance 15; 12 min clearance See above and Section 20.280.005(B)(1) Maximum Finished Floor Height (residential) 5 n/a 5 n/a 5 5 See above Yards (ft) Grand Avenue (east and west) Frontage n/a 0 n/a 0 n/a n/a Pedestrian Priority Zone Street Frontage At property line or 10 feet from curb (whichever is greater) n/a At property line or 10 feet from curb (whichever is greater) n/a At property line or 9 feet from curb (whichever is greater) At property line or 9 feet from curb (whichever is greater) Eastern Neighborhood Streets except Grand Avenue Frontage n/a n/a n/a 20 n/a n/a Interior Side 0; 10 when abutting residential district 0 0; 10 when abutting residential district n/a 0 0 Rear 0, 10 when abutting an R district (E) 0 20 (E) 10 for the first two stories, 15 thereafter (C) 0, 10 when abutting an R district (E) 0, 10 when abutting an R district (E) Maximum Lot Coverage (% of lot) 100 100 90 85 75 90 See Chap. 20.040 Rules of Measurement Limitations: 1. Height break would occur a minimum of 30 feet from the front of the building 2. Corner properties may be exempt from this requirement, subject to evaluation by the decision-making authority in the review process and consistent with the Downtown Station Area Specific Plan design guidelines 6 3. Revise Table 20.280.004-3 Open Space and Landscaping Standards to clarify regulations for the Linden Commercial Corridor (LCC) zoning sub-district: Standard DTC GAC DRC TORD LCC LNC Additional Standards Minimum Usable Open Space (sq ft per res. unit) 100 100 100 Refer to Section 20.280.0 07(K) 100 150 See Supplemental Regulations 20.100.004(D)(10) Minimum Amount of Landscaping (% of site) n/a n/a n/a 15 n/a 10 See Section 20.300.007 Landscaping 4. Revise Section 20.280.005 Additional Development Standards to modify the Private Storage Space requirements to provide design flexibility for residential development projects: F. Private Storage Space. Each residential unit shall have at least 200 cubic feet of enclosed, weather-proofed, and lockable private storage space. The total number of private storage spaces may be reduced up to 25% by the Chief Planner to address operational characteristics that are incompatible with the storage requirement; the total number of private storage spaces may be reduced up to 50% by the Chief Planner if the storage is located proximate to the residential unit. 5. Revise Table 20.280.003 Land Use Regulations for Downtown Station Area Specific Plan Sub-Districts to require a Conditional Use Permit for Multiple-Unit Residential classifications: Uses Permitted DTC GAC DRC TO/RD LCC LNC Additional Regulations Residential Use Classifications Single-Unit Dwelling See sub-classifications below Single Unit Detached (1) (1) (1) - (1) (1) Second Unit (1) (1) (1) - (1) (1) See Section 20.350.035 Second Dwelling Units Single Unit Semi-Attached (1) (1) (1) - (1) (1) Single-Unit Attached (1) (1) (1) - (1) (1) Multiple-Unit Residential See sub-classifications below Duplex (1) - (1) - (1) (1) Multi-Unit C C(3) C(3) - C(3) C(3) Senior Citizen Residential C - C - C(3) C(3) Limitations: 1. Permitted if existing. New units not allowed. 7 2. Limited to facilities serving a maximum of 10 victims and may not be located within 300 feet of any other domestic violence shelter. 3. Prohibited on the ground floor except residential uses located south of Baden Avenue, banks and walk-in offices which are subject to approval of a Use Permit. 6. Revise Section 20.280.005 Additional Development Standards for the Downtown Station Area Specific Plan District to require Conditional Use Permit approval by the City Council for projects requesting the Increased Density and FAR Incentive Program: A. Increased Density and FAR Incentive Program. An increase to the maximum FAR or maximum density as referenced in Table 20.280.004-1 may be permitted for buildings with the approval of a Conditional Use Permit by the City Council through the satisfaction of a combination of the following public benefits: B. Revise Chapter 20.270 El Camino Real/Chestnut Avenue Area Plan District to read as follows: 1. Revise Table 20.270.003 Land Use Regulations for El Camino Real/Chestnut Sub- Districts to require a Conditional Use Permit for Multiple-Unit Residential classifications: Uses Permitted ECR/C- MXH ECR/C- MXM ECR/C- RH Additional Regulations Residential Use Classifications Single-Unit Dwelling See sub-classifications below Single-Unit Attached P(1) P P Multiple-Unit Residential See sub-classifications below Multi-Unit C(1) C C Senior Citizen Residential C(1) C C Limitations: 1. Not permitted on the ground floor along El Camino Real, Chestnut Avenue, Oak Avenue, or BART right- of-way south of Oak Avenue. 2. Revise Section 20.270.004 Development Standards for the El Camino Real/Chestnut Avenue Plan District to require Conditional Use Permit approval by the City Council for projects requesting the Increased Density, FAR, and/or Height Incentive Program: A. Increased Density, FAR and/or Height. An increase in FAR, density, and height may be achieved for buildings through a combination of the following, subject to Conditional Use Permit approval by the City Council: 8 C. Revise Chapter 20.490 Use Permits to read as follows: 1. Revise Section 20.490.003 Procedures to modify the Conditional Use Permit authority language to allow for City Council review of projects requesting an Incentive Program density, FAR, and/or height increase: A. Review Authority. 1. Conditional Use Permits. Unless otherwise specified in the Municipal Code, the Planning Commission shall approve, conditionally approve, or deny applications for Conditional Use Permits based on consideration of the requirements of this chapter. D. Revise Chapter 20.570 Appeals and Calls for Review to read as follows: 1. Revise Section 20.570.006 Calls for Review to create flexibility for the City Council to call up specific projects for discretionary review: 20.570.006 Calls for Review Two or more members of the Planning Commission may call for review of a decision of the Chief Planner and two or more members of the City Council may call for review of a decision of the Chief Planner or Planning Commission within the 15-day appeal period. The call for review shall be processed in the same manner as an appeal by any other person. Such action by the Commission or Council shall stay all proceedings in the same manner as the filing of an appeal. Such action shall not require any statement of reasons and shall not represent opposition to or support of an application or appeal. Within two (2) business days of a Zoning Administrator hearing, the Planning Commission Clerk shall submit a notice of all Zoning Administrator discretionary action to the Planning Commission, following which any member of the Planning Commission may request a call for review of a decision by submitting a notice in writing to the Planning Commission Clerk or noting so on the record at a Planning Commission hearing within the 15-day appeal period. If two (2) or more Planning Commissioners submit a notice in writing to the Planning Commission Clerk requesting a call for review of a decision or two (2) or more Planning Commissioners request a call for review of a decision by noting so on the record at a Planning Commission hearing, the call for review shall become effective and the Chief Planner shall set a public hearing in accordance with the provisions of Chapter 20.450. The Planning Commission Clerk’s notice of Zoning Administrator discretionary approvals submitted to the Planning Commission shall include the date by which a call for review by a Planning Commissioner must be received by the Planning Commission Clerk or noted on the record at a Planning Commission hearing. Any other decision of the Chief Planner that the Planning Commission wishes to call for review may be called for review by at least two (2) Planning Commissions through the process outlined above. Within two (2) business days of the completion of a Planning Commission hearing, the Secretary to the Planning Commission shall submit a notice of all Planning Commission discretionary action to the City Clerk for distribution to the City Council, following which any member of the 9 City Council may request a call for review of a decision by submitting a notice in writing to the City Clerk or noting so on the record at a City Council hearing within the 15-day appeal period. If two (2) or more Councilmembers submit a notice in writing to the City Clerk requesting a call for review of a decision or two (2) or more Councilmembers request a call for review of a decision by noting so on the record at a City Council hearing, the call for review shall become effective and the City Clerk shall set a public hearing in accordance with the provisions of Chapter 20.450. The City Clerk’s notice of discretionary approvals submitted to the City Council shall include the date by which a call for review by a Councilmember must be received by the City Clerk or noted on the record at a City Council hearing. SECTION III. SEVERABILITY. If any provision of this Ordinance or the application thereof to any person or circumstance is held invalid or unconstitutional, the remainder of this Ordinance, including the application of such part or provision to other persons or circumstances shall not be affected thereby and shall continue in full force and effect. To this end, provisions of this Ordinance are severable. The City Council of the City of South San Francisco hereby declares that it would have passed each section, subsection, subdivision, paragraph, sentence, clause, or phrase hereof irrespective of the fact that any one or more sections, subsections, subdivisions, paragraphs, sentences, clauses, or phrases be held unconstitutional, invalid, or unenforceable. SECTION IV. PUBLICATION AND EFFECTIVE DATE. Pursuant to the provisions of Government Code Section 36933, a summary of this Ordinance shall be prepared by the City Attorney. At least five (5) days prior to the Council meeting at which this Ordinance is scheduled to be adopted, the City Clerk shall (1) publish the Summary, and (2) post in the City Clerk’s Office a certified copy of this Ordinance. Within fifteen (15) days after the adoption of this Ordinance, the City Clerk shall (1) publish the summary, and (2) post in the City Clerk ’s Office a certified copy of the full text of this Ordinance along with the names of those City Council members voting for and against this Ordinance or otherwise voting. This Ordinance shall become effective thirty (30) days from and after its adoption. * * * * * * * Introduced at a regular meeting of the City Council of the City of South San Francisco, held the 10th day of February, 2016. Adopted as an Ordinance of the City of South San Francisco at a regular meeting of the City Council held the 24th day of February, 2016 by the following vote: AYES:_______________________________________________________________________ NOES:_______________________________________________________________________ 10 ABSTENTIONS:_______________________________________________________________ ABSENT:_____________________________________________________________________ Attest:__________________________________ Krista Martinelli, City Clerk As Mayor of the City of South San Francisco, I do hereby approve the foregoing Ordinance this 24th day of February, 2016. Mark Addiego, Mayor 11 1 ORDINANCE NO. __________ CITY COUNCIL, CITY OF SOUTH SAN FRANCISCO STATE OF CALIFORNIA AN ORDINANCE APPROVING A DEVELOPMENT AGREEMENT WITH MILLER CYPRESS SSF, LLC FOR 309 AIRPORT BLVD., 315 AIRPORT BLVD., 401-421 AIRPORT BLVD., 405 CYPRESS AVE., AND 216 MILLER AVE WHEREAS, the Successor Agency to the Redevelopment Agency of the City of South San Francisco (“Agency”) is the owner of certain real property located in the City of South San Francisco (“City”), California, known as County Assessor’s Parcel Number 012-317-110 (“401 Airport Boulevard”), 012-317-100 (“411 Airport Boulevard”), 012-317-090 (“421 Airport Boulevard”), 012- 314-100 (“405 Cypress Avenue”), 012-314-220 (“216 Miller Avenue”), 012-318-080 (“315 Airport Boulevard”) and collectively referred to as the “Agency Property”; and, WHEREAS, in August, 2014, the Agency and Miller Cypress SSF, LLC (“Developer”) entered into an Exclusive Negotiation Rights Agreement (“ENRA”) that established a mutual understanding among the City, the Agency, and the Developer regarding the potential development of the Agency Property; and, WHEREAS, in conjunction with the potential acquisition of the Agency Property, the Developer has acquired rights to entitle and develop County Assessor’s Parcel Number 012-318-040 (“309 Airport Boulevard”); and, WHEREAS, the Developer has proposed construction of a high-density residential development, consisting of 260 residential apartments in Phase 1, 12 for-sale residential townhomes in Phase 2, and 342 total vehicle parking spaces (“Project”) over 2.34 acres at the following addresses: 309 Airport Blvd., 315 Airport Blvd., 401-421 Airport Blvd., 405 Cypress Ave., and 216 Miller Ave. (collectively “Project Site”) in the City; and, WHEREAS, the Agency, is interested in selling the Agency Property to the Developer as contemplated in the ENRA, contingent upon approval of this Development Agreement by the City Council, Developer securing all funding for the Project, and Developer obtaining all applicable land use entitlements from the City necessary to construct the Project on the Project Site; and, WHEREAS, the City and the Developer now wish to enter into a Development Agreement (DA15-0003A) (“Development Agreement”) that will supersede any points of agreement contained within the ENRA; and, WHEREAS, Phase 1 of the Project (“Phase 1 of the Project”) includes the construction of two seven story residential apartment buildings with a total of 260 rental units at both corners of Airport Boulevard and Miller Avenue (309, 315, 401, 421 Airport Boulevard) and a private parking lot at 405 Cypress Avenue; and, 1 2 WHEREAS, Phase 2 of the Project (“Phase 2 of the Project”) includes the construction of twelve (12) new for-sale residential townhomes at 216 Miller Avenue; and, WHEREAS, Developer seeks approval of a Conditional Use Permit, Design Review, Waiver and Modification, and Parking Reduction for the Project (“Land Use Entitlements ”) through a separate resolution; and, WHEREAS, approval of the Developer’s proposal is considered a “project” for purposes of the California Environmental Quality Act, Pub. Resources Code § 21000, et seq. (“CEQA”); and, WHEREAS, on January 28, 2015, the City Council certified an Environmental Impact Report (“EIR”) (State Clearinghouse number 2013102001) in accordance with the provisions of the California Environmental Quality Act (Public Resources Code, §§ 21000, et seq., “CEQA”) and CEQA Guidelines, which analyzed the potential environmental impacts of the development of the Downtown Station Area Specific Plan; and, WHEREAS, on January 28, 2015, the City Council also adopted a Statement of Overriding Considerations (“SOC”) in accordance with the provisions of the California Environmental Quality Act (Public Resources Code, §§ 21000, et seq., “CEQA”) and CEQA Guidelines, which carefully considered each significant and unavoidable impact identified in the EIR and found that the significant environmental impacts are acceptable in light of the project’s economic, legal, social, technological and other benefits; and, WHEREAS, the City prepared an Environmental Consistency Analysis for the Project and concluded that the Project would not result in any new significant environmental effects or a substantial increase in the severity of any previously identified effects beyond those disclosed and analyzed in the Downtown Station Area Specific Plan Program EIR certified by City Council nor would any new mitigation measures be required; and, WHEREAS, on January 21, 2016 the Planning Commission for the City of South San Francisco held a lawfully noticed public hearing, solicited public comment and considered the proposed Development Agreement, took public testimony, and made a recommendation that the City Council adopt the Development Agreement. NOW, THEREFORE, BE IT ORDAINED that based on the entirety of the Record before it, as described below, the City Council of the City of South San Francisco does hereby ORDAIN as follows: SECTION I. FINDINGS Based on the entirety of the record before it, which includes without limitation, the California Environmental Quality Act, Public Resources Code §21000, et seq. (“CEQA”) and the CEQA Guidelines, 14 California Code of Regulations §15000, et seq.; the South San Francisco General Plan and General Plan Program EIR; the Downtown Station Area Specific Plan and the Downtown Station Area Specific Plan EIR; the South San Francisco Municipal Code; the Project applications; the Project Plans, as prepared by TCA Architects, dated December 7, 2015; the Development Agreement, the Environmental Consistency Analysis, as prepared by City staff, dated February 10, 2016 including all 2 3 appendices thereto; all site plans, and all reports, minutes, and public testimony submitted as part of the Planning Commission’s duly noticed January 21, 2016 meeting; all reports, minutes, and public testimony submitted as part of the City Council’s duly noticed February 10, 2016 meeting and any other evidence (within the meaning of Public Resources Code §21080(e) and §21082.2), the City Council of the City of South San Francisco hereby finds as follows: I. General Findings. The foregoing recitals are true and correct and made a part of this Ordinance; 1. The Development Agreement, attached hereto as Attachment 1, is incorporated herein by reference and made a part of this Ordinance as if set forth fully herein. 2. The documents and other material constituting the record for these proceedings are located at the Planning Division for the City of South San Francisco, 315 Maple Avenue, South San Francisco, CA 94080, and in the custody of Chief Planner, Sailesh Mehra. 3. Based upon the testimony and information presented at the hearing and upon review and consideration of the environmental documentation provided, including but not limited to the Environmental Consistency Analysis, as prepared by City staff, dated February 10, 2016, the City Council, exercising its independent judgment and analysis, finds that the Project is consistent with the analysis presented in the certified Downtown Station Area Specific Plan Program EIR, and that the Project would not result in any new significant environmental effects or a substantial increase in the severity of any previously identified effects beyond those disclosed and analyzed in the Downtown Station Area Specific Plan Program EIR certified by City Council nor would new mitigation be required for the Project. This is supported by the fact that, consistent with the Downtown Station Area Specific Plan EIR Mitigation Monitoring and Reporting Program, the project prepared Toxic Air Contaminants (TAC) and Green House Gas (GHG) Emissions Assessment, a Historic Resources Analysis, an Updated Historic Evaluation, and a Traffic and Circulation Analysis, all of which determined that the Project would not result in any new impacts not adequately evaluated and addressed by the Downtown Station Area Specific Plan Program EIR. II. Development Agreement Findings 1. The Development Agreement, as proposed, is consistent with the objectives, policies, general land uses and programs specified in the General Plan and the Downtown Station Area Specific Plan, both of which envision a high-density residential project adjacent to the Caltrain commuter station that can revitalize underused parcels and support economic activity in the Downtown area. Further, the land uses, development standards, densities and intensities, buildings and structures proposed are compatible with the goals, policies, and land use designations established in the General Plan (see Gov’t Code, § 65860), and none of the land uses, development standards, densities and intensities, buildings and structures will operate to conflict with or impede achievement of the any of the goals, policies, or land use designations established in the General Plan. 3 4 2. The Development Agreement, as proposed, is compatible with the proposed high-density residential use authorized in and the regulations prescribed for the two land use districts (Downtown Transit Core and Grand Avenue Core) in which the real property is located and complies with all applicable zoning, subdivision, and building regulations and with the guiding policies of the General Plan and Downtown Station Area Specific Plan. 3. The Development Agreement states: a. the duration of the Agreement shall be ten years, as specified in Section 2.2 of the Agreement; b. the permitted uses of the Project Site, with the exception of 309 Airport Boulevard, shall include those uses listed as “permitted” in the Downtown Transit Core zoning sub- district. Permitted uses for the parcel located at 309 Airport Boulevard shall include those uses listed as “permitted” in the Grand Avenue zoning sub-district, as specified in Section 6.2 of the Agreement; c. the density and intensity of use of the Project Site shall be as set for in the Project Approvals and, as and when they are issued, any subsequent approvals, as specified in Section 6.2 of the Agreement; d. the maximum height, bulk and size of the proposed buildings on the Project Site shall be as set for in the Project Approvals and, as and when they are issued, any subsequent approvals, as specified in Section 6.2 of the Agreement; e. provisions for reservation or dedication of land for public purposes, the location of public improvements, and the general location of public utilities shall be as set for in the Project Approvals and, as and when they are issued, any subsequent approvals, as specified in Section 6.2 of the Agreement; SECTION II. APPROVAL OF DEVELOPMENT AGREEMENT The City Council of the City of South San Francisco hereby: 1. Approves the Development Agreement (DA15-0003A) with Miller Cypress SSF, LLC attached hereto as Attachment 1 and incorporated herein by reference; and 2. Authorizes the City Manager to enter into and execute the Development Agreement on behalf of the City Council in substantially the same form as attached hereto as Attachment 1; to make any revisions, amendments, or modifications, subject to the approval of the City Attorney, deemed necessary to carry out the intent of this Ordinance and which do not materially alter or increase the City’s obligations thereunder. 4 5 SECTION III. SEVERABILITY If any provision of this Ordinance or the application thereof to any person or circumstance is held invalid or unconstitutional, the remainder of this Ordinance, including the application of such part or provision to other persons or circumstances shall not be affected thereby and shall continue in full force and effect. To this end, provisions of this Ordinance are severable. The City Council of the City of South San Francisco hereby declares that it would have passed each section, subsection, subdivision, paragraph, sentence, clause, or phrase hereof irrespective of the fact that any one or more sections, subsections, subdivisions, paragraphs, sentences, clauses, or phrases be held unconstitutional, invalid, or unenforceable. SECTION IV. PUBLICATION AND EFFECTIVE DATE Pursuant to the provisions of Government Code Section 36933, a summary of this Ordinance shall be prepared by the City Attorney. At least five (5) days prior to the Council meeting at which this Ordinance is scheduled to be adopted, the City Clerk shall (1) publish the Summary, and (2) post in the City Clerk’s Office a certified copy of this Ordinance. Within fifteen (15) days after the adoption of this Ordinance, the City Clerk shall (1) publish the summary, and (2) post in the City Clerk ’s Office a certified copy of the full text of this Ordinance along with the names of those City Council members voting for and against this Ordinance or otherwise voting. This Ordinance shall become effective thirty (30)days from and after its adoption. ** ** ** * Introduced at a regular meeting of the City Council of the City of South San Francisco, held the 10th day of February, 2016. Adopted as an Ordinance of the City of South San Francisco at a regular meeting of the City Council held the 24th day of February, 2016 by the following vote: AYES:________________________________________________________________ NOES:________________________________________________________________ ABSTENTIONS:________________________________________________________ ABSENT:______________________________________________________________ Attest:__________________________________ Krista Martinelli, City Clerk As Mayor of the City of South San Francisco, I do hereby approve the foregoing Ordinance this 24th day of February, 2016. Mayor 5 6 ATTACHMENT 1 Development Agreement 2599090.1 6 RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: City Clerk City of South San Francisco P.O. Box 711 South San Francisco, CA 94083 ______________________________________________________________________________ (Space Above This Line Reserved For Recorder’s Use) This instrument is exempt from recording fees pursuant to Government Code section 27383. Documentary Transfer Tax is $0.00 (exempt per Revenue & Taxation Code section 11922, Transfer to Municipality). DEVELOPMENT AGREEMENT BY AND BETWEEN CITY OF SOUTH SAN FRANCISCO AND MILLER CYPRESS SSF, LLC 309 AIRPORT BOULEVARD 315 AIRPORT BOULEVARD 401–421 AIRPORT BOULEVARD 405 CYPRESS AVENUE 216 MILLER AVENUE SOUTH SAN FRANCISCO, CALIFORNIA 7 1 DEVELOPMENT AGREEMENT THIS DEVELOPMENT AGREEMENT (“Agreement”) is entered into as of January ___, 2016 by and between Miller Cypress SSF, LLC, a Delaware limited liability company (“Developer”), and the City of South San Francisco (“City”), pursuant to California Government Code (“Government Code”) sections 65864 et seq. Miller Cypress SSF, LLC and the City are sometimes collectively referred to herein as “Parties.” RECITALS A. To strengthen the public planning process, encourage private participation in comprehensive planning and reduce the economic risk of development, the Legislature of the State of California enacted California Government Code sections 65864 et seq. (the “Development Agreements Statute”), which authorizes the City to enter into an agreement with any person having a legal or equitable interest in real property for the development of such property. B. Pursuant to Government Code section 65865, City has adopted procedures and requirements for the consideration of development agreements (South San Francisco Municipal Code (“SSFMC”) Chapter 19.60). This Agreement has been processed, considered, and executed in accordance with such procedures and requirements. C. Developer has, or will acquire pursuant to a purchase and sale agreement, a legal and/or equitable interest in certain real property located on six parcels in the downtown area of the City of South San Francisco, west of US 101 at 309 Airport Boulevard, 315 Airport Boulevard, 401 Airport Boulevard, 411 Airport Boulevard, 421 Airport Boulevard, 405 Cypress Avenue, and 216 Miller Avenue, in the central part of the Downtown Station Area Specific Plan District, and specifically within the Downtown Transit Core and Grand Avenue Core zoning sub- districts, consisting of 2.36 total acres with frontages on Airport Boulevard, Cypress Avenue, and Miller Avenue, and as more particularly described and depicted in Exhibit A (“Project Site”). D. The proposed Project (“Project”) consists of removal of existing buildings and construction at full buildout of two (2) new seven-story multi-unit residential buildings, a private residential parking lot, and twelve (12) townhome units. The building at 401–421 Airport Boulevard will contain 160 apartment homes in five residential levels over two garage levels (up to 85 feet in height). The building at 309–315 Cypress Avenue will contain 100 apartment homes in five residential levels over two garage levels (up to 72 feet in height). A private residential parking lot will be built at 405 Cypress Avenue to support the apartment communities. After the two apartment buildings are complete and fully leased, twelve for-sale townhomes will be built at 216 Miller Avenue. The total proposed building area is approximately 300,000 square feet. A total of approximately 347 parking spaces will provide parking for the commercial and residential components of the project. Additionally, 26 short-term bicycle parking spaces and 73 secure bike rack spaces will be provided throughout the Project Site. E. Development of the Project requires that the Developer obtain from the City the following land use entitlements: Conditional Use Permit; Design Review; Modification to 8 2 Private Storage and Building Height Zoning Standards; Parking Exemption to Reduce Provided Parking by 25%; and a Development Agreement. The entitlements listed in this Recital E are collectively referred to herein as the “Project Approvals.” The Project Approvals are shown in Exhibit B. The Project Site is located in the Downtown Transit Core (DTC) and Grand Avenue Core (GAC) Zoning Sub-Districts and the Conditional Use Permit, Design Review, Waiver and Modification, and Parking Exemption requests are in accordance with SSFMC Chapters 20.280, 20.330, 20.480, 20.490 & 20.510. F. City has determined that the Project presents certain public benefits and opportunities which are advanced by City and Developer entering into this Agreement. This Agreement will, among other things, (1) reduce uncertainties in planning and provide for the orderly development of the Project; (2) provide needed residential development along the Airport Boulevard corridor; (3) mitigate any significant environmental impacts; (4) provide for and generate substantial revenues for the City in the form of one time and annual fees and exactions and other fiscal benefits; and (5) otherwise achieve the goals and purposes for which the Development Agreement Statute was enacted. G. In exchange for the benefits to City described in the preceding Recital, together with the other public benefits that will result from the development of the Project, Developer will receive by this Agreement assurance that it may proceed with the Project in accordance with the “Applicable Law” (defined in section 6.3 below), and therefore desires to enter into this Agreement. H. On January 21, 201, following a duly noticed public hearing, the Planning Commission adopted Resolution No. [XXXX]-2016, recommending that the City Council approve this Agreement. I. The City Council, after conducting a duly noticed public hearing, has found that this Agreement is consistent with the General Plan and Zoning Ordinance and has conducted all necessary proceedings in accordance with the City’s rules and regulations for the approval of this Agreement. In accordance with SSFMC section 19.60.120, the City Council, at a duly noticed public hearing, adopted Ordinance No. [XXXX]-2015, approving and authorizing the execution of this Agreement. AGREEMENT NOW, THEREFORE, the Parties, pursuant to the authority contained in Government Code sections 65864 through 65869.5 and Chapter 19.60 of the South San Francisco Municipal Code and in consideration of the mutual covenants and agreements contained herein, agree as follows: 9 3 ARTICLE 1. DEFINITIONS 1.1 “Administrative Project Amendment” shall have that meaning set forth in Section 7.1 of this Agreement. 1.2 “Administrative Agreement Amendment” shall have that meaning set forth in Section 7.2 of this Agreement. 1.3 “Agreement” shall mean this Development Agreement. 1.4 “Applicable Law” shall have that meaning set forth in Section 6.3 of this Agreement. 1.5 “Assessments” shall have that meaning set forth in Exhibit C. 1.6 “City” shall mean the City of South San Francisco. 1.7 “City Law” shall have that meaning set forth in Section 6.5 of this Agreement. 1.8 “Claims” shall have that meaning set forth in Section 6.10 of this Agreement. 1.9 “Deficiencies” shall have that meaning set forth in Section 9.2 of this Agreement. 1.10 “Developer” shall mean Miller Cypress SSF, LLC. 1.11 “Development Agreements Statute” shall have that meaning set forth in Recital A of this Agreement. 1.12 “Development Fees” shall have that meaning set forth in Section 3.2 of this Agreement. 1.13 “Effective Date” shall have that meaning set forth in Section 2.1 of this Agreement. 1.14 “Indemnitees” shall have that meaning set forth in Section 6.10 of this Agreement. 1.15 “Judgment” shall have that meaning set forth in Section 9.2 of this Agreement. 1.16 “Parties” shall mean the Developer and City, collectively. 1.17 “Periodic Review” shall have that meaning set forth in Section 10.5 of this Agreement. 1.18 “Prevailing Wage Laws” shall have that meaning set forth in Section 6.10 of this Agreement. 1.19 “Project” shall have that meaning set forth in Recital D of this Agreement. 1.20 “Project Approvals” shall have that meaning set forth in Recital E of this Agreement. 1.21 “Project Site” shall have that meaning set forth in Recital C of this Agreement. 10 4 1.22 “Purchase and Sale Agreement and Joint Escrow Instructions Between South San Francisco Successor Agency and Miller Cypress SSF, LLC” or “PSA” is defined as the “Purchase and Sale Agreement and Joint Escrow Instructions between the South San Francisco Successor Agency and Miller Cypress SSF, LLC dated ______ and approved pursuant to South San Francisco Oversight Board Resolution No. ______. 1.23 “Subsequent Approvals” shall mean those certain other land use approvals, entitlements, and permits in addition to the Project Approvals that are necessary or desirable for the Project. In particular, for example, the parties contemplate that Developer may, at its election, seek approvals for the following: amendments of the Project Approvals, design review approvals, unless determined not required pursuant to the further provisions of this Agreement, improvement agreements, grading permits, building permits, lot line adjustments, sewer and water connection permits, certificates of occupancy, subdivision maps, rezonings, development agreements, use permits, sign permits and any amendments to, or repealing of, any of the foregoing. 1.24 “Tax” and “Taxes” shall not include any generally applicable City Business License Tax or locally imposed Sales Tax. 1.25 “Term” shall have that meaning set forth in Section 2.2 of this Agreement. ARTICLE 2. EFFECTIVE DATE AND TERM 2.1 Effective Date. This Agreement shall become effective upon the later of the date the ordinance approving this Agreement becomes effective or the date upon which the Purchase and Sale Agreement and Joint Escrow Instructions between the South San Francisco Successor Agency and Developer becomes effective. (“Effective Date”). In the event the PSA is not effective by March 31, 2016, this Agreement shall terminate and have no further force of effect unless the Developer and City Manager have mutually agreed in writing to extend the date. 2.2 Term. The term of this Agreement (“Term”) shall commence upon the Effective Date and continue for a period of ten (10) years. ARTICLE 3. OBLIGATIONS OF DEVELOPER 3.1 Obligations of Developer Generally. The Parties acknowledge and agree that the City’s agreement to perform and abide by the covenants and obligations of City set forth in this Agreement is a material consideration for Developer’s agreement to perform and abide by its long term covenants and obligations, as set forth herein. The parties acknowledge that many of Developer’s long term obligations set forth in this Agreement are in addition to Developer’s agreement to perform all the applicable mitigation measures identified in the Downtown Station Area Specific Plan (“DSASP”) Environmental Impact Report (“EIR”). 11 5 3.2 City Fees. (a) Developer shall pay those processing, inspection and plan checking fees and charges required by the City for processing applications and requests for Subsequent Approvals under the applicable non-discriminatory regulations in effect at the time such applications and requests are submitted to the City. (b) Consistent with the terms of the Agreement, City shall have the right to impose only such development fees (“Development Fees”) as have been adopted by City as of the Effective Date of this Agreement, or as to which City has initiated formal studies and proposals pursuant to City Council action, and which are identified in Exhibit C. This shall not prohibit City from imposing on Developer any fee or obligation that is imposed by a regional agency in accordance with state or federal obligations and required to be implemented by City. Development Fees shall be due upon issuance of building permits or certificates of occupancy for the Project, as may be required under the adopting ordinance for such Development Fees, except as otherwise provided under the Agreement or the Project Approvals. 3.3 Mitigation Measures. Developer shall comply with the Mitigation Measures identified and approved in the Downtown Station Area Plan EIR (see also the Environmental Consistency Analysis (“ECA”) for the Project), in accordance with the California Environmental Quality Act (“CEQA”) or other law. 3.4 Compliance with Terms of the Purchase and Sale Agreement. Developer shall comply with all terms of the Purchase and Sale Agreement and Joint Escrow Instructions entered into between Developer and the South San Francisco Successor Agency and approved by Oversight Board Resolution No ___________. A material default by Developer under the PSA shall be a material default under this Agreement. In the event the PSA is terminated under its terms prior to the transfer of real property to the Developer, this Agreement shall terminate and have no further force or effect. 3.5 Electric Charging Stations. Developer shall provide electric charging stations in a minimum of two percent of the total parking spaces provided in the parking garages constructed on Parcels A and D and shall also install all necessary conduit for 35 additional electric vehicle charging stations, with the final location of the installed stations and conduit subject to approval by the Chief Planner. ARTICLE 4. OBLIGATIONS OF CITY 4.1 Obligations of City Generally. The parties acknowledge and agree that Developer’s agreement to perform and abide by its covenants and obligations set forth in this Agreement, including Developer’s decision to process the siting of the Project in the City, is a material consideration for City’s agreement to perform and abide by the long term covenants and obligations of City, as set forth herein. 12 6 4.2 Protection of Vested Rights. To the maximum extent permitted by law, City shall take any and all actions as may be necessary or appropriate to ensure that the vested rights provided by this Agreement can be enjoyed by Developer and to prevent any City Law, as defined above, from invalidating or prevailing over all or any part of this Agreement. City shall cooperate with Developer and shall undertake such actions as may be necessary to ensure this Agreement remains in full force and effect. Except as authorized in Section 6.9, City shall not support, adopt, or enact any City Law, or take any other action which would violate the express provisions or intent of the Project Approvals or the Subsequent Approvals. 4.3 Availability of Public Services. To the maximum extent permitted by law and consistent with its authority, City shall assist Developer in reserving such capacity for sewer and water services as may be necessary to serve the Project. 4.4 Developer’s Right to Rebuild. City agrees that Developer may renovate or rebuild all or any part of the Project within the Term of this Agreement should it become necessary due to damage or destruction. Any such renovation or rebuilding shall be subject to the square footage and height limitations vested by this Agreement, and shall comply with the Project Approvals, the building codes existing at the time of such rebuilding or reconstruction, and the requirements of CEQA. 4.5 Expedited Plan Check Process. The City agrees to provide an expedited plan check process for the approval of Project drawings consistent with its existing practices for expedited plan checks. The City shall use reasonable efforts to provide such plan checks within 3 weeks of a submittal that meets the requirements of Section 5.2. The City acknowledges that the City’s timely processing of Subsequent Approvals and plan checks is essential to the Developer’s ability to achieve the schedule under the PSA. ARTICLE 5. COOPERATION - IMPLEMENTATION 5.1 Processing Application for Subsequent Approvals. By approving the Project Approvals, City has made a final policy decision that the Project is in the best interests of the public health, safety and general welfare. Accordingly, City shall not use its discretionary authority in considering any application for a Subsequent Approval to change the policy decisions reflected by the Project Approvals or otherwise to prevent or delay development of the Project as set forth in the Project Approvals. Instead, the Subsequent Approvals shall be deemed to be tools to implement those final policy decisions. 5.2 Timely Submittals By Developer. Developer acknowledges that City cannot expedite processing Subsequent Approvals until Developer submits complete applications on a timely basis. Developer shall use its best efforts to (i) provide to City in a timely manner any and all documents, applications, plans, and other information necessary for City to carry out its obligations hereunder; and (ii) cause Developer’s planners, engineers, and all other consultants to provide to City in a timely manner all such documents, applications, plans and other necessary required materials as set forth in the Applicable Law. It is the express intent of Developer and City to cooperate and diligently work to obtain any and all Subsequent Approvals. 13 7 5.3 Timely Processing By City. Upon submission by Developer of all appropriate applications and processing fees for any Subsequent Approval, City shall promptly and diligently commence and complete all steps necessary to act on the Subsequent Approval application including, without limitation: (i) providing at Developer’s expense and subject to Developer’s request and prior approval, reasonable overtime staff assistance and/or staff consultants for planning and processing of each Subsequent Approval application; (ii) if legally required, providing notice and holding public hearings; and (iii) acting on any such Subsequent Approval application. City shall ensure that adequate staff is available, and shall authorize overtime staff assistance as may be necessary, to timely process such Subsequent Approval application. 5.4 Denial of Subsequent Approval Application. The City may deny an application for a Subsequent Approval only if such application does not comply with the Agreement or Applicable Law (as defined below) or with any state or federal law, regulations, plans, or policies as set forth in Section 6.9. 5.5 Other Government Permits. At Developer’s sole discretion and in accordance with Developer’s construction schedule, Developer shall apply for such other permits and approvals as may be required by other governmental or quasi-governmental entities in connection with the development of, or the provision of services to, the Project. City shall cooperate with Developer in its efforts to obtain such permits and approvals and shall, from time to time, at the request of Developer, use its reasonable efforts to assist Developer to ensure the timely availability of such permits and approvals. 5.6 Assessment Districts or Other Funding Mechanisms. (a) Existing Fees. The Parties understand and agree that as of the Effective Date the fees, exactions, and payments listed in Exhibit C are the only City fees and exactions. Except for those fees and exactions listed in Exhibit C, City is unaware of any pending efforts to initiate, or consider applications for new or increased fees, exactions, or assessments covering the Project Site, or any portion thereof. (b) Future Fees, Taxes, and Assessments. City understands that long term assurances by City concerning fees, taxes and assessments were a material consideration for Developer agreeing to enter this Agreement and to pay long term fees, taxes and assessments described in this Agreement. City shall retain the ability to initiate or process applications for the formation of new assessment districts covering all or any portion of the Project Site. Notwithstanding the foregoing, Developer retains all its rights to oppose the formation or proposed assessment of any new assessment district or increased assessment. In the event an assessment district is lawfully formed to provide funding for services, improvements, maintenance or facilities which are substantially the same as those services, improvements, maintenance or facilities being funded by the fees or assessments to be paid by Developer under the Project Approvals or this Agreement, such fees or assessments to be paid by Developer shall be subject to reduction/credit in an amount equal to 14 8 Developer’s new or increased assessment under the assessment district. Alternatively, the new assessment district shall reduce/credit Developer’s new assessment in an amount equal to such fees or assessments to be paid by Developer under the Project Approvals or this Agreement. ARTICLE 6. STANDARDS, LAWS AND PROCEDURES GOVERNING THE PROJECT 6.1 Vested Right to Develop. Developer shall have a vested right to develop the Project on the Project Site in accordance with the terms and conditions of this Agreement. Nothing in this section shall be deemed to eliminate or diminish the requirement of Developer to obtain any required Subsequent Approvals. 6.2 Permitted Uses Vested by This Agreement. The permitted uses of the Project Site; the density and intensity of use of the Project Site; the maximum height, bulk, and size of proposed buildings; provisions for reservation or dedication of land for public purposes and the location of public improvements; the general location of public utilities; and other terms and conditions of development applicable to the Project, shall be as set forth in the Project Approvals and, as and when they are issued (but not in limitation of any right to develop as set forth in the Project Approvals), the Subsequent Approvals, provided, however, that no further design review or other discretionary approvals or public hearings shall be required except for review of minor changes to the Project Approvals by the Chief Planner as provided in this Agreement. Permitted uses for all Project parcels, with the exception of the parcel located at 309 Airport Boulevard, shall include, without limitation, those uses listed as “permitted” in the Downtown Transit Core zoning sub-district. Permitted uses for the parcel located at 309 Airport Boulevard shall include, without limitation those uses listed as “permitted” in the Grand Avenue Core zoning sub-district. 6.3 Applicable Law. The rules, regulations, official policies, standards and specifications applicable to the Project (the “Applicable Law”) shall be those set forth in this Agreement and the Project Approvals, and, with respect to matters not addressed by this Agreement or the Project Approvals, those rules, regulations, official policies, standards and specifications (including City ordinances and resolutions) governing permitted uses, building locations, timing of construction, densities, design, heights, fees, exactions, and taxes in force and effect on the Effective Date of this Agreement. 6.4 Uniform Codes. City may apply to the Project Site, at any time during the Term, then current Uniform Building Code and other uniform construction codes, and City’s then current design and construction standards for road and storm drain facilities, provided any such uniform code or standard has been adopted and uniformly applied by City on a citywide basis and provided that no such code or standard is adopted for the purpose of preventing or otherwise limiting construction of all or any part of the Project. 6.5 No Conflicting Enactments. Except as authorized in Section 6.9, City shall not impose on the Project (whether by action of the City Council or by initiative, referendum or 15 9 other means) any ordinance, resolution, rule, regulation, standard, directive, condition or other measure (each individually, a “City Law”) that is in conflict with Applicable Law or this Agreement or that reduces the development rights or assurances provided by this Agreement. Without limiting the generality of the foregoing, any City Law shall be deemed to conflict with Applicable Law or this Agreement or reduce the development rights provided hereby if it would accomplish any of the following results, either by specific reference to the Project or as part of a general enactment which applies to or affects the Project: (a) Change any land use designation or permitted use of the Project Site; (b) Limit or control the availability of public utilities, services, or facilities, or any privileges or rights to public utilities, services, or facilities (for example, water rights, water connections or sewage capacity rights, sewer connections, etc.) for the Project; (c) Limit or control the location of buildings, structures, grading, or other improvements of the Project in a manner that is inconsistent with or more restrictive than the limitations included in the Project Approvals or the Subsequent Approvals (as and when they are issued); (d) Limit or control the rate, timing, phasing, or sequencing of the approval, development or construction of all or any part of the Project in any manner; (e) Result in Developer having to substantially delay construction of the Project or require the issuance of additional permits or approvals by the City other than those required by Applicable Law; (f) Establish, enact, increase, or impose against the Project or Project Site any fees, taxes (including without limitation general, special and excise taxes but excluding any increased local sales tax or increases city business license tax), assessments, liens or other monetary obligations (including generating demolition permit fees, encroachment permit and grading permit fees) other than those specifically permitted by this Agreement or other connection fees imposed by third party utilities; (g) Impose against the Project any condition, dedication or other exaction not specifically authorized by Applicable Law; or (h) Limit the processing or procuring of applications and approvals of Subsequent Approvals. 6.6 Initiatives and Referenda. (a) If any City Law is enacted or imposed by initiative or referendum, or by the City Council directly or indirectly in connection with any proposed initiative or referendum, which City Law would conflict with Applicable Law or this 16 10 Agreement or reduce the development rights provided by this Agreement, such Law shall not apply to the Project. (b) Except as authorized in Section 6.9, without limiting the generality of any of the foregoing, no moratorium or other limitation (whether relating to the rate, timing, phasing or sequencing of development) affecting subdivision maps, building permits or other entitlements to use that are approved or to be approved, issued or granted within the City, or portions of the City, shall apply to the Project. (c) To the maximum extent permitted by law, City shall prevent any City Law from invalidating or prevailing over all or any part of this Agreement, and City shall cooperate with Developer and shall undertake such actions as may be necessary to ensure this Agreement remains in full force and effect. (d) Developer reserves the right to challenge in court any City Law that would conflict with Applicable Law or this Agreement or reduce the development rights provided by this Agreement. 6.7 Environmental Mitigation. The parties understand that the DSASP EIR and the ECA were intended to be used in connection with each of the Project Approvals and Subsequent Approvals needed for the Project. Consistent with the CEQA policies and requirements applicable to the DSASP EIR and the ECA, City agrees to use the DSASP EIR and ECA in connection with the processing of any Subsequent Approval to the maximum extent allowed by law and not to impose on the Project any mitigation measures or conditions of approval other than those specifically imposed by the Project Approvals, ECA, and DSASP EIR, or specifically required by CEQA or other Applicable Law. 6.8 Life of Subdivision Maps, Development Approvals, and Permits. The term of any subdivision map or any other map, permit, rezoning, or other land use entitlement approved as a Project Approval or Subsequent Approval shall automatically be extended for the longer of the duration of this Agreement (including any extensions) or the term otherwise applicable to such Project Approval or Subsequent Approval if this Agreement is no longer in effect. The term of this Agreement and any subdivision map or other Project Approval or Subsequent Approval shall not include any period of time during which a development moratorium (including, but not limited to, a water or sewer moratorium or water and sewer moratorium) or the actions of other public agencies that regulate land use, development or the provision of services to the land, prevents, prohibits or delays the construction of the Project or a lawsuit involving any such development approvals or permits is pending. 6.9 State and Federal Law. As provided in Government Code section 65869.5, this Agreement shall not preclude the application to the Project of changes in laws, regulations, plans or policies, to the extent that such changes are specifically mandated and required by changes in state or federal laws or regulations. Not in limitation of the 17 11 foregoing, nothing in this Agreement shall preclude City from imposing on Developer any fee specifically mandated and required by state or federal laws and regulations. 6.10 Prevailing Wage. To the full extent required by all applicable state and federal laws, rules and regulations, Developer and its contractors and agents shall comply with California Labor Code Section 1720 et seq. and the regulations adopted pursuant thereto (“Prevailing Wage Laws”), and shall be responsible for carrying out the requirements of such provisions. If applicable, Developer shall submit to City a plan for monitoring payment of prevailing wages and shall implement such plan at Developer’s expense. To the fullest extent permitted by law, Developer shall indemnify, defend (with counsel approved by City) and hold the City, and their respective elected and appointed officers, officials, employees, agents, consultants, and contractors (collectively, the “Indemnitees”) harmless from and against all liability, loss, cost, expense (including without limitation attorneys’ fees and costs of litigation), claim, demand, action, suit, judicial or administrative proceeding, penalty, deficiency, fine, order, and damage (all of the foregoing collectively “Claims”) which directly or indirectly, in whole or in part, are caused by, arise in connection with, result from, relate to, or are alleged to be caused by, arise in connection with, or relate to, the payment or requirement of payment of prevailing wages (including without limitation, all claims that may be made by contractors, subcontractors or other third party claimants pursuant to Labor Code Sections 1726 and 1781), the failure to comply with any state or federal labor laws, regulations or standards in connection with this Agreement, including but not limited to the Prevailing Wage Laws, or any act or omission of Developer related to this Agreement with respect to the payment or requirement of payment of prevailing wages, whether or not any insurance policies shall have been determined to be applicable to any such Claims. It is further agreed that the City does not and shall not waive any rights against Developer which they may have by reason of this indemnity and hold harmless agreement because of the acceptance by the City, or Developer’s deposit with the City of any of the insurance policies described in this Agreement. The provisions of this Section 6.10 shall survive the expiration or earlier termination of this Agreement and the issuance of a Certificate of Completion for the Project. Developer’s indemnification obligations set forth in this section shall not apply to Claims arising solely from the gross negligence or willful misconduct of the Indemnitees. 6.11 Timing and Review of Project Construction and Completion. (a) The Project consists of two phases. Phasing will occur in such a manner as to always preserve the potential for 272 residential units on the site during the term of the Agreement. (i) Phase 1 shall include: • Two seven-story residential buildings on Parcels A & D, with a minimum of 260 apartment units between them and two levels of parking garages in each building. • A parking lot on Parcel B at 405 Cypress Avenue. 18 12 • All site improvements and design features as shown on the Project Approvals for Phase 1. (ii) Phase 2 shall include: • Twelve (12) For-Sale Townhomes at 216 Miller Avenue. • All site improvements and design features as shown on the Project Approvals for Phase 2. 6.12 No Housing Restrictions on Rental Residential Component. City acknowledges and agrees that the residential component of the Project, other than the twelve townhomes, is proposed for, approved as, and will be constructed as market-rate rental housing. City represents and warrants that no inclusionary housing, occupancy limitation or control, and no rent control requirement applies to the Project so long as the residential component is comprised solely of rental housing. City covenants that it will not adopt or attempt to apply any such restrictions, requirements or controls to the Project, other than the twelve townhomes, so long as the residential component is solely comprised of rental housing. ARTICLE 7. AMENDMENT 7.1 To the extent permitted by state and federal law, any Project Approval or Subsequent Approval may, from time to time, be amended or modified in the following manner: (a) Administrative Project Amendments. Upon the written request of Developer for an amendment or modification to a Project Approval or Subsequent Approval, the Chief Planner or his/her designee shall determine: (i) whether the requested amendment or modification is minor when considered in light of the Project as a whole; and (ii) whether the requested amendment or modification is consistent with this Agreement and Applicable Law. If the Chief Planner or his/her designee finds that the proposed amendment or modification is minor, consistent with this Agreement and Applicable Law, and will result in no new significant impacts not addressed and mitigated in the ECA or DSASP EIR, the amendment shall be determined to be an “Administrative Project Amendment” and the Chief Planner or his designee may, except to the extent otherwise required by law, approve the Administrative Project Amendment without notice and public hearing. Without limiting the generality of the foregoing, lot line adjustments, minor alterations in vehicle circulation patterns or vehicle access points, location of parking stalls on the site, number of required parking stalls if city development standards allow, substitutions of comparable landscaping for any landscaping shown on any final development plan or landscape plan, variations in the location of structures that do not substantially alter the design concepts of the Project, variations in the residential unit mix (number of one, two or three bedroom 19 13 units), location or installation of utilities and other infrastructure connections or facilities that do not substantially alter the design concepts of the Project, and minor adjustments to the Project Site diagram or Project Site legal description shall be treated as Administrative Project Amendments. (b) Non-Administrative Project Amendments. Any request by Developer for an amendment or modification to a Project Approval or Subsequent Approval which is determined not to be an Administrative Project Amendment as set forth above shall be subject to review, consideration and action pursuant to the Applicable Law and this Agreement. 7.2 Amendment of this Agreement. This Agreement may be amended from time to time, in whole or in part, by mutual written consent of the parties hereto or their successors in interest, as follows: (a) Administrative Agreement Amendments. Any amendment to this Agreement which does not substantially affect (i) the Term of this Agreement, (ii) permitted uses of the Project Site, (iii) provisions for the reservation or dedication of land, (iv) conditions, terms, restrictions, or requirements for subsequent discretionary actions, (v) the density or intensity of use of the Project Site or the maximum height or size of proposed buildings or (vi) monetary contributions by Developer, shall be considered an “Administrative Agreement Amendment” and shall not, except to the extent otherwise required by law, require notice or public hearing before the parties may execute an amendment hereto. Such amendment may be approved by City resolution. (b) Other Agreement Amendments. Any amendment to this Agreement other than an Administrative Agreement Amendment shall be subject to recommendation by the Planning Commission (by advisory resolution) and approval by the City Council (by ordinance) following a duly noticed public hearing before the Planning Commission and City Council, consistent with Government Code sections 65867 and 65867.5. (c) Amendment Exemptions. No amendment of a Project Approval or Subsequent Approval, or a Subsequent Approval shall require an amendment to this Agreement. Instead, any such matter automatically shall be deemed to be incorporated into the Project and vested under this Agreement. ARTICLE 8. ASSIGNMENT, TRANSFER AND NOTICE 8.1 Assignment and Transfer. Developer may transfer or assign all or any portion of its interests, rights, or obligations under the Agreement and the Project approvals to third parties acquiring an interest or estate in the Project or any portion thereof including, without limitation, purchasers or lessees of lots, parcels, or facilities. Prior to the issuance of a certificate of occupancy for all or any portion of the Property, Developer 20 14 will seek City's prior written consent to any transfer, which consent will not be unreasonably withheld or delayed. City may refuse to give consent only if, in light of the proposed transferee's reputation and financial resources, such transferee would not, in City's reasonable opinion, be able to perform the obligations proposed to be assumed by such transferee. Such determination will be made by the City Manager and will be appealable by Developer to the City Council. Notwithstanding any other provision of this Agreement to the contrary, each of following Transfers are permitted and shall not require City consent under this Section 8.1: (a) Any transfer for financing purposes to secure the funds necessary for construction and/or permanent financing of the Project; (b) An assignment of this Agreement to an Affiliate of Developer; (c) The sale of one or more of the completed residential units to an occupant thereof; (d) Transfers of common area to a homeowners or property owners association; or (e) Dedications and grants of easements and rights of way required in accordance with the Project Approvals. For the purposes of this Section 8.1, “Affiliate of Developer” means an entity or person that is directly or indirectly controlling, controlled by, or under common control with Developer. For the purposes of this definition, “control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of an entity or a person, whether through the ownership of voting securities, by contract, or otherwise, and the terms “controlling” and “controlled” have the meanings correlative to the foregoing ARTICLE 9. COOPERATION IN THE EVENT OF LEGAL CHALLENGE 9.1 Cooperation. In the event of any administrative, legal, or equitable action or other proceeding instituted by any person not a party to the Agreement challenging the validity of any provision of the Agreement or any Project approval, the parties will cooperate in defending such action or proceeding. City shall promptly notify Developer of any such action against City. If City fails promptly to notify Developer of any legal action against City or if City fails to cooperate in the defense, Developer will not thereafter be responsible for City's defense. The parties will use best efforts to select mutually agreeable legal counsel to defend such action, and Developer will pay compensation for such legal counsel (including City Attorney time and overhead for the defense of such action), but will exclude other City staff overhead costs and normal day-to-day business expenses incurred by City. Developer's obligation to pay for legal counsel will extend to fees incurred on appeal. In the event City and Developer are unable to select mutually agreeable legal counsel to defend such action or proceeding, each party may select its own legal counsel and Developer will pay its and the City's legal fees and costs. Developer shall reimburse the City for all reasonable court costs and attorneys’ fees 21 15 expended by the City in defense of any such action or other proceeding or payable to any prevailing plaintiff/petitioner. 9.2 Reapproval. If, as a result of any administrative, legal, or equitable action or other proceeding, all or any portion of the Agreement or the Project approvals are set aside or otherwise made ineffective by any judgment in such action or proceeding ("Judgment"), based on procedural, substantive or other deficiencies ("Deficiencies"), the parties will use their respective best efforts to sustain and reenact or readopt the Agreement, and/or the Project approvals, that the Deficiencies related to, unless the Parties mutually agree in writing to act otherwise: (a) If any Judgment requires reconsideration or consideration by City of the Agreement or any Project approval, then the City will consider or reconsider that matter in a manner consistent with the intent of the Agreement and with Applicable Law. If any such Judgment invalidates or otherwise makes ineffective all or any portion of the Agreement or Project approval, then the parties will cooperate and will cure any Deficiencies identified in the Judgment or upon which the Judgment is based in a manner consistent with the intent of the Agreement and with Applicable Law. City will then consider readopting or reenacting the Agreement, or the Project approval, or any portion thereof, to which the Deficiencies related. (b) Acting in a manner consistent with the intent of the Agreement includes, but is not limited to, recognizing that the parties intend that Developer may develop the Project as described in the Agreement, and adopting such ordinances, resolutions, and other enactments as are necessary to readopt or reenact all or any portion of the Agreement or Project approvals without contravening the Judgment. ARTICLE 10. DEFAULT; REMEDIES; TERMINATION 10.1 Defaults. Any failure by either party to perform any term or provision of the Agreement, which failure continues uncured for a period of thirty (30) days following written notice of such failure from the other party (unless such period is extended by mutual written consent), will constitute a default under the Agreement. Any notice given will specify the nature of the alleged failure and, where appropriate, the manner in which said failure satisfactorily may be cured. If the nature of the alleged failure is such that it cannot reasonably be cured within such 30-day period, then the commencement of the cure within such time period, and the diligent prosecution to completion of the cure thereafter, will be deemed to be a cure within such 30-day period. Upon the occurrence of a default under the Agreement, the non-defaulting party may institute legal proceedings to enforce the terms of the Agreement or, in the event of a material default, terminate the Agreement. If the default is cured, then no default will exist and the noticing party shall take no further action. 22 16 10.2 Termination. If City elects to consider terminating the Agreement due to a material default of Developer, then City will give a notice of intent to terminate the Agreement and the matter will be scheduled for consideration and review by the City Council at a duly noticed and conducted public hearing. Developer will have the right to offer written and oral evidence prior to or at the time of said public hearings. If the City Council determines that a material default has occurred and is continuing, and elects to terminate the Agreement, City will give written notice of termination of the Agreement to Developer by certified mail and the Agreement will thereby be terminated sixty (60) days thereafter. 10.3 Enforced Delay; Extension of Time of Performance. Subject to the limitations set forth below, performance by either party hereunder shall not be deemed to be in default, and all performance and other dates specified in this Agreement shall be extended, where delays are due to: war; insurrection; strikes and labor disputes; lockouts; riots; floods; earthquakes; fires; casualties; acts of God; acts of the public enemy; epidemics; quarantine restrictions; freight embargoes; governmental restrictions or priority; litigation and arbitration, including court delays; legal challenges to this Agreement, the PSA, the Project Approvals, or any other approval required for the Project or any initiatives or referenda regarding the same; environmental conditions, pre-existing or discovered, delaying the construction or development of the Property or any portion thereof; unusually severe weather but only to the extent that such weather or its effects (including, without limitation, dry out time) result in delays that cumulatively exceed thirty (30) days for every winter season occurring after commencement of construction of the Project; acts or omissions of the other party; or acts or failures to act of any public or governmental agency or entity (except that acts or failures to act of City shall not excuse performance by City); moratorium; or a Severe Economic Recession (each a “Force Majeure Delay”). An extension of time for any such cause shall be for the period of the enforced delay and shall commence to run from the time of the commencement of the cause, if Notice by the party claiming such extension is sent to the other party within sixty (60) days of the commencement of the cause. If Notice is sent after such sixty (60) day period, then the extension shall commence to run no sooner than sixty (60) days prior to the giving of such Notice. Times of performance under this Agreement may also be extended in writing by the mutual agreement of City and Developer. Developer’s inability or failure to obtain financing or otherwise timely satisfy shall not be deemed to be a cause outside the reasonable control of the Developer and shall not be the basis for an excused delay unless such inability, failure or delay is a direct result of a Severe Economic Recession. “Severe Economic Recession” means a decline in the monetary value of all finished goods and services produced in the United States, as measured by initial quarterly estimates of US Gross Domestic Project (“GDP”) published by the US Department of Commerce Bureau of Economic Analysis (and not BEA’s subsequent monthly revisions), lasting more than four (4) consecutive calendar quarters. Any quarter of flat or positive GDP growth shall end the period of such Severe Economic Recession 10.4 Legal Action. Either party may institute legal action to cure, correct, or remedy any default, enforce any covenant or agreement in the Agreement, enjoin any threatened or attempted violation thereof, and enforce by specific performance the obligations and 23 17 rights of the parties thereto. The sole and exclusive remedy for any default or violation of the Agreement will be specific performance. In any proceeding brought to enforce the Agreement, the prevailing party will be entitled to recover from the unsuccessful party all costs, expenses and reasonable attorney's fees incurred by the prevailing party in the enforcement proceeding. 10.5 Periodic Review. (a) Conducting the Periodic Review. Throughout the Term of this Agreement, at least once every twelve (12) months following the execution of this Agreement, City shall review the extent of good-faith compliance by Developer with the terms of this Agreement. This review (“Periodic Review”) shall be conducted by the Chief Planner or his/her designee and shall be limited in scope to compliance with the terms of this Agreement pursuant to Government Code section 65865.1. (b) Notice. At least five (5) days prior to the Periodic Review, and in the manner prescribed in Section 11.9 of this Agreement, City shall deposit in the mail to Developer a copy of any staff reports and documents to be used or relied upon in conducting the review and, to the extent practical, related exhibits concerning Developer’s performance hereunder. Developer shall be permitted an opportunity to respond to City’s evaluation of Developer’s performance, either orally at a public hearing or in a written statement, at Developer’s election. Such response shall be made to the Chief Planner. (c) Good Faith Compliance. During the Periodic Review, the Chief Planner shall review Developer’s good-faith compliance with the terms of this Agreement. At the conclusion of the Periodic Review, the Chief Planner shall make written findings and determinations, on the basis of substantial evidence, as to whether or not Developer has complied in good faith with the terms and conditions of this Agreement. The decision of the Chief Planner shall be appealable to the City Council. If the Chief Planner finds and determines that Developer has not complied with such terms and conditions, the Chief Planner may recommend to the City Council that it terminate or modify this Agreement by giving notice of its intention to do so, in the manner set forth in Government Code sections 65867 and 65868. The costs incurred by City in connection with the Periodic Review process described herein shall be borne by Developer. (d) Failure to Properly Conduct Periodic Review. If City fails, during any calendar year, to either: (i) conduct the Periodic Review or (ii) notify Developer in writing of City’s determination, pursuant to a Periodic Review, as to Developer’s compliance with the terms of this Agreement and such failure remains uncured as of December 31 of any year during the term of this Agreement, such failure shall be conclusively deemed an approval by City of Developer’s compliance with the terms of this Agreement. 24 18 (e) Written Notice of Compliance. With respect to any year for which Developer has been determined or deemed to have complied with this Agreement, City shall, within thirty (30) days following request by Developer, provide Developer with a written notice of compliance, in recordable form, duly executed and acknowledged by City. Developer shall have the right, in Developer’s sole discretion, to record such notice of compliance. 10.6 California Law. This Agreement shall be construed and enforced in accordance with the laws of the State of California. Any action to enforce or interpret this Agreement shall be filed and heard in the Superior Court of San Mateo County, California. 10.7 Resolution of Disputes. With regard to any dispute involving development of the Project, the resolution of which is not provided for by this Agreement or Applicable Law, Developer shall, at City’s request, meet with City. The parties to any such meetings shall attempt in good faith to resolve any such disputes. Nothing in this section 10.8 shall in any way be interpreted as requiring that Developer and City and/or City’s designee reach agreement with regard to those matters being addressed, nor shall the outcome of these meetings be binding in any way on City or Developer unless expressly agreed to by the parties to such meetings. 10.8 Attorneys’ Fees. In any legal action or other proceeding brought by either party to enforce or interpret a provision of this Agreement, the prevailing party is entitled to reasonable attorneys’ fees and any other costs incurred in that proceeding in addition to any other relief to which it is entitled. 10.9 Hold Harmless. Developer shall hold City and its elected and appointed officers, agents, employees, and representatives harmless from claims, costs, and liabilities for any personal injury, death, or property damage which is a result of, or alleged to be the result of, the construction of the Project, or of operations performed under this Agreement by Developer or by Developer’s contractors, subcontractors, agents or employees, whether such operations were performed by Developer or any of Developer’s contractors, subcontractors, agents or employees. Nothing in this section shall be construed to mean that Developer shall hold City harmless from any claims of personal injury, death or property damage arising from, or alleged to arise from, any gross negligence or willful misconduct on the part of City, its elected and appointed representatives, offices, agents and employees. ARTICLE 11. MISCELLANEOUS 11.1 Incorporation of Recitals and Introductory Paragraph. The Recitals contained in this Agreement, and the introductory paragraph preceding the Recitals, are hereby incorporated into this Agreement as if fully set forth herein. 11.2 No Agency. It is specifically understood and agreed to by and between the parties hereto that: (i) the subject development is a private development; (ii) City has no interest or responsibilities for, or duty to, third parties concerning any improvements 25 19 until such time, and only until such time, that City accepts the same pursuant to the provisions of this Agreement or in connection with the various Project Approvals or Subsequent Approvals; (iii) Developer shall have full power over and exclusive control of the Project herein described, subject only to the limitations and obligations of Developer under this Agreement, the Project Approvals, Subsequent Approvals, and Applicable Law; and (iv) City and Developer hereby renounce the existence of any form of agency relationship, joint venture or partnership between City and Developer and agree that nothing contained herein or in any document executed in connection herewith shall be construed as creating any such relationship between City and Developer. 11.3 Enforceability. City and Developer agree that unless this Agreement is amended or terminated pursuant to the provisions of this Agreement, this Agreement shall be enforceable by any party hereto notwithstanding any change hereafter enacted or adopted (whether by ordinance, resolution, initiative, or any other means) in any applicable general plan, specific plan, zoning ordinance, subdivision ordinance, or any other land use ordinance or building ordinance, resolution or other rule, regulation or policy adopted by City that changes, alters or amends the rules, regulations, and policies applicable to the development of the Project Site at the time of the approval of this Agreement as provided by Government Code section 65866. 11.4 Severability. If any term or provision of this Agreement, or the application of any term or provision of this Agreement to a particular situation, is held by a court of competent jurisdiction to be invalid, void, or unenforceable, the remaining terms and provisions of this Agreement, or the application of this Agreement to other situations, shall continue in full force and effect unless amended or modified by mutual consent of the parties. Notwithstanding the foregoing, if any material provision of this Agreement, or the application of such provision to a particular situation, is held to be invalid, void or unenforceable, either City or Developer may (in their sole and absolute discretion) terminate this Agreement by providing written notice of such termination to the other party. 11.5 Other Necessary Acts. Each party shall execute and deliver to the other all such other further instruments and documents as may be reasonably necessary to carry out the Project Approvals, Subsequent Approvals and this Agreement and to provide and secure to the other party the full and complete enjoyment of its rights and privileges hereunder. 11.6 Construction. Each reference in this Agreement to this Agreement or any of the Project Approvals or Subsequent Approvals shall be deemed to refer to the Agreement, Project Approval, or Subsequent Approval as it may be amended from time to time, whether or not the particular reference refers to such possible amendment. This Agreement has been reviewed and revised by legal counsel for both City and Developer, and no presumption or rule that ambiguities shall be construed against the drafting party shall apply to the interpretation or enforcement of this Agreement. 11.7 Other Miscellaneous Terms. The singular shall include the plural; the masculine gender shall include the feminine; “shall” is mandatory; “may” is permissive. If there is more than one signer of this Agreement, the signer obligations are joint and several. 26 20 11.8 Covenants Running with the Land. All of the provisions contained in this Agreement shall be binding upon the parties and their respective heirs, successors and assigns, representatives, lessees, and all other persons acquiring all or a portion of the Project, or any interest therein, whether by operation of law or in any manner whatsoever. All of the provisions contained in this Agreement shall be enforceable as equitable servitudes and shall constitute covenants running with the land pursuant to California law including, without limitation, Civil Code section 1468. Each covenant herein to act or refrain from acting is for the benefit of or a burden upon the Project, as appropriate, runs with the Project Site, and is binding upon the owner of all or a portion of the Project Site and each successive owner during its ownership of such property. 11.9 Notices. Any notice or communication required hereunder between City or Developer must be in writing, and may be given either personally, by telefacsimile (with original forwarded by regular U.S. Mail), by registered or certified mail (return receipt requested), or by Federal Express or other similar courier promising overnight delivery. If personally delivered, a notice shall be deemed to have been given when delivered to the party to whom it is addressed. If given by facsimile transmission, a notice or communication shall be deemed to have been given and received upon actual physical receipt of the entire document by the receiving party’s facsimile machine. Notices transmitted by facsimile after 5:00 p.m. on a normal business day or on a Saturday, Sunday, or holiday shall be deemed to have been given and received on the next normal business day. If given by registered or certified mail, such notice or communication shall be deemed to have been given and received on the first to occur of: (i) actual receipt by any of the addressees designated below as the party to whom notices are to be sent, or (ii) five (5) days after a registered or certified letter containing such notice, properly addressed, with postage prepaid, is deposited in the United States mail. If given by Federal Express or similar courier, a notice or communication shall be deemed to have been given and received on the date delivered as shown on a receipt issued by the courier. Any party hereto may at any time, by giving ten (10) days written notice to the other party hereto, designate any other address in substitution of the address to which such notice or communication shall be given. Such notices or communications shall be given to the parties at their addresses set forth below: If to City, to: City of South San Francisco 400 Grand Avenue Attn: City Manager South San Francisco, CA 94080 Phone: (650) 877-8500 Fax: (650) 829-6609 With a Copy to: Meyers, Nave, Riback, Silver & Wilson 575 Market Street, Suite 2080 San Francisco, CA 94105 Attn: Jason S. Rosenberg, City Attorney Phone: (415) 421-3711 Fax: (415) 421-3767 27 21 If to Developer, to: Miller Cypress SSF, LLC Sares-Regis Group of Northern California 901 Mariners Island Blvd., 7th Floor Attn: Ken Busch San Mateo, CA 94404 Phone: (650) 377-5805 Email: kbusch@srgnc.com With Copies to: Holland & Knight 50 California Street, #2500 San Francisco, CA 94111 Attn: Tamsen Plume Phone: (415) 743-9461 Email: tamsen.plume@hklaw.com 11.10 Entire Agreement, Counterparts And Exhibits. This Agreement is executed in two (2) duplicate counterparts, each of which is deemed to be an original. This Agreement consists of [XX] pages and three (3) exhibits which constitute in full, the final and exclusive understanding and agreement of the parties and supersedes all negotiations or previous agreements of the parties with respect to all or any part of the subject matter hereof. All waivers of the provisions of this Agreement shall be in writing and signed by the appropriate authorities of City and the Developer. The following exhibits are attached to this Agreement and incorporated herein for all purposes: Exhibit A: Description and Diagram of Project Site Exhibit B: Existing Land Use Entitlements and Approvals Exhibit C: Applicable Laws & City Fees, Exactions, and Payments 11.11 Recordation Of Development Agreement. Pursuant to Government Code section 65868.5, no later than ten (10) days after City enters into this Agreement, the City Clerk shall record an executed copy of this Agreement in the Official Records of the County of San Mateo. 28 22 IN WITNESS WHEREOF, this Agreement has been entered into by and between Developer and City as of the day and year first above written. CITY CITY OF SOUTH SAN FRANCISCO, a municipal corporation By: ___________________________ Name: ______________________ City Manager ATTEST: By: ___________________________ City Clerk APPROVED AS TO FORM: By: ___________________________ City Attorney DEVELOPER MILLER CYPRESS SSF, LLC, a Delaware Limited Liability Company By: ___________________________ Name: ___________________________ Its: ___________________________ 2561624.1 29 23 Exhibit A: Description and Diagram of Project Site LEGAL DESCRIPTION Real property in the City of South San Francisco, County of San Mateo, State of California, described as follows: ALL THAT CERTAIN REAL PROPERTY SITUATE IN THE CITY OF SOUTH SAN FRANCISCO, COUNTY OF SAN MATEO, STATE OF CALIFORNIA, BEING [TO BE FILLED IN WHEN EXACT PROPERTY DESCRIPTION IS DETERMINED] APN: JPN: 30 24 Exhibit B: Existing Land Use Entitlements and Approvals [To be completed when the exact titles and resolution numbers for entitlements approved by the Planning Commission and the City Council are known.] 31 25 Exhibit C: Applicable Laws & City Fees, Exactions, and Payments CURRENT SOUTH SAN FRANCISCO LAWS Developer shall comply with the following City regulations and provisions applicable to the Property as of the Effective Date (except as modified by this Agreement and the Project Approvals). 1.1 South San Francisco General Plan. The Developer will develop the Project in a manner consistent with the objectives, policies, general land uses and programs specified in the South San Francisco General Plan, as adopted on October 13, 1999 and as amended from time to time. 1.2 Downtown Station Area Specific Plan. The Developer will develop the Project in a manner consistent with the objectives, policies, general land uses and programs specified in the South San Francisco Downtown Station Area Specific Plan, as adopted in January 2015. 1.3 Downtown Station Area Specific Plan Zoning District. The Developer shall construct the Project in a manner consistent with the Downtown Station Area Specific Plan Zoning District applicable to the Project as of the Effective Date (except as modified by this Agreement). 1.4 South San Francisco Municipal Code. The Developer shall construct the Project in a manner consistent with the South San Francisco Municipal Code provisions, as applicable to the Project as of the Effective Date (except as modified by this Agreement). FEES, EXACTIONS, & PAYMENTS Subject to the terms of Section 5.6(b) of this Agreement, Developer agrees that Developer shall be responsible for the payment of the following fees, charges, exactions, taxes, and assessments (collectively, “Assessments”). From time to time, the City may update, revise, or change its Assessments. Further, nothing herein shall be construed to relieve the Property from common benefit assessments levied against it and similarly situated properties by the City pursuant to and in accordance with any statutory procedure for the assessment of property to pay for infrastructure and/or services that benefit the Property. Except as indicated below, the amount paid for a particular Assessment, shall be the amount owed, based on the calculation or formula in place at the time payment is due, as specified below. 2.1 Administrative/Processing Fees. The Developer shall pay the applicable application, processing, administrative, legal and inspection fees and charges, as currently adopted pursuant to City’s Master Fee Schedule and required by the City for processing of land use entitlements, including without limitation, General Plan amendments, zoning changes, precise plans, development agreements, conditional use permits, variances, transportation demand management plans, tentative subdivision maps, parcel maps, lot 32 26 line adjustments, general plan maintenance fee, demolition permits, and building permits. 2.2 Impact Fees (Existing Fees). Except as modified below and as set forth in Section 3.2(b) of this Agreement, the following existing impact fees shall be paid for net new square footage at the rates and at the times prescribed in the resolution(s) or ordinance(s) adopting and implementing the fees. (a) Child Care Impact Fee. (SSFMC Chapter 20.310; Ordinance 1432-2001). (b) Public Safety Impact Fee. (Resolution 97-2012) Prior to receiving a building permit the Project, the Developer shall pay the Public Safety Impact Fee, as set forth in Resolution No. 97-2012, adopted on December 10, 2012, to assist the City’s Fire Department and Police Department with funding the acquisition and maintenance of Police and Fire Department vehicles, apparatus, equipment, and similar needs for the provision of public safety services. (c) Sewer Capacity Charge. (Resolution 39-2010) Prior to receiving a building permit for Tenant Improvements for the Project, the Developer shall pay the Sewer Capacity Charge, as set forth in Resolution No. 39-2010. (d) General Plan Maintenance Fee. (Resolution 74-2007). 2.3 User Fees. (a) Sewer Service Charges. (assessed as part of property tax bill) (b) Stormwater Charges. (assessed as part of property tax bill) 2.4 Community Enhancement Payments. (a) Public Art Commitment. Developer agrees to (i) either install public art as part of the Project worth a minimum of $25,000 or, if such public art is not installed by the certificate of occupancy, then (ii) pay twenty-five thousand dollars ($25,000.00) to the City in order to support the development of public art in the City. (b) Community Benefit Payment. At issuance of the first building permit, Developer agrees to pay five hundred thousand dollars ($500,000.00) to the City to support increased pedestrian connectivity to the South San Francisco Caltrain station. (c) Park In-Lieu Payment. Developer agrees to pay ten thousand dollars ($10,000.00) per residential unit constructed, to the City, in order to support the development of parks and open space areas in the City. Developer agrees to pay this fee for all of each parcel’s residential units prior to issuance of the first Certificate of Occupancy for such parcel. For example, the Park In-Lieu 33 27 Payments for all units on Parcel A shall be paid at the issuance of the first Certificate of Occupancy for Parcel A. 2.5 Business License Tax Modifications. In the event that the City’s business license tax is modified and duly approved by voters, and any subsequent tax modifications become applicable to the properties on the Project during the term of this Agreement, Developer shall be responsible to pay the applicable business license tax amounts, as modified. 34 RESOLUTION NO.______ CITY COUNCIL, CITY OF SOUTH SAN FRANCISCO, STATE OF CALIFORNIA A RESOLUTION TO ACCEPT YEAR END FINANCIAL REPORTS FOR THE FISCAL YEAR ENDED JUNE 30, 2015 WHEREAS, the City of South San Francisco prepares and distributes its annual financial reports in accordance with generally accepted accounting practices; and NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of South San Francisco that the City Council hereby has received and accepts the following documents for the fiscal year ended June 30, 2015: • Comprehensive Annual Financial Report • Transportation Development Act Article III Fund – Basic Financial Statements for the Years Ended June 30, 2015 and 2014 • Report on Compliance with the Agreement for Distribution of San Mateo County Measure A Funds for Local Transportation Purposes • Memorandum on Internal Control and Required Communications – Basic Financial Statements for the Years Ended June 30, 2015 and 2014 * * * * * * I hereby certify that the foregoing Resolution was regularly introduced and adopted by the City Council of the City of South San Francisco at a regular meeting held on the 24th day of February, 2016 by the following vote: AYES: NOES: ABSTAIN: ABSENT: ATTEST: City Clerk Page 1 Comprehensive Annual Financial Report Fiscal Year 2014‐2015 Page 1 of 202 CITY OF SOUTH SAN FRANCISCO, CALIFORNIA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2015 Page 2 of 202 This Page Left Intentionally Blank Page 3 of 202 CITY OF SOUTH SAN FRANCISCO, CALIFORNIA Comprehensive Annual Financial Report For the Year Ended June 30, 2015 Table of Contents Page INTRODUCTORY SECTION Table of Contents ............................................................................................................................................... i Letter of Transmittal ......................................................................................................................................... v Certificate of Achievement for Excellence in Financial Reporting ................................................................ ix Organization Chart ............................................................................................................................................ x City Council and Directory of City Officials .................................................................................................. xi FINANCIAL SECTION Independent Auditor's Report ...................................................................................................................... 1 Management’s Discussion and Analysis ....................................................................................................... 5 Basic Financial Statements: Government-wide Financial Statements: Statement of Net Position .................................................................................................................. 29 Statement of Activities ...................................................................................................................... 30 Fund Financial Statements: Major Governmental Funds: Balance Sheet ................................................................................................................................ 34 Reconciliation of Governmental Fund Balances to Net Position of Governmental Activities .... 37 Statement of Revenues, Expenditures, and Changes in Fund Balances ....................................... 38 Reconciliation of the Net Change in Fund Balances Total Governmental Funds with the Statement of Activities ........................................................................................................ 40 Statement of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual – Budgetary Basis: General Fund ....................................................................................................................... 41 Low and Moderate Income Housing Assets ....................................................................... 42 Page 4 of 202 CITY OF SOUTH SAN FRANCISCO, CALIFORNIA Comprehensive Annual Financial Report For the Year Ended June 30, 2015 Table of Contents Page FINANCIAL SECTION (Continued) Major Proprietary Funds: Statement of Net Position .............................................................................................................. 44 Statement of Revenues, Expenses, and Changes in Fund Net Position ........................................ 45 Statement of Cash Flows ............................................................................................................... 46 Fiduciary Funds: Statement of Fiduciary Net Position ............................................................................................. 48 Statement of Changes in Fiduciary Net Position .......................................................................... 49 Notes to Basic Financial Statements ...................................................................................................... 51 Required Supplementary Information: Schedule of Changes in Net Position Liability and Related Ratios- Miscellaneous and Safety Plan ............................................................................................ 98 Schedule of Contributions – Miscellaneous and Safety Plan ........................................................ 99 Other Post-Employment Benefits Schedule of Funding Progress .............................................. 100 Supplementary Information: Major Governmental Funds Other Than the General Fund and Special Revenue Funds: Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual: Capital Improvement Capital Projects Fund (Non GAAP Legal Basis) .................................... 104 East of 101 Sewer Impact Fees Capital Projects Fund (Non GAAP Legal Basis) ................ 105 East of 101 Traffic Impact Fees Capital Projects Fund (Non GAAP Legal Basis) ............... 106 Child Care Impact Fees Capital Projects Fund (Non GAAP Legal Basis) ............................ 107 Developer Deposits Capital Projects Fund (Non GAAP Legal Basis) .................................. 108 Capital Infrastructure Reserve Fund (Non GAAP Legal Basis) ............................................ 109 Non-major Governmental Funds: Combining Balance Sheet ............................................................................................................... 114 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances ..................................................................................................................... 118 Budgeted Non-major Government Funds: Combining Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual ................................................................................... 122 Page 5 of 202 CITY OF SOUTH SAN FRANCISCO, CALIFORNIA Comprehensive Annual Financial Report For the Year Ended June 30, 2015 Table of Contents Page FINANCIAL SECTION (Continued) Internal Service Funds: Combining Statement of Net Position ............................................................................................ 130 Combining Statement of Revenues, Expenses and Changes in Fund Net Position ....................... 131 Combining Statement of Cash Flows ............................................................................................. 132 Fiduciary Funds: Statement of Changes in Assets and Liabilities – Agency Fund .................................................. 134 STATISTICAL SECTION Net Position by Component – Last Ten Fiscal Years .................................................................... 137 Changes in Net Position - Last Ten Fiscal Years ........................................................................... 138 Fund Balances of Governmental Funds - Last Ten Fiscal Years ................................................... 141 Changes in Fund Balance of Governmental Funds – Last Ten Fiscal Years ................................ 142 Assessed and Estimated Actual Value of Taxable Property - Last Ten Fiscal Years ................... 144 Property Tax Rates – Direct and Overlapping Governments - Last Ten Fiscal Years ................................................................................................................ 145 Principal Property Taxpayers – Current Year and Nine Years Ago .............................................. 146 Twenty Largest Taxable Property Owners for Merged RDA Project Area .................................. 147 Property Tax Levies and Collections – Last Ten Fiscal Years ...................................................... 148 Ratio of Outstanding Debt by Type – Last Ten Fiscal Years ........................................................ 149 Computation of Direct and Overlapping Debt ............................................................................... 150 Computation of Legal Bonded Debt Margin ................................................................................. 151 Revenue Bond Coverage Sewer Rental Enterprise Fund – Last Ten Fiscal Years ....................... 152 Sewer Debt Service Coverage Sewer Rental Enterprise Fund – Last Five Fiscal Years .............. 153 Page 6 of 202 CITY OF SOUTH SAN FRANCISCO, CALIFORNIA Comprehensive Annual Financial Report For the Year Ended June 30, 2015 Table of Contents Page STATISTICAL SECTION (Continued) Redevelopment Pledged Revenue Coverage – Last Seven Fiscal Years....................................... 154 Demographic and Economic Statistics – Last Ten Fiscal Years ................................................... 155 Principal Employers – Current Year and Nine Fiscal Years Ago ................................................. 156 Full-Time Equivalent City Governmental Employees by Function – Last Ten Fiscal Years ....... 157 Operating Indicators by Function/Program – Last Six Fiscal Years ............................................. 158 Capital Asset Statistics by Function/Program – Last Ten Fiscal Years ......................................... 159 Miscellaneous Information – Last Three Fiscal Years .................................................................. 160 Page 7 of 202 FINANCE DEPARTMENT 650-877-8507 December 16, 2015 Honorable Mayor and Members Of the City Council City of South San Francisco South San Francisco, California CITY COUNCIL 2015 RICHARD A. GARBARINO, MAYOR MARK ADDIEGO, VICE MAYOR LIZA NORMANDY, COUNCILMEMBER PRADEEP GUPTA, PH.D., COUNCILMEMBER KARYL MATSUMOTO, COUNCILMEMBER MIKE FUTRELL, CITY MANAGER The Comprehensive Annual Financial Report (CAFR) of the City of South San Francisco (the City) for the fiscal year ended June 30, 2015, is hereby submitted. Responsibility for the accuracy of the data, and the completeness and fairness of the presentation, including all disclosures, rests with the City. To the best of our knowledge and belief, the enclosed data is accurate in all material respects and is reported in a manner designed to present fairly the financial position and results of operations of the various funds of the City. All disclosures necessary to enable the reader to gain an understanding of the City's financial activities have been included. This report includes all financial activities of the City of South San Francisco, including financial information for the City, as the primary government, and for its component units, for which the City is considered financially accountable. The component units are included because of the significance of their governing, operational, and/or financial relationships with the City. The Successor Agency that was created due to the Redevelopment Agency dissolution is also included in this report. Management's Discussion & Analysis (MD&A) provides a narrative introduction overview and analysis to accompany the basic financial statements. This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The MD&A is found immediately following the report of the independent auditor in the financial section. BACKGROUND OF THE CITY The City encompasses approximately 9.5 square miles and has a population of 66,000. It employs approximately 479 full-time and part-time regular employees. 400 GRAND AVENUE • P.O. BOX 711 • SOUTH SAN FRANCISCO, CA 94083 Page 8 of 202 South San Francisco is a full service city which includes public safety (police, fire and paramedics), libraries, parks, cultural and recreational activities, senior citizen services, public works, public improvements, engineering, planning, building regulation, economic development, drainage, street lighting, and general administrative services. Sewer service, downtown parking operations, and storm water management are accounted for in the City's enterprise funds. The Conference Center Authority is included in the financial statements by discrete presentation -that is, the Authority's financial data is reported in a column separate from the financial data of the City. Water and refuse services are provided by private entities. South San Francisco was incorporated and became a general law city of the State of California on September 19, 1908. The form of government is the Council-Manager plan. The Council is composed of a Mayor and four Council Members who are elected at large. Each Council Member serves a term of four years, with a rotating Mayor chosen by majority vote of the Council, for a term of one year. The City Manager is the administrative head of the government of the City, under the direction of the City Council. The offices of City Clerk and City Treasurer are elected. The City Attorney is appointed by the City Council. All department heads are appointed and serve under the administrative direction of the City Manager. All other officers and employees of the City are appointed by the City Manager and serve under the administrative direction of their department heads. FINANCIAL INFORMATION In developing and appraising the City's accounting system, consideration is given to the adequacy of internal accounting controls. Internal accounting controls are designed to provide reasonable but not absolute assurance regarding: (1) the safeguarding of assets against loss from unauthorized use or disposition; (2) the reliability of financial records for preparing financial statements and maintaining accountability for assets; and (3) transactions being properly executed in accordance with management's authorization. The concept of reasonable assurance recognizes that: ( 1) the cost of a control should not exceed the benefits likely to be derived; and (2) the evaluation of costs and benefits requires estimates and judgments by management. Basic characteristics of sound internal accounting control include segregation of accounting duties, approvals of accounting transactions, and regular reconciliation of detail and control records. All internal control evaluations occur within this framework. We believe that the City's internal accounting controls adequately safeguard assets and provide reasonable assurances of proper recording of financial transactions. 2 Page 9 of 202 The City adopts fiscal year budgets for its general, special revenue, debt service, enterprise, and capital project funds. The government also maintains an encumbrance accounting system as one technique of accomplishing budgetary control. Encumbered amounts lapse at year-end. However, encumbrances generally are reappropriated as a part of the following year's budget. To accomplish a multi-year perspective on financial planning, the City has used a five year model in prior years. Debt Administration The Successor Agency has outstanding tax allocation bonds and lease revenue bonds. These are not considered to be general tax-supported obligations. There are also various capital leases and notes payable in City's governmental and proprietary funds. Capital Assets The City comprised land, buildings, infrastructure, machinery, equipment, furniture, fixtures, and vehicles owned and used by general government and proprietary functions. Assets are reported within the basic financial statements. Risk Management The City maintained a risk management program for workers' compensation, general liability, and property damage. As part of this comprehensive plan, monies have accumulated in the self-insurance internal service fund to meet potential losses. In addition, a safety committee of City employees reviews all accidents and recommends preventive measures to minimize future accident related losses. The City self-insures the deductible or retention levels of its workers compensation, general liability and property damage insurance policies. A third party administrator handles worker compensation claims. The Association of Bay Area Governments' municipal pool self-insurance plan provides the City's general liability and property damage coverage along with claims and risk management services. An employers' casualty insurance company provides workers compensation coverage in excess of the deductible. OTHER INFORMATION Independent Audit The City engaged an independent accounting firm to audit the books of accounts, financial records, transactions, and financial statements. Their report covering 2014-15 is in the Financial Section of this report. 3 Page 10 of 202 Award The City's Comprehensive Annual Financial Report for the fiscal year ended June 30, 2014, received a Certificate of Achievement for Excellence in Financial Reporting from the Government Finance Officers Association. The award signified the report's attainment of easily readable and efficiently organized content and satisfaction of generally accepted accounting principles and legal requirements. The award is valid for a period of one year only. However, the City believes that this current report continues to conform to program eligibility requirements. Acknowledgments The preparation of the Comprehensive Annual Financial Report was made possible by the dedicated services of the entire staff of the Finance Department and our auditors. Each member of the department has our sincere appreciation for the contributions made in the preparation of this report. Respectfully submitted, Richard Lee Director of Finance 4 �� ftike Futrell / /-City Manager Page 11 of 202 Page 12 of 202 Organizational Chart Page 13 of 202 City Council & Directory of Officials City Council Richard A. Garbarino Mayor Mark N. Addiego Vice Mayor Pradeep Gupta Councilmember Karyl Matsumoto Councilmember Liza Normandy Councilmember Elected Officials Krista Martinelli City Clerk Frank Risso City Treasurer Appointed Officials Mike Futrell City Manager Jim Steele Assistant City Manager / Chief Sustainability Officer Leslie Arroyo Communications Director Richard Lee Finance Director LaTanya Bellow Human Resources Director Doug Hollis Chief Innovation Officer Alex Greenwood Economic & Community Development Director Gerry Kohlmann Fire Chief Jeff Azzopardi Chief of Police Valerie Sommer Library Director Brian McMinn Public Works Director Sharon Ranals Parks & Recreation Director Page 14 of 202 This Page Left Intentionally Blank Page 15 of 202 INDEPENDENT AUDITOR’S REPORT Honorable Members of the City Council City of South San Francisco, California Report on Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of South San Francisco (City), California, as of and for the year ended June 30, 2015, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the Table of Contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the component unit financial statements of the South San Francisco Conference Center Authority (Authority), which represents 1%, 2%, and 3%, respective, of the assets, net position, and revenue of the entity-wide reporting entity. These component unit financial statements were audited by other auditors, whose report thereon has been furnished to us and our opinion, insofar as it relates to the amounts included for the Authority, is based solely on the report of these auditors. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. 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. Page 16 of 202 Opinions In our opinion, based on our audit and the report of the other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the aggregate discretely presented component unit, each major fund, and the aggregate remaining information of the City as of June 30, 2015, and the respective changes in financial position and, where applicable, cash flows thereof and the respective budgetary comparisons listed as part of the basic financial statements for the year then ended in conformity with accounting principles generally accepted in the United States of America. Emphasis of Matters Management adopted the provisions of the following Governmental Accounting Standards Board Statements, which became effective during the year ended June 30, 2015 that required a prior period adjustment to the financial statements, as discussed in Note 1R to the financial statements June 30, 2015:  Statement No. 68, Accounting and Financial Reporting for Pensions—an amendment of GASB Statement No. 27.  Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date— an amendment of GASB Statement No. 68. The emphasis of these matters does not constitute a modification to our opinions. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that Management’s Discussion and Analysis, other Required Supplementary Information 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. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements as a whole. The Introductory Section, Supplemental Information, and Statistical Section as listed in the Table of Contents are presented for purposes of additional analysis and are not required parts of the basic financial statements. Page 17 of 202 The Supplemental Information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the Supplemental Information is fairly stated, in all material respects, in relation to the basic financial statements 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 23, 2015, 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. Pleasant Hill, California November 23, 2015 Page 18 of 202 This Page Left Intentionally Blank Page 19 of 202 CITY OF SOUTH SAN FRANCISCO MANAGEMENT’S DISCUSSION AND ANALYSIS Required Supplementary Information Government Accounting Standards Board Statement 34 (GASB 34) requires the City of South San Francisco to provide this overview of its financial activities for the fiscal year. Please read this in conjunction with the accompanying Transmittal Letter and Basic Financial Statements. FISCAL 2014-15 FINANCIAL HIGHLIGHTS Summary: The General Fund ended FY 2014-15 with a surplus of $0.7 million, which reflects a transfer of $6.1 million to the Capital Infrastructure Reserve Fund. General Fund reserves were fully funded in accordance with the City’s Reserves Policy, which follows the Government Finance Officers’ Association (GFOA) best practice of 15-20% of operating revenues. General Fund revenues (excluding operating transfers in) increased $7.0 million compared to the prior year. Revenues from Transient Occupancy Tax (TOT) played a large role in the year-over- year increase. Tourism in the San Francisco Bay Area remained robust, as demonstrated through increases in average room rates and occupancy rates. City-wide financial highlights of the year include the following:  Property tax revenues, excluding those from the former Redevelopment Agency (RDA), increased $581,800, or 3.8 percent compared to the prior year. The increase primarily reflects reassessment of properties whose assessed values were reduced during the recession, which is indicative of the vibrant real estate market in the San Francisco Bay Area.  Property taxes from the former RDA increased $737,900, or 18.0 percent. As the Successor Agency pays down the obligations of the former RDA, the proportional share of property taxes to the taxing entities increases.  Revenue from permits increased $428,900, or 9.8 percent over the prior year. The City’s East of 101 area experienced robust development, particularly in the biotech sector.  Excluding Property Tax in-lieu of Vehicle License Fees, Intergovernmental revenues increased by $905,200, primarily due to a provision in the state’s FY 2014-15 budget that provided for payment of SB90 State Mandate Cost Reimbursements when actual revenues exceeded projections.  Governmental program net expenses increased 7.1 percent, or $4.1 million to $61.0 million reflecting less revenue from Charges for Services and more expenses in General Government. Primary drivers for the additional expenses included litigation costs, increased staff resources to address bandwidth needs, labor negotiation services, recruitment costs and community outreach efforts. The decrease in revenues from Charges for Services is attributable to less capital project permit activity compared to the prior year for projects funded by deposit balances. Page 20 of 202 CITY OF SOUTH SAN FRANCISCO MANAGEMENT’S DISCUSSION AND ANALYSIS Required Supplementary Information  Business-type program expenses increased by $4.4 million in FY 2014-15, most notably in the Sewer Fund. The year-over-year increase was due to a significant amount of capital expense that was offset into construction in progress in the prior year. OVERVIEW OF THE COMPREHENSIVE ANNUAL FINANCIAL REPORT This Comprehensive Annual Financial Report is in six parts: 1) The Introductory Section, which includes the Transmittal Letter and general information, 2) Management’s Discussion and Analysis (this part), 3) The Basic Financial Statements, which include the Government-wide and the Fund Financial Statements, along with the notes accompanying these statements, 4) Required Supplementary Information and the accompanying notes, 5) Other Supplementary Information including combining statements for non-major governmental funds, internal service funds, other budgetary information, and a fiduciary statement of changes in assets and liabilities, and 6) The Statistical Section. Basic Financial Statements The Basic Financial Statements comprise the City-wide Financial Statements and the Fund Financial Statements. These two sets of financial statements provide two different views of the City’s financial activities and financial position. The City-wide Financial Statements provide a longer-term view of the City’s activities as a whole, and consist of the Statement of Net Position and the Statement of Activities. The Statement of Net Position provides information about the financial position of the City as a whole, including all its capital assets and long-term liabilities on the full accrual basis, similar to that used by corporations. The Statement of Activities provides information about all the City’s revenues and all its expenses, also on the full accrual basis, with the emphasis on measuring net revenues or expenses of each the City’s programs. The Statement of Activities explains in detail the change in Net Assets for the year. All of the City’s activities are grouped into Government Activities and Business-type activities, as explained below. All the amounts in the Statement of Net Position and the Statement of Activities are separated into Governmental Activities and Business-type Activities in order to provide a summary of these two activities of the City as a whole. The Fund Financial Statements report the City’s operations in more detail than the government- wide statements and focus primarily on the short-term activities of the City’s General Fund and other Major Funds. The Fund Financial Statements measure only current revenues and expenditures and fund balances; they exclude capital assets, long-term debt and other long-term amounts. Page 21 of 202 CITY OF SOUTH SAN FRANCISCO MANAGEMENT’S DISCUSSION AND ANALYSIS Required Supplementary Information 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. Major Funds are explained below. The fiduciary statements provide financial information about the activities of Non-Obligated Assessment Districts, for which the City acts solely as agent. Note 1 to the Basic Financial Statements provides a summary of the City’s significant accounting policies, fund categories, and fund types. City-wide Financial Statements The Statement of Net Position and the Statement of Activities present information about the following:  Governmental activities - All of the City’s basic services are considered to be governmental activities, including general government, fire, police, public works, parks and recreation, library, and economic and community development. These services are supported by general City revenues such as taxes, and by specific program revenues from grants, contributions, and fees. The City’s governmental activities also include the City of South San Francisco Capital Improvements Financing Authority, as the City Council also governs this entity.  Business-type activities - All the City’s enterprise activities are reported here, including sewage treatment, parking, and storm water management. Unlike governmental services, user fees fully support most of these services.  Component Unit - The City of South San Francisco Conference Center Authority comprises the component unit. The Authority serves the City and other interests and it has a governing body separate from the City Council. Citywide financial statements are prepared on the accrual basis, which means they measure the flow of all economic resources of the City as a whole. Page 22 of 202 CITY OF SOUTH SAN FRANCISCO MANAGEMENT’S DISCUSSION AND ANALYSIS Required Supplementary Information Fund Financial Statements The Fund Financial Statements provide detailed information about each of the City’s most significant funds, called Major Funds. The concept of major funds, and the determination of which are major funds, 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 only in a single column. Subordinate schedules present the detail of these Non-major funds. Major Funds present the major activities of the City for the year, and may change from year to year as a result of changes in the pattern of City’s activities. Fund Financial Statements include governmental, enterprise and internal service funds as discussed below. Governmental Fund Financial Statements are prepared on the modified accrual basis, which means they measure only current financial resources and uses. Capital assets and other long- lived assets, along with long-term liabilities, are not presented in the Governmental Fund Financial Statements. Enterprise and Internal Service Fund financial statements are prepared on the full accrual basis, as in the past, and include all their assets and liabilities, current and long-term. Since the City’s Internal Service Funds provide goods and services only to the City’s governmental and business-type activities, their activities are reported only in total at the Fund level. Internal Service Funds may not be Major Funds because their revenues are derived from other City Funds. These revenues are eliminated in the citywide financial statements and any related profits or losses are returned to the activities, which created them, along with any residual net assets of the Internal Service Funds. Comparisons of Budget and Actual financial information are required in the Basic Financial Statements only for the General Fund and other Major Funds that are Special Revenue Funds. Fiduciary Statements The City is the agent for certain assessment districts, holding amounts collected from property owners which await transfer to these Districts’ bond trustees. The City’s fiduciary activities are reported in the separate Statement of Fiduciary Net Position and the Statement of Changes in Fiduciary Net Position. These activities are excluded from the City’s other financial statements because the City cannot use these assets to finance its own operations. Page 23 of 202 CITY OF SOUTH SAN FRANCISCO MANAGEMENT’S DISCUSSION AND ANALYSIS Required Supplementary Information FINANCIAL ACTIVITIES OF THE CITY AS A WHOLE This analysis focuses on net position and changes in net position of the City’s Governmental Activities (Table and Charts 1 through 3) and Business-type Activities (Tables 4 and 5) presented in the City-wide Statement of Net Position and Statement of Activities. A comparative analysis is presented for fiscal years 2014-15 and 2013-14. Governmental Activities Governmental Net Position Table 1 Governmental Net Position at June 30 (In Millions) With the implementation of GASB Statements No. 68 and No. 71, the City reduced the beginning net positions of fiscal year 2014-15 to $134.4 million. The City’s net position from governmental activities decreased to $145.4 million as of June 30, 2015. 20152014 Cash and investments90.2$ 91.3$ Other assets9.5 10.7 Capital assets233.3 233.8 Total assets 333.0 335.8 Total outflows related to pension10.3 ‐ Total outflow of resources 10.3 ‐ Long‐term debt outstanding 14.9 14.5 Other liabilities 161.9 60.8 Total liabilities 176.8 75.3 Deferred inflows related to pension21.0 ‐ Total deferred inflow of resources 21.0 ‐ Net position: Invested in capital assets, net of debt230.5 230.4 Restricted 49.3 42.4 Unrestricted (134.4) (12.3) Total net position 145.4$ 260.5$ Page 24 of 202 CITY OF SOUTH SAN FRANCISCO MANAGEMENT’S DISCUSSION AND ANALYSIS Required Supplementary Information Table 2 Expense and Program Revenue Comparison in Governmental Activities (In Millions) 2014‐152013‐14 Expenses General government$8.4$7.2 Fire department22.0 21.2 Police department23.9 24.4 Public works department14.5 15.0 Recreation and community services12.4 12.7 Library4.3 4.3 Economic and community development5.9 5.0 Interest on long‐term debt Total expenses$91.4$89.7 Revenues Program revenues: Charges for services$24.1$26.1 Operating grants and contributions 5.8 5.6 Capital grants and contributions 0.6 1.5 Total program revenues $30.5$33.3 Genera l revenues: Taxes: Property taxes $24.7$22.9 Sales taxes 13.9 12.7 Transient occupancy taxes 13.0 11.2 Other taxes 8.7 8.1 Motor vehicle in lieu 0.0 0.0 Property taxes in lieu 5.6 5.3 Investment earnings 0.6 1.1 Miscellaneous 4.6 1.5 Extraordinary Item ‐ ‐ Total general revenues $71.0$62.9 Total revenues $101.4$96.1 Excess (deficiency) before transfers $10.0 $6.5 Transfers (1.4) (1.0) Change in net assets 8.6 5.4 Net assets ‐ beginning*136.9 255.0 Net assets ‐ ending $145.5$260.5 *Note ‐ Reflects GASB 68 Prior Period Adjustment Page 25 of 202 CITY OF SOUTH SAN FRANCISCO MANAGEMENT’S DISCUSSION AND ANALYSIS Required Supplementary Information Governmental program revenues (Table 2) decreased by $2.8 million compared to the prior year. Charges for services decreased $2.0 million, reflecting a decrease in permit issuance activity for prepaid capital projects. Revenues from capital grants and contributions decreased by $0.9 million in comparison to the prior year, when the City received a number of grants for street and bridge repair. Chart 1 Revenues by Source - Governmental Activities 2014-15 Within Governmental Activity revenue sources, as shown in Chart 1, Charges for Services decreased from 27% to 24%, reflecting an influx of capital contributions and traffic impact fees in the prior year as well as a reduction in permit issuance activity for prepaid capital projects. Tables 2 (above) and 3 (below) illustrate the difference between program revenues and expenses. Program revenues consist of capital and operating grants and contributions and fees for services. General City revenues, such as property taxes, sales and transient occupancy taxes, motor vehicle in-lieu taxes, and investment earnings, cover the shortfall between program revenues and program expenses. General government net expenses increased from $1.1 million to $4.1 million, reflecting the impact of litigation costs, staff augmentation to maintain service levels, labor negotiation services, executive recruitment costs and community outreach efforts. Property taxes 24% Sales taxes 14% Transient occupancy taxes 13% Other taxes 9% Property Taxes in lieu 5% Interest and Rentals 1% Miscellaneous 3% Charges for Services 24%Operating Grants and Contributions 6% Capital Grants and Contributions 1% Page 26 of 202 CITY OF SOUTH SAN FRANCISCO MANAGEMENT’S DISCUSSION AND ANALYSIS Required Supplementary Information Table 3 Net (Expense) Revenue from Services Governmental Activities (In Millions) 2014-152013-14 General government($4.1)($1.1) Fire department(18.5) (17.9) Police department(20.2) (20.9) Public works department(6.5) (5.9) Recreation and community services(7.8) (8.2) Library(3.6) (3.8) Economic and community development(0.4) 1.4 Interest on long-term debt Total ($61.1)($56.4) Page 27 of 202 CITY OF SOUTH SAN FRANCISCO MANAGEMENT’S DISCUSSION AND ANALYSIS Required Supplementary Information Business-type Activities Table 4 Business-type Net Position at June 30 (in Millions) While total assets remained fairly flat in 2015, long term liabilities increased in recognition of the GASB 68 allocated pension liability, which drove the reduction of total net position from $93.4 million to $82.8 million. 20152014 Cash and Investments18.9$ 16.9$ Other assets0.6 0.6 Capital assets126.3 130.0 Total assets145.8 147.5 Deferred outflows related to pension1.1 ‐ Total Deferred outflow of resource s 1.1 ‐ Long‐term liabilities outstanding55.9 47.7 Other liabilities 5.9 6.4 Total liabilities61.8 54.1 Deferred inflows related to pension2.3 ‐ Total deferred inflow of resources2.3 ‐ Net position: Investment in capital assets 78.6 78.0 Restricted ‐ ‐ Unrestricted4.2 15.4 Total net position 82.8$ 93.4$ Page 28 of 202 CITY OF SOUTH SAN FRANCISCO MANAGEMENT’S DISCUSSION AND ANALYSIS Required Supplementary Information Table 5 Change in Business-type Net Position (In Millions) Business activity expenses increased $4.4 million compared to the prior year, particularly in Sewer Enterprise activities, due to significant capital expense in the prior year that was offset into construction in progress. Business activity revenues slightly decreased by $0.7 million, primarily due to the impact of a rate increase offset by a reduction in contributions from participating agencies. FINANCIAL ANALYSIS OF THE CITY’S FUNDS Governmental Funds Governmental funds highlight the City’s near-term inflows, outflows, and balances of spendable resources. Such information can be helpful in determining the City’s financial status. Unrestricted fund balance is a major indicator of designated and uncommitted resources available for spending in future fiscal years. 2014‐152013‐14 Expenses Sewer Enterprise24.0$ 19.3$ Parking District0.5 0.9 Storm Water1.2 1.1 Total expenses25.7 21.3 Revenues Program Revenues Charges for Services21.0 20.4 Operating grants and contributions6.2 7.6 Total program revenues27.3 28.0 General revenues Investment earnings0.1 0.2 Total general revenues0.1 0.2 Excess (deficiency) before transfers1.7 6.8 Transfers1.4 1.0 Change in net position3.1 7.8 Net position ‐ beginning (as adjusted)79.7 85.6 Net position ‐ ending 82.8$ 93.4$ Page 29 of 202 CITY OF SOUTH SAN FRANCISCO MANAGEMENT’S DISCUSSION AND ANALYSIS Required Supplementary Information At June 30, 2015, the City’s governmental funds reported combined fund balances of $70.9 million, an increase of $8.5 million, or 13.6 percent compared to the prior year. The General Fund ending fund balance was $21.3 million, reflecting an increase of $0.8 million, or 3.7 percent. The City’s Reserves Policy follows the GFOA-recommended threshold (20% of operating revenues). As such, higher revenues from Transient Occupancy Tax and permit fees in the fiscal year increased the reserves threshold. Total governmental fund revenues increased $4.6 million, or 4.8 percent, this year to $101.0 million, attributable to property tax, sales tax and transient occupancy tax, the City’s principal revenue sources. Total governmental fund expenditures increased $2.6 million, or 2.9 percent, this year to $90.8 million. Fire Department expenditures increased the most compared to the prior year, due to overtime to meet minimum staffing requirements, incurred as a result of injury leave and responding to calls for mutual aid. Comparison of Final Budgets to Original Adopted Budget The budget is initially adopted by the City Council in June, based on revenue projections that are up to date through May. Between May and the end of the fiscal year, there can be major fluctuations in revenues depending on the economy and/or actions by the State of California. There can also be significant changes to departmental expenditure budgets to the extent unforeseen expenses occur. In the Fund Financial Statements, the page titled “Statement of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual” later in this document shows the initial adopted and final budgets for the General Fund. Significant changes between the adopted and final budgets are described below: Page 30 of 202 CITY OF SOUTH SAN FRANCISCO MANAGEMENT’S DISCUSSION AND ANALYSIS Required Supplementary Information Table 6 Comparison of Final Budgets to Original Adopted Budget (in Thousands) OriginalFinal Pct Discussion: RevenuesBudgetBudgetChangeChange(Items of more than 5% and $100,000 variance) Property taxes 20,707$ 22,514$ 1,807$ 8.7% The budget was increased to account for additional Educational Revenue Augmentation Fund revenues; the bud get was estimated conservatively at the recommendation of county officials and in line with the budgeting practices of other local agencies given the uncertainty of available excess ERAF funds. In addition, the adopted budget assumed an increase in assessed value of 1.9%, which was the most current estimate available from the county assessor at the time. The final change in assessed value was 5.3%, resulting in an additional $505,000 in property tax revenues. Sales taxes14,539 14,984 445 3.1% The budget was increased to account for a one-time provision in the state budget to address the In-Lieu Sales Tax Triple Flip shortfall in San Mateo County, which occurred due to the number of Basic Aid school districts. Transient occupancy taxes 10,685 11,435 750 7.0% In 2014, San Francisco International Airport broke its seventh consecutive record for passenger traffic. Room rates and occupancy rates reached all-time highs. All of which indicative of vibrant tourism in the San Francisco Bay Area. Other taxes 4,047 4,047 - Franchise Fee3,248 3,248 - Intergovernmental6,118 7,555 1,437 23.5% The Library, Police, and Economic and Community Development Departments often receive Federal and State grants after the year starts. Interest and rentals2,931 2,932 1 0.0% Licenses and permits3,297 3,747 450 13.6%The City's East of 101 area experienced significant permit activity, particularly in the biotech sector. Charges for services8,025 8,547 522 6.5% The additional budget reflects an agreement with Pacific Gas and Electric to reimburse the City for installation of new gas transmission lines. Fines and forfeitures1,088 1,088 - Other249 249 - Total 74,934$ 80,346$ 5,412$ 7.2% Page 31 of 202 CITY OF SOUTH SAN FRANCISCO MANAGEMENT’S DISCUSSION AND ANALYSIS Required Supplementary Information Table 6 (continued) Comparison of Final Budgets to Original Adopted Budget (in Thousands) OriginalFinal Pct Discussion: ExpendituresBudgetBudgetChangeChange(Items of more than 5% and $100,000 variance) City Council 192$ 221$ 29$ 15.1% City Clerk 508 426 (82) -16.1% City Treasurer 122 103 (19) -15.6% City Attorney 765 862 97 12.7%The City incurred additional legal costs due to various litigation matters. City Manager 1,048 1,241 193 18.4% Extensive outreach efforts took place to gauge community prioritization of city services, programs, facilities and infrastructure. Finance 1,900 2,009 109 5.7% Temporary staffing services were needed to augment operational needs during staff transition. Non-Departmental1,086 1,139 53 4.9% Human Resources1,039 1,318 279 26.9%Additional costs from executive recruitment services and office reconfiguration. Fire 19,801 21,248 1,447 7.3% The budget increase is due to overtime incurred from minimum staffing needs, reflecting the impact of injury leave and responses to calls for mutual aid. Police 22,572 23,672 1,100 4.9%The budget increase is also due to overtime incurred from minimum staffing needs, due to vacancies and injury leaves. Public Works 4,199 5,070 871 20.7% The additional budget reflects installation of a root barrier on Junipero Serra Boulevard, operation of the South City Shuttle, and installation of new gas transmission lines. Parks and Recreation 12,146 11,852 (294) -2.4% Library4,406 4,303 (103) -2.3% Economic and Community Development 4,525 4,799 274 6.1% Additional consulting services were needed to augment staff bandwidth due to the rapid pace and quantity of developments. Total74,309$ 78,263$ 3,954$ 5.3% Page 32 of 202 CITY OF SOUTH SAN FRANCISCO MANAGEMENT’S DISCUSSION AND ANALYSIS Required Supplementary Information Analysis of Major Governmental Funds General Fund Total General Fund revenues in FY 2014-15 were $85.3 million, $5.0 million, or 6.2 percent over the final amended budget. General Fund departments stayed within budget, resulting in a year-end net operating budget impact (revenue over expenditures) of a positive $5.0 million, before capital improvement expenses and transfers out to other funds. Transient Occupancy Tax (TOT) revenue reached $12.9 million, $1.8 million more than the all- time high from the previous year, and demonstrating the impact of vibrant tourism in the San Francisco Bay Area. License and permit revenues increased $0.4 million, reaching their highest post-recession point, reflecting a robust development climate. The largest gains over the prior year occurred in the following categories:  Transient Occupancy Taxes increased $1.8 million, a barometer for local tourism;  Licenses and permits increased $0.4 million, reflecting significant permit activity in the East of 101 area and indicative of the current development climate;  Property taxes were $1.5 million higher than the prior year due to increases in the allocation for the former Redevelopment Agency (RDA), which increase for taxing entities as the obligations of the former RDA are paid down. Some year-over-year decreases occurred in the General Fund, including a decrease of $307 thousand in Fines and Forfeitures due to the elimination of the City’s red light camera program. Charges for Services decreased slightly, reflecting accumulated revenues from several years which were recognized in the prior year through the Ground Emergency Medical Transportation program. General Fund expenditures increased $4.5 million, or 6.2% over the prior fiscal year. The increase is attributable to additional costs from legal services, staff augmentation to ensure maintenance of service levels, labor negotiation services, executive recruitment services and community outreach efforts. As of June 30, 2015, the General Fund balance includes $3.2 million in unrestricted reserves, $11.6 million reserved for emergencies and economic contingencies, and $2.3 million for budget contingencies. Total discretionary reserves were $17.3 million and are now shown in the Comprehensive Annual Financial Report as Unassigned Fund Balance, consistent with the new Government Accounting Standards Board (GASB) Statement 54. Page 33 of 202 CITY OF SOUTH SAN FRANCISCO MANAGEMENT’S DISCUSSION AND ANALYSIS Required Supplementary Information Other Post Employment Benefit (OPEB) Liability Impact on Fund Balance The City has a particularly rich retiree health benefit for employees hired prior to April 25, 2010 (legacy employees). Those legacy employees who retire from PERS and from the City concurrently with at least 5 years of service are entitled to 100% coverage of retiree medical insurance premiums paid by the City. This benefit resulted in an OPEB liability estimated as of the last outside actuarial analysis of $66 million as of June 30, 2013, which reflects investment of $13.5 million with the California Employers’ Retiree Benefit Trust (CERBT). The City Council approved an appropriation of over $800 thousand ($250 thousand from the General Fund, and the remainder from enterprise funds) to be contributed to CERBT on an annual basis. City Housing Fund Up until Redevelopment Agencies were abolished in FY 2011-12 by the State of California under AB 26, the City set aside 20% of Redevelopment property taxes to fund the provision of new affordable housing units, as well as the operation and maintenance of housing stock that the Redevelopment Agency had already funded. That fund was formerly called the Low/Moderate Income Housing Fund. With its source of funding (20% of Redevelopment property tax dollars) abolished, the City Council voted to take on the operations of the former housing units by becoming the Successor Housing Agency, with activities funded primarily from the rental revenues received by the City for those City-owned occupied housing units. Any shortfall between the rents received and the operations and maintenance costs of those housing units are funded by either one time grants or by the General Fund. Any fund balances will be held for future housing property maintenance needs. In FY 2014-15, the City Housing Fund received for $266 thousand in rental income from the City’s affordable housing properties, and $66 thousand in interest income. The fund also received $922 thousand in revenues to fund the Brookwood development, and $1.2 million in loan repayment from Mid-Peninsula Housing. The fund also had $171 thousand in operating expenses for maintenance and service contracts, $327 thousand in expenses for retail property, and $563 thousand in expenses for the Brookwood development. Capital Improvement Fund The City consolidates and reports its governmental fund-type capital project expenditures in this fund. Resources consist of transfers from the General Fund, major and non-major funds, developer impact fees, and gasoline taxes and transportation sales taxes from non-major governmental funds. Resources also come from federal, state, and local grants, contributions from other cities, utilities and private developers. Entire capital projects are appropriated in one- year, but expended over multiple years, with unspent appropriations carried forward year-to-year until completion. Page 34 of 202 CITY OF SOUTH SAN FRANCISCO MANAGEMENT’S DISCUSSION AND ANALYSIS Required Supplementary Information East of 101 Sewer Impact Fee Fund The fund has a negative fund balance of $40 thousand as of June 30, 2015 due to a prepayment of impact fees by a large biotech firm to front-fund a now completed project. In 2007, the City entered into an agreement with this firm to pre-fund the sewer impact fees for the East Grand Avenue Sewer Trunk project in order for the project to be completed prior to the issuance of building permits. As a result, the pre-funding is shown on the City’s books as a liability until sufficient development generates impact fees to cover the prepayment of those fees, or until the City has a new agreement with the firm. In FY 2014-15, the City received $472 thousand in East of 101 Sewer Impact fees while expenditures were very limited, thus its considerable improvement in net position compared to the prior year. East of 101 Traffic Impact Fee Fund In FY 2014-15, the City received $1.4 million in traffic impact fees, with nominal expenditures. As of June 30, 2015, the fund has a balance of $5.9 million. Child Care Impact Fee Fund The City received $478 thousand in child care impact fees in FY 2014-15. Factoring in limited expenditures, this fund has a balance of $2.5 million as of June 30, 2015. Larger scale projects can be funded once a sufficient balance has been accumulated. Developer Deposit Since 2007, the City has entered into agreements with a large biotech firm to front-fund sewer and streetscape projects. The remaining balances of the pre-funding are shown on the City’s books as a liability which will be reduced as related project expenditures are incurred. Page 35 of 202 CITY OF SOUTH SAN FRANCISCO MANAGEMENT’S DISCUSSION AND ANALYSIS Required Supplementary Information Other Governmental Funds Presented as a group in the Basic Financial Statements, these funds are individually presented as Supplementary Information. Enterprise Funds Sewer Enterprise Fund The Sewer Enterprise fund reported operating income (before non-operating revenues and expenses transfers) of $3.5 million in FY 2014-15. Operating revenues decreased by $0.8 million, or 3.1 percent. The Water Quality Control Plant is a shared facility, with the cities of San Bruno, Millbrae and Burlingame sharing in the cost of operations and capital improvements. In FY 2014-15, there was $4.5 million less in cash flows out for the acquisition of capital assets, thus the reimbursement from the participating agencies was less than the prior year. Operating expenses increased by $3.7 million or 19.6 percent, due to increases in personnel, recognition of OPEB expense, and non-capital maintenance costs. Net position increased $2.4 million to end the year at $67.9 million. Parking District Fund Net position increased by $89 thousand to $13.9 million due to an increase in parking permit and parking meter revenues. Storm Water Fund The Storm Water Fund is used to account for resources needed to fund storm drain and storm infrastructure operations and maintenance and capital replacement, as well as comply with various federal and state regulations regarding storm water runoff. Revenues totaled $415 thousand, primarily from a levy on property owners. Transfers totaled $1.4 million, of which $670,000 was from the Gas Tax Fund and $750,000 was from the General Fund. Expenditures totaled $1.2 million, $672,000 less than the amended budget. This is primarily due salary savings from ongoing drought conditions that resulted in the redeployment of Public Works staff to other maintenance areas. Reserves as of the fiscal year ended June 30, 2015, totaled $1.2 million. Service fee revenues remain capped in this fund without a ballot measure to increase assessed fees. Page 36 of 202 CITY OF SOUTH SAN FRANCISCO MANAGEMENT’S DISCUSSION AND ANALYSIS Required Supplementary Information CAPITAL ASSETS GASB Statement 34 requires the City to add infrastructure to its reportable capital assets. Infrastructure includes streets, drainage systems, and traffic control and safety devices. Previously, governments excluded the value of such property from their reports of capital assets. The City has now successfully reported on the depreciated value of all such assets acquired or built since 1980. The City reports the depreciated book value of other types of capital assets such as buildings, land, equipment and furniture, on a City-wide Statement of Net Assets. Such information is summarized below and is more completely detailed in Note 3 to the Basic Financial Statements. The City depreciates all its capital assets, except land and construction in progress. At June 30, 2015, the City had $359.6 million in capital assets, net of depreciation, representing a decrease of $4.2 million from the prior year. The decrease reflects the dearth of capital asset additions within Business-type activities compared to the prior year, thus the net reduction is driven by accumulated depreciation. Page 37 of 202 CITY OF SOUTH SAN FRANCISCO MANAGEMENT’S DISCUSSION AND ANALYSIS Required Supplementary Information These are invested in a broad range of capital assets used in governmental and business-type activities, as shown in Table 7 below: Table 7 Capital Assets (in Millions) at June 30 20152014 Governmental Activities: Land47.6$ 47.6$ Buildings and improvements85.0 84.8 Equipment and vehicles19.6 19.5 Furniture and fixtures1.8 1.8 Infrastructure ‐ streets*183.1 183.1 Infrastructure ‐ traffic control devices*5.1 5.1 Infrastructure ‐ storm drains*8.9 8.9 Construction in progress18.4 10.8 Less accumulated depreciation(136.2) (127.8) Totals233.3$ 233.8$ * Additions during the fiscal year only Business‐type Activities Land1.4$ 1.4$ Buildings and improvements 66.7 66.7 Clean water facilities and transmission line75.5 75.5 Infrastructure ‐ storm drains 4.8 4.8 Infrastructure ‐ streets 7.4 7.4 Equipment and vehicles 11.2 10.7 Construction in progress 7.1 7.3 Less accumulated depreciation (47.8) (43.8) Totals 126.3$ 130.0$ Total City 359.6$ 363.8$ Page 38 of 202 CITY OF SOUTH SAN FRANCISCO MANAGEMENT’S DISCUSSION AND ANALYSIS Required Supplementary Information DEBT ADMINISTRATION Each of the City’s debt issues is discussed in detail in Note 5 to the Basic Financial Statements. A summary of the City’s outstanding debt for the past two fiscal years is as follows: Table 8 Outstanding Debt (In Millions) at June 30 The decline in Business-type Activities outstanding debt of $4.4 million is the result of scheduled repayments. The largest remaining debt obligations are the following: - Three loans to the City’s Sewer Enterprise Fund from the State Water Resources Control Board to finance the expansion of the City’s water quality control plant and pay for Wet Weather improvements which will improve environmental impacts on the Bay. Principal and interest repayments commence on the loans upon completion of the project related to each loan package. The three current loans outstanding have fixed interest of 2.6%, 2.5% and 2.4% are due in 2022, 2026 and 2028. Because of the regional benefits and equity interest in these projects, the City of San Bruno shares in the loan repayments for the first two of the three current loans. ECONOMIC OUTLOOK AND MAJOR ACCOMPLISHMENTS The economic outlook and major accomplishments of the City are discussed in the accompanying Transmittal Letter. Governmental Activities 20152014 Loan payable to Successor Agency11.4$ 11.7$ Capital leases2.8 3.3 Total Governmental Activities Outstanding Debt14.2$ 15.0$ Business‐type Activities State Water Resources Board loans43.5$ 47.6$ 2005 Sewer Bonds 4.1 4.4 Total Business‐type Activities Outstanding Debt47.6$ 52.0$ Page 39 of 202 CITY OF SOUTH SAN FRANCISCO MANAGEMENT’S DISCUSSION AND ANALYSIS Required Supplementary Information CONTACTING THE CITY’S FINANCIAL MANAGEMENT This Comprehensive Annual Financial Report is intended to provide readers with a general overview of the City’s finances. Questions about this report or requests for additional financial information should be directed to the City of South San Francisco Finance Department, P.O. Box 711, South San Francisco, CA 94083, and phone (650) 877-8512. The City’s website is at www.ssf.net. Page 40 of 202 This Page Left Intentionally Blank Page 41 of 202 CITY OF SOUTH SAN FRANCISCO STATEMENT OF NET POSITION AND STATEMENT OF ACTIVITIES The Statement of Net Position and the Statement of Activities summarize the entire City’s financial activities and financial position. The Statement of Net Position reports the excess of the City’s total assets and deferred outflows of resources over the City’s total liabilities and deferred inflows of resources, including all the City’s capital assets and all its long-term debt. The Statement of Net Position focuses the reader on the composition of the City’s net position, by subtracting total liabilities from total assets. The Statement of Net Position summarizes the financial position of all the City’s Governmental Activities in a single column, and the financial position of all the City’s Business-Type Activities in a single column; these columns are followed by a total column which presents the financial position of the entire City. The City’s Governmental Activities include the activities of its General Fund, along with all its Special Revenue, Capital Projects and Debt Service Funds. Since the City’s Internal Service Funds service these Funds, their activities are consolidated with Governmental Activities, after eliminating inter-fund transactions and balances. The City’s Business Type Activities include all its Enterprise Fund activities. The Statement of Activities reports increases and decreases in the City’s net position. It is also prepared on the full accrual basis, which means it includes all the City’s revenues and all its expenses, regardless of when cash changes hands. This differs from the “modified accrual” basis used in the Fund financial statements, which reflect only current assets, current liabilities, available revenues and measurable expenditures. The Statement of Activities presents the City’s expenses first, listed by program, and follow these with the expenses of its business-type activities. Program revenues—that is, revenues which are generated directly by these programs—are then deducted from program expenses to arrive at the net expense of each governmental and business-type program. The City’s general revenues are then listed in the Governmental Activities or Business-type Activities column, as appropriate, and the Change in Net Position is computed and reconciled with the Statement of Net Position. Both these Statements include the financial activities of the City and the City of South San Francisco Capital Improvements Financing Authority that is legally separate but a component unit of the City because it is controlled by the City, which is financially accountable for its activities. Data for the South San Francisco Conference Center Authority is reflected as a discretely presented component unit of the City. This data is presented separately from other funds of the City to reflect operations under control of a governing body with a voting majority which is different from the City Council. Page 42 of 202 This Page Left Intentionally Blank Page 43 of 202 Component Unit Primary GovernmentSouth San Francisco GovernmentalBusiness-Type Conference ActivitiesActivitiesTotalCenter ASSETS Cash and investments (Note 2)$89,606,132$18,870,622$108,476,754$2,576,504 Receivables: Accounts4,751,653841,9385,593,591269,200 Accrued interest200,71541,166241,881 Loans2,263,2662,263,266 Deposit203,510203,510 Inventory1,1341,134 Other 4,844 Restricted cash and investments (Note 2)612,282612,282488,075 Internal balances (Note 4A)201,159(201,159) Land held for development (Note 1M)1,900,0001,900,000 Capital assets: (Note 3) Nondepreciable65,954,2948,535,02674,489,320 Depreciable, net accumulated depreciation167,349,315117,726,864285,076,1793,795,724 Total Assets333,043,460 145,814,457478,857,9177,134,347 DEFERRED OUTFLOW OF RESOURCES Related to pension (Note 7)10,262,4201,140,26911,402,689 Deferred amounts from refunding of debt (Note 5)77,334 Total Deferred Outflow of Resources10,262,4201,140,26911,402,68977,334 LIABILITIES Accounts payable 1,924,023261,3862,185,409168,253 Accrued salaries and benefits2,454,4232,454,42338,807 Accrued interest payable819,891819,89122,148 Other payable754,523146,121900,64446,245 Deposits1,939,1247,5001,946,624302,768 Unearned revenue3,140,0413,140,041 Accrued insurance losses: (Note 11) Due within one year712,000712,000 Due in more than one year10,632,00010,632,000 Compensated absences obligation: (Note 1K) Due within one year3,459,871242,5593,702,430 Due in more than one year2,176,910273,5922,450,502 Debt and capital lease obligations: (Note 5) Due within one year547,5744,420,7814,968,355410,000 Due in more than one year13,609,15043,242,83256,851,9821,330,000 OPEB obligations - due in more than one year (Note 9)23,810,70023,810,700 Net Pension Liability - due in more than one year (Note 7)111,676,25512,408,473124,084,728 Total Liabilities 176,836,594 61,823,135238,659,729 2,318,221 DEFERRED INFLOW OF RESOURCES Related to pension (Note 7)21,029,9432,336,66023,366,603 Total Deferred Inflow of Resources 21,029,9432,336,66023,366,603 NET POSITION (Note 6) Net investment in capital assets 230,517,03778,598,277309,115,314 2,055,724 Restricted for: Debt service 488,075 Special revenue projects 21,627,478 21,627,478 Capital projects 27,684,350 27,684,350 Total Restricted Net Position 49,311,828 49,311,828 488,075 Unrestricted (134,389,522)4,196,654(130,192,868)2,349,661 Total Net Position $145,439,343$82,794,931$228,234,274 $4,893,460 See accompanying notes to financial statements CITY OF SOUTH SAN FRANCISCO STATEMENT OF NET POSITION JUNE 30, 2015 Page 44 of 202 Operating Capital Charges forGrants andGrants and Functions/Programs Expenses ServicesContributionsContributions Primary Government Governmental Activities: General Government $8,421,857$3,946,302 $378,733 Fire 22,005,8833,520,275 Police 23,910,4362,370,7361,344,675 Public Works 14,493,0395,071,7292,345,742 $632,735 Parks and Recreation 12,383,8803,708,272 877,417 Library 4,300,885 120,850 588,109 Economic and Community Development 5,928,3165,337,177 219,169 Total Governmental Activities 91,444,29624,075,3415,753,845 632,735 Business-type Activities Sewer 23,969,57919,798,0336,242,687 Parking District 503,014 819,051 Storm Water 1,234,616 407,640 Total Business-type Activities 25,707,20921,024,7246,242,687 Total Primary Government $117,151,505$45,100,065$11,996,532 $632,735 Component Unit Conference Center $3,177,494$1,425,916 General revenues: Taxes: Property taxes Sales taxes Transient occupancy taxes Other taxes Motor vehicle in lieu, unrestricted Property taxes in lieu of vehicle license fees Investment earnings Miscellaneous Transfers (Note 4) Total general revenues and transfers Change in Net Position Net Position - Beginning, As adjusted (Note 1R) Net Position - Ending See accompanying notes to financial statements CITY OF SOUTH SAN FRANCISCO STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2015 Program Revenues Page 45 of 202 Component Unit South San Francisco GovernmentalBusiness-Type Conference Activities Activities Total Center ($4,096,822)($4,096,822) (18,485,608)(18,485,608) (20,195,025)(20,195,025) (6,442,833)(6,442,833) (7,798,191)(7,798,191) (3,591,926)(3,591,926) (371,970)(371,970) (60,982,375)(60,982,375) $2,071,1412,071,141 316,037 316,037 (826,976)(826,976) 1,560,2021,560,202 (60,982,375)1,560,202(59,422,173) ($1,751,578) 24,650,648 24,650,648 13,932,125 13,932,125 12,947,473 12,947,473 2,215,145 8,650,056 8,650,056 26,995 26,995 5,551,651 5,551,651 629,036 126,874 755,910 9,416 4,577,239 4,577,239 29,461 (1,429,308)1,429,308 69,535,9151,556,18271,092,097 2,254,022 8,553,5403,116,38411,669,924 502,444 136,885,80379,678,547216,564,350 4,391,016 $145,439,343$82,794,931$228,234,274$4,893,460 Primary Government Net (Expenses) Revenues and Changes in Net Position Page 46 of 202 This Page Left Intentionally Blank Page 47 of 202 FUND FINANCIAL STATEMENTS Major funds are defined generally as having significant activities or balances in the current year. The funds described below were determined to be Major Funds by the City in fiscal 2015. Individual non-major funds may be found in the Supplemental section. GENERAL FUND This fund accounts for resources traditionally associated with government, such as administration, public safety, library, parks maintenance, and recreation, outside of those accounted for in other funds. LOW AND MODERATE INCOME HOUSING ASSETS SPECIAL REVENUE FUND To account for the activities related to the assets assumed by the City as Housing Successor to the housing activities of the former Redevelopment Agency of the City of South San Francisco. CAPITAL IMPROVEMENT CAPITAL PROJECTS FUND To account for expenditures associated with the acquisition, construction, or improvement of City owned facilities and infrastructure. Funding comes from the general fund, special revenue funds, grants and fees. EAST OF 101 SEWER IMPACT FEES CAPITAL PROJECTS FUND These fees provide new development’s share of new and rehabilitated sewer collection and treatment facilities to serve the East of Highway 101 area. EAST OF 101 TRAFFIC IMPACT FEES CAPITAL PROJECTS FUND These fees are to provide new development’s share of new and expanded roadway and intersection improvements to serve the East of Highway 101 area. CHILD CARE IMPACT FEES CAPITAL PROJECTS FUND These citywide fees provide new development’s share of new and expanded childcare facilities to serve the childcare needs of working parents. DEVELOPER DEPOSIT FUND To account for a deposit by a large corporation for various capital projects the developer agreed to fund. CAPITAL INFRASTRUCTURE RESERVE FUND Replacement, upgrade, and maintenance of the City’s infrastructure are backlogged, constituting a significant liability. Funds are set aside in this fund as part of the budget process and as part of the City’s reserve policy to address the replacement and/or upgrade of the city infrastructure (such as parks, buildings, facilities, streets, sidewalks, and storm water facilities). Page 48 of 202 GOVERNMENTAL FUNDS BALANCE SHEET JUNE 30, 2015 Low and Moderate East of 101 General Income Capital Sewer Fund Housing AssetsImprovementImpact Fees ASSETS Cash and investments (Note 2)$20,795,013 $1,803,973 $1,357,707 $1,924,201 Receivables: Accounts 4,087,846 7,637 499,057 Accrued interest 65,237 4,590 4,219 Loans 1,367,951 Inventory 1,134 Restricted cash and investments (Note 2)433,723 Land held for redevelopment (Note 1M) $24,949,230 $3,617,874 $1,856,764 $1,928,420 Total Assets LIABILITIES Liabilities: Accounts payable $787,724 $5,511 $600,174 Accrued salaries and benefits 2,454,423 Other payable 267,772 458,732 Deposits 75,000 Unearned revenue 157,936 289,759 $1,968,879 Due to other funds (Note 4B) Total Liabilities 3,667,855 80,511 1,348,665 1,968,879 DEFERRED INFLOWS OF RESOURCES Unavailable revenue - accounts receivable 219,545 Total deferred inflows of resources 219,545 Fund Balances (Note 6): Nonspendable 1,134 Restricted 3,537,363 Committed 2,536,790 Assigned 1,458,029 288,554 Unassigned 17,285,422 (40,459) Total Fund Balances (Deficits)21,281,375 3,537,363 288,554 (40,459) Total Liabilities and Fund Balances (Deficits)$24,949,230 $3,617,874 $1,637,219 $1,928,420 CITY OF SOUTH SAN FRANCISCO Capital Projects Funds Page 49 of 202 East of 101 Capital Other Total Traffic Child Care Developer InfrastructureGovernmentalGovernmental Impact Fees Impact Fees Deposit Reserve Fund Funds Funds $5,927,618 $2,483,494 $1,059,151 $17,658,721 $18,342,254 $71,352,132 76,661 4,671,201 17,233 6,201 5,377 42,254 145,111 895,315 2,263,266 1,134 178,559 612,282 1,900,000 1,900,000 $5,944,851 $2,489,695 $1,064,528 $17,658,721 $21,435,043 $80,945,126 $195,899 $1,589,308 2,454,423 9,250 735,754 $991,644 872,480 1,939,124 723,467 3,140,041 100 100 991,644 1,801,196 9,858,750 219,545 219,545 1,134 $5,944,851 $2,489,695 72,884 $11,758,721 19,633,847 43,437,361 2,536,790 5,900,000 7,646,583 17,244,963 5,944,851 2,489,695 72,884 17,658,721 19,633,847 70,866,831 $5,944,851 $2,489,695 $1,064,528 $17,658,721 $21,435,043 $80,725,581 Capital Projects Funds Page 50 of 202 This Page Left Intentionally Blank Page 51 of 202 CITY OF SOUTH SAN FRANCISCO GOVERNMENTAL FUNDS BALANCE SHEET - RECONCILIATION OF GOVERNMENTAL FUND BALANCES TO NET POSITION OF GOVERNMENTAL ACTIVITIES JUNE 30, 2015 Total fund balances reported on the governmental funds balance sheet $70,866,831 Amounts reported for Governmental Activities in the Statement of Net Position are different from those reported in the Governmental Funds because of the following: Capital assets used in Governmental Activities are not financial resources and, therefore, are not reported in the Governmental Funds.228,171,088 Revenues which are deferred on the Fund Balance Sheets, because they are not available currently, are taken into revenue in the Statement of Activities.219,545 Internal service funds are used by management to charge the cost of management of communication, telephone, building, fleet maintenance, equipment replacement, workers' compensation, employee benefits, insurance, and post-retirement healthcare benefits to individual funds. The assets and liabilities are included in Governmental Activities in the Statement of Net Position.(15,727,098) The assets and liabilities below are not due and payable in the current period and therefore are not reported in the funds: Long-term debt (11,370,152) Deferred outflows related pension 10,262,420 Net Pension Liability (111,676,255) Deferred inflows related to pension (21,029,943) Non-current portion of compensated absences (4,277,093) Net position of governmental activities $145,439,343 See accompanying notes to financial statements Page 52 of 202 Low and Moderate East of 101 General Income Capital Sewer Fund Housing AssetsImprovementImpact Fees REVENUES Property taxes $23,079,858 Sales taxes 15,284,011 Transient occupancy taxes 12,947,473 Franchise Fees 3,743,656 Other taxes 4,906,400 Intergovernmental 7,537,766 $565,896 Interest and rentals 2,866,296 $332,178 $12,837 Licenses and permits 4,795,158 Charges for services 8,695,265 459,624 Fines and forfeitures 1,221,413 Other 222,611 2,037,940 11,652 Total Revenues 85,299,907 2,370,118 577,548 472,461 EXPENDITURES Current: City Council 221,155 City Clerk 426,410 City Treasurer 102,576 City Attorney 861,747 City Manager 1,223,159 Finance 1,982,911 Non-departmental 1,075,055 2,500 Human Resources 1,266,571 Fire 21,247,989 Police 23,512,560 Public Works 4,564,498 10,014,584 Parks and Recreation 11,826,407 Library 4,247,650 Economic and Community Development 4,246,016 769,724 128,438 Other Debt service: Principal repayments Total Expenditures 76,804,704 769,72410,143,022 2,500 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 8,495,203 1,600,394(9,565,474)469,961 OTHER FINANCING SOURCES (USES) Transfers in (Note 4C)1,955,824 9,881,403 Transfers out (Note 4C)(9,698,911)(290,798)(16,191) Total Other Financing Sources (Uses)(7,743,087)(290,798)9,881,403 (16,191) Net Change in Fund Balances 752,116 1,309,596 315,929 453,770 Fund balances (deficits) - July 1 20,529,259 2,227,767 (27,375)(494,229) Fund balances (deficits) - June 30 $21,281,375 $3,537,363$288,554($40,459) See accompanying notes to financial statements Capital Projects Funds CITY OF SOUTH SAN FRANCISCO GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES FOR THE YEAR ENDED JUNE 30, 2015 Page 53 of 202 East of 101 Capital Other Total Traffic Child Care DeveloperInfrastructureGovernmentalGovernmental Impact FeesImpact Fees Deposit Reserve Fund Funds Funds $1,570,790$24,650,648 15,284,011 12,947,473 3,743,656 1,393,938 6,300,338 2,349,409 10,453,071 $50,753 $18,701 $94,084 157,117 3,531,966 4,795,158 1,411,851 477,806 $1,049,546 1,293,620 13,387,712 1,221,413 257,637 2,130,828 4,660,668 1,462,604 496,507 1,049,546 351,721 8,895,702100,976,114 221,155 426,410 102,576 861,747 1,223,159 1,982,911 2,500 3,385 1,083,440 1,266,571 21,247,989 99,183 23,611,743 2,500 1,341,489 15,923,071 11,826,407 4,247,650 773,330 5,917,508 480,290 480,290 352,674 352,674 2,500 2,500 3,050,351 90,775,301 1,460,104 494,007 1,049,546 351,721 5,845,351 10,200,813 6,146,000 17,983,227 (2,311,180)(1,049,547)(6,350,475)(19,717,102) (2,311,180)(1,049,547)6,146,000 (6,350,475)(1,733,875) (851,076)494,007 (1)6,497,721 (505,124)8,466,938 6,795,927 1,995,688 72,885 11,161,000 20,138,971 62,399,893 $5,944,851 $2,489,695 $72,884$17,658,721$19,633,847$70,866,831 Capital Projects Funds Page 54 of 202 CITY OF SOUTH SAN FRANCISCO Reconciliation of the NET CHANGE IN FUND BALANCES - TOTAL GOVERNMENTAL FUNDS with the STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2015 NET CHANGE IN FUND BALANCES - TOTAL GOVERNMENTAL FUNDS$8,466,938 Amounts reported for Governmental Activities in the Statement of Activities are different because of the following: Capital Assets Transactions Governmental funds report capital outlays as expenditures. However, in the Statement of Activities the cost of those assets is capitalized and allocated over their estimated useful lives and reported as depreciation expense. Capital assets additions 8,215,527 Retirement and adjustment of capital assets 72,512 Current year depreciation (8,272,523) Long-Term Debt Payments Repayment of principal is an expenditure in the governmental funds, but in the Statement of Net Position the repayment reduces long-term liabilities. Repayment of principal is added back to fund balance352,674 Accrual of Non-Current Items of current financial resources and therefore is not reported as revenue or expenditures in governmental funds (net change): Compensated absences (215,721) Unavailable revenue 219,545 Net pension liability, and deferred outflows and inflows of resources1,160,921 Allocation of Internal Service Fund Activity Internal service funds are used by management to charge the costs of certain activities to individual funds. The net revenue of the internal service fund is reported with governmental activities.(1,446,333) CHANGE IN NET POSITION OF GOVERNMENTAL ACTIVITIES$8,553,540 See accompanying notes to financial statements The amount below included in the Statement of Activities does not require the use Page 55 of 202 CITY OF SOUTH SAN FRANCISCO GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL (NON GAAP LEGAL BASIS) FOR THE YEAR ENDED JUNE 30, 2015 Variance with Final Budget ActualPositive Original Final Amount(Negative) Resources (inflows): Property taxes $20,706,506$22,513,706$23,079,858 $566,152 Sales taxes 14,538,91014,984,01015,284,011 300,001 Transient occupancy taxes 10,684,77211,434,77212,947,473 1,512,701 Franchise fees 3,248,0003,248,0003,743,656 495,656 Other taxes 4,047,0004,047,0004,906,400 859,400 Intergovernmental 6,117,7127,555,5817,537,766 (17,815) Interest and rentals 2,931,5002,931,5002,866,296 (65,204) Licenses and permits 3,296,8543,746,8544,795,158 1,048,304 Charges for services 8,024,9408,546,6028,695,265 148,663 Fines and forfeitures 1,088,5001,088,5001,221,413 132,913 Other 249,248 249,248 222,611 (26,637) Amounts available for appropriation 74,933,94280,345,77385,299,907 4,954,134 Charges to appropriations (outflows) City Council 192,249 221,157 221,155 2 City Clerk 507,564 426,412 426,410 2 City Treasurer 122,094 102,578 102,576 2 City Attorney 764,998 861,748 861,747 1 City Manager 1,048,2021,241,3751,241,376 (1) Finance 1,900,2352,009,3832,009,381 2 Non-departmental 1,086,3151,138,9491,138,950 (1) Human Resources 1,038,5211,318,1031,318,106 (3) Fire 19,800,67621,247,99021,247,989 1 Police 22,572,27423,671,82923,671,829 Public Works 4,199,3275,069,9895,069,994 (5) Parks and Recreation 12,145,99311,851,92511,851,923 2 Library 4,406,3544,302,6884,302,691 (3) Economic and Community Development 4,524,3554,798,6084,798,606 2 Total charges to appropriations 74,309,15778,262,73478,262,733 1 OTHER FINANCING SOURCES (USES) Transfers in (Note 4C)1,121,9092,453,7571,955,824 (497,933) Transfers out (Note 4C)(1,650,250)(6,022,944)(9,698,911)(3,675,967) Total Other Financing Sources (Uses)(528,341)(3,569,187)(7,743,087)(4,173,900) NET CHANGE IN FUND BALANCES $96,444($1,486,148)(705,913)$780,235 Fund Balance - July 1 20,529,259 Adjustment to budgetary basis: Encumbrance adjustments 1,458,029 Fund Balance - June 30 $21,281,375 See accompanying notes to financial statements Budgeted Amounts Page 56 of 202 CITY OF SOUTH SAN FRANCISCO LOW AND MODERATE INCOME HOUSING ASSETS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL (NON GAAP LEGAL BASIS) FOR THE YEAR ENDED JUNE 30, 2015 Variance with Final Budget Positive BudgetActual Amounts(Negative) REVENUES: Interest and rental$194,518$332,178$137,660 Other506,0002,037,9401,531,940 Total Revenues700,5182,370,1181,669,600 EXPENDITURES: Current: Economic and Community Development587,806769,724(181,918) Total Expenditures587,806769,724(181,918) EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES112,7121,600,3941,487,682 OTHER FINANCING SOURCES (USES) Transfers out(291,029)(290,798)231 Total other financing sources (uses)(291,029)(290,798)231 NET CHANGE IN FUND BALANCE($178,317)1,309,596$1,487,913 Fund balance - July 12,227,767 Fund balance - June 30$3,537,363 SPECIAL REVENUE FUND Page 57 of 202 MAJOR PROPRIETARY FUNDS Proprietary funds account for City operations financed and operated in a manner similar to a private business enterprise. The intent of the City is that the cost of providing goods and services be financed primarily through user charges. The concept of major funds established by GASB Statement 34 extends to Proprietary Funds. The City reported all enterprise funds as major proprietary funds. GASB 34 does not provide for the disclosure of budget versus actual comparisons regarding proprietary funds that are major funds. SEWER ENTERPRISE FUND This fund accounts for user charges and debt proceeds supporting the operation, maintenance, and capital expansion of the wastewater collection and treatment system. PARKING DISTRICT FUND This fund accounts for meter and parking permit fees used to acquire and maintain parking facilities. STORM WATER FUND This fund accounts for user charges sustaining the Storm Water Management Program mandated by state and federal authorities. Page 58 of 202 CITY OF SOUTH SAN FRANCISCO PROPRIETARY FUNDS STATEMENT OF NET POSITION JUNE 30, 2015 Governmental Business-type Activities - Enterprise FundsActivities SewerParkingStorm Internal EnterpriseDistrictWaterTotalService Funds ASSETS Current assets: Cash and investments (Note 2)$16,091,716$1,646,474$1,132,432$18,870,622$18,254,000 Receivables: Accounts841,938841,93880,452 Accrued interest34,5604,2222,38441,16655,604 Due from other funds (Note 4A)100 Deposit 203,510 Total current assets16,968,2141,650,6961,134,81619,753,72618,593,666 Noncurrent assets: Capital assets: (Note 3) Nondepreciable7,503,1241,023,3208,5828,535,02634,854 Depreciable, net accumulated depreciation106,352,85911,291,40282,603117,726,8645,097,667 Total non-current assets113,855,98312,314,72291,185126,261,8905,132,521 Total Assets130,824,19713,965,4181,226,001146,015,61623,726,187 Deferred Outflow Related to pension (Note 7)1,140,2691,140,269 LIABILITIES Current liabilities: Accounts payable 226,5536,21528,618261,386334,715 Other payable146,121146,12118,769 Accrued interest payable819,891819,891 Deposits payable7,5007,500 Accrued insurance loss (Note 11)712,000 Compensated absences obligation (Note 1K)234,9447,294321242,559824,803 Current portion of long-term debt (Note 5)4,420,7814,420,781547,574 Total current liabilities5,855,79013,50928,9395,898,2382,437,861 Noncurrent liabilities: Accrued insurance losses (Note 11)10,632,000 Compensated absences obligation (Note 1K)231,0524,13238,408273,592534,885 Net OPEB obligation (Note 9)23,810,700 Noncurrent portion of long-term debt (Note 5)43,242,83243,242,8322,238,998 Net pension liability (Note 7)12,408,47312,408,473 Total noncurrent liabilities55,882,3574,13238,40855,924,89737,216,583 Total Liabilities61,738,14717,64167,34761,823,13539,654,444 Deferred Inflow Related to pension (Note 7)2,336,6602,336,660 NET POSITION: Net investment in capital assets66,192,37012,314,72291,18578,598,2772,345,949 Unrestricted (deficit)1,697,2891,633,0551,067,4694,397,813(18,274,206) Total Net Position$67,889,659$13,947,777$1,158,65482,996,090($15,928,257) Some amounts reported for business-type activities in the statement of net position are different because certain internal service fund assets and liabilities are included in business-type activities(201,159) $82,794,931 See accompanying notes to financial statements Page 59 of 202 CITY OF SOUTH SAN FRANCISCO PROPRIETARY FUNDS STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION FOR THE YEAR ENDED JUNE 30, 2015 Governmental Business-type Activities - Enterprise FundsActivities SewerParkingStorm Internal EnterpriseDistrictWaterTotalService Funds OPERATING REVENUES Charges for services$19,758,143$405,540$20,163,683$21,654,166 Other cities' participation6,159,9376,159,937 Permit fees39,89039,890 Parking fees $819,051819,051 Total Operating Revenues25,957,970819,051405,54027,182,56121,654,166 OPERATING EXPENSES Personnel expenses7,166,011247,737856,2018,269,94913,849,236 Professional services3,960,9107,74933,6714,002,330418,847 OPEB expenses1,070,08433,4411,103,5252,842,525 Program supplies1,123,15844,428248,4261,416,0121,345,892 Insurance122,8461,0522,154126,0521,008,927 Self-insurance and claims 2,582,118 Repair and maintenance1,030,9699325,7901,056,852514,814 Rents and leases1,592,1001,592,100 Utilities1,257,66146,3999,0921,313,15235,394 Administration1,296,524102,67446,6491,445,847 Depreciation3,785,150259,08716,9404,061,177718,608 Other10,4091,63412,043244,327 Total Operating Expenses22,415,822742,6601,240,55724,399,03923,560,688 Operating Income (Loss)3,542,14876,391(835,017)2,783,522(1,906,522) NONOPERATING REVENUES (EXPENSES) Interest income106,83012,6527,392126,874159,269 Gain on dispositions of capital assets 72,216 Interest expense(1,320,905)(1,320,905)(101,156) Other82,7502,10084,85038,028 Total Nonoperating Revenues (Expenses)(1,131,325)12,6529,492(1,109,181)168,357 Income (loss) before transfers2,410,82389,043(825,525)1,674,341(1,738,165) TRANSFERS Transfers in (Note 4C)16,1911,420,0001,436,1911,326,275 Transfers out (Note 4C)(6,883)(6,883)(1,021,708) Change in Net Position2,420,13189,043594,4753,103,649(1,433,598) Net Position (Deficits) - July 1, as adjusted (Note 1R)65,469,52813,858,734564,17979,892,441(14,494,659) Net Position (Deficits) - June 30$67,889,659$13,947,777$1,158,654$82,996,090($15,928,257) Change in Net Position$3,103,649 Some amounts reported for business-type activities in the statement of activities are different because the net revenue (expense) of certain internal service funds is reported with business-type activities12,735 Change in Net Position of Business-Type Activities$3,116,384 See accompanying notes to financial statements Page 60 of 202 CITY OF SOUTH SAN FRANCISCO PROPRIETARY FUNDS STATEMENT OF CASH FLOWS FOR THE YEAR ENDED JUNE 30, 2015 Governmental Business-type Activities - Enterprise FundsActivities SewerParkingStorm Internal EnterpriseDistrictWaterTotalService Funds CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers$25,949,948$819,051$407,640$27,176,639 Cash payment to suppliers for goods and services(11,520,813)(241,124)(350,626)(12,112,563)($14,421,726) Cash payment to employees for services(7,236,280)(249,296)(848,496)(8,334,072)(14,687,245) Cash received from interfund service provided 22,636,767 Cash payment for judgments and claims (1,310,118) Other payments (29,555) Net Cash Provided by (Used in) Operating Activities7,192,855328,631(791,482)6,730,004(7,811,877) CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Payments from other funds 8,900 Transfers in16,1911,420,0001,436,1911,326,275 Transfers out(6,883)(6,883)(1,021,708) Net Cash Provided by Noncapital Financing Activities9,3081,420,0001,429,308313,467 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Principal paid on long-term debt(4,312,405)(4,312,405)(530,264) Interest paid on long-term debt(1,399,037)(1,399,037)(101,156) Acquisition of capital assets, net(607,194)(607,194)(249,475) Proceeds from the sale of capital assets 72,216 Net Cash Used in Capital and Related Financing Activities(6,318,636)(6,318,636)(808,679) CASH FLOWS FROM INVESTING ACTIVITIES Interest received108,65312,0276,774127,454188,576 Net Cash Provided by Investing Activities108,65312,0276,774127,454188,576 Net Increase (Decrease) in cash and cash equivalents992,180340,658635,2921,968,130(8,118,513) Cash and cash equivalents, beginning15,099,5361,305,816497,14016,902,49226,372,513 Cash and cash equivalents, ending$16,091,716$1,646,474$1,132,432$18,870,622$18,254,000 Reconciliation of operating income (loss) to net cash provided by operating activities: Operating income (loss)$3,542,148$76,391($835,017)$2,783,522($1,906,522) Adjustments to reconcile operating income (loss) to cash flows from operating activities: Depreciation3,785,150259,08716,9404,061,177718,608 Other non-operating revenue (expenses)82,7502,10084,85038,028 Net change in assets and liabilities: Accounts and lease receivables(90,772)(90,772)(55,427) Prepaid items 1,000,000 Accounts payable77,591(5,288)16,79089,093(947,149) Other payable(133,743)(133,743)18,769 Accrued insurance losses 1,272,000 OPEB obligations (8,011,000) Compensated absence obligations58,723(1,559)7,70564,86960,816 (Decrease) increase due to retirement system(128,992)(128,992) Net Cash Provided by (Used in) Operating Activities$7,192,855$328,631($791,482)$6,730,004($7,811,877) See accompanying notes to basic financial statements Page 61 of 202 FIDUCIARY FUND An agency fund is used to account for assets held by the City acting as an agent for another government entity. The financial activity of this fund, excluded from the Entity-wide financial statements, is presented in a separate Fiduciary Fund financial statement. SUCCESSOR AGENCY PRIVATE PURPOSE TRUST FUND The Fund is used to account for the activities of the Successor Agency to the former Redevelopment Agency of the City of South San Francisco. SSF EMPLOYEE DEFERRED COMP TRUST OVERSIGHT FUND This fund is used to pay for the administrative costs of monitoring the Deferred Compensation Funds on behalf of City employees. Page 62 of 202 Agency Fund SuccessorSSF Employee AgencyDef Comp Private PurposeTrust Trust FundOversight ASSETS Cash and investments (Note 2)$6,761,071$49,140 Accounts receivable2,877 Accrued interest receivable16,547134 Advances to the City (Note 5)11,370,152 Loans receivable (Note 13B)273,581 Restricted cash and investments (Note 2)84,160,610 Capital assets (Note 13C): Nondepreciable52,769,724 Depreciable, net accumulated depreciation3,072,416 Total Assets$158,426,978$49,274 LIABILITIES Accounts payable$13,395$231 Accrued interest payable968,501 Deposits 37,519 Other accrued liability 49,043 Noncurrent portion of pollution remediation (Note 13E)537,000 Long-term debt (Note 13D): Due within one year1,925,000 Due in more than one year57,590,000 Total Liabilities61,071,415$49,274 NET POSITION Held in trust for other purposes$97,355,563 See accompanying notes to financial statements CITY OF SOUTH SAN FRANCISCO STATEMENT OF FIDUCIARY NET POSITION FIDUCIARY FUNDS JUNE 30, 2015 Page 63 of 202 Successor Agency Private Purpose Trust Fund ADDITIONS Intergovernmental$8,645,608 Interest and rentals1,420,614 Other 5,000 Total Additions10,071,222 DEDUCTIONS Economic and Community Development1,162,371 Interest expense3,859,405 Depreciation87,061 Total Deductions 5,108,837 Change in net position 4,962,385 NET POSITION HELD IN TRUST FOR OTHER PURPOSES Beginning of the year 92,393,178 End of the year $97,355,563 See accompanying notes to financial statements CITY OF SOUTH SAN FRANCISCO FIDUCIARY FUNDS STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FOR THE YEAR ENDED JUNE 30, 2015 Page 64 of 202 This Page Left Intentionally Blank Page 65 of 202 CITY OF SOUTH SAN FRANCISCO NOTES TO BASIC FINANCIALS STATEMENTS For the Fiscal Year Ended June 30, 2015 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Description of the Financial Reporting Entity As required by generally accepted accounting principles, the financial statements present the City of South San Francisco (the City) as the Primary Government, with its component units for which the City is considered financially accountable. The component units discussed below are included in the City's reporting entity because of the significance of their operational and financial relationships with the City. B. Description of Blended Component Units The accompanying basic financial statements include all funds and boards and commissions that are controlled by the City Council. The basic financial statements include the City’s blended component units, entities for which the City is considered to be financially accountable. A blended component unit, although a legally separate entity, is in substance, part of the City’s operations and so data from this unit is combined with the City. The City’s following blended component units are described below. The City of South San Francisco Capital Improvements Financing Authority is a joint exercise of powers authority created in 1991 between the City and the City of South San Francisco former Redevelopment Agency. The Financing Authority is authorized to borrow money through the purchase or issuance of bonds, notes, or other obligations for the purpose of making loans to the City and other public entities to finance capital improvements. The City Council members serve as the Board of Directors. C. Description of Discrete Component Unit The City of South San Francisco Conference Center Authority was established in 1992 to manage and operate the South San Francisco Conference Center. The Authority is governed by a Board of nine commissioners consisting of two Council members and seven representatives from various businesses appointed by City Council. The Authority does not meet the criteria of a blended component unit, since the City Council is not the component unit’s governing body and the Authority does not provide services entirely to the City. However the City is financially accountable and is able to impose its will on the Authority. The Authority is therefore considered a discrete component unit with its financial data reported separately from the financial data of the City. The City of South San Francisco Conference Center Authority financial statements may be obtained from the Authority at 255 South Airport Boulevard, South San Francisco, CA 94080. Page 66 of 202 CITY OF SOUTH SAN FRANCISCO NOTES TO BASIC FINANCIALS STATEMENTS For the Fiscal Year Ended June 30, 2015 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Basis of Presentation Government-wide Statements - The Statement of Net Position and the Statement of Activities display information about the primary government (the City) and its component units. These statements include the financial activities of the overall City government, except for fiduciary activities. Interfund transfers and amounts owed between funds within the primary government have been eliminated from the statements. Amounts representing interfund services and uses remain in the statements. These statements distinguish between the governmental and business- type activities of the City. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions. Business-type activities are financed in whole or in part by fees charged to external parties. The Statement of Activities presents a comparison between direct expenses and program revenues for each segment of the business-type activities of the City and for each function of the City’s governmental activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Program revenues include (a) charges paid by the recipients of goods or services offered by the programs, (b) grants and contributions that are restricted to meeting the operational needs of a particular program and (c) fees, grants and contributions that are restricted to financing the acquisition or construction of capital assets. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues. Fund Financial Statements: The fund financial statements provide information about the City’s funds, including fiduciary funds and blended component units. Separate statements for each fund category – governmental, proprietary, and fiduciary – are presented. The emphasis of fund financial statements is on major individual governmental and enterprise funds, each of which is displayed in a separate column. All remaining governmental and enterprise funds are aggregated and reported as nonmajor funds. Proprietary fund operating revenues, such as charges for services, result from exchange transactions associated with the principal activity of the fund. Exchange transactions are those in which each party receives and gives up essentially equal values. Nonoperating revenues, such as subsidies and investment earnings, result from nonexchange transactions or ancillary activities. E. Major Funds Major funds are defined as funds that have either assets, liabilities, revenues or expenditures/expenses equal to ten percent of their fund-type total and five percent of the grand total. The General Fund is always a major fund. The City may also select other funds it believes should be presented as major funds. The City reported the following major governmental funds in the accompanying financial statements: General Fund – Accounts for resources traditionally associated with government, such as administration, public safety, library, parks, maintenance, and recreation, outside of those accounted for in other funds. Page 67 of 202 CITY OF SOUTH SAN FRANCISCO NOTES TO BASIC FINANCIALS STATEMENTS For the Fiscal Year Ended June 30, 2015 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Low and Moderate Income Housing Asset Special Revenue Fund – This fund was established to account for the activities related to the assets assumed by the City as Housing Successor to the housing activities of the former Redevelopment Agency of the City. Capital Improvement Capital Projects Fund - Accounts for expenditures associated with the acquisition, construction, or improvement of City-owned facilities and infrastructure. Funding comes from the General Fund, Special Revenue funds, grants and fees. East of 101 Sewer Impact Fees Capital Projects Fund – These fees provide new development’s share of new and rehabilitated sewer collection and treatment facilities to serve the East of Highway 101 area. East of 101 Traffic Impact Fees Capital Projects Fund – These fees are to provide new developments share of new and expanded roadway and intersection improvements to serve the East of Highway 101 area. Child Care Impact Fees Capital Projects Fund – These citywide fees provide new development’s share of new and expanded childcare facilities to serve the City. Developer Deposits Capital Projects Fund – Accounts for a deposit by a large corporation for various capital projects the developer agreed to fund. Capital Infrastructure Reserve Fund – Replacement, upgrade, and maintenance of the City’s infrastructure are backlogged, constituting a significant liability. Funds are set aside in this fund as part of the budget process and as part of the City’s reserve policy to address the replacement and/or upgrade of the city infrastructure (such as parks, buildings, facilities, streets, sidewalks, and storm water facilities). The City reported all enterprise funds as major funds in the accompanying financial statements. The enterprise funds are: Sewer Enterprise Fund - Accounts for user charges and debt proceeds supporting the operation, maintenance, and capital expansion of the wastewater collection and treatment system. Parking District Fund - Accounts for meter and parking permit fees used to acquire and maintain parking facilities. Storm Water Fund - Accounts for user charges sustaining the Storm Water Management Program mandated by state and federal authorities. The City also reports the following fund types: Internal Service Funds - These funds account for City services, self insurance, health and retirement benefits, and equipment replacement; all of which are provided to other departments on a cost-reimbursement basis. Page 68 of 202 CITY OF SOUTH SAN FRANCISCO NOTES TO BASIC FINANCIALS STATEMENTS For the Fiscal Year Ended June 30, 2015 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Fiduciary Funds - An agency fund is used to account for assets held by the City as an agent for SSF Employee Deferred Comp Trust Oversight Fund. The Successor Agency Private-Purpose Trust Fund accounts for the accumulation of resources to be used for payments at appropriate amounts and times in the future. The financial activities of the funds are excluded from the Government-wide financial statements, but are presented in the separate Fiduciary Fund financial statements. F. Basis of Accounting The government-wide, proprietary, private-purpose trust fund, and discretely presented component unit financial statements are reported using the economic resources measurement focus and the full accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. The agency funds which only report assets and liabilities and do not have a measurement focus. Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The City considers all revenues reported in the governmental funds to be available if the revenues are collected within sixty days after year-end. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on long-term debt, claims and judgments, and compensated absences, which are recognized as expenditures to the extent they have matured. General capital asset acquisitions are reported as expenditures in governmental funds. Proceeds from long-term debt and acquisitions under capital leases are reported as other financing sources. Those revenues susceptible to accrual are property and sales taxes, certain intergovernmental revenues, interest revenue, licenses and permits, charges for services, fines and forfeitures. Sales taxes collected and held by the state at year end on behalf of the City are also recognized as revenue. Other receipts and taxes are recognized as revenue when the cash is received. Non-exchange transactions, in which the City gives or receives value without directly, receiving or giving equal value in exchange, include taxes, grants, entitlements, and donations. On the accrual basis, revenue from taxes is recognized in the fiscal year for which the taxes are levied or assessed. Revenue from grants, entitlements, and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. Under the terms of grant agreements, the City may fund certain programs with a combination of cost-reimbursement grants, categorical block grants, and general revenue. Thus, both restricted and unrestricted net position may be made available to finance program expenditures. The City’s policy is to first apply restricted grant resources to such programs, followed by general revenues if necessary. The City considers restricted shared state revenues such as gasoline taxes and public safety sales taxes, restricted locally imposed transportation sales taxes, fines, forfeitures, licenses, permits, charges for services, and program grants as program revenues. Page 69 of 202 CITY OF SOUTH SAN FRANCISCO NOTES TO BASIC FINANCIALS STATEMENTS For the Fiscal Year Ended June 30, 2015 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) G. Budgets, Budgetary Accounting, and Encumbrances The City is not legally required to budget any of its funds, but does so to enhance City management's effectiveness in their financial planning efforts and to enhance control over the City's operations. Budgets are adopted on a modified accrual basis, except for encumbrances and for the Capital Improvement Fund. Encumbrances are considered expenditures in the year of the purchase order issuance. The Capital Improvement Fund is adopted on a multi-year project basis with unexpended and unencumbered budgets reappropriated in the following year. The City operates under the general laws of the State of California (the State) and annually adopts a budget effective July 1 for the ensuing fiscal year for the General fund; Special Revenue funds; Capital Projects funds except for the Developer Deposits Capital Projects Fund; and Enterprise funds. The budget is adopted by the City Council and controlled at the department level for the General fund and at the fund level or lower for all other funds with adopted budgets. From the effective date of the budget, the amounts stated therein as proposed expenditures become appropriations to the various City departments. The City Council may amend the budget by resolution during the fiscal year. The department heads may authorize transfers within one object category within the same department within a fund. The City Manager may authorize transfers between object categories and departments within a fund. All appropriations lapse at year-end, except for capital projects and encumbrances. Original adopted budgets and final amended budgets are presented in the basic financial statements. Supplementary budget appropriations were necessary during the year ended June 30, 2015. Encumbrance accounting, under which, purchase orders, contracts and other commitments for the expenditure of funds are recorded in order to reserve that portion of the applicable appropriation, is employed as an extension of the budgetary process. Encumbrances outstanding at year-end are reported as reservations of fund balances since they do not constitute expenditures or liabilities. Encumbrances are reappropriated in the following year. The budgetary comparison statements present comparisons of the legally adopted budget with actual charges to appropriations on a budgetary basis. In order to provide a meaningful comparison, the actual charges on a budgetary basis include encumbrances, which is a basis that differs significantly from those used to present financial statements in conformity with generally accepted accounting principles. Certain indirect costs are included in program expenses reported for individual functions and activities. H. Cash Equivalents - For purposes of the statement of cash flows, the City considers all highly liquid investments (including all restricted assets) with maturity of three months or less when purchased to be cash equivalents. The City maintains a cash and investment pool that is available for use by all funds. As the proprietary funds' share of this pool is readily available when needed, such share is also considered to be cash equivalent. Deposit assets in the proprietary funds are related to insurance and benefits and are not considered cash equivalents for purposes of the statement of cash flows. Page 70 of 202 CITY OF SOUTH SAN FRANCISCO NOTES TO BASIC FINANCIALS STATEMENTS For the Fiscal Year Ended June 30, 2015 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) I. Inventory and Prepaid Items - consist of consumable supplies. Inventory is stated at cost (first- in, first-out method). The costs are recorded as expenditures at the time the individual inventory or prepaid item is consumed. Reported inventory and prepaid items are equally offset by a fund balance reservation, which indicates that they do not constitute "available spendable resources" even though they are a component of net current assets. J. Capital Assets - All capital assets are valued at historical cost or estimated historical cost if actual historical cost is not available. Contributed capital assets are valued at their estimated fair market value on the date contributed. The purpose of depreciation is to spread the cost of capital assets equitably among all users over the life of these assets. The amount charged to depreciation expense each year represents that year’s pro rata share of the cost of capital assets. Depreciation is provided using the straight line method which means the cost of the asset is divided by its expected useful life in years and the result is charged to expense each year until the asset is fully depreciated. The City has assigned the useful lives listed below to capital assets: Buildings 50 years Clean water facilities and transmission lines 40 years Improvements 30 years Machinery and equipment 5-20 years Furniture and fixtures 12 years Infrastructure 20-40 years Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase is reflected in the capitalized value of the asset constructed, net of interest earned on the invested proceeds over the same period. The capitalization level is $20,000 for vehicles, and $100,000 for all else, including all other equipment that is not a vehicle. K. Vacation and Sick Pay - are accrued as earned. Upon termination, employees are paid for all unused vacation at their current hourly rates. After five to twenty years of employment, one half of accumulated sick leave becomes vested, up to a maximum amount as specified under labor contract provisions. The vested portion is available for current use or, if unused, is payable at termination or retirement. The long-term portion of the liability for compensated absences for governmental fund type operations is recorded as compensated absences in the government-wide financial statements. The portion expected to be permanently liquidated is recorded in the Health and Retirement Benefits Internal Service Fund. Proprietary fund liabilities are recorded within their respective funds. Page 71 of 202 CITY OF SOUTH SAN FRANCISCO NOTES TO BASIC FINANCIALS STATEMENTS For the Fiscal Year Ended June 30, 2015 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) The changes of the compensated absences were as follows: GovernmentalBusiness-Type ActivitiesActivitiesTotal Beginning Balance$5,360,244$451,282$5,811,526 Additions3,642,693355,0083,997,701 Payments(3,366,156)(290,139)(3,656,295) Ending Balance$5,636,781$516,151$6,152,932 Current Portion$3,459,871$242,559$3,702,430 Compensated absences are liquidated by the fund that has recorded the liability. The long-term portion of governmental activities compensated absences is liquidated primarily by the Health and Retirement Benefits Internal Service Fund. L. Property Tax Levy, Collection and Maximum Rates - State of California Constitution Article XIII A provides that the combined maximum property tax rate on any given property may not exceed 1% of its assessed value unless an additional amount for general obligation debt has been approved by voters. Assessed value is calculated at 100% of market value as defined by Article XIII A and may be adjusted by no more than 2% per year unless the property is sold, transferred, or substantially improved. The State Legislature has determined the method of distribution of receipts from a 1% tax levy among the counties, cities, school districts and other districts. The County of San Mateo assesses properties, bills for and collects property taxes on the schedule that follows: Secured Unsecured Valuation/lien dates January 1 January 1 Levy dates July 1 July 1 Due dates (delinquent as of) 50% on November 1 (December 10) July 1 (August 31) 50% on February 1 (April 10) The term "unsecured" refers to taxes on personal property other than land and buildings. These taxes are secured by liens on the property being taxed. Property taxes levied are recorded as revenue and receivables when they are collected during the fiscal year of levy or within 60 days of year-end. Page 72 of 202 CITY OF SOUTH SAN FRANCISCO NOTES TO BASIC FINANCIALS STATEMENTS For the Fiscal Year Ended June 30, 2015 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) M. Land held for development - is stated at the lower of historical cost or net realizable value (equal to agreed upon sales price if a disposition and development agreement has been reached with a developer). N. Unbilled Services - for the Sewer Rental Enterprise Fund are accrued at year-end. O. Use of Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent asset and liabilities at the dates of the financial statements and the reported amounts of revenues and expenditures/expenses during the reporting periods. Actual results could differ from those estimates. P. Deferred Outflows/Inflows of Resources - In addition to assets, the statement of financial position or balance sheet reports a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position or fund balance that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. In addition to liabilities, the statement of financial position or balance sheet reports a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position or fund balance that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. Q. New Accounting Pronouncements GASB Statement No. 68 – In June 2012, GASB issued Statement No. 68, Accounting and Financial Reporting for Pensions—an amendment of GASB Statement No. 27. The intention of this Statement is to improve the decision-usefulness of information in employer and governmental non-employer contributing entity financial reports and enhance its value for assessing accountability and inter-period equity by requiring recognition of the entire net pension liability and a more comprehensive measure of pension expense. GASB Statement No. 69 – In January 2013, GASB issued Statement No. 69, Government Combinations and Disposals of Government Operations. The intention of this Statement is to improve the decision usefulness of financial reporting by requiring that disclosures be made by governments about combination arrangements in which they engage and for disposals of government operations. GASB Statement No. 71 – In November 2013, GASB issued Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date—an amendment of GASB Statement No. 68. The intension of this Statement is to eliminate the source of a potential significant understatement of restated beginning net position and expense in the first year of implementation of Statement 68 in the accrual-basis financial statements of employers and non- employer contributing entities. Page 73 of 202 CITY OF SOUTH SAN FRANCISCO NOTES TO BASIC FINANCIALS STATEMENTS For the Fiscal Year Ended June 30, 2015 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) R. Prior Period Adjustment The implementation of GASB Statements No, 68 and No. 71 required the City to make prior period adjustments. As a result, the beginning net positions of the Governmental Activities and Business-Type Activities were reduced by $123,604,699 and $13,733,856, respectively. See Note 7 for additional information. NOTE 2 - CASH AND INVESTMENTS The City’s goal is to invest at the maximum yield, consistent with safety and liquidity, while individual funds can process payments for expenditures at any time. A. Policies The City invests in individual investments and in investment pools. Individual investments are evidenced by specific identifiable securities instruments, or by an electronic entry registering the owner in the records of the institution issuing the security, called the book entry system. In order to increase security, the City employs the Trust Department of a bank as the custodian of certain City managed investments, regardless of their form. California Law requires banks and savings and loan institutions to pledge government securities with a market value of 110% of the City’s cash on deposit, or first trust deed mortgage notes with a market value of 150% of the deposit, as collateral for these deposits. Under California Law this collateral is held in a separate investment pool by another institution in the City’s name and places the City ahead of general creditors of the institution. The City’s investments are carried at fair value, as required by generally accepted accounting principles. The City adjusts the carrying value of its investments to reflect their fair value at each fiscal year end, and it includes the effects of these adjustments in income for that fiscal year. B. Classification Cash and investments as of June 30, 2015 are classified in the financial statements as shown below, based on whether or not their use is restricted under the terms of City debt instruments or agency agreements. Page 74 of 202 CITY OF SOUTH SAN FRANCISCO NOTES TO BASIC FINANCIALS STATEMENTS For the Fiscal Year Ended June 30, 2015 NOTE 2 - CASH AND INVESTMENTS (Continued) Financial Statement Presentation: Statement of Net Position: City of South San Francisco: Cash and investments available for operations$108,476,754 Restricted cash and investments612,282 Total Primary Government cash and investments109,089,036 Statement of Fiduciary Assets: Cash and investments available for operations6,810,211 Restricted cash and investments84,160,610 Total Fiduciary cash and investments90,970,821 Conference Center: Cash and investments available for operations2,576,504 Restricted cash and investments488,075 Total South San Francisco Conference Center cash and investments3,064,579 Total cash and investments$203,124,436 The City does not allocate investments by fund. Each proprietary fund’s portion of Cash and Investments Available for Operations is in substance a demand deposit available to finance operations, and is considered a cash equivalent in preparing the statement of cash flows. C. Investments Authorized by the California Government Code and the City’s Investment Policy The City’s investment policy and the California Government Code allow the City to invest in the following provided the credit ratings of the issuers are acceptable to the City and approved percentages and maturities are not exceeded. The table below also identifies certain provisions of the California Government Code, or the City’s Investment Policy where it is more restrictive: Minimum MaximumMaximum MaximumCredit PercentageInvestment Authorized Investment TypeMaturityQualityof Portfolioin One Issuer U.S. Treasury Obligations5 yearsN/ANo LimitNo Limit U.S. Agency Securities 5 yearsN/ANo Limit25% Commercial Paper 270 daysA1,P110%5% Repurchase Agreements 90 daysAANo LimitNo Limit Local Agency Investment Fund (LAIF) Upon DemandN/A$50 millionNo Limit Money Market Mutual FundsN/AHighest Rating Category 20%10% FDIC Insured Corporate Notes5 yearsN/ANo Limit25% Page 75 of 202 CITY OF SOUTH SAN FRANCISCO NOTES TO BASIC FINANCIALS STATEMENTS For the Fiscal Year Ended June 30, 2015 NOTE 2 - CASH AND INVESTMENTS (Continued) The City of South San Francisco Conference Center Authority (Authority) maintains its cash and investments separately from the City. The investment policy of the Authority contains no limitations on the amount that can be invested in any one issue beyond that stipulated by the California Government Code. D. Investments Authorized by Debt Agreements The Successor Agency to the former Redevelopment Agency must maintain required amounts o/f cash and investments with trustees or fiscal agents under the terms of certain debt issues. These funds are unexpended bond proceeds or are pledged as reserves to be used if the City fails to meet its obligations under these debt issues. The California Government Code requires these funds to be invested in accordance with City ordinance bond indentures or State statute. The table below identifies the investment types that are authorized for investments held by fiscal agents. The table also identifies certain provisions of these debt agreements: Minimum Maximum MaximumCredit Percentage Authorized Investment TypeMaturityQualityof Portfolio U.S. Treasury ObligationsN/AN/ANo Limit U.S. Agency Securities N/A N/ANo Limit Commercial Paper 270 daysHighest Rating Category No Limit State and Local Investment Pool N/AHighest Rating Category No Limit Guaranteed Investment Contracts (fully collateralized) (A) N/A AAANo Limit Municipal Obligations N/AHighest Rating Category No Limit State Obligations N/ATwo Highest Rating Categories No Limit (A) Guaranteed Investment Contracts must be fully collateralized with U.S. Treasury Obligations or U.S. Agency Obligations. Page 76 of 202 CITY OF SOUTH SAN FRANCISCO NOTES TO BASIC FINANCIALS STATEMENTS For the Fiscal Year Ended June 30, 2015 NOTE 2 - CASH AND INVESTMENTS (Continued) The City of South San Francisco Conference Center Authority must maintain required amounts of cash and investments with trustees or fiscal agents under the terms of certain debt issues. These funds are unexpended bond proceeds or are pledged as reserves to be used if the Authority fails to meet its obligations under these debt issues. The California Government Code requires these funds to be invested in accordance with the Authority’s ordinance, bond indentures or State statute. The table below identifies the investment types that are authorized for investments held by fiscal agents. The table also identifies certain provisions of these debt agreements: Minimum Maximum MaximumCredit Percentage Authorized Investment TypeMaturityQualityof Portfolio U.S. Treasury ObligationsN/AN/ANo Limit U.S. Agency Securities N/AN/A10% Negotiable Certificates of Deposit N/AA No Limit Commercial Paper N/AAaaNo Limit Corporate NotesN/AA No Limit Money MarketN/AN/ANo Limit Guaranteed Investment Contracts (fully collateralized) (A)N/AAAANo Limit (A) Guaranteed Investment Contracts must be fully collateralized with U.S. Treasury Obligations or U.S. Agency Obligations. E. Interest Rate Risk Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Normally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. The City also manages its interest rate risk is by holding most investments to maturity, thus reversing unrealized market gains and losses. Page 77 of 202 CITY OF SOUTH SAN FRANCISCO NOTES TO BASIC FINANCIALS STATEMENTS For the Fiscal Year Ended June 30, 2015 NOTE 2 - CASH AND INVESTMENTS (Continued) Information about the sensitivity of the fair values of the City’s investments (including investments held by bond trustee) to market interest rate fluctuations is provided by the following table that shows the distribution of the City’s investments by maturity or earliest call date: Remaining maturity Less thanOne to Five 1 yearYearsTotal City and Fiduciary: U.S. Agency Securities Non-callable$4,942,418$51,673,878$56,616,296 U.S. Treasury Notes11,094,78972,214,72383,309,512 Local Agency Investment Fund 33,826,147 33,826,147 Money Market Funds15,571,780 15,571,780 Guaranteed Investment Agreements3,099,7503,099,750 Cash in Banks7,628,9607,628,960 Cash on Hand7,4127,412 South San Francisco Conference Center: Local Agency Investment Fund 2,124,5652,124,565 U.S. Agency Securities 488,075 488,075 Cash in Banks451,840451,840 Cash on Hand9999 Total Cash and Investments$76,136,085$126,988,351$203,124,436 The City is a participant in the Local Agency Investment Fund (LAIF) that is regulated by California Government Code Section 16429 under the oversight of the Treasurer of the State of California. The City reports its investment in LAIF at the fair value amount provided by LAIF, which is the same as the value of the pool share. The balance is available for withdrawal on demand, and is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis. Included in LAIF’s investment portfolio are collateralized mortgage obligations, mortgage-backed securities, other asset-backed securities, loans to certain state funds, and floating rate securities issued by federal agencies, government-sponsored enterprises, United States Treasury Notes and Bills, and corporations. At June 30, 2015, these investments have an average maturity of 239 days. Money market funds are available for withdrawal on demand and as of June 30, 2015 have an average maturity of 48 days. Page 78 of 202 CITY OF SOUTH SAN FRANCISCO NOTES TO BASIC FINANCIALS STATEMENTS For the Fiscal Year Ended June 30, 2015 NOTE 2 - CASH AND INVESTMENTS (Continued) F. Credit Risk Credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Presented below is the actual rating as of June 30, 2015, for each of the Primary Government’s investment types as provided by Moody’s investment rating system, except as noted: Not Investment Type AAAAAA-mfRated Total City and Fiduciary: U.S. Agency Securities Non-callable $56,616,296 $56,616,296 U.S. Treasury Notes 83,309,512 83,309,512 Money Market Funds $15,571,780 15,571,780 Totals 139,925,80815,571,780 155,497,588 Not rated: Guaranteed Investment Agreements $3,099,7503,099,750 Local Agency Investment Fund 33,826,14733,826,147 Cash in Banks 7,628,9607,628,960 Cash on Hand 7,412 7,412 South San Francisco Conference Center: U.S. Agency Securities 488,075 488,075 Not rated: Local Agency Investment Fund 2,124,565 2,124,565 Cash in Banks 451,840 451,840 Cash on Hand 99 99 Total Cash and Investments $142,990,387 $44,562,269$203,124,436 G. Concentration of Credit Risk The City’s investment policy contains limitations on the amount that can be invested in any one issuer beyond that stipulated by the California Government Code. Investments in any one issuer, other than U. S. Treasury securities, mutual funds, and external investment pools that represent 5% or more of total Entity-wide investments are as follows at June 30, 2015: Investment IssuerTypeAmount Federal National Mortgage AssociationFederal agency securities$16,119,250 Federal Home Loan BankFederal agency securities13,926,508 Federal Home Loan Mortgage Corporation Federal agency securities18,605,083 Page 79 of 202 CITY OF SOUTH SAN FRANCISCO NOTES TO BASIC FINANCIALS STATEMENTS For the Fiscal Year Ended June 30, 2015 NOTE 3 - CAPITAL ASSETS A. Capital Asset Changes – Changes in capital assets during the fiscal year consist of: Balance Balance June 30, 2014AdditionsRetirementsAdjustmentsTransfersJune 30, 2015 Governmental activities Capital assets not being depreciated: Land$47,563,435$47,563,435 Construction in Progress10,281,770$8,215,527($14,549)($126,743)18,356,005 Total capital assets not being depreciated57,845,2058,215,527(14,549)(126,743)65,919,440 Capital assets being depreciated: Buildings and Improvements84,829,214126,74384,955,957 Infrastructure - Streets 183,079,365183,079,365 Infrastructure - Storm Drains8,927,4928,927,492 Infrastructure - Traffic Control Devices5,138,1385,138,138 Equipment and Vehicle6,454,2476,454,247 Furniture and Fixtures1,837,5541,837,554 Total capital assets being depreciated290,266,010126,743290,392,753 Less accumulated depreciation for: Buildings and Improvements(28,274,458)(2,289,556)83,745(30,480,269) Infrastructure - Streets (79,815,129)(5,336,974)(85,152,103) Infrastructure - Storm Drains(2,548,561)(204,500)(2,753,061) Infrastructure - Traffic Control Devices(2,219,923)(183,199)(2,403,122) Equipment and Vehicle(5,739,649)(200,846)2,707(5,937,788) Furniture and Fixtures(1,357,923)(57,448)609(1,414,762) Total accumulated depreciation(119,955,643)(8,272,523)87,061(128,141,105) Net Governmental Fund Capital Assets Being Depreciated170,310,367(8,272,523)87,061126,743162,251,648 Internal Service Fund Capital Assets Capital assets not being depreciated: Construction in Progress424,41234,854(424,412)34,854 Total capital assets not being depreciated424,41234,854(424,412)34,854 Capital assets being depreciated: Equipment and Vehicle13,060,147214,621($552,680)424,41213,146,500 Accumulated depreciation(7,882,905)(718,608)552,680(8,048,833) Net Internal Service Fund Capital Assets Being Depreciated5,177,242(503,987)424,4125,097,667 Governmental activity capital assets, net$233,757,226($526,129)$72,512$233,303,609 Page 80 of 202 CITY OF SOUTH SAN FRANCISCO NOTES TO BASIC FINANCIALS STATEMENTS For the Fiscal Year Ended June 30, 2015 NOTE 3 - CAPITAL ASSETS (Continued) Balance Balance June 30, 2014AdditionsRetirementsJune 30, 2015 Component Unit: South San Francisco Conference Center Buildings and Improvements $10,386,536$187,298($42,444)$10,531,390 Furniture and Fixtures 660,83347,949(7,380)701,402 Machinery and equipment 207,81538,435(8,448)237,802 Total:11,255,184273,682(58,272)11,470,594 Less accumulated depreciation (7,302,723)(430,419)58,272(7,674,870) Component unit, net $3,952,461($156,737)$3,795,724 Balance Balance June 30, 2014AdditionsAdjustmentsTransfersJune 30, 2015 Business-type activities Capital assets, not being depreciated: Land $1,396,758 $1,396,758 Construction in Progress 7,356,583 $607,194($305,463)($520,046)7,138,268 Total capital assets not being depreciated8,753,341607,194(305,463)(520,046)8,535,026 Capital assets being depreciated: Buildings and Improvements 66,715,639 66,715,639 Clean Water Facilities and Lines 75,522,774 75,522,774 Infrastructure - Storm Drains 4,773,977 4,773,977 Infrastructure - Streets 7,377,546 7,377,546 Equipment and Vehicle 10,659,072 520,046 11,179,118 Furniture and Fixtures 31,154 31,154 Total capital assets being depreciated165,080,162 520,046 165,600,208 Less accumulated depreciation for: Buildings and Improvements (11,302,989)(1,621,200)(12,924,189) Clean Water Facilities and Lines (21,613,675)(1,888,069)(23,501,744) Infrastructure - Storm Drains (397,830)(159,132)(556,962) Infrastructure - Streets (1,002,411)(209,570)(1,211,981) Equipment and Vehicle (9,464,108)(183,206)(9,647,314) Furniture and Fixtures (31,154)(31,154) Total accumulated depreciation (43,812,167)(4,061,177)(47,873,344) Net capital assets being depreciated121,267,995(4,061,177)520,046 117,726,864 Business-type activity capital assets, net$130,021,336($3,453,983)($305,463)$126,261,890 B. Capital Asset Contributions - Some capital assets may have been acquired using federal and State grant funds, or were contributed by developers or other governments. GASB Statement 34 requires that these contributions be accounted for as revenues at the time the capital assets are contributed. Page 81 of 202 CITY OF SOUTH SAN FRANCISCO NOTES TO BASIC FINANCIALS STATEMENTS For the Fiscal Year Ended June 30, 2015 NOTE 3 - CAPITAL ASSETS (Continued) C. Depreciation Allocation - Depreciation expense is charged to functions and programs based on their usage of the related assets. The amounts allocated to each function or program are as follows: Governmental Activities Governmental functions General government $696,429 Fire380,538 Police56,855 Public works6,587,021 Parks and recreation388,300 Library60,903 Economic and community development 102,477 Total Governmental Functions 8,272,523 Internal Service Funds 718,608 Total Governmental Activities $8,991,131 Business-Type Activities Sewer Enterprise$3,785,150 Parking District259,087 Storm Water16,940 Total Business-Type Activities $4,061,177 NOTE 4 - INTER-FUND TRANSACTIONS A. Internal Balances Internal balances are presented in the Entity-wide financial statements only. They represent the net interfund receivables and payables remaining after the elimination of all such balances within governmental and business-type activities. B. Inter-fund Receivables and Payables Amounts due to or due from other funds reflect inter-fund balances for services rendered or short- term loans expected to be repaid in the next fiscal year. Due From Other Fund Due to Other Fund Amount Equipment Replacement Internal Service FundSupplemental Law Enforcement Services Special Revenue Fund $100 $100 Page 82 of 202 CITY OF SOUTH SAN FRANCISCO NOTES TO BASIC FINANCIALS STATEMENTS For the Fiscal Year Ended June 30, 2015 NOTE 4 - INTER-FUND TRANSACTIONS (Continued) C. Transfers Resources may be transferred from one City fund to another. Transfers routinely fund capital projects or capital outlays, lease or debt service payments, operating expenses and low and moderate-income housing projects. The purpose of majority of these transfers is to reimburse a fund that has made an expenditure on behalf of another fund. Some expenditures reimbursed were for capital projects, debt service, maintenance and operating expenses, and contributions for post employment benefits. Transfers between funds during the fiscal year ended June 30, 2015 were as follows: FROM FUND (OUT) TO FUND (IN)AMOUNT General Fund Capital Improvement Capital Projects Fund $2,552,911 6,146,000 Storm Water Enterprise Fund 750,000 250,000 Capital Improvement Capital Projects Fund 290,798 East of 101 Sewer Impact Fees Capital Project Fund Sewer Enterprise Fund 16,191 East of 101 Traffic Impact Fees Capital Project Fund Capital Improvement Capital Projects Fund 2,311,180 Developer Deposit Capital Projects Funds Capital Improvement Capital Projects Fund 1,049,547 Non-major Governmental Funds General Fund 1,941,795 Capital Improvement Capital Projects Fund 3,662,405 Storm Water Enterprise Fund 670,000 City Service Internal Service Fund 76,275 Sewer Enterprise Fund General Fund 1,029 Capital Improvement Capital Projects Fund 5,854 Internal Service Fund Equipment Replacement Fund General Fund 13,000 Capital Improvement Capital Projects Fund 8,708 Self-Insurance Internal Service Fund 1,000,000 Total $20,745,693 Health and Retirement Benefits Internal Service Fund Capital Infrastructure Reserve Capital Projects Fund Low and Moderate Income Housing Assets Fund Special Revenue Fund Page 83 of 202 CITY OF SOUTH SAN FRANCISCO NOTES TO BASIC FINANCIALS STATEMENTS For the Fiscal Year Ended June 30, 2015 NOTE 5 - LONG-TERM DEBT A. Current Year Transactions and Balances A summary of governmental and business-type activities transactions for the fiscal year ended June 30, 2015 follows: Authorized and Balance atBalance atCurrent IssuedJune 30, 2014RetirementJune 30, 2015Portion Governmental Activities: 2007 Loans Payable to the Successor Agency (1)$11,722,826$352,674$11,370,152 Total Governmental Activities Debt 11,722,826352,67411,370,152 Capital Leases (2): 2008 Two Fire Trucks450,50693,293357,213$97,059 2010 Two Ambulances297,34181,226216,11584,156 2010 Two Fire Trucks 776,718107,027669,691111,296 2013 Fire Truck 1,174,774117,2611,057,513120,378 2014 Sweeper 617,497131,457486,040134,685 Total Capital Leases 3,316,836530,2642,786,572547,574 Net Governmental Long-Term Debt $15,039,662$882,938$14,156,724$547,574 Business-Type Activities: 1999 State Water Resources Loan, 2.6%, due 8/1/22 (3)$47,721,252$25,969,336$2,598,218$23,371,118$2,665,772 2004 State Water Resources Loan, 2.5%, due 1/1/27 (3)21,258,52914,381,9161,042,504$13,339,4121,068,566 2008 State Water Resources Loan, 2.4%, (4) 9,164,5057,239,766406,683$6,833,083416,443 2005 Sewer Revenue Bonds, 2.75 to 5.0%, due 04/30/26 (5)6,000,0004,385,000265,000$4,120,000270,000 Total Enterprise Fund Long-Term Debt $84,144,286$51,976,018$4,312,405$47,663,613$4,420,781 Component Unit - Conference Center: 2003 Revenue Bonds, 2.25% to 4.0%, due 9/1/18 (6)$5,865,000$2,135,000$395,000$1,740,000$410,000 Unamortized refunding loss on 2003 bonds(103,849)(26,515)(77,334) Total Conference Center $5,865,000$2,031,151$368,485$1,662,666$410,000 Page 84 of 202 CITY OF SOUTH SAN FRANCISCO NOTES TO BASIC FINANCIALS STATEMENTS For the Fiscal Year Ended June 30, 2015 NOTE 5 - LONG-TERM DEBT (Continued) (1) As of June 30, 2015, the Oyster Point Improvements Impact Fund owed Successor Agency (formerly the Merged Redevelopment Project Area Capital Project Fund) for developer fees in the amount of $11,370,152 for the Flyover and Hookramps Projects that were completed in prior years. The outstanding balance will be paid off from the future developer fees. With the dissolution of the Agency effective January 31, 2012, the Successor Agency assumed the asset which the City is to repay. This payable is recorded as a long-term obligation (see also Note 13). Prior to the dissolution of all Redevelopment Agencies in California by the State, the former Redevelopment Agency (Agency) advanced $12,176,207 to the Oyster Point Improvement Impact Fee Capital Projects Fund (the Oyster Point Fund). The impact fees are collected according to a fee methodology adopted under the terms of AB 1600. The fees are assessed against commercial development in a specific geographic area that is primarily east of Highway 101 to repay the former Agency for the funds it advanced to the Oyster Point Fund to pay for freeway interchange improvements at Highway 101 and Oyster Point Blvd, and are assessed per an adopted Engineering report's formula that measures each new development's impact on the area's trip traffic. While the former Agency advanced the funds, the impact fee was put in place specifically to charge future developers for their share of traffic trips generated prior to the construction of the improvements. When the Agency was dissolved, the Successor Agency, and therefore, all local taxing entities, are entitled to receive future Oyster Point Impact fees collected by the City from developers. Future developers, not the City of South San Francisco, are legally obligated to pay the future fees until the liability owed to the Successor Agency is paid off as long as the fee continues to be levied and is in place. The repayment has significantly slowed since 2007, as development has subsided and fees assessed have therefore dropped. Management believes it may take 10-30 years or more before the Successor Agency is fully paid back. (2) The City has entered into long-term capital leases with various financing agencies. Under these capital leases, all leased assets shall be distributed to the City at the end of the lease terms and shall thereafter remain the sole property of the City. Therefore, these capital leases have been recorded at the present value of the future minimum lease payments at the date of inception of the lease, and the corresponding assets have been included in the Statement of Net Position as appropriate. Capital lease payments are made from revenues of the Equipment Replacement Internal Service Fund and the General Fund. (3) The two loans were authorized by the State Water Resources Control Board to improve and expand the City’s wastewater treatment plant. Loan proceeds were issued as the projects progressed and debt service payments commenced one year after project completion. Sewage treatment user fees support the debt service payments. (4) State Water Resources Control Board Loan – In November 2007, the City approved the $11.8 million loan agreement with State Water Resources Control Board (SWRCB) to finance the City’s Wet Weather Program project. Under the terms of the contract, the City has agreed to repay $11.8 million to the State in exchange for receiving $9.2 million in proceeds to be used to fund the Project. The difference between the repayment obligation and proceeds amounted to $2.6 million and represents in-substance interest on the outstanding balance. Debt service payments commenced on August 15, 2009. Page 85 of 202 CITY OF SOUTH SAN FRANCISCO NOTES TO BASIC FINANCIALS STATEMENTS For the Fiscal Year Ended June 30, 2015 NOTE 5 - LONG-TERM DEBT (Continued) (5) On October 25, 2005, the California Statewide Communities Development Authority issued 2005D Water and Wastewater Revenue Bonds. The City participated in the pooled bond sale and the City’s portion of debt is $6,000,000. Proceeds were used to finance sewer system capital improvement. The principal payment on the debt commenced in October 2006 and is due each October 1. Final principal payment is due on October 1, 2026. Interest payment at the rate of 4.457% is payable semi-annually each April 1 and October 1. The 2005 Water and Wastewater Revenue Bonds are secured by a pledge of net revenues of the City’s Enterprise system. Net Revenues available for debt service amounted to $7.5 million which represented coverage of 16.5 over the $455,532 in debt service. (6) On June 1, 2003, the City of South San Francisco Capital Improvement Financing Authority (CIFA) issued $5,865,000 of 2003 Revenue Bonds. The CIFA was created through a joint exercise of powers agreement between the City and the City of South San Francisco Financing Authority for the purpose of obtaining financing for capital improvements. The 2003 Revenue Bonds are obligations of the CIFA although the Authority is required to make the bond principal and interest payments in return for the use and ownership of the improvements to the leased buildings that comprise the Conference Center’s facilities. The Authority has pledged the $2.50 tax imposed on the City’s hotel occupants on a per day per room basis as the sole source of repayment of these obligations. The 2003 revenue bonds are, in substance, obligations of the Authority and have therefore been recorded as such in these discretely presented component unit financial statements. The 2003 revenue bonds were issued for the purpose of refunding the 1993 revenue bonds. The refunding reduced required interest payments and did not extend the maturities on the bonds. The advance refunding reduced the Authority's total debt service payments by $846,859 and resulted in an accounting loss of $401,345, which has been deferred in accordance with GASB Statement No. 23, Accounting and Financial Reporting for Refunding of Debt Reported by Proprietary Activities. This loss is being amortized over the remaining life of the old debt and the remaining balance is reported as a deferred outflow of resources. The 2003 revenue bonds bear interest rates ranging from 2.25% to 4.00% and mature on September 1, 2018. Page 86 of 202 CITY OF SOUTH SAN FRANCISCO NOTES TO BASIC FINANCIALS STATEMENTS For the Fiscal Year Ended June 30, 2015 NOTE 5 - LONG-TERM DEBT (Continued) B. Debt Service Requirements Future debt service requirements, including interest and capital leases, but excludes the 2007 and 2008 Loans payable to the Redevelopment Successor Agency at June 30, 2015, were as follows: Component Unit For the Year Governmental Activities Business-Type ActivitiesConference Center Authority Ended June 30Principal InterestPrincipalInterestPrincipalInterest 2016 $547,574$83,845$4,420,780$609,714$410,000$80,269 2017 565,47565,9434,536,8001,174,229425,00066,444 2018 538,42147,4314,660,5301,060,207445,00051,581 2019 381,48330,7434,782,037942,915460,00035,644 2020 263,83920,3304,906,394822,328 18,400 2021-2025 489,78021,06619,950,3572,163,285 2026-2029 4,406,715154,720 Totals $2,786,572$269,358$47,663,613$6,927,398$1,740,000$252,338 Certificates of Participation and Capital Leases are issued for the purpose of financing the construction or acquisition of projects defined in each leasing arrangement. Projects are leased to the City for lease payments which, together with unspent proceeds of the leasing arrangement, will be sufficient to meet the debt service obligations of the leasing arrangement. At the termination of the leasing arrangement, title to the project will pass to the City. Leasing arrangements are similar to debt; they allow investors to participate in a share of guaranteed payments which are made by the City. Because they are similar to debt, the present value of the total of the payments to be made by the City is recorded as long-term debt. The City’s leasing arrangements are included in long term obligations discussed above. A summary of capital assets leased through the issuance of leasing arrangements follows: Original Leasing ArrangementFund/ActivityCost Capital LeasesGovernmental Activity$5,842,799 Page 87 of 202 CITY OF SOUTH SAN FRANCISCO NOTES TO BASIC FINANCIALS STATEMENTS For the Fiscal Year Ended June 30, 2015 NOTE 6 - NET POSITION AND FUND BALANCES A. Net Position Net Position is the excess of all the City’s assets and deferred outflows of resources over all its liabilities and deferred inflows of resources, regardless of fund. Net Position are divided into three captions. These captions apply only to Net Position, which is determined only at the Government-wide level, and are described below: Net Investment in Capital Assets describes the portion of Net Position which is represented by the current net book value of the City’s capital assets, less the outstanding balance of any debt issued to finance these assets. Restricted describes the portion of Net Position which is restricted as to use by the terms and conditions of agreements with outside parties, governmental regulations, laws, or other restrictions which the City cannot unilaterally alter. Unrestricted describes the portion of Net Position which is not restricted to use. B. Fund Balance The City’s fund balances are classified in accordance with Governmental Accounting Standards Board Statement Number 54 (GASB 54), Fund Balance Reporting and Governmental Fund Type Definitions, which requires the City to classify its fund balances based on spending constraints imposed on the use of resources. For programs with multiple funding sources, the City prioritizes and expends funds in the following order: Restricted, Committed, Assigned, and Unassigned. Each category in the following hierarchy is ranked according to the degree of spending constraint. Nonspendables represents balances set aside to indicate items do not represent available, spendable resources even though they are a component of assets. Fund balances required to be maintained intact, such as Permanent Funds, and assets not expected to be converted to cash, such as prepaids, notes receivable, and land held for redevelopment are included. However, if proceeds realized from the sale or collection of nonspendable assets are restricted, committed or assigned, then Nonspendable amounts are required to be presented as a component of the applicable category. Restricted fund balances have external restrictions imposed by creditors, grantors, contributors, laws, regulations, or enabling legislation which requires the resources to be used only for a specific purpose. Nonspendable amounts subject to restrictions are included along with spendable resources. Committed fund balances have constraints imposed by Council Resolution of the City Council which may be altered only by Council Resolution of the City Council. Nonspendable amounts subject to council commitments are included along with spendable resources. Page 88 of 202 CITY OF SOUTH SAN FRANCISCO NOTES TO BASIC FINANCIALS STATEMENTS For the Fiscal Year Ended June 30, 2015 NOTE 6 – NET POSITION AND FUND BALANCE (Continued) Assigned fund balances are amounts constrained by the City’s intent to be used for a specific purpose, but are neither restricted nor committed. Intent is expressed by the City Council or its designee and may be changed at the discretion of the City Council or its designee. The City Council had delegated authority to the Finance Director to assign fund balances which are not otherwise restricted or committed. This category includes encumbrances; Nonspendables, when it is the City’s intent to use proceeds or collections for a specific purpose, and residual fund balances, if any, of Special Revenue, Capital Projects and Debt Service Funds which have not been restricted or committed. Unassigned fund balance represents residual amounts that have not been restricted, committed, or assigned. This includes the residual general fund balance and residual fund deficits, if any, of other governmental funds. Minimum Fund Balance Policies - The City’s Reserve Policy is to have the General Fund Reserves equal to at least two months of operating revenues of 15% and up to 20%, which is in alignment with GFOA best practices. Included is an emergency reserve that reflects 2% of the general fund operating expenditures budget as well as an economic contingency which is 7% of general fund revenues. Funds in excess of these requirements will continue to be earmarked for paying down long-term liabilities, such as the Retiree Health/Other Post-Employment Benefits (OPEB) or for Infrastructure and Facilities Replacement needs. Detailed classifications of the City’s Fund Balances, as of June 30, 2015, are below: Low and Moderate East of 101 GeneralIncome HousingCapitalSewer Fund Balance Classifications Fund AssetsImprovementImpact Fees Nonspendables: Items not in spendable form: Inventory and prepaid items $1,134 Total Nonspendable Fund Balances 1,134 Restricted for: Low and moderate housing projects $3,537,363 Total Restricted Fund Balances 3,537,363 Committed for: Capital projects 2,536,790 Total Committed Fund Balances 2,536,790 Assigned to: Encumbrances 1,458,029 Capital projects $288,554 Total Assigned Fund Balances 1,458,029 288,554 Unassigned: General fund 17,285,422 Other governmental fund deficit residuals ($40,459) Total Unassigned Fund Balances 17,285,422 (40,459) Total Fund Balances $21,281,375$3,537,363$288,554($40,459) (Continued) Capital Project Funds Page 89 of 202 CITY OF SOUTH SAN FRANCISCO NOTES TO BASIC FINANCIALS STATEMENTS For the Fiscal Year Ended June 30, 2015 NOTE 6 – NET POSITION AND FUND BALANCE (Continued) East of 101 Capital Other TrafficChild CareDeveloper InfrastructureGovernmental Fund Balance Classifications (continued)Impact FeesImpact FeesDepositReserve FundFunds Restricted for: Traffic impact fees projects $5,944,851 Child Care impact fees projects $2,489,695 Developer deposit fees projects $72,884 Capital infrastructure projects $11,758,721 Gas Tax projects $1,494,307 Developer contributions projects 2,156,211 Community Development Block Grant projects 1,004,770 Maintenance districts projects 1,801,547 Transportation sales tax projects 2,401,758 City programs projects 3,824,282 Other Special Revenues projects 5,407,240 Capital projects activities 1,543,732 Total Restricted Fund Balances 5,944,8512,489,69572,88411,758,72119,633,847 Committed for: Capital projects 5,900,000 Total Committed Fund Balances 5,900,000 Total Fund Balances $5,944,851$2,489,695$72,884$17,658,721$19,633,847 Capital Project Funds C. Net Deficit The East of 101 Sewer Impact Fees Capital Projects Fund had net deficit in the amount of $40,459, at June 30, 2015. Future revenues are expected to offset the deficit. The Health and Retirement Benefits Internal Service Fund had net deficit in the amount of $22,974,983 at June 30, 2015. This deficit is attributable to the Net OPEB Obligation described in Footnote 9. NOTE 7 – PENSION PLANS 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’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 the CalPERS Financial Office. 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. A. General Information about the Pension Plans Plan Descriptions – All qualified permanent and probationary employees are eligible to participate in the City’s separate Safety (police and fire) and Miscellaneous (all other) Plans, agent multiple-employer defined benefit pension plans administered by the California Public Employees’ Retirement System (CalPERS), which acts as a common investment and administrative agent for its participating member employers. Benefit provisions under the Plans are established by State statute and City resolution. Page 90 of 202 CITY OF SOUTH SAN FRANCISCO NOTES TO BASIC FINANCIALS STATEMENTS For the Fiscal Year Ended June 30, 2015 NOTE 7 – PENSION PLANS (Continued) 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. Benefits Provided – CalPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of full time employment. Members with five years of total service are eligible to retire at age 50 with statutorily reduced benefits. All members are eligible for non-duty disability benefits after 10 years of service. The death benefit is one of the following: the Basic Death Benefit, the 1957 Survivor Benefit, or the Optional Settlement 2W Death Benefit. The cost of living adjustments for each plan are applied as specified by the Public Employees’ Retirement Law. The Plans’ provisions and benefits in effect at June 30, 2015, are summarized as follows: Miscellaneous Classic PlanClassic PlanPEPRA Plan Hire date Prior to April 25, 2010 After April 25, 2010 On or after January 1, 2013 Benefit formula 2.7% @ 55 2% @ 60 2% @ 62 Benefit vesting schedule5 years service5 years service5 years service Benefit paymentsmonthly for lifemonthly for lifemonthly for life Retirement age556062 Monthly benefits, as a % of eligible compensation2.0% to 2.7%1.092% to 2.418%1.0% to 2.5% Required employee contribution rates8%7%6.5% Required employer contribution rates23.309%23.309%23.309% Safety Classic PlanClassic PlanPEPRA Plan Hire date Prior to April 25, 2010 After April 25, 2010 On or after January 1, 2013 Benefit formula3% @ 50 3% @ 552.7% @ 57 Benefit vesting schedule5 years service5 years service5 years service Benefit paymentsmonthly for lifemonthly for lifemonthly for life Retirement age505557 Monthly benefits, as a % of eligible compensation3%2.4% to 3.0%2.0% to 2.7% Required employee contribution rates9%9%12% Required employer contribution rates39.027%39.027%39.027% Page 91 of 202 CITY OF SOUTH SAN FRANCISCO NOTES TO BASIC FINANCIALS STATEMENTS For the Fiscal Year Ended June 30, 2015 NOTE 7 – PENSION PLAN (Continued) Employees Covered – At June 30, 2015, the following employees were covered by the benefit terms for each Plan: MiscellaneousSafety Inactive employees or beneficiaries currently receiving benefits377257 Inactive employees entitled to but not yet receiving benefits292111 Active employees242152 Total911520 Contributions – Section 20814(c) of the California Public Employees’ Retirement Law requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. Funding contributions for both Plans are determined annually on an actuarial basis as of June 30 by CalPERS. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The City is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. B. Net Pension Liability The City’s net pension liability for each Plan is measured as the total pension liability, less the pension plan’s fiduciary net position. The net pension liability of each of the Plans is measured as of June 30, 2014, using an annual actuarial valuation as of June 30, 2013 rolled forward to June 30, 2014 using standard update procedures. A summary of principal assumptions and methods used to determine the net pension liability is shown below. Actuarial Assumptions – For the measurement period ended June 30, 2014, the total pension liabilities were determined by rolling forward the June 30, 2013 total pension liability. The June 30, 2013 and June 30, 2014 total pension liabilities were based on the following actuarial methods and assumptions: Page 92 of 202 CITY OF SOUTH SAN FRANCISCO NOTES TO BASIC FINANCIALS STATEMENTS For the Fiscal Year Ended June 30, 2015 NOTE 7 – PENSION PLAN (Continued) Valuation Date Measurement Date Actuarial Cost Method Actuarial Assumptions: Discount Rate Inflation Payroll Growth Projected Salary Increase Investment Rate of Return Post Retirement Benefit Increase Mortality (1) Depending on age, service and type of employment (2) Net of pension plan investment expenses, including inflation (3) The mortality table used was developed based on CalPERS' specific data. The table includes 3.0% 3.3% - 14.2% (1) 7.5% (2) Contract COLA up to 2.75% until Purchasing Power applies, 2.75% thereafter Derived using CalPers Membership Data for all Funds (3) 20 years of mortality improvements using Society of Actuaries Scale BB. For more details on this table, please refer to the CalPERS 2014 experience study report available on CalPERS website. Miscellaneous & Safety June 30, 2013 June 30, 2014 Entry-Age Normal Cost Method 7.5% 2.75% All other actuarial assumptions used in the June 30, 2013 valuation were based on the results of a January 2014 actuarial experience study for the period 1997 to 2011, including updates to salary increase, mortality and retirement rates. 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 7.50% for each Plan. To determine whether the municipal bond rate should be used in the calculation of a discount rate for each 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 run out of assets. Therefore, the current 7.50 percent discount rate is adequate and the use of the municipal bond rate calculation is not necessary. The long term expected discount rate of 7.50 percent will be applied to all plans in the Public Employees Retirement Fund (PERF). The stress test results are presented in a detailed 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 7.50 percent investment return assumption used in this accounting valuation is net of administrative expenses. Administrative expenses are assumed to be 15 basis points. An investment return excluding administrative expenses would have been 7.65 percent. Using this lower discount rate has resulted in a slightly higher Total Pension Liability and Net Pension Liability. CalPERS deemed the difference immaterial to the agent multiple-employer plans. Page 93 of 202 CITY OF SOUTH SAN FRANCISCO NOTES TO BASIC FINANCIALS STATEMENTS For the Fiscal Year Ended June 30, 2015 NOTE 7 – PENSION PLAN (Continued) CalPERS is scheduled to review all actuarial assumptions as part of its regular Asset Liability Management (ALM) review cycle that is scheduled to be completed in February 2018. Any changes to the discount rate will require Board action and proper stakeholder outreach. For these reasons, CalPERS expects to continue using a discount rate net of administrative expenses for GASB 67 and 68 calculations through at least the 2017-18 fiscal year. CalPERS will continue to check the materiality of the difference in calculation until such time as they have changed their methodology. The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. 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. Such cash flows were developed assuming that both members and employers will make their required contributions on time and as scheduled in all future years. Using historical returns of all the funds’ asset classes, expected compound (geometric) returns were calculated over the short-term (first 10 years) and the long-term (11-60 years) using a building-block approach. Using the expected nominal returns for both short-term and long-term, the present value of benefits was calculated for each fund. The expected rate of return was set by calculating the single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated using both short-term and long-term returns. The expected rate of return was then set equivalent to the single equivalent rate calculated above and rounded down to the nearest one quarter of one percent. The table below reflects 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 geometric rates of return are net of administrative expenses. Asset Class New Strategic Allocation Real Return Years 1 - 10(a) Real Return Years 11+(b) Global Equity47.0%5.25%5.71% Global Fixed Income19.0%0.99%2.43% Inflation Sensitive6.0%0.45%3.36% Private Equity12.0%6.83%6.95% Real Estate11.0%4.50%5.13% Infrastructure and Forestland3.0%4.50%5.09% Liquidity2.0%-0.55%-1.05% Total100% (a) An expected inflation of 2.5% used for this period. (b) An expected inflation of 3.0% used for this period. Page 94 of 202 CITY OF SOUTH SAN FRANCISCO NOTES TO BASIC FINANCIALS STATEMENTS For the Fiscal Year Ended June 30, 2015 NOTE 7 – PENSION PLAN (Continued) C. Changes in the Net Pension Liability The changes in the Net Pension Liability for each Plan are as follows: Miscellaneous Plan: Increase (Decrease) Total Pension Liability Plan Fiduciary Net Position Net Pension Liability/(Asset) Balance at June 30, 2013 $188,659,588$125,614,993$63,044,595 Changes in the year: Service cost 3,449,973 3,449,973 Interest on the total pension liability 13,930,544 13,930,544 Differences between actual and expected experience 0 Changes in assumptions 0 Changes in benefit terms 0 Contribution - employer 4,235,454(4,235,454) Contribution - employee (paid by employer)0 Contribution - employee 1,466,176(1,466,176) Net investment income 21,712,340(21,712,340) Administrative expenses 0 Benefit payments, including refunds of employee contributions (9,287,975)(9,287,975)0 Net changes 8,092,54218,125,995(10,033,453) Balance at June 30, 2014 $196,752,130$143,740,988$53,011,142 Safety Plan: Increase (Decrease) Total Pension Liability Plan Fiduciary Net Position Net Pension Liability/(Asset) Balance at June 30, 2013 $256,002,648$170,937,835$85,064,813 Changes in the year: Service cost 5,143,842 5,143,842 Interest on the total pension liability 18,899,544 18,899,544 Differences between actual and expected experience 0 Changes in assumptions 0 Changes in benefit terms 0 Contribution - employer 6,535,399(6,535,399) Contribution - employee (paid by employer)0 Contribution - employee 2,151,163(2,151,163) Net investment income 29,348,051(29,348,051) Administrative expenses 0 Benefit payments, including refunds of employee contributions (13,161,296)(13,161,296)0 Net changes 10,882,09024,873,317(13,991,227) Balance at June 30, 2014 $266,884,738$195,811,152$71,073,586 Page 95 of 202 CITY OF SOUTH SAN FRANCISCO NOTES TO BASIC FINANCIALS STATEMENTS For the Fiscal Year Ended June 30, 2015 NOTE 7 – PENSION PLAN (Continued) Sensitivity of the Net Pension Liability to Changes in the Discount Rate – The following presents the net pension liability of the City for each Plan, calculated using the discount rate for each Plan, as well as what the City’s net pension liability would be if it were calculated using a discount rate that is 1-percentage point lower or 1-percentage point higher than the current rate: MiscellaneousSafety 1% Decrease 6.50%-1.00% Net Pension Liability $77,787,495$106,517,799 Current Discount Rate7.50%0.00% Net Pension Liabilit y$53,011,142$71,073,586 1% Increase 8.50%1.00% Net Pension Liability $32,355,721$41,894,599 Pension Plan Fiduciary Net Position – Detailed information about each pension plan’s fiduciary net position is available in the separately issued CalPERS financial reports. D. Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions For the year ended June 30, 2015, the City recognized pension expense of $4,186,544 and $5,926,232 for the Miscellaneous and Safety Plans, respectively. At June 30, 2015, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Miscellaneous Plan: Deferred OutflowsDeferred Inflows of Resourcesof Resources Pension contributions subsequent to measurement date $4,210,974 Differences between actual and expected experience Changes in assumptions Net differences between projected and actual earning s on plan investments ($9,984,543) Total$4,210,974($9,984,543) Page 96 of 202 CITY OF SOUTH SAN FRANCISCO NOTES TO BASIC FINANCIALS STATEMENTS For the Fiscal Year Ended June 30, 2015 NOTE 7 – PENSION PLAN (Continued) Safety Plan: Deferred OutflowsDeferred Inflows of Resourcesof Resources Pension contributions subsequent to measurement date $7,191,715 Differences between actual and expected experience Changes in assumptions Net differences between projected and actual earnings on plan investments ($13,382,060) Total $7,191,715($13,382,060) $11,402,689 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2016. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows: Miscellaneous Plan: Increase Year Ended(Decrease) in June 30Pension Expense 2016($2,496,136) 2017(2,496,136) 2018(2,496,136) 2019(2,496,135) Safety Plan: Increase Year Ended(Decrease) in June 30Pension Expense 2016($3,345,515) 2017(3,345,515) 2018(3,345,515) 2019(3,345,515) Page 97 of 202 CITY OF SOUTH SAN FRANCISCO NOTES TO BASIC FINANCIALS STATEMENTS For the Fiscal Year Ended June 30, 2015 NOTE 8 - DEFERRED COMPENSATION PLAN A. Deferred Compensation Plan City employees may defer a portion of their compensation under a City sponsored Deferred Compensation Plan created in accordance with Internal Revenue Code Section 457. Under this Plan, participants are not taxed on the deferred portion of their compensation until it is distributed to them; distributions may be made only at termination, retirement, death or in an emergency as defined by the Plan. The laws governing deferred compensation plan assets require plan assets to be held by a Trust for the exclusive benefit of plan participants and their beneficiaries. Since the assets held under these plans are not the City’s property and are not subject to City control, they have been excluded from these financial statements. NOTE 9 – POST-EMPLOYMENT BENEFITS The City provides certain health care benefits for all employees who retire after attaining age 50 with at least five years of service or disability at any age. The City provides certain health care benefits for those employees hired prior to April 25, 2010. In order to reduce the City’s OPEB obligations over time, the City changed to a defined contribution post retirement health plan for employees hired as of April 25, 2010 or after. For those new hires, the City is now providing a medical after retirement health plan (MARA), and contributes 1.5% of salary for those plans. Benefits are provided as authorized by various memorandums of understanding entered into by the City and its employees. As of June 30, 2015, approximately 341 retirees were eligible to receive benefits. The City provides fully paid medical coverage under various health care plans. A summary of eligibility and retiree contribution requirements are shown below by bargaining unit: Page 98 of 202 CITY OF SOUTH SAN FRANCISCO NOTES TO BASIC FINANCIALS STATEMENTS For the Fiscal Year Ended June 30, 2015 NOTE 9 – POST-EMPLOYMENT BENEFITS (Continued) Eligibility * Hired < 4/25/2010 * Age 50 and 5 years City service or disability at any age after 5 years service Medical Benefit* City pays single premium up to largest HMO single premium. Cap for 2013/2014: - $978.15/month pre-65 (Blue Shield) - $512.91/month post-65 Medical eligible (Blue Shield) - $1,669.85/ month post-65 not Medicare eligible (Kaiser) * Medicare ineligible retirees allowed to stay in their pre-Medicare premium plans after age 65 * City pays premium and reimburses Medicare Part B hired before 4/25/2010 only Surviving Spouse Benefit * Participation with premium payment * AFSCME, Local 1569, Mid-Management, IAFF - surviving spouses covered 2 months following death of retiree Dental, Vision, & LifeNone During fiscal year 2009, the City implemented the provisions of Governmental Accounting Standards Board Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions. This Statement establishes uniform financial reporting standards for employers providing postemployment benefits other than pensions (OPEB). The provisions of this statement are applied prospectively and do affect prior years financial statements. Required disclosures are presented below. The City offers retirees a single- employer postemployment benefits plan that is administered by the City. The City’s Health and Retirement Benefits Fund hold assets designated for the payment of City’s OPEB obligations. The City joined the California Employers’ Retiree Benefit Trust (CERBT), an agent multiple- employer plan administered by CALPERS, consisting of an aggregation of single-employer plans. A. Funding Policy and Actuarial Assumptions The annual required contribution (ARC) was determined as part of a June 30, 2013 actuarial valuation using the entry age normal actuarial cost method. This is a projected benefit cost method, which takes into account those benefits that are expected to be earned in the future as well as those already accrued. The actuarial assumptions included (a) 4.0% investment rate of return if not pre-funded and assets remain in City’s own investment portfolio; 7.25% if pre- funded with CERBT, (b) 3.25% projected annual salary increase, (c) 3.0% inflation rate. Page 99 of 202 CITY OF SOUTH SAN FRANCISCO NOTES TO BASIC FINANCIALS STATEMENTS For the Fiscal Year Ended June 30, 2015 NOTE 9 – POST-EMPLOYMENT BENEFITS (Continued) The actuarial assumptions also included the following health care cost trend: YearNon-MedicareMedicare 2015 20167.5%7.8% 20177.0%7.2% 20186.5%6.7% 20196.0%6.1% 20205.5%5.6% 2021+5.0%5.0% Actual Premiums The actuarial methods and assumptions used include techniques that smooth the effects of short- term volatility in actuarial accrued liabilities and the actuarial value of assets. Actuarial calculations reflect a long-term perspective and actuarial valuations involve estimates of the value of reported amounts and assumptions about the probability of events far into the future. Actuarially determined amounts are subject to revision at least biannually as results are compared to past expectations and new estimates are made about the future. The City’s OPEB unfunded actuarial accrued liability is being amortized as a level percentage of projected payroll on a closed basis using a 24-year amortization period. B. Funding Progress and Funded Status Generally accepted accounting principles permits contributions to be treated as OPEB assets and deducted from the Actuarial Accrued Liability (AAL) when such contributions are placed in an irrevocable trust or equivalent arrangement. In fiscal year 2015, the City made contribution less than the ARC as presented below: Annual required contribution (ARC)$7,325,000 Interest on net OPEB Obligation 1,725,000 Adjustment to annual required contribution (3,166,000) Annual OPEB cost 5,884,000 Contributions made: Benefits paid 2,646,000 Prefunding Contribution to Trust 11,249,000 Total contributions 13,895,000 Change in net OPEB Asset / (Obligation)8,011,000 Net OPEB Asset / (Obligation) at June 30, 2014 (31,821,700) Net OPEB Asset / (Obligation) at June 30, 2015 ($23,810,700) Page 100 of 202 CITY OF SOUTH SAN FRANCISCO NOTES TO BASIC FINANCIALS STATEMENTS For the Fiscal Year Ended June 30, 2015 NOTE 9 – POST-EMPLOYMENT BENEFITS (Continued) The Plan’s annual required contributions and actual contributions for the year ended June 30, 2015 is set forth below (in thousands): Fiscal Year Annual OPEB Cost Actual Contribution Percentage of Annual OPEB Contributed Net OPEB Obligation 6/30/2013 $9,229,000$2,226,00024%$31,261,700 6/30/2014 7,086,0006,526,00092%31,821,700 6/30/2015 5,884,00013,895,000236%23,810,700 Funded Status and Funding Progress – As of June 30, 2013, the most recent actuarial valuation date, the plan was 0% funded. The Actuarial Accrued Liability (AAL) for benefits was $66,444,000 and the Actuarial Value of Plan Assets was $0 resulting in an Unfunded Actuarial Accrued Liability (UAAL) of $66,444,000. The covered payroll (annual payroll of active employees covered by the plan) was $29,914,000 and the ratio or UAAL to the covered payroll was 0 percent. The schedule of funding progress presented immediately following the financial statements as required supplementary information, presents multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits. A separate audited GAAP basis for this post-employment benefit plan report is not available. NOTE 10 – JOINTLY GOVERNED ORGANIZATIONS The City participates in the jointly governed organizations discussed below through formally organized and separate entities established under the Joint Exercise of Powers Act of the State of California. As separate legal entities, these entities exercise full powers and authorities within the scope of the related Joint Powers Agreements including the preparation of annual budgets, accountability for all funds, the power to make and execute contracts and the right to sue and be sued. Each joint organization is governed by a board consisting of representatives from member municipalities. Each board controls the operations of the respective joint organization, including selection of management and approval of operating budgets, independent of any influence by member municipalities beyond their representation on that board. Obligations and liabilities of this joint organization are not the City’s responsibility and the City does not have an equity interest in the assets of each joint organization except upon dissolution of the joint organization. Page 101 of 202 CITY OF SOUTH SAN FRANCISCO NOTES TO BASIC FINANCIALS STATEMENTS For the Fiscal Year Ended June 30, 2015 NOTE 10 – JOINTLY GOVERNED ORGANIZATIONS (Continued) A. Oyster Point Marina (OPM) was established in 1977 by the City and the San Mateo County Harbor District (Harbor District) for the purpose of expanding, improving and operating the Oyster Point Marina and Park. The governing board consists of two of the City's council members and two Harbor District commissioners. The Harbor District operates OPM. Operation of the Marina provides revenues for the marina's operations. The City retains title to the land; however, the City is not liable for any obligations of the San Mateo County Harbor District. Condensed unaudited financial information may be obtained from San Mateo County Harbor District, #1 Johnson Pier, Half Moon Bay, CA 94019. B. Peninsula Traffic Congestion Relief Alliance (PTCRA) was formed from the merger of The Inter City Transportation Systems Management Agency and Multi-City Transportation Systems Management Agency (MCTSMA) in 2000. The members are Cities of South San Francisco, Brisbane, Colma, Daly City, Half Moon Bay, Millbrae, Pacifica and San Bruno and seven other members for the purpose of mitigating traffic congestion. The governing board consists of one council member from each member city. The finance director of Daly City acts as the treasurer and controller of PTCRA. The individual cities are not liable for the debts, liabilities or obligations of PTCRA. Each member city has an equal interest in PTCRA. Condensed accrual basis unaudited financial information may be obtained from the City of Daly City Finance Department, 333 90th Street, Daly City, CA 94015. C. City/County Association of Governments (C/CAG) was established in 1990 by the County of San Mateo and the Cities of San Mateo County for preparation, adoption, monitoring and enforcing of Countywide state mandated plans. A Board of Directors consisting of one council member from each member city and one member from the County Board of Supervisors governs C/CAG. The city treasurer of San Carlos acts as the treasurer of C/CAG. The individual cities and the County are not liable for the debts, liabilities, or obligations of C/CAG. Condensed unaudited cash basis financial information may be obtained from the City of San Carlos Finance Department, 666 Elm Street, San Carlos, CA 94070. Page 102 of 202 CITY OF SOUTH SAN FRANCISCO NOTES TO BASIC FINANCIALS STATEMENTS For the Fiscal Year Ended June 30, 2015 NOTE 11 - RISK MANAGEMENT A. Insurance Coverage The City participates in Association of Bay Area Governments (ABAG) Plan Corporation, a non profit benefit corporation established to provide liability insurance coverage, claims and risk management, and legal defense to its participating members. ABAG Plan provides $5,000,000 of general liability and automobile coverage per occurrence and is responsible for paying claims in excess of the City’s $100,000 self-insured retention. The City's liability coverage through ABAG is a total of $30 million, with the first $5 million covered out of ABAG's financial reserves, and with the next $25 million covered from two excess insurance policies acquired by ABAG. The Plan includes a per occurrence or wrongful act or employee benefit wrongful act up to $10,000,000 with two retained limits of $5,000,000. A boiler and machinery policy insures up to a combined limit of $100,000,000 with various deductibles. For pollution, the City purchased separate insurance which insures up to $10,000,000 for each condition and up to $50,000,000 in the aggregate with a $100,000 self-insured retention per pollution condition. For the year ended June 30, 2015, the City paid ABAG Plan $777,144 in premiums and did not receive a refund of premiums paid in prior years. ABAG Plan has not determined the value of the City’s interest in its net position. Financial statements may be obtained from ABAG Services, P.O. Box 2050, Oakland, CA 94694-2050. The City has also purchased excess coverage insurance for worker’s compensation claims from CSAC Excess Insurance Authority $500,000 self-insured retention. For the past five fiscal years, general liability and worker compensation settlements did not exceed insurance coverage. B. Liability for Uninsured Claims The City provides for the uninsured portion of claims and judgments in the Self Insurance Internal Service Fund. Claims and judgments, including a provision for claims incurred but not reported, are recorded when a loss is deemed probable of assertion and the amount of the loss is reasonably determinable. As discussed above, the City has coverage for such claims, but it has retained the risk for the deductible or uninsured portion of these claims. The City’s liability for uninsured claims is limited to workers’ compensation and general liability claims, as discussed above, and was estimated by management based on prior year’s claims experience as follows: June 30, 2015 Fiscal Year Workers'General 2013-2014 Compensation LiabilityTotal Total Balance, beginning of year $9,548,000$524,000$10,072,000$9,807,000 Current year claims and changes in estimates of prior years claims2,837,313252,1273,089,4402,474,962 Claims Paid (1,304,313)(513,127)(1,817,440)(2,209,962) Balance, end of year $11,081,000$263,000$11,344,000$10,072,000 Current portion $562,000$150,000$712,000$712,000 Page 103 of 202 CITY OF SOUTH SAN FRANCISCO NOTES TO BASIC FINANCIALS STATEMENTS For the Fiscal Year Ended June 30, 2015 NOTE 12 - COMMITMENTS AND CONTINGENCIES The City is subject to litigation arising in the normal course of business. In the opinion of the City Attorney there is no pending litigation which is likely to have a material adverse effect on the financial position of the City. The City participates in Federal and State grant programs. These programs have been audited by the City’s independent auditors in accordance with the provisions of the Federal Single Audit Act as amended and applicable State requirements. No cost disallowances were proposed as a result of these audits; however, these programs are still subject to further examination by the grantors and the amount, if any, of expenditures which may be disallowed by the granting agencies cannot be determined at this time. The City expects such amounts, if any, to be immaterial. A. Rental Revenues From Use of City Property The Conference Center Authority, a discrete component unit, leases land from the City under an operating lease commencing on January 1, 1999, with a 30-year term from February 1, 1999, to January 31, 2029. The rent amount is subject to re-negotiation at the option of either party between January 1 and February 28, 2009 and 2019. These leases are considered for accounting purposes to be operating leases. Property lease revenue from the Conference Center Authority during the year fiscal year ended June 30, 2015, was $420,000. The cost and carrying amount of leased land under this lease receivable is $5,325,000. Future minimum lease payments from the Conference Center Authority land leases are as follows: Component Unit Year ending June 30Conference Center 2016$420,000 2017420,000 2018420,000 2019420,000 2020420,000 2021-20252,100,000 2026-20291,680,000 Total$5,880,000 Page 104 of 202 CITY OF SOUTH SAN FRANCISCO NOTES TO BASIC FINANCIALS STATEMENTS For the Fiscal Year Ended June 30, 2015 NOTE 12 - COMMITMENTS AND CONTINGENCIES (Continued) Price Club Associates leases the land for the Costco store on South Airport Boulevard from the City. Lease payments are based on a percentage of Costco’s gross annual sales, with minimum annual rent set at $400,000, payable in monthly installments of $33,333. In fiscal 2014, Costco exercised the option to extend the lease through fiscal year 2029. In fiscal 2015 lease payments were $400,000. Future minimum lease revenues for the Costco lease is as follows: Year ending June 30:Costco 2016$400,000 2017400,000 2018400,000 2019400,000 2020400,000 2021-20252,000,000 2026-20291,600,000 $5,600,000 NOTE 13 – FORMER REDEVELOPMENT AGENCY DISSOLUTION AND SUCCESSOR AGENCY ACTIVITIES The activities of the Successor Agency are reported in the Successor Agency to the former Redevelopment Agency Private-Purpose Trust Fund as the activities are under the control of the Oversight Board. The City provides administrative services to the Successor Agency to wind down the affairs of the former Redevelopment Agency. Information presented in the following footnotes represents assets and liabilities of the Successor Agency. A. Cash and Investments Cash and investments of the Successor Agency as of June 30, 2015 are discussed in Note 2 to the financial statements. Information presented in the following footnotes represents other assets and liabilities of the Successor Agency as of June 30, 2015. B. Loans Receivable The Successor Agency assumed the non-housing loans receivable of the former Redevelopment Agency as of February 1, 2012. The former Redevelopment Agency engaged in programs designed to encourage construction of or improvement to low-to-moderate income housing. Under these programs, grants or loans were provided to homeowners or developers who agreed to expend these funds in accordance with the Agency’s terms. Page 105 of 202 CITY OF SOUTH SAN FRANCISCO NOTES TO BASIC FINANCIALS STATEMENTS For the Fiscal Year Ended June 30, 2015 NOTE 13 – FORMER REDEVELOPMENT AGENCY DISSOLUTION AND SUCCESSOR AGENCY ACTIVITIES (Continued) C. Capital Assets The Successor Agency assumed the capital assets of the former Redevelopment Agency as of February 1, 2012. All capital assets are valued at historical cost or estimated historical cost if actual historical cost is not available. Contributed capital assets are valued at their estimated fair market value on the date contributed. The Successor Agency’s policy is to capitalize all assets with costs exceeding certain minimum thresholds and with useful lives exceeding two years. All capital assets with limited useful lives are depreciated over their estimated useful lives. The purpose of depreciation is to spread the cost of capital assets equitably among all users over the life of these assets. The amount charged to depreciation expense each year represents that year’s pro rata share of the cost of capital assets. Depreciation of all capital assets is charged as an expense against operations each year and the total amount of depreciation taken over the years, called accumulated depreciation, is reported on the balance sheet as a reduction in the book value of capital assets. Depreciation is provided using the straight line method which means the cost of the asset is divided by its expected useful life in years and the result is charged to expense each year until the asset is fully depreciated. The Successor Agency has assigned the useful lives listed below to capital assets: Buildings 50 years Improvements 30 years Machinery and equipment 5-20 years Furniture and fixtures 12 years Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase is reflected in the capitalized value of the asset constructed, net of interest earned on the invested proceeds over the same period. The capitalization level is $20,000 for vehicles, and $100,000 for all else, including all other equipment that is not a vehicle. Page 106 of 202 CITY OF SOUTH SAN FRANCISCO NOTES TO BASIC FINANCIALS STATEMENTS For the Fiscal Year Ended June 30, 2015 NOTE 13 – FORMER REDEVELOPMENT AGENCY DISSOLUTION AND SUCCESSOR AGENCY ACTIVITIES (Continued) Capital assets recorded at June 30 comprise: Balance Balance June 30, 2014AdditionsJune 30, 2015 Fiduciary activities Capital assets not being depreciated: Land $52,769,724 $52,769,724 Total capital assets not being depreciated 52,769,724 52,769,724 Capital assets being depreciated: Buildings and Improvements 3,788,506 3,788,506 Equipment and Vehicle 242,190 242,190 Furniture and Fixtures 21,506 21,506 Total capital assets being depreciated 4,052,202 4,052,202 Less accumulated depreciation for: Buildings and Improvements (638,160)($83,745)(721,905) Equipment and Vehicle (233,669)(2,707)(236,376) Furniture and Fixtures (20,896)(609)(21,505) Total accumulated depreciation (892,725)(87,061)(979,786) Net capital assets being depreciated 3,159,477 (87,061)3,072,416 Fiduciary activity capital assets, net $55,929,201($87,061)$55,842,140 Page 107 of 202 CITY OF SOUTH SAN FRANCISCO NOTES TO BASIC FINANCIALS STATEMENTS For the Fiscal Year Ended June 30, 2015 NOTE 13 – FORMER REDEVELOPMENT AGENCY DISSOLUTION AND SUCCESSOR AGENCY ACTIVITIES (Continued) D. LONG-TERM DEBT All of the long-term debt of the Successor Agency were issued by the former Redevelopment Agency. Current year transactions were as follows: Balance Balance Current Type of Obligation June 30, 2014RetirementsJune 30, 2015Portion 2006 Revenue Bonds, 3.75 to 5.13%, due 9/1/35 (1)$60,060,000($1,605,000)$58,455,000$1,680,000 1999 Revenue Bonds, 3.3 to 5.0%, due 9/1/18 (2)1,290,000(230,000)1,060,000 245,000 Total Successor Agency $61,350,000($1,835,000)$59,515,000$1,925,000 Debt Service Requirements Debt service requirements are shown below for all long-term debt. For the YearSuccessor Agency Activities Ended June 30PrincipalInterest 2016$1,925,000$2,796,131 20172,000,0002,702,556 20182,100,0002,606,906 20192,195,0002,509,444 20201,990,0002,407,444 2021-202511,540,00010,918,320 2026-203014,680,0007,692,878 2031-203518,755,0003,518,125 20364,330,000108,250 Totals$59,515,000$35,260,054 (1) On April 19, 2006, the former Agency issued $70,675,000 of Tax Allocation Revenue Bonds, Series 2006A to advance refund and defease $9,920,000 of the 1997 Downtown Tax Allocation Bonds and $23,860,000 of the 1999 Revenue Bonds, and to finance various redevelopment projects. Net proceeds of $9,364,974 and $3,753,130 plus an additional $801,925 and $20,039,830 from the 1997 and 1999 bonds were used to purchase U.S. government securities for the 1997 Downtown Tax Allocation Bonds and 1999 Revenue Bonds, respectively. Those securities were deposited in irrevocable trust with an escrow agent to provide for all future debt service payments. The 1997 and 1999 bonds are considered to be defeased and the liabilities for those bonds have been removed. As of June 30, 2015, $7,150,000 and $13,550,000 of principal remained outstanding on the defeased 1997 and 1999 bonds, respectively. Page 108 of 202 CITY OF SOUTH SAN FRANCISCO NOTES TO BASIC FINANCIALS STATEMENTS For the Fiscal Year Ended June 30, 2015 NOTE 13 – FORMER REDEVELOPMENT AGENCY DISSOLUTION AND SUCCESSOR AGENCY ACTIVITIES (Continued) The 2006 Bonds are special obligation of the former Redevelopment Agency payable solely from and secured by a pledge of tax revenues generated within the project area. Interest on the 2006A Bonds is payable on each March 1 and September 1. Principal payments are due each September 1. The pledge of future tax revenue ends upon repayment of the $94,079,604 in remaining debt service on the bonds which is scheduled to occur in 2036. In September 2012, a bank escrow account in the amount of $50.2 million was established by action of the Successor Agency Oversight Board and approved by the State Department of Finance. The purpose of the escrow account is to set aside funds to call and fully repay the 2006 Tax Allocation Revenue Bonds in 2016. (2) On February 1, 1999, the City of South San Francisco Capital Improvements Financing Authority (CIFA) issued $31,720,000 of 1999 Revenue Bonds to provide funds to pay loans (Homart Development), to finance redevelopment and housing activities and to refund the 1993 Gateway tax allocation bonds, which were due in 2018. The 1999 revenue bonds are obligations of the CIFA although the Redevelopment Agency is required to make bond principal and interest payments from the Gateway increment tax and housing set-aside revenues. The 1999 Revenue Bonds are, in substance, obligations of the Redevelopment Agency, and have therefore been recorded as such in these financial statements. On April 16, 2006, the Gateway principal portion of the $23,860,000 was refunded as discussed in (1) above. The housing bonds are now obligations of the Redevelopment Successor Agency. The 1999 Revenue Bonds were issued and net proceeds of $9,614,978 plus an additional $956,470 of 1993 bond reserve funds were used to purchase U.S. government securities. Those securities were deposited in an irrevocable trust with an escrow agent to provide for all future debt service payments on the 1993 bonds. As a result, the 1993 bonds are considered to be defeased and the liability for those bonds has been removed. Pledged Revenues With the dissolution of the former Redevelopment Agency discussed above, Tax Increment is no longer distributed, and instead the Successor Agency receives payments from the County’s Redevelopment Property Tax Trust Fund (RPTTF) that are to be used to fund debt service on the Bonds, with no distinction between housing and non-housing revenues. Page 109 of 202 CITY OF SOUTH SAN FRANCISCO NOTES TO BASIC FINANCIALS STATEMENTS For the Fiscal Year Ended June 30, 2015 NOTE 13 – FORMER REDEVELOPMENT AGENCY DISSOLUTION AND SUCCESSOR AGENCY ACTIVITIES (Continued) E. POLLUTION REMEDIATION In fiscal 2010, the former Redevelopment Agency purchased an unimproved parcel adjacent to the Caltrain Commuter Rail station from the State of California. The current rail station is among the oldest on the peninsula, is under the freeway, is small, has limited parking, and is not adjacent to the Downtown due to the freeway. The Successor Agency will contribute that site to the County Transportation Agency for the future reconfiguration of that rail station after the County secures necessary funding from other sources. The Successor Agency’s contribution will include use of the purchased parcel in order to make the station safer, more visually pleasing, more usable to commuters and business shuttles, and to make the Downtown accessible to pedestrians to and from the train station. As part of that land purchase, the price paid by the former Agency to the State was discounted to give the former Agency credit in the amount of $537,000 against known pollution remediation costs on the site. If the funding from the County for the station reconfiguration does not materialize, and if construction does not occur on that site, the pollution mitigation costs will be much less. F. COMMITMENTS AND CONTINGENCIES State Approval of Enforceable Obligations The Successor Agency prepares a Recognized Obligation Payment Schedule (ROPS) semi- annually that contains all proposed expenditures for the subsequent six-month period. The ROPS is subject to the review and approval of the Oversight Board as well as the State Department of Finance. Although the State Department of Finance may not question items included on the ROPS in one period, they may question the same items in a future period and disallow associated activities. The amount, if any, of current obligations that may be denied by the State Department of Finance cannot be determined at this time. The City expects such amounts, if any, to be immaterial. State Asset Transfer Review The activities of the former Redevelopment Agency and the Successor Agency are subject to further examination by the State of California and the amount, if any, of expenditures which may be disallowed by the State cannot be determined at this time. In addition, the State Controller’s Office will be conducting a review of the propriety of asset transfers between the former Redevelopment Agency or the Successor Agency and any public agency that occurred on or after January 1, 2011 and the amount, if any, of assets that may be required to be returned to the Successor Agency cannot be determined at this time. The City expects such amounts, if any, to be immaterial. Page 110 of 202 This Page Left Intentionally Blank Page 111 of 202 REQUIRED SUPPLEMENTARY INFORMATION Page 112 of 202 CITY OF SOUTH SAN FRANCISCO REQUIRED SUPPLEMENTARY INFORMATION For the Fiscal Year Ended June 30, 2015 Miscellaneous Safety Total Pension Liability Service Cost $3,449,973$5,143,842 Interest 13,930,54418,899,544 Differences between expected and actual experience 00 Changes in assumptions 00 Changes in benefits 0 0 Benefit payments, including refunds of employee contributions (9,287,975) (13,161,296) Net change in total pension liability 8,092,542 10,882,090 Total pension liability - beginning 188,659,588 256,002,648 Total pension liability - ending (a)$196,752,130 $266,884,738 Plan fiduciary net position Contributions - employer $4,235,454 $6,535,399 Contributions - employee 1,466,176 2,151,163 Net investment income 21,712,340 29,348,051 Benefit payments, including refunds of employee contributions (9,287,975) (13,161,296) Net change in plan fiduciary net position 18,125,995 24,873,317 Plan fiduciary net position - beginning 125,614,993 170,937,835 Plan fiduciary net position - ending (b)$143,740,988 $195,811,152 Net pension liability - ending (a)-(b)$53,011,142 $71,073,586 Plan fiduciary net position as a percentage of the total pension liability 73.06%73.37% Covered - employee payroll $19,098,611 $17,932,167 Net pension liability as percentage of covered- employee payroll 277.57%396.35% Notes to Schedule: * - Fiscal year 2015 was the 1st year of implementation, therefore only one year is shown. Benefit changes. In 2015, benefit terms were modified to base public safety employee pensions on a final three- year average salary instead of a final five-year average salary. Changes in assumptions. In 2015, amounts reported as changes in assumptions resulted primarily from adjustments to expected retirement ages of general employees. Agent Multiple-Employer Defined Pension Plans As of June 30, 2015 SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND RELATED RATIOS Last 10 Years* Page 113 of 202 CITY OF SOUTH SAN FRANCISCO REQUIRED SUPPLEMENTARY INFORMATION For the Fiscal Year Ended June 30, 2015 Miscellaneous Safety Actuarially determined contribution $4,210,973 $7,191,715 Contributions in relation to the actuarially determined contributions 4,210,973 7,191,715 Contribution deficiency (excess)$0 $0 Covered-employee payroll $19,098,611 $17,932,167 Contributions as a percentage of covered- employee payroll 22.05%40.11% Notes to Schedule Valuation date:6/30/2012 Methods and assumptions used to determine contribution rates: Actuarial cost method Entry age Amortization method Level percentage of payroll Remaining amortization period 24 years as of the Valuation Date Asset valuation method 15-year smoothed market Inflation 2.75% Salary increases 3.30% to 14.20% depending on Age, Service, and type of employment Investment rate of return Retirement age Mortality * - Fiscal year 2015 was the 1st year of implementation, therefore only one year is shown. The probabilities of Retirement are based on the 2010 CalPERS Experience Study for the period from 1997 to 2007 The probabilities of mortality are based on the 2010 CalPERS Experience Study for the period from 1997 to 2007. Pre-retirement and Post-retirement mortality rates include 5 years of projected mortality improvement using Scale AA published by the Society of Actuaries 7.50% net of administrative expenses Agent Multiple-Employer Defined Pension Plans For the fiscal year ended June 30, 2015 Last 10 Years* SCHEDULE OF CONTRIBUTIONS Page 114 of 202 CITY OF SOUTH SAN FRANCISCO REQUIRED SUPPLEMENTARY INFORMATION For the Fiscal Year Ended June 30, 2015 Overfunded (In Thousands)Overfunded(Underfunded) Entry Age(Underfunded)Actuarial ActuarialActuarialActuarialActuarialLiability as ValuationValue ofAccruedAccruedFundedCoveredPercentage of DateAssetsLiabilityLiabilityRatioPayrollCovered Payroll 6/30/2010$0$82,184($82,184)0%$32,797(250.6%) 6/30/2012071,306(71,306)0%31,431(226.9%) 6/30/2013066,444(66,444)0%29,914(222.1%) Other Post-Employment Benefits Schedule of Funding Progress Page 115 of 202 SUPPLEMENTARY INFORMATION Page 116 of 202 This Page Left Intentionally Blank Page 117 of 202 MAJOR GOVERNMENTAL FUNDS OTHER THAN GENERAL FUND AND SPECIAL REVENUE FUNDS CAPITAL IMPROVEMENT FUND To account for expenditures associated with the acquisition, construction, or improvement of City owned facilities and infrastructure. Funding comes from the general fund, special revenue funds, grants and fees. EAST OF 101 SEWER IMPACT FEES CAPITAL PROJECTS FUND These fees provide new development’s share of new and rehabilitated sewer collection and treatment facilities to serve the East of Highway 101 area. EAST OF 101 TRAFFIC IMPACT FEES CAPITAL PROJECTS FUND These fees are to provide new development’s share of new and expanded roadway and intersection improvements to serve the East of Highway 101 area. CHILD CARE IMPACT FEES CAPITAL PROJECTS FUND These citywide fees provide new development’s share of new and expanded childcare facilities to serve the City. DEVELOPER DEPOSIT CAPITAL PROJECTS FUND These fees provide new development’s share of funding for the Oyster Point at Highway 101 interchange improvements. CAPITAL INFRASTRUCTURE RESERVE FUND Replacement, upgrade, and maintenance of the City’s infrastructure are backlogged, constituting a significant liability. Funds are set aside in this fund as part of the budget process and as part of the City’s reserve policy to address the replacement and/or upgrade of the city infrastructure (such as parks, buildings, facilities, streets, sidewalks, and storm water facilities). Page 118 of 202 CITY OF SOUTH SAN FRANCISCO CAPITAL IMPROVEMENT CAPITAL PROJECTS FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL (NON GAAP LEGAL BASIS) FOR THE YEAR ENDED JUNE 30, 2015 Variance with Final Budget Positive BudgetActual Amounts(Negative) REVENUES: Intergovernmental$5,712,897$565,896($5,147,001) Other306,00011,652(294,348) Total Revenues6,018,897577,548(5,441,349) EXPENDITURES: Current: Public works27,622,50014,619,00813,003,492 Total Expenditures27,622,50014,619,00813,003,492 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES(21,603,603)(14,041,460)7,562,143 OTHER FINANCING SOURCES (USES) Transfers in21,563,4299,881,403(11,682,026) Total other financing sources (uses)21,563,4299,881,403(11,682,026) NET CHANGE IN FUND BALANCE($40,174)(4,160,057)($4,119,883) Fund balance - July 1(27,375) Adjustment to budgetary basis: Encumbrance adjustments4,475,986 Fund balance - June 30$288,554 Page 119 of 202 CITY OF SOUTH SAN FRANCISCO EAST OF 101 SEWER IMPACT FEES CAPITAL PROJECTS FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL (NON GAAP LEGAL BASIS) FOR THE YEAR ENDED JUNE 30, 2015 Variance with Final Budget Positive BudgetActual Amounts(Negative) REVENUES: Interest and rental $12,837$12,837 Charges for services$472,000459,624(12,376) Total Revenues472,000472,461461 EXPENDITURES: Current: Non-departmental2,5002,500 Total Expenditures2,5002,500 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES469,500469,961461 OTHER FINANCING SOURCES (USES) Transfers out(63,008)(16,191)46,817 Total other financing sources (uses)(63,008)(16,191)46,817 NET CHANGE IN FUND BALANCE$406,492453,770$47,278 Fund balance (deficit) - July 1(494,229) Fund balance (deficit) - June 30($40,459) Page 120 of 202 CITY OF SOUTH SAN FRANCISCO EAST OF 101 TRAFFIC IMPACT FEES CAPITAL PROJECTS FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL (NON GAAP LEGAL BASIS) FOR THE YEAR ENDED JUNE 30, 2015 Variance with Final Budget Positive BudgetActual Amounts(Negative) REVENUES: Interest and rental $50,753$50,753 Charges for services$1,500,0001,411,851(88,149) Total Revenues1,500,0001,462,604(37,396) EXPENDITURES: Current: Public works2,5002,500 Total Expenditures2,5002,500 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES1,497,5001,460,104(37,396) OTHER FINANCING SOURCES (USES) Transfers (out)(4,819,889)(2,311,180)2,508,709 Total other financing sources (uses)(4,819,889)(2,311,180)2,508,709 NET CHANGE IN FUND BALANCE($3,322,389)(851,076)$2,471,313 Fund balance - July 16,795,927 Fund balance - June 30$5,944,851 Page 121 of 202 CITY OF SOUTH SAN FRANCISCO CHILD CARE IMPACT FEES CAPITAL PROJECTS FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL (NON GAAP LEGAL BASIS) FOR THE YEAR ENDED JUNE 30, 2015 Variance with Final Budget Positive BudgetActual Amounts(Negative) REVENUES: Interest and rental $18,701$18,701 Charges for services$497,000477,806(19,194) Total Revenues497,000496,507(493) EXPENDITURES: Current: Non-departmental2,5002,500 Total Expenditures2,5002,500 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES494,500494,007(493) NET CHANGE IN FUND BALANCE$494,500494,007($493) Fund balance - July 11,995,688 Fund balance - June 30$2,489,695 Page 122 of 202 CITY OF SOUTH SAN FRANCISCO DEVELOPER DEPOSIT CAPITAL PROJECTS FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL (NON GAAP LEGAL BASIS) FOR THE YEAR ENDED JUNE 30, 2015 Variance with Final Budget FinalPositive BudgetActual Amounts(Negative) REVENUES: Charges for services$1,050,000$1,049,546($454) Total Revenues1,050,0001,049,546(454) OTHER FINANCING SOURCES (USES) Transfers (out)(2,848,933)(1,049,547)1,799,386 Total other financing sources (uses)(2,848,933)(1,049,547)1,799,386 NET CHANGE IN FUND BALANCE($1,798,933)(1)$1,798,932 Fund balance - July 1 72,885 Fund balance - June 30$72,884 Page 123 of 202 Variance with Final Budget FinalPositive BudgetActual Amounts(Negative) REVENUES: Interest and rental $94,084$94,084 Other$352,000257,637(94,363) Total Revenues352,000351,721(279) OTHER FINANCING SOURCES (USES) Transfers in6,146,0006,146,000 Total other financing sources (uses)6,146,0006,146,000 NET CHANGE IN FUND BALANCE$6,498,0006,497,721($279) Fund balance - July 111,161,000 Fund balance - June 30$17,658,721 CITY OF SOUTH SAN FRANCISCO CAPITAL INFRASTRUCTURE RESERVE FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL (NON GAAP LEGAL BASIS) FOR THE YEAR ENDED JUNE 30, 2015 Page 124 of 202 This Page Left Intentionally Blank Page 125 of 202 NON-MAJOR GOVERNMENTAL FUNDS Special revenue funds are used to account for revenue sources that are restricted by law or administrative action to expenditures for specified purposes. Special revenue funds used by the City of South San Francisco include: Gas Tax - Accounts for State monies received and expended for street improvements, repairs, engineering, and administration under Streets and Highway Code Sections 2105, 2106, 2107, and 2107.5. Includes sales taxes on gasoline received from the State’s Traffic Congestion Relief Fund. Developer Contributions – Accounts for fees deposited for planning and engineering reviews or for future project development. Federal Aviation Grant – This fund accounts for federal monies received for insulating structures against airport noise. Community Development Block Grant - Accounts for Federal monies received to be expended for development of jobs and suitable housing for low-income residents. Miscellaneous Grants - Accounts for federal monies received for miscellaneous projects. Maintenance District - Accounts for a portion of property tax dedicated to provide for the maintenance of landscaped areas within housing developments. Transportation Sales Tax - Accounts for the sales tax that provides resources for street improvements and repairs. Solid Waste Reduction - Accounts for revenues and expenditures associated with the waste reduction, recycling, composting and household hazardous waste programs for residents and businesses. Supplemental Law Enforcement Services – Accounts for State monies provided for designated Police department services. City Programs – Organizations and individuals provide revenues that fund certain programs and services. Affordable Housing Trust – The inclusionary housing requirement in the City provides that 20% of new residential housing units (for projects of 4 or more units) be affordable. These in-lieu fees (in-lieu of production of affordable housing units by the developer) provide new residential development’s share of affordable housing units. PEG Equipment and Access – Accounts for the one percent of money set-aside from cable franchise fees that are used to support public, educational and governmental (PEG) channels. Page 126 of 202 NON-MAJOR GOVERNMENTAL FUNDS (Continued) Capital projects funds are used to account for resources used for the acquisition and construction of capital facilities or major capital equipment, except for capital improvements financed by proprietary funds. Capital projects funds used at the City of South San Francisco include: Non-obligated Capital Projects - Accounts for the construction of assets financed by non- obligated debt. Public Safety Impact Fee – These fees are to provide new development’s share of funding for the replacement of public safety capital equipment, vehicles and facilities. Oyster Point Improvements Impact Fees Capital Projects Fund - These fees provide new development’s share of funding for the Oyster Point at Highway 101 interchange improvements. Sewer Capacity Charges – accounts for cost recovery charged to new development based on proportional benefit, associated with providing sewer collection and treatment capacity to new development, both through existing infrastructure provided, and through future capital projects not funded by other sources. Page 127 of 202 This Page Left Intentionally Blank Page 128 of 202 Federal Community DeveloperAviationDevelopmentMiscellaneous Gas TaxContributionsGrantBlock GrantGrants ASSETS Cash and investments $1,489,176$3,153,805$721,411 $136,869 Receivables: Accounts $5,586 Accrued interest 5,131 10,061 2,056 Loans 851,042 Restricted cash and investments 178,559 Land held for resale Total Assets $1,494,307$3,163,866$723,467$1,035,187$136,869 LIABILITIES Liabilities: Accounts payable $135,175 $21,167 Other payable 9,250 Deposits 872,480 Due to other funds Unearned revenue $723,467 Total Liabilities 1,007,655723,467 30,417 Fund Balances: Restricted $1,494,3072,156,211 1,004,770$136,869 Total Fund Balances 1,494,3072,156,211 1,004,770136,869 Total Liabilities and Fund Balances$1,494,307$3,163,866$723,467$1,035,187$136,869 JUNE 30, 2015 SPECIAL REVENUE FUNDS CITY OF SOUTH SAN FRANCISCO NONMAJOR GOVERNMENTAL FUNDS COMBINING BALANCE SHEET Page 129 of 202 SolidSupplemental AffordablePEG MaintenanceTransportationWasteLaw Enforce-City HousingEquipment and DistrictsSales TaxReductionment ServicesProgramsTrust Access $1,802,678$2,394,919$932,818 $78$3,852,757$1,645,158$679,842 15,000 334 46,741 6,839 125 9,819 4,555 1,679 44,273 1,900,000 $1,802,678$2,401,758$947,818 $203$3,862,576$3,594,320$728,262 $1,131 $132 $38,294 $100 1,131 132 100 38,294 1,801,547$2,401,758947,686 1033,824,282$3,594,320$728,262 1,801,5472,401,758947,686 1033,824,2823,594,320728,262 $1,802,678$2,401,758$947,818 $203$3,862,576$3,594,320$728,262 (Continued) SPECIAL REVENUE FUNDS Page 130 of 202 Total Non-obligatedPublicOyster PointSewer Nonmajor CapitalSafetyImprovementCapacityGovernmental ProjectsImpact FeeImpact FeesChargesFunds ASSETS Cash and investments$678,701$300,718$25,206$528,118$18,342,254 Receivables: Accounts 9,00076,661 Accrued interest4123271,25042,254 Loans 895,315 Restricted cash and investments 178,559 Land held for resale 1,900,000 Total Assets$678,701$301,130$25,533$538,368$21,435,043 LIABILITIES Liabilities: Accounts payable $195,899 Other payable 9,250 Deposits 872,480 Due to other funds 100 Unearned revenue 723,467 Total Liabilities 1,801,196 Fund Balances: Restricted $678,701$301,130$25,533$538,36819,633,847 Total Fund Balances678,701301,13025,533538,36819,633,847 Total Liabilities and Fund Balances$678,701$301,130$25,533$538,368$21,435,043 CAPITAL PROJECTS FUNDS CITY OF SOUTH SAN FRANCISCO NONMAJOR GOVERNMENTAL FUNDS COMBINING BALANCE SHEET JUNE 30, 2015 Page 131 of 202 This Page Left Intentionally Blank Page 132 of 202 Federal Community DeveloperAviationDevelopmentMiscellaneous Gas TaxContributionsGrantsBlock GrantGrants REVENUES Property taxes Other taxes Intergovernmental $2,126,497 $219,168 Interest and rentals 14,638$28,832$6,06730,499 Charges for services 535,521 Other Total Revenues 2,141,135564,3536,067249,667 EXPENDITURES Current: Economic and community development 368,1546,067282,012 Public works Non-departmental Police Other Debt service: Principal repayments Total Expenditures368,1546,067282,012 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES2,141,135196,199(32,345) OTHER FINANCING SOURCES (USES) Transfers out(2,920,689)(900,915)(25,400) Total Other Financing Sources (Uses)(2,920,689)(900,915)(25,400) Net Change in Fund Balances(779,554)(704,716)(57,745) Fund balance - July 12,273,8612,860,9271,062,515$136,869 Fund balance - June 30$1,494,307$2,156,211$1,004,770$136,869 SPECIAL REVENUE FUNDS CITY OF SOUTH SAN FRANCISCO NONMAJOR GOVERNMENTAL FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES FOR THE YEAR ENDED JUNE 30, 2015 Page 133 of 202 SolidSupplemental AffordablePEG MaintenanceTransportationWasteLaw Enforce-City HousingEquipment and DistrictsSales TaxReductionment ServicesProgramsTrust Access $1,570,790 $1,295,185 $98,753 20,091 430$33,120$15,781 $5,046 $180,000 15,500 1,725,427 11178,644 1,570,7901,315,276180,000 99,1831,758,547 31,292183,690 117,097 1,338,989 3,385 99,183 480,290 1,338,989 117,097 99,183480,290 3,385 231,8011,315,276 62,903 1,278,257 31,292180,305 (13,574)(1,238,365)(203,822)(1,024,554) (13,574)(1,238,365)(203,822)(1,024,554) 218,227 76,911(140,919)253,703 31,292180,305 1,583,3202,324,8471,088,605 1033,570,5793,563,028547,957 $1,801,547$2,401,758$947,686 $103$3,824,282$3,594,320$728,262 (Continued) SPECIAL REVENUE FUNDS Page 134 of 202 Total Non-obligatedPublicOyster PointSewer Nonmajor CapitalSafety ImprovementCapacity Governmental ProjectsImpact FeeImpact FeesChargesFunds REVENUES Property taxes $1,570,790 Other taxes 1,393,938 Intergovernmental $3,7442,349,409 Interest and rentals$1,392$1,18239157,117 Charges for services352,410210,1891,293,620 Other226,7462,130,828 Total Revenues228,138353,592213,9728,895,702 EXPENDITURES Current: Economic and community development 773,330 Public works 2,5001,341,489 Non-departmental 3,385 Police 99,183 Other 480,290 Debt service: Principal repayments352,674352,674 Total Expenditures352,6742,5003,050,351 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES228,138918211,4725,845,351 OTHER FINANCING SOURCES (USES) Transfers out($23,156)(6,350,475) Total Other Financing Sources (Uses)(23,156)(6,350,475) Net Change in Fund Balances(23,156)228,138918211,472(505,124) Fund balance - July 1$701,85772,99224,615326,89620,138,971 Fund balance - June 30$678,701$301,130$25,533$538,368$19,633,847 CAPITAL PROJECTS FUNDS CITY OF SOUTH SAN FRANCISCO NONMAJOR GOVERNMENTAL FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES FOR THE YEAR ENDED JUNE 30, 2015 Page 135 of 202 This Page Left Intentionally Blank Page 136 of 202 GAS TAX DEVELOPER CONTRIBUTIONS VarianceVariance FinalPositiveFinalPositive BudgetActual(Negative)BudgetActual(Negative) REVENUES Property taxes Other taxes Intergovernmental$2,103,483$2,126,497$23,014 Interest and rentals15,00014,638(362)$28,832$28,832 Charges for services $553,000535,521(17,479) Other Total Revenues2,118,4832,141,13522,652553,000564,35311,353 EXPENDITURES Current: Economic and community development324,160499,872(175,712) Public works Non-departmental Other Police Debt service: Principal Repayments Total Expenditures 324,160499,872(175,712) EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES2,118,4832,141,13522,652228,84064,481(164,359) OTHER FINANCING SOURCES (USES) Transfers out(4,158,619)(2,920,689)1,237,930($1,150,452)(900,915)249,537 Total Other Financing Sources (Uses)(4,158,619)(2,920,689)1,237,930(1,150,452)(900,915)249,537 NET CHANGE IN FUND BALANCES($2,040,136)(779,554)$1,260,582($921,612)(836,434)$85,178 Adjustment to budgetary basis: Encumbrance adjustments 131,718 Fund balance - July 12,273,8612,860,927 Fund balance - June 30$1,494,307$2,156,211 AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL (NON GAAP LEGAL BASIS) COMBINING SCHEDULE OF REVENUES, EXPENDITURES, CITY OF SOUTH SAN FRANCISCO FOR THE YEAR ENDED JUNE 30, 2015 NONMAJOR GOVERNMENTAL FUNDS Page 137 of 202 Variance Variance Variance Final PositiveFinal PositiveFinal Positive BudgetActual(Negative)BudgetActual(Negative)BudgetActual(Negative) $617,249$219,168($398,081) $4,000$6,067$2,067 30,49930,499 8,569 (8,569) 4,0006,0672,067625,818249,667(376,151) 733,2396,067727,172585,302301,854283,448 733,2396,067727,172585,302301,854283,448 (729,239)729,23940,516(52,187)(92,703) (120,870)(25,400)95,470 (120,870)(25,400)95,470 ($729,239)$729,239($80,354)(77,587)$2,767 19,842 1,062,515 $136,869 $1,004,770 $136,869 (Continued) FEDERAL AVIATION GRANT MISCELLANEOUS GRANTS BLOCK GRANT COMMUNITY DEVELOPMENT Page 138 of 202 VarianceVariance FinalPositiveFinalPositive BudgetActual(Negative)BudgetActual(Negative) REVENUES Property taxes$1,340,734$1,570,790$230,056 Other taxes $1,290,000$1,295,185$5,185 Intergovernmental Interest and rentals 25,00020,091(4,909) Charges for services Other Total Revenues1,340,7341,570,790230,0561,315,0001,315,276276 EXPENDITURES Current: Economic and community development Public works1,584,4091,338,989245,420 Non-departmental Other Police Debt service: Principal Repayments Total Expenditures1,584,4091,338,989245,420 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES(243,675)231,801475,4761,315,0001,315,276276 OTHER FINANCING SOURCES (USES) Transfers out(90,000)(13,574)76,426(2,908,652)(1,238,365)1,670,287 Total Other Financing Sources (Uses)(90,000)(13,574)76,426(2,908,652)(1,238,365)1,670,287 NET CHANGE IN FUND BALANCES($333,675)218,227$551,902($1,593,652)76,911$1,670,563 Adjustment to budgetary basis: Encumbrance adjustments Fund balance - July 11,583,3202,324,847 Fund balance - June 30$1,801,547$2,401,758 COMBINING SCHEDULE OF REVENUES, EXPENDITURES, FOR THE YEAR ENDED JUNE 30, 2015 BUDGET AND ACTUAL (NON GAAP LEGAL BASIS) AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS CITY OF SOUTH SAN FRANCISCO TRANSPORTATION SALES TAXMAINTENANCE DISTRICTS Page 139 of 202 VarianceVarianceVariance FinalPositiveFinalPositiveFinalPositive BudgetActual(Negative)BudgetActual(Negative)BudgetActual(Negative) $100,000$98,753($1,247) 430430$33,120$33,120 $180,000$180,000 $1,760,0001,725,427(34,573) 180,000180,000100,00099,183(817)1,760,0001,758,547(1,453) 195,481191,636$3,845 481,000480,290710 100,00099,183817 195,481191,6363,845100,00099,183817481,000480,290710 (15,481)(11,636)3,8451,279,0001,278,257(743) (460,000)(203,822)256,178($2,153,187)(1,024,554)1,128,633 (460,000)(203,822)256,178(2,153,187)(1,024,554)1,128,633 ($475,481)(215,458)$260,023($874,187)253,703$1,127,890 74,539 1,088,6051033,570,579 $947,686$103$3,824,282 (Continued) CITY PROGRAMSSOLID WASTE REDUCTIONENFORCEMENT SERVICES SUPPLEMENTAL LAW Page 140 of 202 VarianceVariance FinalPositiveFinalPositive BudgetActual(Negative)BudgetActual(Negative) REVENUES Property taxes Other taxes Intergovernmental Interest and rentals$15,781$15,781$5,000$5,046$46 Charges for services$31,00015,500(15,500) Other1111125,000178,64453,644 Total Revenues31,00031,292292130,000183,69053,690 EXPENDITURES Current: Economic and community development Public works Non-departmental 200,000198,8851,115 Other Police Debt service: Principal Repayments Total Expenditures 200,000198,8851,115 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES31,00031,292292(70,000)(15,195)54,805 OTHER FINANCING SOURCES (USES) Transfers out Total Other Financing Sources (Uses) NET CHANGE IN FUND BALANCES$31,00031,292$292($70,000)(15,195)$54,805 Adjustment to budgetary basis: Encumbrance adjustments 195,500 Fund balance - July 13,563,028547,957 Fund balance - June 30$3,594,320$728,262 FOR THE YEAR ENDED JUNE 30, 2015 BUDGET AND ACTUAL (NON GAAP LEGAL BASIS) AND CHANGES IN FUND BALANCES COMBINING SCHEDULE OF REVENUES, EXPENDITURES, NONMAJOR GOVERNMENTAL FUNDS CITY OF SOUTH SAN FRANCISCO PEG AFFORDABLE HOUSING TRUSTEQUIPMENT AND ACCESS Page 141 of 202 Variance Variance Variance Final PositiveFinal PositiveFinal Positive BudgetActual(Negative)BudgetActual(Negative)BudgetActual(Negative) $1,392$1,392 $1,182$1,182 $354,000352,410(1,590) $228,000226,746(1,254) 228,000228,138 $138354,000353,592 (408) $52,561 52,561 352,674352,674 405,235352,67452,561 228,000228,138 138(51,235)91852,153 ($660,000)($23,156)$636,844 (660,000)(23,156)636,844 ($660,000)(23,156)$636,844$228,000228,138 $138($51,235)918$52,153 $701,857 72,992 24,615 $678,701 $301,130 $25,533 NONOBLIGATED CAPITAL PROJECTS OYSTER POINT PUBLIC SAFETY IMPACT FEEIMPROVEMENT IMPACT FEES Page 142 of 202 Variance FinalPositive BudgetActual(Negative) REVENUES Property taxes Other taxes Intergovernmental$3,744$3,744 Interest and rentals3939 Charges for services210,000210,189189 Other Total Revenues210,000213,9723,972 EXPENDITURES Current: Economic and community development Public works$2,5002,500 Non-departmental Other Police Debt service: Principal Repayments Total Expenditures2,5002,500 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES207,500211,4723,972 OTHER FINANCING SOURCES (USES) Transfers out Total Other Financing Sources (Uses) NET CHANGE IN FUND BALANCES$207,500211,472$3,972 Adjustment to budgetary basis: Encumbrance adjustments Fund balance - July 1326,896 Fund balance - June 30$538,368 BUDGET AND ACTUAL (NON GAAP LEGAL BASIS) FOR THE YEAR ENDED JUNE 30, 2015 CITY OF SOUTH SAN FRANCISCO NONMAJOR GOVERNMENTAL FUNDS COMBINING SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES CAPACITY CHARGES SEWER Page 143 of 202 INTERNAL SERVICE FUNDS Internal service funds account for department services and financing performed for other departments within the same governmental jurisdiction. Funding comes from charges assessed to the departments benefiting from the service. Internal service funds used at the City include: City Service – Accounts for vehicle maintenance and information technology services provided to City departments. Self Insurance – Accounts for workers' compensation, general liability and property damage claim activity and financing is represented in this fund. Health and Retirement Benefits - Accounts for health and retirement benefits paid on the behalf of eligible City employees. Equipment Replacement – Accounts for resources set-aside for the future replacement of City vehicles and equipment. Page 144 of 202 CITY OF SOUTH SAN FRANCISCO INTERNAL SERVICE FUNDS COMBINING STATEMENT OF NET POSITION JUNE 30, 2015 Health and SelfRetirementEquipment City ServiceInsuranceBenefitsReplacementTotal ASSETS Current assets: Cash and investments $838,019$12,123,493$1,977,418$3,315,070$18,254,000 Receivables: Accounts 8,236 72,216 80,452 Accrued interest 1,906 29,58713,693 10,418 55,604 Due from other funds 100 100 Deposit 157,50046,010 203,510 Prepaid Items Total current assets 848,16112,310,5802,037,1213,397,80418,593,666 Noncurrent assets: Capital assets: Nondepreciable 34,854 34,854 Depreciable, net of accumulated depreciation 2,031 5,095,6365,097,667 Total Assets 850,19212,310,5802,037,1218,528,29423,726,187 LIABILITIES Current liabilities: Accounts payable 88,253180,49861,187 4,777334,715 Other payable 8,496 10,273 18,769 Current portion of accrued insurance loss 712,000 712,000 Current portion of compensated absences 60,612 764,191 824,803 Current portion of long-term debt 547,574547,574 Total current liabilities 148,865892,498833,874562,6242,437,861 Noncurrent liabilities: Accrued insurance loss 10,632,000 10,632,000 Compensated absences obligation 167,355 367,530 534,885 Net OPEB obligation 23,810,700 23,810,700 Noncurrent portion of long-term debt 2,238,9982,238,998 Total noncurrent liabilities 167,35510,632,00024,178,2302,238,99837,216,583 Total Liabilities 316,22011,524,49825,012,1042,801,62239,654,444 NET POSITION: Net investment in capital assets 2,031 2,343,9182,345,949 Unrestricted 531,941786,082(22,974,983)3,382,754(18,274,206) Total Net Position $533,972$786,082($22,974,983)$5,726,672($15,928,257) Page 145 of 202 Health and Self RetirementEquipment City ServiceInsuranceBenefitsReplacementTotal OPERATING REVENUES Charges for services $3,689,161$4,258,864$12,028,509$1,677,632$21,654,166 Total Operating Revenues 3,689,1614,258,86412,028,5091,677,63221,654,166 OPERATING EXPENSES Personnel expenses 1,794,3011,201,54110,853,394 13,849,236 OPEB expenses 2,842,525 2,842,525 Professional services 271,804128,232 18,811 418,847 Program supplies 918,519384,929 3,122 39,3221,345,892 Insurance 7,5661,001,361 1,008,927 Self-insurance and claims 2,582,118 2,582,118 Repair and maintenance 442,515 72,299 514,814 Utilities 35,394 35,394 Depreciation 580 718,028 718,608 Other 7,850 236,477 244,327 Total Operating Expenses 3,478,5295,298,18113,954,329 829,64923,560,688 Operating Income (Loss)210,632(1,039,317)(1,925,820)847,983(1,906,522) NONOPERATING REVENUES (EXPENSES) Interest income 5,787 87,826 34,956 30,700 159,269 Interest expense (101,156)(101,156) Gain from disposal of capital assets 72,216 72,216 Other 38,028 38,028 Total Nonoperating Revenues (Expenses)5,787125,854 34,956 1,760 168,357 Net income (loss) before transfers 216,419(913,463)(1,890,864)849,743(1,738,165) TRANSFERS Transfers in 76,2751,000,000 250,000 1,326,275 Transfers out (1,021,708)(1,021,708) Change in Net Position 292,694 86,537(1,640,864)(171,965)(1,433,598) Net Position - (deficits) July 1 241,278699,545(21,334,119)5,898,637(14,494,659) Net Position - (deficits) June 30 $533,972$786,082($22,974,983)$5,726,672($15,928,257) INTERNAL SERVICE FUNDS COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION FOR THE YEAR ENDED JUNE 30, 2015 CITY OF SOUTH SAN FRANCISCO Page 146 of 202 CITY OF SOUTH SAN FRANCISCO INTERNAL SERVICE FUNDS COMBINING STATEMENT OF CASH FLOWS FOR THE YEAR ENDED JUNE 30, 2015 Health and SelfRetirementEquipment City ServiceInsuranceBenefitsReplacementTotal CASH FLOWS FROM OPERATING ACTIVITIES Cash received from interfund service provided $3,705,950$4,296,892$13,028,509$1,605,416$22,636,767 Cash payment to suppliers for goods and services (1,683,648)(1,514,522)(11,111,935)(111,621)(14,421,726) Cash payment to employees for services (1,832,036)(1,071,536)(11,783,673)(14,687,245) Cash payment for judgments and claims (1,310,118)(1,310,118) Other payments (29,555)(29,555) Net Cash Provided by Operating Activities 190,266400,716(9,867,099)1,464,240(7,811,877) CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Repayments from other funds 8,900 8,900 Transfers in 76,2751,000,000250,000 1,326,275 Transfers out (1,021,708)(1,021,708) Net Cash Provided by Noncapital Financing Activities 76,2751,000,000250,000(1,012,808)313,467 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Principal paid on capital lease (530,264)(530,264) Interest payments (101,156)(101,156) Acquisition of capital assets, net (249,475)(249,475) Proceeds from the sale of capital assets 72,21672,216 Net Cash Used in Capital and Related Financing Activities (808,679)(808,679) CASH FLOWS FROM INVESTING ACTIVITIES Interest received 5,764 87,988 63,521 31,303188,576 Net Cash Provided by Investing Activities 5,764 87,988 63,521 31,303188,576 Net Increase (Decrease) in cash and cash equivalents 272,3051,488,704(9,553,578)(325,944)(8,118,513) Cash and cash equivalents, beginning 565,71410,634,78911,530,9963,641,01426,372,513 Cash and cash equivalents, ending $838,019$12,123,493$1,977,418$3,315,070$18,254,000 Reconciliation of operating income (loss) to net cash provided by operating activities: Operating income (loss)$210,632($1,039,317)($1,925,820)$847,983($1,906,522) Adjustments to reconcile operating income (loss) to cash flows from operating activities: Depreciation 580 718,028718,608 Other non-operating revenue (expenses)38,028 38,028 Net change in assets and liabilities: Accounts and lease receivables 16,789 (72,216)(55,427) Prepaid Items 1,000,000 1,000,000 Accounts payable (41,470)130,005(995,856)(39,828)(947,149) Other payable 8,496 10,27318,769 Accrued insurance losses 1,272,000 1,272,000 OPEB obligations (8,011,000)(8,011,000) Compensated absence obligations 3,735 57,081 60,816 Net Cash Provided by (Used in) Operating Activities $190,266$400,716($9,867,099)$1,464,240($7,811,877) Page 147 of 202 AGENCY FUND An agency fund is used to account for monies where the City is acting as an agent for another government entity. The agency fund used at the City of South San Francisco consisted of: SSF Employee Deferred Comp Trust Oversight – This fund is used to pay for the administrative costs of monitoring the Deferred Compensation Funds on behalf of City employees. Page 148 of 202 Balance Balance June 30, 2014AdditionsDeductionsJune 30, 2015 ASSETS Cash and investments $52,147$49,140$52,147$49,140 Accrued interest 110 134 110 134 Total Assets $52,257$49,274$52,257$49,274 LIABILITIES Accounts payable $17,711$231$17,711 $231 Other accrued liabilities 34,54649,04334,546 49,043 Total Liabilities $52,257$49,274$52,257$49,274 CITY OF SOUTH SAN FRANCISCO AGENCY FUND STATEMENT OF CHANGES IN ASSETS AND LIABILITIES FOR THE YEAR ENDED JUNE 30, 2015 SSF Employee Deferred Comp Trust Oversight Page 149 of 202 STATISTICAL SECTION This part of the City’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 City’s overall financial health. In contrast to the financial section, the statistical section information is not subject to independent audit. Financial Trends These schedules contain trend information to help the reader understand how the City’s financial performance and well being have changed over time: 1. Net Position by Component 2. Changes in Net Position 3. Fund Balances of Governmental Funds 4. Changes in Fund Balance of Governmental Funds Revenue Capacity These schedules contain information to help the reader assess the City’s most significant local revenue source, the property tax: 1. Assessed Value and Estimated Market Value of Taxable Property 2. All Overlapping Property Tax Rates 3. Principal Property Tax Payers 4. Twenty Largest Taxable Property Owners for Merged RDA Project Area 5. Property Tax Levies and Collections Debt Capacity These schedules present information to help the reader assess the affordability of the City’s current levels of outstanding debt and the City’s ability to issue additional debt in the future: 1. Ratio of Outstanding Debt by Type 2. Computation of Direct and Overlapping Debt 3. Computation of Legal Bonded Debt Margin 4. Continuing Disclosure Requirements: a. Revenue Bond Coverage b. Sewer Debt Service Coverage c. Bonded Debt Pledge Revenue Coverage Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment within which the City’s financial activities take place: 1. Demographic and Economic Statistics 2. Principal Employers Page 150 of 202 STATISTICAL SECTION - (Continued) Operating Information These schedules contain service and infrastructure data to help the reader understand how the information in the City’s financial report relates to the services the City provides and the activities it performs: 1. Full-Time City Government Employees by Function 2. Operating Indicators by Function/Program 3. Capital Asset Statistics by Function/Program Miscellaneous Information 1. Collection and Use of 1% Special Transient Occupancy Tax Sources Unless otherwise noted, the information in these schedules is derived from the Comprehensive Annual Financial Reports for the relevant year. The City implemented GASB Statement 34 in 2003; schedules presenting government-wide information include information beginning in that year. Page 151 of 202 2006 2007 2008 2009 2010 Governmental activities Invested in capital assets, net of related debt $110,328,726$212,273,574$233,230,681$237,441,155$209,507,012 Restricted 58,015,34389,194,34480,346,63486,962,89078,625,094 Unrestricted 11,886,141 3,306,910 9,205,15021,455,06765,537,953 Total governmental activities net position$180,230,210$304,774,828$322,782,465$322,782,465$353,670,059 Business-type activities Invested in capital assets, net of related debt $32,352,591$34,640,593$45,635,119$52,347,955$58,522,676 Restricted 2,059,070 2,806,562 1,480,000 4,971,538 Unrestricted (44,279)3,951,703(2,674,600)(3,496,600)792,921 Total business-type activities net position$34,367,382$41,398,858$44,440,519$44,440,519$59,315,597 Primary government Invested in capital assets, net of related debt $142,681,317$246,914,167$278,865,800$289,789,110$268,029,688 Restricted 60,074,41392,000,90681,826,63491,935,42878,625,094 Unrestricted 11,841,862 7,258,613 6,530,55017,958,46766,330,874 Total primary government net position $214,597,592$346,173,686$367,222,984$399,683,005$412,985,656 2011 2012 2013 2014 2015 Governmental activities Invested in capital assets, net of related debt $214,246,561218,218,696$216,508,668$230,440,390$230,517,037 Restricted 163,669,353 43,321,28630,514,98642,367,62349,311,828 Unrestricted (19,267,010)(3,837,201)8,021,490(12,317,511)(134,389,522) Total governmental activities net position$358,648,904$257,702,781$257,702,781$260,490,502$145,439,343 Business-type activities Invested in capital assets, net of related debt $66,113,596$70,653,841$72,217,660$78,045,318$78,598,277 Unrestricted 9,292,18910,877,10513,353,98815,367,085 4,196,654 Total business-type activities net position$75,405,785$81,530,946$81,530,946$93,412,403$82,794,931 Primary government Invested in capital assets, net of related debt $280,360,157$288,872,537$288,726,328$308,485,708$309,115,314 Restricted 163,669,35343,321,28630,514,98642,367,62349,311,828 Unrestricted (9,974,821)7,039,90421,375,478 3,049,574(130,192,868) Total primary government net position $434,054,689$339,233,727$340,616,792$353,902,905$228,234,274 Source: City of South San Francisco, Department of Finance CITY OF SOUTH SAN FRANCISCO (accrual basis of accounting) Last Ten Fiscal Years Net Position by Component ($200) ($100) $0 $100 $200 $300 $400 $500 2006200720082009201020112012201320142015 Millions Unrestricted Restricted Invested in Capital Assets Net of Related Debt Page 152 of 202 20 0 6 20 0 7 20 0 8 20 0 9 20 1 0 20 1 1 20 1 2 20 1 3 20 1 4 20 1 5 Ex p e n s e s Go v e r n m e n t a l A c t i v i t i e s : Ge n e r a l G o v e r n m e n t $5 , 8 2 5 , 0 3 0 $ 6 , 2 7 8 , 6 6 9 $ 7 , 4 3 5 , 3 5 0 $ 7 , 1 4 0 , 6 7 6 $ 6 , 5 3 8 , 0 5 2 $ 7 , 7 1 1 , 1 5 6 $ 7 , 8 0 1 , 3 2 8 $ 8 , 3 6 0 , 9 4 5 $ 7 , 1 5 5 , 0 3 5 $ 8 , 4 2 1 , 8 5 7 Fi r e D e p a r t m e n t 14 , 8 9 1 , 0 1 7 1 4 , 9 6 0 , 2 7 0 1 7 , 1 4 7 , 6 7 0 1 9 , 0 4 7 , 8 7 7 1 7 , 8 6 8 , 0 5 0 2 0 , 0 3 2 , 1 4 1 2 0 , 7 4 9 , 3 2 3 2 2 , 7 4 6 , 2 9 1 2 1 , 2 0 0 , 9 0 3 2 2 , 0 0 5 , 8 8 3 Po l i c e D e p a r t m e n t 16 , 5 8 2 , 1 7 2 1 7 , 9 5 1 , 5 0 8 1 8 , 9 5 9 , 3 7 3 2 1 , 0 5 1 , 2 6 3 2 0 , 3 5 2 , 5 7 0 2 2 , 4 2 9 , 7 8 2 2 3 , 3 3 0 , 2 0 8 2 4 , 7 5 6 , 9 5 8 2 4 , 3 7 6 , 3 7 9 2 3 , 9 1 0 , 4 3 6 Pu b l i c W o r k s 10 , 5 9 5 , 9 9 9 1 3 , 4 7 2 , 0 8 4 1 6 , 2 8 6 , 5 9 2 2 0 , 9 2 4 , 1 3 2 1 5 , 8 7 3 , 7 8 3 1 7 , 1 2 7 , 0 8 6 2 1 , 2 6 9 , 2 8 1 1 5 , 7 7 3 , 7 1 0 1 4 , 9 8 0 , 4 1 7 1 4 , 4 9 3 , 0 3 9 Pa r k , R e c r e a t i o n a n d M a i n t e n a n c e S e r v i c e s 5, 1 6 3 , 3 3 3 4 , 9 8 9 , 6 0 1 1 1 , 2 3 3 , 1 7 0 1 1 , 5 7 4 , 8 0 8 1 0 , 4 1 1 , 8 2 1 1 0 , 8 6 6 , 5 6 8 1 1 , 6 4 1 , 8 9 2 1 2 , 5 7 0 , 2 3 6 1 2 , 6 5 8 , 3 0 9 1 2 , 3 8 3 , 8 8 0 Li b r a r y 4, 1 0 4 , 8 5 4 4 , 4 3 2 , 7 3 1 4 , 7 1 9 , 2 3 3 4, 9 5 9 , 1 3 8 4 , 6 1 6 , 6 5 8 4 , 6 6 4 , 4 9 0 4, 7 5 4 , 7 6 0 4 , 6 1 5 , 9 6 7 4 , 3 1 0 , 5 5 0 4 , 3 0 0 , 8 8 5 Ec o n o m i c a n d C o m m u n i t y D e v e l o p m e n t 18 , 4 3 1 , 9 2 9 1 6 , 1 5 8 , 9 9 8 4 , 7 1 2 , 2 3 9 1 5 , 8 8 6 , 8 3 4 2 3 , 1 4 7 , 8 7 7 1 5 , 0 1 8 , 4 9 5 8, 7 0 2 , 9 4 9 1 6 , 1 2 6 , 4 2 7 5 , 5 2 5 , 5 4 1 5 , 9 2 8 , 3 1 6 In t e r e s t o n L o n g - T e r m D e b t 2, 1 7 1 , 3 2 5 4 , 8 8 3 , 0 5 3 5 , 6 9 4 , 0 9 7 5, 2 8 9 , 8 1 8 5 , 0 3 5 , 7 8 0 4 , 2 4 9 , 4 5 4 3, 3 2 8 , 2 4 4 52 , 1 3 9 To t a l G o v e r n m e n t a l A c t i v i t i e s E x p e n s e s 77 , 7 6 5 , 6 5 9 8 3 , 1 2 6 , 9 1 4 8 6 , 1 8 7 , 7 2 3 1 0 5 , 8 7 4 , 5 4 6 1 0 3 , 8 4 4 , 5 9 1 1 0 2 , 0 9 9 , 1 7 2 1 0 1 , 5 7 7 , 9 8 5 1 0 5 , 0 0 2 , 6 7 3 9 0 , 2 0 7 , 1 3 4 9 1 , 4 4 4 , 2 9 6 Bu s i n e s s - T y p e A c t i v i t i e s : Se w e r R e n t a l 14 , 8 8 0 , 1 1 3 1 4 , 7 0 5 , 7 0 9 1 6 , 3 4 0 , 3 4 4 1 7 , 5 4 9 , 6 9 0 1 8 , 9 4 4 , 2 6 7 1 9 , 2 7 7 , 9 5 9 1 9 , 4 4 6 , 7 3 9 2 0 , 8 7 0 , 5 2 2 1 9 , 3 0 1 , 1 0 3 2 3 , 9 6 9 , 5 7 9 Pa r k i n g D i s t r i c t 30 3 , 7 1 2 35 2 , 6 2 9 36 3 , 8 7 8 34 1 , 1 0 0 3 3 8 , 9 9 5 57 1 , 2 6 1 76 9 , 1 1 7 79 2 , 6 0 9 94 3 , 8 5 9 50 3 , 0 1 4 St o r m W a t e r 67 5 , 7 7 3 68 3 , 4 5 8 70 5 , 0 9 9 74 6 , 3 1 6 7 2 2 , 2 3 2 71 0 , 9 0 3 1, 0 1 0 , 0 9 3 1 , 6 5 5 , 9 5 0 1 , 0 7 8 , 8 6 8 1 , 2 3 4 , 6 1 6 To t a l B u s i n e s s - T y p e A c t i v i t i e s E x p e n s e s 15 , 8 5 9 , 5 9 8 1 5 , 7 4 1 , 7 9 6 1 7 , 4 0 9 , 3 2 1 1 8 , 6 3 7 , 1 0 6 2 0 , 0 0 5 , 4 9 4 2 0 , 5 6 0 , 1 2 3 2 1 , 2 2 5 , 9 4 9 2 3 , 3 1 9 , 0 8 1 2 1 , 3 2 3 , 8 3 0 2 5 , 7 0 7 , 2 0 9 To t a l P r i m a r y G o v e r n m e n t E x p e n s e s $9 3 , 6 2 5 , 2 5 7 $ 9 8 , 8 6 8 , 7 1 0 $ 1 0 3 , 5 9 7 , 0 4 4 $ 1 2 4 , 5 1 1 , 6 5 2 $ 1 2 3 , 8 5 0 , 0 8 5 $ 1 2 2 , 6 5 9 , 2 9 5 $ 1 2 2 , 8 0 3 , 9 3 4 $ 1 2 8 , 3 2 1 , 7 5 4 $ 1 1 1 , 5 3 0 , 9 6 4 $ 1 1 7 , 1 5 1 , 5 0 5 Pr o g r a m R e v e n u e s Go v e r n m e n t a l A c t i v i t i e s : Ch a r g e s f o r S e r v i c e s : Ge n e r a l G o v e r n m e n t $2 , 0 9 3 , 5 7 4 $ 2 , 4 0 3 , 6 9 7 $ 2 , 5 7 8 , 3 8 4 $ 2 , 6 8 9 , 3 7 0 $ 2 , 5 3 9 , 3 1 6 $ 2 , 6 8 8 , 9 9 0 $ 2 , 0 3 2 , 2 9 2 $ 1 , 9 5 1 , 0 1 6 $ 5 , 7 8 5 , 5 9 8 $ 3 , 9 4 6 , 3 0 2 Fi r e D e p a r t m e n t 2, 3 3 9 , 1 3 9 2 , 6 9 9 , 4 2 6 2 , 4 2 5 , 6 7 3 2, 4 1 5 , 6 1 7 2 , 8 5 1 , 9 8 4 3 , 2 2 1 , 8 3 7 3, 6 9 7 , 6 6 5 2 , 9 8 7 , 9 5 6 3 , 3 0 4 , 9 5 2 3 , 5 2 0 , 2 7 5 Po l i c e D e p a r t m e n t 1, 5 3 9 , 6 8 5 1 , 7 6 5 , 5 0 7 1 , 6 8 5 , 5 1 4 1, 6 5 0 , 6 2 0 1 , 4 7 9 , 1 0 4 1 , 8 1 5 , 4 0 5 2, 5 9 9 , 1 4 9 2 , 6 4 0 , 1 4 6 2 , 8 0 5 , 6 4 0 2 , 3 7 0 , 7 3 6 Pu b l i c W o r k s 46 0 , 1 8 4 16 4 , 8 4 6 2 , 9 7 3 , 2 9 7 2, 4 6 2 , 5 3 8 4 , 4 1 2 , 5 8 1 3 , 8 0 5 , 8 2 4 3, 6 0 7 , 2 2 4 2 , 9 2 6 , 2 2 7 4 , 7 3 4 , 8 1 3 5 , 0 7 1 , 7 2 9 Pa r k , R e c r e a t i o n a n d M a i n t e n a n c e S e r v i c e s 2, 7 3 8 , 3 7 8 2 , 7 5 7 , 5 1 3 3 , 7 5 5 , 3 6 8 4, 8 7 2 , 7 1 8 3 , 0 3 2 , 3 9 9 3 , 0 0 4 , 4 3 5 3, 1 7 8 , 2 7 6 3 , 4 3 3 , 5 6 7 3 , 5 7 1 , 9 4 7 3 , 7 0 8 , 2 7 2 Li b r a r y 24 0 , 2 3 8 19 2 , 4 4 5 23 3 , 7 5 3 24 0 , 5 4 2 1 8 7 , 3 8 0 16 8 , 5 0 5 14 3 , 9 7 1 12 5 , 4 1 6 13 8 , 8 2 7 12 0 , 8 5 0 Ec o n o m i c a n d C o m m u n i t y D e v e l o p m e n t 6, 0 3 9 , 7 5 2 1 0 , 0 4 1 , 0 0 2 4 , 4 8 3 , 2 9 2 4, 8 6 8 , 4 4 5 4 , 6 5 2 , 0 3 1 4 , 9 4 4 , 3 2 8 4, 9 6 8 , 3 8 3 3 , 4 5 7 , 0 2 0 5 , 8 0 0 , 8 4 9 5 , 3 3 7 , 1 7 7 Op e r a t i n g G r a n t s a n d C o n t r i b u t i o n s 4, 7 8 9 , 2 6 9 5 , 7 1 9 , 4 4 0 6 , 8 4 0 , 6 2 8 1 3 , 3 8 8 , 0 1 6 5 , 7 8 6 , 2 2 7 5 , 5 4 9 , 7 1 1 5, 6 5 0 , 6 8 5 5 , 4 5 5 , 0 1 0 5 , 6 0 1 , 9 1 6 5 , 7 5 3 , 8 4 5 Ca p i t a l G r a n t s a n d C o n t r i b u t i o n s 5, 4 6 8 , 4 0 6 8 , 4 3 3 , 7 8 5 3 , 1 1 3 , 6 7 4 18 2 , 4 6 2 2 1 7 , 8 7 7 2 , 7 2 8 , 5 4 3 1, 4 7 1 , 4 1 6 4 , 0 3 6 , 7 8 6 1 , 5 3 8 , 2 2 5 63 2 , 7 3 5 To t a l G o v e r n m e n t A c t i v i t i e s P r o g r a m R e v e n u e s 25 , 7 0 8 , 6 2 5 3 4 , 1 7 7 , 6 6 1 2 8 , 0 8 9 , 5 8 3 3 2 , 7 7 0 , 3 2 8 2 5 , 1 5 8 , 8 9 9 2 7 , 9 2 7 , 5 7 8 2 7 , 3 4 9 , 0 6 1 2 7 , 0 1 3 , 1 4 4 3 3 , 2 8 2 , 7 6 7 3 0 , 4 6 1 , 9 2 1 Bu s i n e s s - T y p e A c t i v i t i e s : Ch a r g e s f o r S e r v i c e s : Se w e r R e n t a l 12 , 1 1 6 , 3 8 8 1 2 , 5 6 8 , 5 3 3 1 4 , 1 1 2 , 0 5 1 1 5 , 7 7 0 , 4 7 0 1 7 , 4 8 6 , 4 1 8 1 8 , 0 8 7 , 6 9 5 1 9 , 3 1 0 , 2 8 6 1 9 , 3 3 8 , 1 0 7 1 9 , 1 5 5 , 4 6 7 1 9 , 7 9 8 , 0 3 3 Pa r k i n g D i s t r i c t 44 7 , 4 3 1 44 9 , 9 4 5 55 3 , 3 1 7 60 6 , 8 4 7 6 1 6 , 5 7 8 72 2 , 8 0 7 76 0 , 2 4 8 73 2 , 9 3 2 78 5 , 5 8 6 81 9 , 0 5 1 St o r m W a t e r 41 0 , 1 7 5 41 3 , 0 8 7 42 1 , 7 2 7 41 9 , 4 4 6 4 2 2 , 4 6 7 40 6 , 5 8 9 40 9 , 4 9 8 42 7 , 2 9 1 40 9 , 4 5 8 40 7 , 6 4 0 Op e r a t i n g G r a n t s a n d C o n t r i b u t i o n s 7, 1 8 5 , 6 1 2 5 , 7 0 9 , 2 5 8 4 , 9 5 1 , 0 1 3 1 0 , 3 9 2 , 2 1 9 5 , 6 7 9 , 9 0 2 5 , 5 0 9 , 8 7 4 5, 9 3 6 , 5 2 7 6 , 1 3 7 , 4 0 1 7 , 6 1 9 , 6 0 1 6 , 2 4 2 , 6 8 7 Ca p i t a l G r a n t s a n d C o n t r i b u t i o n s 1, 4 5 2 , 1 1 5 3 , 0 9 6 , 7 2 8 17 3 , 7 6 7 16 2 , 5 9 9 24 , 7 2 0 31 , 6 7 0 To t a l B u s i n e s s - T y p e A c t i v i t i e s P r o g r a m R e v e n u e 21 , 6 1 1 , 7 2 1 2 2 , 2 3 7 , 5 5 1 2 0 , 2 1 1 , 8 7 5 2 7 , 3 5 1 , 5 8 1 2 4 , 2 3 0 , 0 8 5 2 4 , 7 5 8 , 6 3 5 2 6 , 4 1 6 , 5 5 9 2 6 , 6 3 5 , 7 3 1 2 7 , 9 7 0 , 1 1 2 2 7 , 2 6 7 , 4 1 1 To t a l P r i m a r y G o v e r n m e n t P r o g r a m R e v e n u e s $4 7 , 3 2 0 , 3 4 6 $ 5 6 , 4 1 5 , 2 1 2 $ 4 8 , 3 0 1 , 4 5 8 $ 6 0 , 1 2 1 , 9 0 9 $ 4 9 , 3 8 8 , 9 8 4 $ 5 2 , 6 8 6 , 2 1 3 $ 5 3 , 7 6 5 , 6 2 0 $ 5 3 , 6 4 8 , 8 7 5 $ 6 1 , 2 5 2 , 8 7 9 $ 5 7 , 7 2 9 , 3 3 2 Ne t ( E x p e n s e ) / R e v e n u e Go v e r n m e n t a l A c t i v i t i e s ($ 5 2 , 0 5 7 , 0 3 4 ) ( $ 4 8 , 9 4 9 , 2 5 3 ) ( $ 5 8 , 0 9 8 , 1 4 0 ) ( $ 7 3 , 1 0 4 , 2 1 8 ) ( $ 7 8 , 6 8 5 , 6 9 2 ) ( $ 7 4 , 1 7 1 , 5 9 4 ) ( $ 7 4 , 2 2 8 , 9 2 4 ) ( $ 7 7 , 9 8 9 , 5 2 9 ) ( $ 5 6 , 9 2 4 , 3 6 7 ) ( $ 6 0 , 9 8 2 , 3 7 5 ) Bu s i n e s s - T y p e A c t i v i t i e s 5, 7 5 2 , 1 2 3 6 , 4 9 5 , 7 5 5 2 , 8 0 2 , 5 5 4 8 , 7 1 4 , 4 7 5 4 , 2 2 4 , 5 9 1 4 , 1 9 8 , 5 1 2 5 , 1 9 0 , 6 1 0 3 , 3 1 6 , 6 5 0 6 , 6 4 6 , 2 8 2 1 , 5 6 0 , 2 0 2 To t a l P r i m a r y G o v e r n m e n t N e t E x p e n s e ($ 4 6 , 3 0 4 , 9 1 1 ) ( $ 4 2 , 4 5 3 , 4 9 8 ) ( $ 5 5 , 2 9 5 , 5 8 6 ) ( $ 6 4 , 3 8 9 , 7 4 3 ) ( $ 7 4 , 4 6 1 , 1 0 1 ) ( $ 6 9 , 9 7 3 , 0 8 2 ) ( $ 6 9 , 0 3 8 , 3 1 4 ) ( $ 7 4 , 6 7 2 , 8 7 9 ) ( $ 5 0 , 2 7 8 , 0 8 5 ) ( $ 5 9 , 4 2 2 , 1 7 3 ) CI T Y O F S O U T H S A N F R A N C I S C O Ch a n g e s i n N e t P o s i t i o n La s t T e n F i s c a l Y e a r s (A c c r u a l B a s i s o f A c c o u n t i n g ) Page 153 of 202 20 0 6 20 0 7 20 0 8 20 0 9 20 1 0 20 1 1 20 1 2 20 1 3 20 1 4 20 1 5 Ge n e r a l R e v e n u e s a n d O t h e r C h a n g e s i n N e t P o s i t i o n Go v e r n m e n t a l A c t i v i t i e s : Ta x e s : Pr o p e r t y T a x e s $3 3 , 5 0 4 , 6 2 4 $ 4 1 , 4 6 9 , 3 4 9 $ 4 4 , 1 6 5 , 4 9 0 $ 5 9 , 3 6 9 , 5 5 0 $ 5 5 , 0 1 4 , 3 6 7 $ 5 4 , 3 2 3 , 4 2 0 $ 3 7 , 3 7 9 , 1 7 5 $ 2 6 , 4 2 0 , 8 6 1 $ 2 2 , 8 9 0 , 8 2 8 $ 2 4 , 6 5 0 , 6 4 8 Sa l e s T a x e s 11 , 9 4 4 , 4 9 6 1 2 , 4 4 6 , 9 2 1 1 2 , 1 8 0 , 8 8 5 1 1 , 7 5 2 , 7 7 6 9 , 1 4 6 , 6 2 0 1 1 , 1 9 9 , 1 7 5 1 1 , 6 9 1 , 5 6 4 1 2 , 9 3 1 , 8 0 5 1 2 , 7 2 5 , 1 4 1 1 3 , 9 3 2 , 1 2 5 Tr a n s i e n t O c c u p a n c y T a x 5, 4 6 9 , 7 0 8 5 , 9 5 9 , 0 3 4 7 , 0 9 8 , 2 8 4 6 , 1 7 8 , 3 9 1 5 , 8 2 0 , 6 7 5 7 , 1 9 1 , 9 3 8 8 , 6 1 9 , 1 7 0 9 , 6 5 9 , 2 8 1 1 1 , 1 7 4 , 0 1 7 1 2 , 9 4 7 , 4 7 3 Ot h e r T a x e s 5, 0 7 6 , 1 8 2 5 , 3 6 9 , 8 6 8 6 , 0 8 3 , 1 6 2 6 , 8 7 0 , 7 9 1 6 , 7 6 8 , 7 5 3 7 , 0 7 1 , 4 4 6 7 , 0 8 9 , 6 8 7 7 , 5 8 8 , 4 7 1 8 , 1 4 1 , 0 1 0 8 , 6 5 0 , 0 5 6 Mo t o r V e h i c l e I n - L i e u 4, 4 6 3 , 0 6 9 41 1 , 0 9 8 26 7 , 0 6 1 18 3 , 1 9 3 19 2 , 0 3 5 21 1 , 5 0 3 16 8 , 2 1 4 33 , 7 6 7 40 , 0 7 4 26 , 9 9 5 Pr o p e r t y t a x e s i n l i e u o f v e h i c l e l i c e n s e f e e s 4, 2 0 6 , 7 9 9 4 , 6 0 8 , 6 4 9 5 , 5 6 3 , 1 6 5 5 , 2 2 4 , 5 4 7 5 , 0 8 6 , 1 4 4 5 , 1 5 3 , 3 8 4 4 , 9 5 5 , 8 7 3 5 , 3 1 9 , 1 5 4 5 , 5 5 1 , 6 5 1 In t e r e s t E a r n i n g s 3, 6 2 7 , 8 3 4 6 , 9 2 4 , 2 9 2 8 , 9 9 4 , 2 0 3 4 , 7 6 0 , 3 4 5 5 , 1 2 7 , 2 5 5 3 , 9 4 4 , 7 8 5 2 , 3 8 4 , 2 0 7 80 9 , 7 2 1 1 , 1 0 8 , 1 7 7 62 9 , 0 3 6 Ot h e r 3, 1 7 0 , 3 0 5 4 , 5 5 1 , 0 5 0 1 , 4 1 7 , 7 7 3 1 , 9 2 5 , 6 6 6 1 , 4 9 6 , 7 4 4 1 , 8 9 1 , 4 2 1 9 , 3 0 0 , 1 3 7 1 , 9 6 5 , 7 4 4 2 , 0 1 2 , 4 4 4 4 , 5 7 7 , 2 3 9 Ex t r a o r d i n a r y I t e m (1 0 7 , 7 1 7 , 4 2 8 ) Tr a n s f e r s (4 7 4 , 0 2 7 ) ( 1 7 6 , 6 8 0 ) ( 1 6 9 , 3 3 0 ) ( 4 2 3 , 0 1 2 ) ( 1 , 4 5 9 , 2 9 6 ) ( 1 1 , 7 6 9 , 3 9 3 ) (7 8 5 , 3 0 9 ) ( 9 0 6 , 8 5 7 ) ( 1 , 0 4 1 , 1 2 0 ) ( 1 , 4 2 9 , 3 0 8 ) Sp e c i a l i t e m (8 , 5 4 0 , 4 0 0 ) 11 , 8 7 3 , 2 2 6 Cu m u l a t i v e e f f e c t f r o m c h a n g e i n a c c o u n t i n g m e t h o d ( 7 , 1 8 8 , 2 0 6 ) To t a l G o v e r n m e n t A c t i v i t i e s 59 , 5 9 3 , 9 8 5 8 1 , 1 6 1 , 7 3 1 7 6 , 1 0 5 , 7 7 7 9 6 , 1 8 0 , 8 6 5 8 7 , 3 3 1 , 7 0 0 7 9 , 1 5 0 , 4 3 9 - 2 6 , 7 1 7 , 1 9 9 7 5 , 3 3 1 , 8 9 2 6 2 , 3 6 9 , 7 2 5 6 9 , 5 3 5 , 9 1 5 Bu s i n e s s - T y p e A c t i v i t i e s : In t e r e s t E a r n i n g s 80 , 1 1 9 35 9 , 0 4 1 69 , 7 7 7 24 4 , 8 8 7 17 5 , 1 8 8 12 2 , 2 8 3 14 9 , 2 4 2 95 , 1 7 7 15 3 , 3 5 3 12 6 , 8 7 4 Tr a n s f e r s 17 6 , 6 8 0 17 6 , 6 8 0 16 9 , 3 3 0 42 3 , 0 1 2 1 , 4 5 9 , 2 9 6 1 1 , 7 6 9 , 3 9 3 78 5 , 3 0 9 90 6 , 8 5 7 1 , 0 4 1 , 1 2 0 1 , 4 2 9 , 3 0 8 To t a l B u s i n e s s - T y p e A c t i v i t i e s 25 6 , 7 9 9 53 5 , 7 2 1 23 9 , 1 0 7 66 7 , 8 9 9 1 , 6 3 4 , 4 8 4 1 1 , 8 9 1 , 6 7 6 93 4 , 5 5 1 1 , 0 0 2 , 0 3 4 1 , 1 9 4 , 4 7 3 1 , 5 5 6 , 1 8 2 To t a l P r i m a r y G o v e r n m e n t $5 9 , 8 5 0 , 7 8 4 $ 8 1 , 6 9 7 , 4 5 2 $ 7 6 , 3 4 4 , 8 8 4 $ 9 6 , 8 4 8 , 7 6 4 $ 8 8 , 9 6 6 , 1 8 4 $ 9 1 , 0 4 2 , 1 1 5 ( $ 2 5 , 7 8 2 , 6 4 8 ) $ 7 6 , 3 3 3 , 9 2 6 $ 6 3 , 5 6 4 , 1 9 8 $ 7 1 , 0 9 2 , 0 9 7 Ch a n g e i n N e t P o s i t i o n Go v e r n m e n t a l A c t i v i t i e s $7 , 5 3 6 , 9 5 1 $ 3 2 , 2 1 2 , 4 7 8 $ 1 8 , 0 0 7 , 6 3 7 $ 2 3 , 0 7 6 , 6 4 7 $ 8 , 6 4 6 , 0 0 8 $ 4 , 9 7 8 , 8 4 5 ( $ 1 0 0 , 9 4 6 , 1 2 3 ) ( $ 2 , 6 5 7 , 6 3 7 ) $ 5 , 4 4 5 , 3 5 8 $ 8 , 5 5 3 , 5 4 0 Bu s i n e s s - T y p e A c t i v i t i e s 6, 0 0 8 , 9 2 2 7 , 0 3 1 , 4 7 6 3 , 0 4 1 , 6 6 1 9 , 3 8 2 , 3 7 4 5 , 8 5 9 , 0 7 5 1 6 , 0 9 0 , 1 8 8 6 , 1 2 5 , 1 6 1 4 , 3 1 8 , 6 8 4 7 , 8 4 0 , 7 5 5 3 , 1 1 6 , 3 8 4 To t a l P r i m a r y G o v e r n m e n t $1 3 , 5 4 5 , 8 7 3 $ 3 9 , 2 4 3 , 9 5 4 $ 2 1 , 0 4 9 , 2 9 8 $ 3 2 , 4 5 9 , 0 2 1 $ 1 4 , 5 0 5 , 0 8 3 $ 2 1 , 0 6 9 , 0 3 3 ( $ 9 4 , 8 2 0 , 9 6 2 ) $ 1 , 6 6 1 , 0 4 7 $ 1 3 , 2 8 6 , 1 1 3 $ 1 1 , 6 6 9 , 9 2 4 (A c c r u a l B a s i s o f A c c o u n t i n g ) CI T Y O F S O U T H S A N F R A N C I S C O Ch a n g e s i n N e t P o s i t i o n (c o n t i n u e d ) La s t T e n F i s c a l Y e a r s Page 154 of 202 This Page Left Intentionally Blank Page 155 of 202 CITY OF SOUTH SAN FRANCISCO Fund Balances of Governmental Funds Last Ten Fiscal Years (Modified Accrual Basis of Accounting) (b) 2006200720082009201020112012201320142015 General Fund Reserved $453,567$732,903$283,435$554,692$889,186 Unreserved 16,586,72420,359,47114,503,26317,509,82314,841,958 Nonspendable 67,129$90,167$805,677$14,163 $1,134 Committed 401,797208,0541,406,4303,879,4512,536,790 Assigned 771,849840,365566,104743,7461,458,029 Unassigned 15,049,16817,347,44523,498,19415,891,89917,285,422 Total General Fund $17,040,291$21,092,374$14,786,698$18,064,515$15,731,144$16,289,943$18,486,031$26,276,405$20,529,259$21,281,375 (a) All Other Governmental Funds Reserved $79,859,526$84,748,754$70,194,663$65,117,971$64,163,373 Unreserved, reported in: Special revenue funds 13,559,25017,973,39021,286,43123,826,18411,079,390 Debt service funds 126,691124,003119,525121,7643,198,600 Capital project funds 21,945,88929,928,5733,578,59551,589,53869,286,211 Restricted $163,727,096$43,364,540$30,539,396$42,392,238$43,437,361 Assigned 2,390,9042,076,0651,105,320 06,188,554 Unassigned (14,353,252)(1,388,956)(1,379,895)(521,604)(40,459) Total all other governmental funds $115,491,356$132,774,720$95,179,214$140,655,457$147,727,574$151,764,748$44,051,649$30,264,821$41,870,634$49,585,456 #REF!132,531,647153,867,094109,965,912158,719,972163,458,718168,054,691168,054,69162,537,68070,866,831 (a)The change in total fund balance for the General Fund and other governmental funds is explained in Management's Discussion and Analysis. (b)In fiscal year 2011, the City implemented GASB 54, Fund Balance Reporting and Governmental Fund Type Definitions, which requires the City to classify its fund balances based on spending constraints imposed on the use of resources. $0 $20,000 $40,000 $60,000 $80,000 $100,000 $120,000 $140,000 $160,000 $180,000 2006200720082009201020112012201320142015 Thousands Total Committed Total Unassigned Total Assigned Total Restricted Total Nonspendable Total Unreserved Total Reserved Page 156 of 202 2006 2007 2008 2009 Revenues Property Taxes $33,504,626$41,469,349$44,165,490$59,369,550 Other Taxes 22,157,87823,505,13824,313,54322,755,561 Intergovernmental revenues 11,495,084 9,103,85913,219,05315,088,171 Interest and Rents 6,807,538 1,043,52812,318,594 7,625,428 Licenses and permits 5,342,009 5,557,296 5,716,017 5,957,815 Charges for services 10,533,289 6,729,77210,792,04313,644,314 Fines and forfeitures 889,08510,691,238 1,073,603 1,013,434 Other 2,065,05417,083,402 1,091,514 3,722,979 Total Revenues 92,794,563115,183,582112,689,857129,177,252 Expenditures Current: General government 4,211,157 4,451,564 5,897,066 5,752,948 Fire Department 14,713,65814,972,46716,875,31117,724,990 Police Department 16,425,23818,040,50818,757,39419,989,136 Public works 16,722,02815,038,20614,910,40112,360,989 Recreation and Community Services 4,631,328 4,927,68710,826,04110,700,332 Library 4,064,649 4,399,017 4,766,821 4,679,270 Economic and Community Development18,344,11615,675,69413,848,04919,554,780 Other 1,169,699 633,060 1,023,435 474,805 Capital outlay 2,429,448 844,74436,544,741 4,247,021 Debt service: Principal repayment 23,094,686 8,610,556 1,692,296 1,755,426 Interest and fiscal charges 2,393,177 5,500,469 5,441,036 4,571,150 Total Expenditures 108,199,18493,093,972130,582,591101,810,847 Excess (deficiency) of revenues over (under) expenditures (15,404,621)22,089,610(17,892,734)27,366,405 Other Financing Sources (Uses) Transfers in 20,973,24614,505,34620,182,01418,754,214 Transfers (out)(20,890,788)(14,351,319)(24,253,621)(19,330,934) Tax allocation bonds issued 70,675,000 Premium on bonds 2,005,535 Payments to refunded bond escrow (13,118,105) Other debt proceeds Sale of capital assets 13,750 13,750 13,750 13,784 Total other financing sources (uses)59,658,638 167,777 (4,057,857)(562,936) Net Change in fund balances before extraordinary item 44,254,01722,257,387(21,950,591)26,803,469 Extraordinary item Net change in fund balances $44,254,017$22,257,387($21,950,591)$26,803,469 Debt service as a percentage of noncapital expenditures 21.6%13.9%3.9%6.8% CITY OF SOUTH SAN FRANCISCO Changes in Fund Balance of Governmental Funds Last Ten Fiscal Years (Modified Accrual Basis of Accounting) Page 157 of 202 2010 2011 2012 2013 2014 2015 $54,718,916$54,128,998$38,174,655$27,077,697$23,010,136$24,650,648 19,771,31023,412,99228,866,54631,894,81133,931,44638,275,478 10,609,60511,860,65811,580,53013,054,59410,757,44010,453,071 7,680,293 7,612,223 4,955,223 3,238,089 3,632,693 3,531,966 7,270,081 7,004,603 3,056,507 3,054,451 4,366,271 4,795,158 9,986,35210,010,54110,088,070 9,275,72416,864,40913,387,712 1,054,549 2,133,677 2,184,234 1,753,682 1,528,319 1,221,413 2,542,492 2,261,247 3,000,563 1,837,675 2,249,728 4,660,668 113,633,598118,424,939101,906,32891,186,72396,340,442100,976,114 5,916,364 6,407,094 6,485,219 6,658,532 5,970,429 7,167,969 16,790,83418,140,95418,812,86120,877,91720,163,75921,247,989 19,359,77020,272,68421,217,81822,542,13523,309,56823,611,743 8,416,242 9,856,20114,253,609 9,186,49316,791,89415,923,071 9,960,09010,168,42510,101,40810,927,43311,552,50211,826,407 4,342,662 4,231,762 4,272,701 4,112,570 3,987,928 4,247,650 26,279,40619,894,692 8,184,33420,512,545 5,972,966 5,917,508 480,290 6,724,022 6,969,052 8,894,514 1,887,434 1,842,000 1,752,000 453,381 352,674 4,255,050 4,274,170 1,817,764 52,139 103,931,874102,057,03495,792,22894,869,76488,202,42790,775,301 9,701,72416,367,905 6,114,100 (3,683,041)8,138,01510,200,813 18,047,35188,175,882108,413,018 4,467,53021,870,23417,983,227 (22,175,268)(99,947,814)(109,646,766)(6,780,943)(24,149,582)(19,717,102) (4,127,917)11,771,932 (1,233,748)(2,313,413)(2,279,348)(1,733,875) 5,573,807 4,595,973 4,880,352 (5,966,454)5,858,667 8,466,938 (110,397,363) $5,573,807$4,595,973($105,517,011)($5,966,454)$5,858,667$8,466,938 6.6%6.7%4.2%0.1%0.6%0.4% For The Fiscal Year Ended June 30, Page 158 of 202 Real Property Total Real Total FiscalResidentialCommercialIndustrial SecuredUnsecured Total EstimatedDirect YearPropertyPropertyPropertyOther PropertyPropertyAssessed (a)Full Market (a)Tax Rate (b) 2006$4,695,615,723$1,015,770,532$3,104,488,020$363,794,750$9,179,669,025$1,232,399,424$10,412,068,449$10,412,068,4490.30509% 20075,088,269,7111,166,696,6223,456,741,386280,811,7059,992,519,4241,294,249,19511,286,768,61911,286,768,6190.30977% 20085,484,465,766 1,227,775,836 3,934,414,550 324,421,836 10,971,077,988 1,365,179,480 12,336,257,46812,336,257,4680.31878% 20095,790,070,116 1,368,274,141 4,871,255,093 523,110,471 12,552,709,821 2,373,808,053 14,926,517,87414,926,517,8740.34939% 20105,467,563,992 1,429,401,205 5,197,739,403 498,656,817 12,593,361,417 1,424,610,941 14,017,972,35814,017,972,3580.36462% 20115,547,292,029 1,509,554,164 4,922,422,763 387,673,530 12,366,942,486 1,279,681,193 13,646,623,67913,646,623,6790.36933% 20125,579,044,758 1,581,852,456 4,967,158,758 403,895,119 12,531,951,091 1,295,085,027 13,827,036,11813,827,036,1180.37860% 20135,606,400,603 1,628,754,902 5,050,279,321 418,927,733 12,704,362,559 1,288,434,392 13,992,796,95113,992,796,9510.42174% 20145,900,441,192 1,713,575,060 4,273,694,531 1,204,288,116 13,091,998,899 1,212,353,871 14,304,352,77014,304,352,7700.13474% 20156,313,393,048 2,402,335,027 4,588,967,014 345,957,716 13,650,652,805 1,244,971,467 14,895,624,27214,895,624,2720.13804% Source: HdL Coren & Cone, San Mateo County Assessor 2013/15 Combined Tax Rolls. (a) (b) CITY OF SOUTH SAN FRANCISCO The State Constitution requires property to be assessed at one hundred percent of the most recent purchase price, plus an increment of no more than two percent annually, plus any local over-rides. These values are considered to be full market values. California cities do not set their own direct tax rate. The state constitution establishes the rate at 1% and allocates a portion of that amount, by an annual calculation, to all the taxing entities within a tax rate area. ASSESSED AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY LAST TEN FISCAL YEARS $0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000 2006200720082009201020112012201320142015 Mi l l i o n s Series1 Series2 Page 159 of 202 Fiscal BasicSchool Total Direct/Overlapping Year LevyDistrictsTax Rates 2006 1.000 0.1176 1.1176 (1,12) 2007 1.000 0.1287 1.1287 (1,13) 2008 1.000 0.1370 1.1370 (1,14) 2009 1.000 0.1426 1.1426 (1,15) 2010 1.000 0.1600 1.1600 (1,16) 2011 1.000 0.1707 1.1707 (1,17) 2012 1.000 0.1824 1.1824 (1,18) 2013 1.000 0.1959 1.1959 (1,19) 2014 1.000 0.2046 1.2046 (1,20) 2015 1.000 0.1822 1.1822 (1,21) Notes: (1) Like other cities, South San Francisco includes several property tax rate areas with different rates. A mean average is indicated. (11) (12) Of the 63 tax rate areas in the City, 58 have a tax rate of 1.0247 percent, which includes South San Francisco Unified School District bonds and San Mateo Jr. College bond, 3 have a rate of 1.0485, which includes Jefferson Union High School bonds, one has a rate of 1.0574, which includes San Bruno Park Elementary and San Mateo High bonds, and one at a tax rate of 1.0450 percent, for Brisbane ESD bonds and Jefferson Union High School bonds. (13) Of the 68 tax rate areas in the City, 63 have a tax rate of 1.0379 percent, which includes South San Francisco Unified School District bonds and San Mateo Jr. College bond, 3 have a rate of 1.0612, which includes Jefferson Union School bonds, one has a rate of 1.0664, which includes San Bruno Park Elementary and San Mateo High bonds, and one at a tax rate of 1.0575, for Brisbane ESD bonds and Jefferson Union High School bonds. (14) Of the 68 tax rate areas in the City, 63 have a tax rate of 1.0360 percent which includes South San Francisco Unified School District bonds and San Mateo Jr. College bond, 3 have the rate of 1.0756, which includes Jefferson Union School bonds, one has a rate of 1.0716, which includes San Bruno Park Elementary and San Mateo High bonds, and one at a tax rate of of 1.0596 percent, for Brisbane ESD bonds and Jefferson union High School bonds. (15) Of the 68 tax rate areas in the City, 63 have a tax rate of 1.0327 percent, which includes South San Francisco Unified School District bonds and San Mateo Jr. College bond. 2 have the rate of 1.0719 and one has a rate of 1.0689, which includes Jefferson Union School bonds and Brisbane ESD bonds, and one has a rate of 1.0710 which includes San BrunoPark Elementary. (16) Of the 68 tax rate areas in the City, 63 have a tax rate of 1.0377 percent, which includes South San Francisco Unified School District bonds and San Mateo Jr. College bond. 3 have the rate of 1.0783 and one has a rate of 1.0748, which includes Jefferson Union School bonds, and Brisbane ESD bonds, and one has a rate of 1.0804 which includes San BrunoPark Elementary. (17) Of the 68 tax rate areas in the City, 63 have a tax rate of 1.0389 percent, which includes SSFUSD bonds and San Mateo Jr College bond. 3 has a rate of 1.0870 percent and one at 1.0832 percent which includes Jefferson Union School bonds and Brisbane ESD bonds. One has a rate of 1.0834 percent which includes San Bruno Park Elementary. (18) Of the 68 tax rate areas in the City, 63 have a tax rate of 1.0420 percent, which includes SSFUSD bonds and San Mateo Jr College bond. 3 has a rate of 1.0893 percent and one at 1.0854 percent which includes Jefferson Union School bond, Brisbane ESD bonds & San Mateo JR College bonds and one has a rate of 1.0909 percent which includes San Bruno Park Elementary. (19) Of the 68 tax rate areas in the City, 63 have a tax rate of 1.0521 percent, which includes SSFUSD bonds, San Mateo Jr College bond, and San Mateo Comm College. 4 has a rate of 1.0921 percent which includes Brisbane ESD Bond, Jefferson High bonds, SM Jr College bond and San Mateo Comm College. 1 has a rate of 1.0905 percent, which includes San Bruno Pk Elem bond, SM Union High, SM Jr College bond and San Mateo Comm Coll bond. (20) Of the 68 tax rate areas in the City, 63 have a tax rate of 1.0522 percent, which includes SSFUSD bonds, San Mateo Jr College bond, and San Mateo Comm College. 4 has a rate of 1.1048 percent which includes Brisbane ESD Bond, Jefferson High bonds, SM Jr College bond and San Mateo Comm College. 1 has a rate of 1.0864 percent, which includes San Bruno Pk Elem bond, SM Union High, SM High, SM Jr College bond and San Mateo Comm Coll bond. (21) Of the 68 tax rate areas in the City, 63 have a tax rate of 1.0703 percent, which includes SSFUSD bonds, San Mateo Jr College bond, and San Mateo Comm College. 4 has a rate of 1.0991 percent which includes Brisbane ESD Bond, Jefferson High bonds, SM Jr College bond and San Mateo Comm College. 1 has a rate of 1.0983 percent, which includes San Bruno Pk Elem bond, SM Union High, SM High, SM Jr College bond and San Mateo Comm Coll bond. Source: HDL, Coren & Cone (San Mateo County Assessor 2005/06- 2014/15 Tax Rate Table). CITY OF SOUTH SAN FRANCISCO DIRECT AND OVERLAPPING PROPERTY TAX RATES LAST TEN FISCAL YEARS Of the 63 tax rate areas in the City, 57 have a tax rate of 1.0271 percent, which includes South San Francisco Unified School District bonds and San Mateo Jr. College bond, 3 have a rate of 1.0524, which includes Jefferson Union High School bonds, one has a rate of 1.0597, which includes San Bruno Park Elementary and San Mateo High bonds, one at a tax rate of 1.0229 percent, for Series 99 SSFUSD bonds, and one at a tax rate of 1.0459 percent, for Brisbane ESD bonds and Jefferson Union High School bonds. Page 160 of 202 Percentage Percentage of Total City of Total City Taxable TaxableTaxable Taxable Assessed AssessedAssessed Assessed Taxpayer ValueRankValueValue RankValue Genentech Inc.$1,763,579,111111.84%$1,315,580,2651 12.83% Slough SSF LLC 1,062,682,2722 7.13%------ ARE San Francisco LLC 407,673,4263 2.74% Slough BTC LLC ------250,826,0273 2.45% Britannia Pointe Grand LP 287,378,2654 1.93%147,316,9764 1.44% United Airlines Inc 215,075,6605 1.44%279,956,4102 2.73% Myers Peninsula Venture LLC 153,235,4446 1.03%------ BMR 750 800 850 gateway LP N A 152,901,5507 1.03% ------ Gateway Center LLC 138,821,2328 0.93%------ BMR 180 Oyster Point LLC 130,222,3759 0.87%------ SFF Logistics Inc 118,000,000100.79%------ Gateway Center LLC DE ------72,500,0005 0.71% SFO Fuel Company LLC ------70,106,3936 0.68% BNP Leasing Corporation ------66,465,9777 0.65% Costco Wholesale Corporation ------59,954,3618 0.58% Britannia Biotech Gateway LLP ------59,038,5229 0.58% Carramerica Realty Operating Partner -------52,020,00010 0.51% Subtotal $4,429,569,335 29.74%$2,373,764,931 23.15% Total Net Assessed Valuation: Fiscal Year 2014-15 $14,895,624,272 Fiscal Year 2005-06 $10,254,014,950 San Mateo County Assessor 2005-06 & 2014-15 Combined Tax Rolls and the SBE Non Unitary Tax Roll. Source: HdL Coren & Cone, 2005-06 & 2014-15 Top Ten Property Taxpayers (Net Values) 2014-15 2005-06 CITY OF SOUTH SAN FRANCISCO Principal Property Tax Payers Current Year and Nine Years Ago Page 161 of 202 CI T Y O F S O U T H S A N F R A N C I S C O Tw e n t y L a r g e s t T a x a b l e P r o p e r t y O w n e r s f o r M e r g e d R D A P r o j e c t A r e a JU N E 3 0 , 2 0 1 5 To t a l % o f T o t a l As s e s s e d A V i n P r o j e c t Pr o p e r t y T a x P a y e r Se c u r e d U n s e c u r e d Va l u e Ar e a La n d U s e Sl o u g h $9 3 2 , 4 5 2 , 0 9 2 $9 3 2 , 4 5 2 , 0 9 2 2 1 . 9 1 % I n d u s t r i a l Br i t a n n i a P o i n t e G r a n d L P 42 3 , 1 3 8 , 2 5 8 $4 2 3 , 1 3 8 , 2 5 8 9 . 9 4 % I n d u s t r i a l Ge n e n t e c h 24 4 , 3 2 2 , 1 3 3 1 6 9 , 2 1 2 , 2 4 4 $ 4 1 3 , 5 3 4 , 3 7 7 9 . 7 2 % I n d u s t r i a l , O f f i c e , R & D BM R G a t e w a y L L C $2 8 3 , 1 2 3 , 9 2 5 $2 8 3 , 1 2 3 , 9 2 5 6 . 6 5 % C o m m e r c i a l AR E S a n F r a n c i s c o E x c h L L C 2 2 1 , 2 4 1 , 0 9 1 $2 2 1 , 2 4 1 , 0 9 1 5 . 2 0 % I n d u s t r i a l , C o m m e r c i a l Ga t e w a y C e n t e r L L C 19 6 , 8 0 3 , 8 9 2 21 3 , 1 4 6 $ 1 9 7 , 0 1 7 , 0 3 8 4 . 6 3 % C o m m e r c i a l AS N S o l a i r e L L C 10 7 , 1 3 8 , 3 8 1 $1 0 7 , 1 3 8 , 3 8 1 2 . 5 2 % R e s i d e n t i a l Co s t c o W h o l e s a l e C o r p 39 , 7 1 3 , 5 6 7 4 1 , 6 3 8 , 8 1 8 $ 8 1 , 3 5 2 , 3 8 5 1 . 9 1 % C o m m e r c i a l HC P O y s t e r P o i n t I I I L L C 67 , 8 2 8 , 5 0 6 $6 7 , 8 2 8 , 5 0 6 1 . 5 9 % U n k n o w n Am g e n S F L L C 0 6 0 , 3 6 7 , 7 6 1 $ 6 0 , 3 6 7 , 7 6 1 1 . 4 2 % I n d u s t r i a l Ga t e w a y B o u l e v a r d L L C 59 , 0 5 0 , 7 6 6 $5 9 , 0 5 0 , 7 6 6 1 . 3 9 % I n d u s t r i a l Oi k S i e r r a P o i n t L L C 42 , 3 5 1 , 3 3 1 $4 2 , 3 5 1 , 3 3 1 1 . 0 0 % C o m m e r c i a l DW F I I I G a t e w a y L L C 42 , 0 0 9 , 8 6 0 $4 2 , 0 0 9 , 8 6 0 0 . 9 9 % C o m m e r c i a l Bl u e L i n e T r a n s f e r I n c . 37 , 6 6 1 , 6 2 4 $3 7 , 6 6 1 , 6 2 4 0 . 8 9 % I n d u s t r i a l SR I T e n G a t e w a y L L C 34 , 8 6 7 , 5 8 2 $3 4 , 8 6 7 , 5 8 2 0 . 8 2 % C o m m e r c i a l , O f f i c e , 2 + s t o r i e s Ar e u s I n c 34 , 0 3 2 , 7 3 5 $3 4 , 0 3 2 , 7 3 5 0 . 8 0 % C o m m e r c i a l Th e r a v a n c e I n c . 32 , 8 6 2 , 3 1 9 $ 3 2 , 8 6 2 , 3 1 9 0 . 7 7 % I n d u s t r i a l , O f f i c e , R & D Fe l c o r C M B S S F H o l d i n g s L P 3 1 , 5 6 3 , 7 5 2 $3 1 , 5 6 3 , 7 5 2 0 . 7 4 % R e s i d e n t i a l , H o t e l s , M o t e l s HP T M I I I P r o p e r t i e s T r u s t 27 , 1 7 0 , 0 0 0 $2 7 , 1 7 0 , 0 0 0 0 . 6 4 % R e s i d e n t i a l , H o t e l s , M o t e l s Ka i s e r P e r m a n t e n t e H o s p i t a l s $ 2 4 , 0 4 1 , 0 6 6 1 , 4 4 6 , 9 4 5 $ 2 5 , 4 8 8 , 0 1 1 0 . 6 0 % I n d u s t r i a l To t a l T o p T w e n t y 2, 8 4 8 , 5 1 0 , 5 6 1 3 0 5 , 7 4 1 , 2 3 3 3 , 1 5 4 , 2 5 1 , 7 9 4 7 4 . 1 3 % Pe r c e n t o f A V 90 . 3 % 9. 7 % So u r c e : S a n M a t e o C o u n t y A s s e s s o r , R D A S e c u r e d & U n s e c u r e d S S F 2 0 1 5 T a x R o l l s So u r c e : M u n i S e r v i c e s (1 ) G i v e n t h e n a t u r e o f t h e r e s e a r c h p e r f o r m e d a t G e n e n t e c h , a s i g n i f i c a n t p o r t i o n o f t h e t o t a l a s s e s s e d v a l u e o f t h e G e n e n t e c h P r o p e r t y i s l i k e l y e q u i p m e n t . I t w o u l d a p p e a r o n t h e s e c u r e d r o l l a s t h a t c o n t a i n s th e v a l u e o f p e r s o n a l p r o p e r t y / i m p r o v e m e n t s Page 162 of 202 Fiscal Delinquent taxes YearRate (2)Levies (3)Allocations (5)CollectionsDelinquenciesas a Percent of 20061.00 (4)$11,112,993 (4)(4)0.0% 20071.00 (4)12,281,105 (4)(4)0.0% 20081.00 (4)13,177,156 (4)(4)0.0% 20091.00 (4)14,979,798 (4)(4)0.0% 20101.00 (4)13,697,389 (4)(4)0.0% 20111.00 (4)13,351,506 (4)(4)0.0% 20121.00 (4)13,360,854 (4)(4)0.0% 20131.00 (4)13,740,246 (4)(4)0.0% 20141.00 (4)14,928,197 (4)(4)0.0% 20151.00 (4)15,184,788 (4)(4)0.0% Notes: (1) Excludes State Reimbursed Exemptions and deductions for County property tax administration. (2) County adopted full cash value method of valuation rather than assessed valuation. (3) Levies include real and personal property. (4) (5)San Mateo County controller's Office. Adjusted estimated revenue for City of South San Francisco. Source: San Mateo County Auditor -- Controller's Office; Finance Department Revenue Reports Information not applicable. All general purpose property taxes are levied by the county and allocated to other governmental entities. CITY OF SOUTH SAN FRANCISCO PROPERTY TAX LEVIES AND COLLECTIONS (1) LAST TEN FISCAL YEARS $6 $7 $8 $9 $10 $11 $12 $13 $14 $15 $16 2006200720082009201020112012201320142015 Mi l l i o n s Allocations Page 163 of 202 CITY OF SOUTH SAN FRANCISCO Ratio of Outstanding Debt by Type Last Ten Fiscal Years Governmental Activities RDA TaxLeaseCertificatesSpecial FiscalAllocationRevenueof Assessment YearBondsBondsParticipationDebtLoansTotal 2006$73,495,000$231,549$5,335,000$11,227,163$90,288,712 200772,400,000194,1565,200,0003,884,00081,678,156 200871,000,000153,8605,060,0003,772,00079,985,860 200969,545,000110,4344,915,0003,660,00078,230,434 201068,030,00004,765,0003,548,00076,343,000 201166,455,00004,610,0003,436,00074,501,000 201264,815,00004,445,0003,324,00072,584,000 201363,115,00000063,115,000 201461,350,00000061,350,000 201559,515,00000059,515,000 Business-Type Activities SewerCertificatesState WaterTotalPercentage FiscalRevenueof ResourcesPrimaryof PersonalPer YearBondsParticipationLoansTotalGovernmentIncome (a)Capita (a) 2006$6,000,000$69,978,799$75,978,799$166,267,5119.19%$2,693.51 20076,000,00067,133,16573,133,165154,811,3218.14%2,491.21 20085,790,00067,878,19473,668,194153,654,0547.82%2,419.29 20095,575,00069,025,32274,600,322152,830,7567.84%2,351.24 20105,350,00065,028,41070,378,410146,721,4107.65%2,227.37 20115,120,00060,831,03865,951,038140,452,0387.27%2,184.09 20124,885,00056,530,94661,415,946133,999,9466.76%2,057.52 20134,640,00052,118,58756,758,587119,873,5875.98%1,824.28 20144,385,00047,591,01951,976,019113,326,0195.57%1,723.62 20154,120,00043,543,61447,663,614107,178,614n/an/a Note : Debt amounts exclude any premiums, discounts, or other amortization amounts. Sources:City of South San Francisco State of California, Department of Finance (population) U.S. Department of commerce, Bureau of the Census (income) (a) See Schedule of Demographic and Economic Statistics for personal income and population data. $0 $10 $20 $30 $40 $50 $60 $70 $80 $90 $100 2006200720082009201020112012201320142015 Mi l l i o n s Total Governmental Total Business Page 164 of 202 CITY OF SOUTH SAN FRANCISCO COMPUTATION OF DIRECT AND OVERLAPPING DEBT JUNE 30, 2015 2014-15 Assessed Valuation:$14,895,624,272 Redevelopment Incremental Valuation:- Adjusted Assessed Valuation:$14,895,624,272 Total Debt City's Share of OVERLAPPING TAX AND ASSESSMENT DEBT:6/30/2015% Applicable (1)Debt 6/30/15 San Mateo Community College District $664,859,9948.986%$59,744,319 Jefferson Union High School District 151,171,645 1.629 2,462,586 South San Francisco Unified School District 186,096,874 89.211 166,018,882 Brisbane School District 6,660,437 11.842 788,729 City of Brisbane Marina Boulevard and Lagoon Road Reassessment District 1,580,000 24.216 382,613 TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT $229,397,129 Ratio to 2014-15 Assessed Valuation: Total Overlapping Tax and Assessment Debt………1.54% OVERLAPPING FUND DEBT: San Mateo County General Fund Obligations$460,064,8168.986%$41,341,424 San Mateo County Board of Education Certificates of Participation10,430,000 8.986 937,240 San Mateo County Flood Control District Certificates of Participation21,435,000 60.598 12,989,181 South San Francisco Unified School District Certificates of Participation702,995 89.211 627,149 TOTAL DIRECT AND OVERLAPPING GENERAL FUND DEBT:$55,894,994 OVERLAPPING TAX INCREMENT DEBT (Successor Agency):$59,515,000100.000%$59,515,000 TOTAL DIRECT DEBT $0 Total Overlapping Debt $344,807,123 COMBINED TOTAL DEBT $344,807,123(2) (1) Percentage of overlapping agency's assessed valuation located within boundaries of the city. Ratios to Adjusted Assessed Valuation: Total Overlapping Tax and Assessment Debt1.54% Total Direct Debt0.00% Combined Total Debt2.31% Ratios to Redevelopment Successor Agency Incremental Valuation ($3,902,722,067): Total Overlapping Tax Increment Debt 1.52% Source: California Municipal Statistics, Inc. and City of South San Francisco 510-658-2640 Austin Busch (2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue, tax allocation bonds, and Successor Agency Debt. Page 165 of 202 ASSESSED VALUATION:$14,895,624,272 BONDED DEBT LIMIT (3.75% OF ASSESSED VALUE) (a)$558,585,910 LESS AMOUNT OF DEBT SUBJECT TO LIMIT:0 LEGAL BONDED DEBT MARGIN $558,585,910 Total net debt Total Net DebtLegal applicable to the limit Fiscal Debt Applicable to Debt as a percentage Year Limit Limit Margin of debt limit 2006 $390,455,531 $0$390,455,531 0.00% 2007 423,253,823 0423,253,823 0.00% 2008 469,575,123 0469,575,123 0.00% 2009 559,744,420 0559,744,420 0.00% 2010 525,673,963 0525,673,963 0.00% 2011 511,748,388 0511,748,388 0.00% 2012 518,513,854 0518,513,854 0.00% 2013 524,729,886 0524,729,886 0.00% 2014 536,413,229 0536,413,229 0.00% 2015 558,585,910 0558,585,910 0.00% NOTE: (a) Source: HDL Coren & Cone, San Mateo County Assessor - Combined Tax Rolls CITY OF SOUTH SAN FRANCISCO COMPUTATION OF LEGAL BONDED DEBT MARGIN JUNE 30, 2015 California Government Code, Section 43605 sets the debt limit at 15%. The Code section was enacted prior to the change in basing assessed value to full market value when it was previously 25% of market value. Thus, the limit shown as 3.75% is one-fourth the limit to account for the adjustment of showing assessed valuation at full cash value. Page 166 of 202 CITY OF SOUTH SAN FRANCISCO REVENUE BOND COVERAGE SEWER RENTAL ENTERPRISE FUND LAST TEN FISCAL YEARS Net Revenue Debt Service Requirements (4) FiscalGrossOperatingAvailable for Year Revenue (1)Expenses (2)Debt ServicePrincipalInterestTotalCoverage 2006$18,081,987$10,506,394$7,575,593 (3)$156,165$156,16548.51 200721,409,05511,146,87010,262,185 (3)248,914248,91441.23 200818,418,86612,096,2566,322,610 (3)241,846241,84626.14 200920,722,77813,228,8837,493,895215,000235,897450,89716.62 201023,321,58213,774,7579,546,825225,000230,941455,94120.94 201123,735,46913,527,54410,207,925230,000223,973453,97322.49 201225,365,82413,924,33411,441,490235,000216,501451,50125.34 201324,782,58715,151,9689,630,619245,000208,459453,45921.24 201426,908,31614,904,22512,004,091255,000199,831454,83126.39 201526,147,55018,630,6727,516,878265,000190,532455,53216.50 Notes:Details regarding the City's outstanding debt can be found in the notes to the financial statements. (1) Gross revenue includes operating revenue and non-operating revenue. (2) Direct operating expenses include operating expenses (except depreciation) and non-operating expenses (except interest expense). (3) Retirement of principal for 2005 Sewer Revenue Bonds begins in fiscal year 2008. (4) The requirement does not include loan payments on State Water Resources Board loans. See schedule of Sewer Debt service coverage for details. Source: City of South San Francisco, Department of Finance $5 $10 $15 $20 $25 $30 2006200720082009201020112012201320142015 Mi l l i o n s Revenue (1) Expenses (2) Page 167 of 202 SEWER DEBT SERVICE COVERAGE SEWER RENTAL ENTERPRISE FUND LAST FIVE FISCAL YEARS Fiscal Year 20112012201320142015 Revenues Service Charges$18,087,695$19,193,259$19,310,559$19,129,475$19,758,128 Connection and Other Fees31,670117,02727,54825,992122,640 Interest Income106,230119,01180,692133,248106,830 Developer Fees Other Cities' Participation (1)5,509,8745,936,5266,137,401 7,619,601 6,159,937 Total Revenues $23,735,469$25,365,824$25,556,200$26,908,316$26,147,535 Operating Expenses (2)$13,527,544$13,924,334$15,151,968$14,904,225$18,759,650 Wastewater System Net Revenues $10,207,925$11,441,490$10,404,232$12,004,091$7,387,885 Parity Debt Service (3) State Water Resources Control Board Loans$6,270,859$5,997,459$6,012,716 $6,022,799$5,445,162 CSCDA Series 2005D Revenue Bonds 222,061214,589206,405 197,630 188,148 Total Parity Debt $6,492,920$6,212,048$6,219,121 $6,220,429$5,633,310 Total Parity Debt Service Coverage 1.57 1.84 1.67 1.93 1.31 10,012,86710,012,86710,012,867 10,012,86710,012,867 (2) Excludes depreciation, capital expenditures and debt service. (3) Includes Sewer Revenue Bonds and State Water Loan payments (1) Primarily consists of payments from the City of San Bruno. The City of San Bruno is a co-owner of the Plant and pays the City in advance on a quarterly basis for the City of San Bruno's share of operating costs. See "Wastewater System" herein. (4) Reflects an adopted increase in rates for Fiscal Year 2004-05 of 25% per Resolution No. 68-2004, adopted by the City Council on July 14, 2004 and effective on and after July 1, 2004 and an adopted increase in rates for Fiscal Year 2005-06 of 9% per Resolution No. 68-2005, adopted by the City Council on June 22, 2005 and effective on and after June 22, 2005. CITY OF SOUTH SAN FRANCISCO Page 168 of 202 CITY OF SOUTH SAN FRANCISCO REDEVELOPMENT PLEDGED REVENUE COVERAGE LAST SEVEN FISCAL YEARS Funding Source: RDA tax increment revenues FiscalAvailable Debt Service Requirements FiscalAvailableDebt Service Requirements YearRevenuePrincipalInterestTotalCoverageYearRevenuePrincipalInterestTotalCoverage 2009$32,246,342$1,275,000$3,245,969$4,520,9697.13 2009$6,353,579$180,000$115,145$295,14521.53 201035,871,5771,330,0003,193,8694,523,8697.93 20105,798,618185,000107,205292,20519.84 201144,300,878 1,380,0003,141,394 4,521,3949.80 20115,732,171195,00098,748293,74819.51 201225,114,631 1,435,0003,086,819 4,521,8195.55 201225,114,631205,00089,645294,64585.24 2013 1,490,0003,030,181 4,520,181 2013 210,00079,995289,995 2014 1,545,0002,971,344 4,516,344 2014 220,00069,780289,780 2015 1,605,0002,904,331 4,509,331 2015 230,00058,750288,750 (1) New issuance. Retirement of principal and interest begins in fiscal year 2007. Funding Source: RDA tax increment revenues Funding Source: RDA tax increment revenues FiscalAvailable Debt Service Requirements FiscalAvailableDebt Service Requirements YearRevenuePrincipalInterestTotalCoverageYearRevenuePrincipalInterestTotalCoverage 2009$32,246,342$145,000$250,938$395,93881.442009$32,246,342$43,426$9,664$53,090607.39 201035,871,577150,000244,775394,77590.87201035,871,577110,4346,428116,862306.96 201144,300,878155,000238,250393,250112.652011 201225,114,631165,000230,500395,50063.50 2012 2013 2013 2014 2014 2015 2015 Funding Source: RDA tax increment revenues FiscalAvailableDebt Service Requirements YearRevenuePrincipalInterestTotalCoverage 2009$32,246,342$1,463,426$3,506,570$4,969,9966.49 201035,871,5771,590,4343,445,0725,035,5067.12 201144,300,8781,535,0003,379,6444,914,6449.01 201225,114,6311,600,0003,317,3194,917,3195.11 20131,490,0003,030,1814,520,181 2014 1,545,0002,971,3444,516,344 2015 1,605,0002,904,3314,509,331 Note: Redevelopment Agencies abolished as of 1/31/2012.Numbers for 2012 include the first and second RPTTF distributions received. (A) Shows coverage of all non-housing bonds pledged to tax increment. Source: City of South San Francisco, Department of Finance RDA All Non-housing (A) 2006 RDA Revenue Bonds Funding Source: RDA Gateway and Low Moderate Income Housing tax increment revenues. Gateway bonds defeased in FY 05-06. 1999 RDA Revenue Bonds (Housing) 1989 Cal Health Facilities Financing Authority Revenue Bonds1999 Certificates of Participation Page 169 of 202 CITY OF SOUTH SAN FRANCISCO DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN YEARS City City EstimatedPersonalPer CapitaCitySan MateoCity City Income (2)PersonalUnemploymentCountyPopulation Year Population (1)(in thousands)Income (2)Rate (3)Population (1) % of County 200460,909$1,586,667$26,0506.0%712,4008.55% 200561,4441,681,50727,3665.3%723,4538.49% 200661,7291,810,07529,3234.6%724,1048.52% 200762,1431,903,01630,6234.7%733,4968.47% 200863,5121,964,02830,9246.0%739,4698.59% 200965,0001,948,79829,98210.3%745,8588.71% 201065,8721,918,06129,11810.7%754,2858.73% 201164,3071,932,61830,0539.7%729,4438.82% 201265,1271,982,85730,4466.3%735,6788.85% 201365,7102,005,66630,5235.2%747,3738.79% 201465,7492,033,15630,9234.5%745,6358.82% Notes: ** All data entered were updated to reflect the City of South San Francisco's current information available through HDL, Coren & Cone 2014-15 CAFR Statistical Report. Data Sources: (1) Population: HDL/California State Dept of Finance. Estimated City's population as of January 2014 (2) Personal and per capita income: HDL, Coren & Cone (3) Unemployment Data: HDL/California Employment Development Department 0 0.02 0.04 0.06 0.08 0.1 0.12 20042005200620072008200920102011201220132014 City Unemployment Rate (3) 8.00% 8.20% 8.40% 8.60% 8.80% 9.00% 2004200520062007200820092010201120122013 City Population % of County 0 500,000 1,000,000 1,500,000 2,000,000 2,500,000 20042005200620072008200920102011201220132014 Personal Income (2) (in thousands) $25 $26 $27 $28 $29 $30 $31 $32 Th o u s a n d s City Per Capita Personal Income (2) Page 170 of 202 Percentage Percentage Number of of Total CityNumber of of Total City Employer EmployeesRankEmploymentEmployeesRankEmployment Genentech 8,4511 12.9%7,5002 12.1% Layton Construction Co Inc 7792 1.2% Onyx Pharmaceuticals Inc 6503 1.0% Life Technologies Corporation 6224 0.9% Costo Wholesalers (2 stores)6165 0.9%7984 1.3% The New French Bakery, Inc 4146 0.6% Amgen San Francisco LLC 4067 0.6% Successfactors, Inc.4008 0.6% SBM Site Services LLC 3889 0.6% Wave Division Holdings LLC 34410 0.5% United Airlines 9,0001 14.6% Kaiser Medical Center 1,1003 1.8% United Parcel Service 7325 1.2% Aeroground 4006 0.6% Exelixis 5457 0.9% Elan Pharmaceuticals 3008 0.5% Oroweat 3009 0.5% See's Candies 2005 0.3% Subtotal 13,070 19.9%20,875 33.8% Total City Population 65,749 61,824 Source: SSF Business License Database- Business licenses expiring 12/31/15. Information for 1998-2005 not available. SSF CAFR 2005-06 data. 2005-062014-15 CITY OF SOUTH SAN FRANCISCO Principal Employers Current Year and Nine Years Ago Page 171 of 202 CITY OF SOUTH SAN FRANCISCO Full-Time Equivalent City Government Employees by Function Last Ten Fiscal Years (Adopted Operating Budget) 2006200720082009201020112012201320142015 Function General Government (3) 36.8835.4835.6735.6037.0037.0036.6036.6037.6040.60 Fire Department 78.4876.4877.48 80.4882.4882.4882.4882.4882.9883.48 Police Department110.45107.45110.85 111.65114.65112.65110.65115.65119.75118.87 Public Works (1) (2) 75.3739.7642.0042.1043.8540.0543.0345.0247.2138.68 Park, Rec. & Maintenance Services (1)70.23105.49115.15116.37116.34116.05107.86111.66117.21121.31 Library 39.1538.5438.6840.21 40.8140.8135.3435.3537.6637.71Economic and Comm. Development (2) 27.7537.2133.3535.3526.4528.9524.4523.4524.4035.15 Wastewater 38.7437.5938.5938.59 39.5440.6438.8238.8239.6339.06 Total 477.05478.00491.77500.35501.12498.63479.23489.03506.44514.86 Notes: 1. Oversight of the Parks and Building Maintenance Division has been moved from Public Works to the Parks & Recreation Departme 2. Oversight of the Engineering Division has been moved from Economic and Community Development to Public Works. 3. Council members are added to the General Government total. Source: City of South San Francisco Adopted Operating Budget FY 2014-15 0.00 100.00 200.00 300.00 400.00 500.00 600.00 2006200720082009201020112012201320142015 Em p l o y e e WastewaterEconomic and Comm. Development (2)LibraryPark, Rec. & Maintenance Services (1)Public Works (1) (2)Police DepartmentFire DepartmentGeneral Government (3) Page 172 of 202 201020112012201320142015 Function/Program Public safety: Fire: Inspection permit issued2,4251,4491,9972,3692,5741,817 Police: Police calls for service32,95330,06529,19533,65729,35931,532 Law violations: Part I crimes2,1951,9052,0121,8741,7801,874 Physical arrests (adult and juvenile)1,8671,7531,7902,0812,1581,933 Traffic violations4,7314,7533,9543,6324,1753,828 Parking violations14,99919,03119,10814,64816,59713,378 Public works Street resurfacing (miles) (Eng Div)2.02.44.753220 Potholes repaired (square miles)0.500.230.370.130.200.11 Asphalt used for street repairs (tons)656169.07420287435250 Culture and recreation: Recreation class participants21,60224,70226,73727,18426,69426,879 Library: Total items borrowed(3) 560,186723,592731,911701,721686,491643,630 Items in collection(3) 191,455176,086181,905188,394185,482130,106 Wastewater Residential connections16,69816,51016,46616,46616,48216,470 Commercial connections1,5851,5731,5761,5661,5621,560 Other connections136136140127128128 Average daily sewage treatment (millions of gallons)8.929.389.189.278.288.89 Note: N/A denotes information not available. (1) Total Parking Citations reported is comprised of both handwritten and automated parking citations. Prior to 2007, the handwritten citations were only reported. (2) Street resurfacing (.8 miles) numbers includes pavement surface repaired through cape seal (7.70 miles). (3) Year 2010 Library items circulated is low due to 21 weeks closure of Main Library. CITY OF SOUTH SAN FRANCISCO Operating Indicators by Function/Program Last Six Fiscal Years Page 173 of 202 ` 2006200720082009201020112012201320142015 Function/Program Public safety: Fire stations5555 555555 Police stations111111(6) 1(6) 111 Police Fleet4141 (1) 45 (2) 48 (2) 48525151(8) 5053 Public works Miles of streets127127127127127127127127127127 Street lights3,6033,7383,7793,7794,1564,1604,160(7) 4,5054,5054,505 Parking District lights20202020202020202020 Traffic Signals70707070737474747474 Culture and recreation: Community services: City parks30252828282828282828 City parks acreage172189190190190190190190190190 Playgrounds19242424242424242424 City trails8666 666666 Community gardens1111 111111 Community centers3444 444444 Senior centers22222(4) 11111 Skate Park (3) 111111 Dog park (3) 111111 Swimming pools1111 111111 Tennis courts7777 777777 Basketball Courts15121212121212121212 Baseball/softball diamonds8111111111111111111 Soccer/football fields2555 555555 Library: City Libraries (6)2222 222222 Wastewater Miles of sanitary sewers164164164164164164164164164164 Miles of storm sewers125125125125125125125125125125 Number of treatment plants1111 111111 Source: ssf.net/depts/rcs; Director of Rec & Comm Services; Superintendent of parks & Maintenance (1) Police patrol units consists of 35 marked/unmarked cars, 6 motorcycles, 1 SWAT and 3 cushman. (2) Year 2009, the 3 units added are not new. These are units that was not included on the previous Fleet count. (3) Year 2010, Skate park and dog park was added on the list. (4) The only senior center is Magnolia Center but programming still continues at El Camino. (5) Community Learning Center not included on count as it is only a homework center not a library. (6) Police substation located behind Miller parking garage not included. (7) Includes all lights in SSF billed as LS-2 from PG&E (8) One less motorcycle from last year. Last Ten Fiscal Years Capital Asset Statistics by Function/Program CITY OF SOUTH SAN FRANCISCO Page 174 of 202 2013 2014 2015 Transient Occupancy Tax Detail 8% TOT collected $8,693,353$10,056,615$11,652,726 1% Measure I Special Tax 965,9281,117,4021,294,747 Total TOT Collection $9,659,281$11,174,017$12,947,474 1% Measure I Special Tax Use Police $193,186$223,480$258,949 Fire 193,186 223,480 258,949 Library 193,186 223,480 258,949 Parks 193,186 223,480 258,949 Recreation 193,186 223,480 258,949 Total 1% Measure I Special Tax $965,928$1,117,402$1,294,747 CITY OF SOUTH SAN FRANCISCO Collection and Use of 1% Special Transient Occupancy Tax (TOT) Approved by Voters as Measure I * Miscellaneous Information Last Three Fiscal Years * Note: Measure I, a one percent supplemental special tax to the already existing 8% general transient occupancy tax (TOT) was approved on Nov. 2, 2004 and took effect January 1, 2005. Special tax was earmarked for use to supplement Police, Fire, Library, and Parks and Recreation expenditures. Page 175 of 202 Page 176 of 202 Page 177 of 202 Page 178 of 202 Page 179 of 202 Page 180 of 202 Page 181 of 202 Page 182 of 202 Page 183 of 202 Page 184 of 202 Page 185 of 202 Page 186 of 202 Page 187 of 202 Page 188 of 202 Page 189 of 202 Page 190 of 202 Page 191 of 202 Page 192 of 202 Page 193 of 202 Page 194 of 202 Page 195 of 202 Page 196 of 202 Page 197 of 202 Page 198 of 202 Page 199 of 202 Page 200 of 202 Page 201 of 202 Page 202 of 202 StaffRe ort DATE: February24,2016 TO: Mayor, Vice Mayor and Councilmembers FROM: Richard Lee, Director of Finan"" (DL,, SUBJECT: APPROVAL OF FY 201 5- l6 MID-YEAR FINANCIAL REPORT AND RESOLUTION AMENDING THE FY 2015-16 BUDGET I, RECOMMENDATION It is recommended that the City Council approve the attached resolution to amend the FY 2015-16 budget. II. BACKGROUND/DISCUSSION This Staff Report transmits the FY 2015-16 mid-year financial results, and recommends changes to certain revenues and expenditures in the 2015-16 budget. A. Economic Context Labor Force As of December 2015, the unemployment rate was 3.3 percent in South San Francisco, 3.1 percent in San Mateo County and 5.8 percent in Califomia. Over the past fifteen years, unemployment in South San Francisco has been as high as 10.7 percent and as low as 3.2 percent, a level reached in November 2015. The unemployment rate in South San Francisco has historically been slightly higher than San Mateo County, but lower than the State of Califomia. Real Estate As of January 2016, the median sales price for residential properties in South San Francisco was $760,000, a7.2 percent increase from the prior year, and a 68.9 percent increase from five years ago. The current average price per square foot for residential property in the City is $590, an increase of 19.2 percent compared to the prior year, and a 68.6 percent increase from five years ago. In 2015, there were 274 single family residential properties sold in South San Francisco, a decrease of 6.5 percent compared to the prior year. The average single family residential Staff Report Subject: APPROVAL OF FY 2015-16 MID-YEAR FINANCIAL REPORT AND RESOLUTION AMENDING THE FY 2015-16 BUDGET Page 2 of 10 property spent 25 days on the market in 2015 compared to 30 days in the prior year and 58 days in 2010. Local Development South San Francisco is in the midst of a robust development cycle, along with a number of other cities in San Mateo County. The total job value for applied building permits from July – December 2015 was nearly $350 million, a 91% increase compared to the same period from the prior year. The total value for building permits in 2015 was over $500 million, more than 2010, 2011 and 2012 combined. The impact of the extraordinary labor trends, robust real estate and local development trends above are reflected in the revenue and expenditure items below. B. General Fund Overview With City Council approval of the FY 2015-16 mid-year budget adjustments presented in Attachment A of the Resolution, the General Fund is projected to end FY 2015-16 with a surplus of $7.2 million. Total General Fund Revenues are projected to be $92.8 million; 8.0 percent or $6.9 million more than the FY 2015-16 Amended Budget. Total General Fund Expenditures are projected to be $89.5 million; 0.9 percent less or $830,000 less than the Amended Budget. C. General Fund Revenues 1) Measure W +$1,500,000 South San Francisco residents approved Measure W, a half cent transactions and use tax on the November 2015 ballot. The tax will go into effect on April 1, 2016. Staff estimates remittances from the State Board of Equalization for the remainder of FY 2015-16 will be $1.5 million. 2) Triple Flip +$1,302,000 April 2016 will mark the return of the City’s share of sales tax revenues to 1% and the end of the state’s Triple Flip mechanism. The additional revenue reflects funds that were taken by the state in 2004 through the Triple Flip implementation process, and will be returned to the City at the end of this fiscal year. 3) Transient Occupancy Tax (TOT) +$1,371,600 The average room rate was $161 over the first six months of FY 2015-16, an increase of $10 or 6.5 percent compared to the same period in the prior year, while the average occupancy rate remained high at 82.7 percent. Staff Report Subject: APPROVAL OF FY 2015-16 MID-YEAR FINANCIAL REPORT AND RESOLUTION AMENDING THE FY 2015-16 BUDGET Page 3 of 10 4) Permit Fees +$1,418,000 The pace and magnitude of permit activity is evident through its revenue stream. The FY 2015- 16 Adopted Budget assumed $3.9 million in revenues from permit fees; Revenues through December 2015 are $2.6 million. 5) Office of Emergency Services (OES) Mutual Aid Reimbursement +$479,500 The severity and duration of the 2015 fire season in California was exacerbated by drought conditions. The South San Francisco Fire Department responded to mutual aid calls for several incidents, including the Wragg, Rocky, Jerusalem, Butte and Mad River Complex Fires. 6) Transfer from Asset Seizure for Police Overtime +$516,800 Based on trends in Police Department operations for the first six months of FY 2015-16, overtime costs are projected to result in a net cost of $1.3 million. Staff recommends that the City Council authorize the transfer of $516,800 from Asset Seizure funds. This amount represents the difference between the FY 2015-16 Adopted Budget and projected actual Police Department overtime. Guidance from the Department of Justice deems reimbursement of overtime costs an allowable use of Asset Seizure funds. D. Mid-year Budget Adjustments Staff requests that the FY 2015-16 budget be amended as indicated in Attachment A of the Resolution, which include the following highlighted items. General Fund 1) City Manager City Website Upgrade +$100,000 (one-time) Staff asks that the City Council appropriate funds to upgrade the City’s website to enhance user experience by improving navigational ease and speed. Communications +$52,000 Staff requests additional appropriations for various communication needs, including graphic design, printing and postage of Measure W Town Hall and Peninsula Clean Energy mailers, newsletters and new street banners for the downtown area and El Camino Real. Staff Report Subject: APPROVAL OF FY 2015-16 MID-YEAR FINANCIAL REPORT AND RESOLUTION AMENDING THE FY 2015-16 BUDGET Page 4 of 10 2) Human Resources Safety Program Consultant +$125,000 The City of South San Francisco has experienced an increase in workers’ compensation injuries over the past two fiscal years resulting in significant cost to the City as a self- insured agency. The table below shows workers’ compensation injury counts and the City’s respective reserves by fiscal year over the past seven years. It is critical for the City to better manage the causes and effects of safety accidents in an effort to protect our employees from injury and reduce the cost to the City. The proposed funding for a limited term employee to create, promote and manage safe working conditions, implement injury prevention programs, educate the workforce and enforce safety as a priority is a critical need for the City. Staff Report Subject: APPROVAL OF FY 2015-16 MID-YEAR FINANCIAL REPORT AND RESOLUTION AMENDING THE FY 2015-16 BUDGET Page 5 of 10 3) Economic and Community Development Change Building Inspector to Senior Building Inspector Cost for remainder of FY 2015-16: +$5,100 | Cost for FY 2016-17: +$10,800 Staff recommends changing one Building Inspector position to a Senior Building Inspector. This change is requested to improve overall supervision of the building inspection staff. In addition, it would support staff retention efforts by offering a potential promotional opportunity to key Building staff. Change City Building Official to Deputy Director of ECD Cost for remainder of FY 2015-16: +$17,200 | Cost for FY 2016-17: +$36,100 Staff further recommends that the City Building Official position be changed to a new classification, Deputy Director of ECD. This change would increase the attractiveness of the CBO position, which has been extremely difficult to recruit during the past 18 months. Real Estate Due Diligence and Disposition Services +$57,000 These services are needed to support: (a) analysis associated with planning for the Measure W civic complex, including the assessment of various real estate scenarios; and (b) preparation of various City-owned parcels (e.g., Maple/Miller, Old Firehouse, etc.) for sale via Request for Qualifications (RFQ). BIO Conference +$37,000 (one-time) With BIO International taking place in San Francisco this year, the City Council has asked staff to plan for an enhanced presence and outreach to prospective companies. East of 101 Urban Design and Engineering Analysis +$65,000 (one-time) Costs include preliminary urban design, environmental, and engineering analysis by a consultant for selected East of 101 areas to identify opportunities for changes to City land use policies, characterize infrastructure and other issues, and to lay the groundwork for a future specific plan (or plans) in this area. Electronic Plan Submittal +$45,000 (one-time) This request would fund the first phase of implementation of a new software module within the City’s existing permit-tracking software (CRW). The new software module will allow a comprehensive Electronic Plan Review system to expedite and improve the submission, routing, review, tracking and archiving of full-size construction documents and/or plans associated with building permit applications. The second implementation phase, the funding for which will be requested as part of the FY 2016-17 operating budget, will empower City staff to redline, provide comments, upload, convert to PDF, and publish or share plans – with all work handled online, instantly and seamlessly. Instead of forcing customers to deliver large paper sets of plans Staff Report Subject: APPROVAL OF FY 2015-16 MID-YEAR FINANCIAL REPORT AND RESOLUTION AMENDING THE FY 2015-16 BUDGET Page 6 of 10 to City Hall, and then wait for the plans to be marked up by multiple departments, the plans will now be able to be sent electronically and City staff will be able to concurrently review plans, thus saving significant time for the customer. The requested funding will implement the first phase of an overall strategy for full digitization of the permit process. This first phase, Electronic Plan Submittal, has been a goal of the City for several years because it will: (a) allow a significant time-saving convenience that will increase customer service; (b) bring the City of SSF in line with best practices that are used by most Bay Area cities; and (c) increase operational efficiency and save about 30-40 hours of staff time per year. Oyster Point Business Assessment +$61,700 (one-time) Staff requests that the City Council authorize additional appropriations to develop a focused market study, conduct a site inspection and develop preliminary drawings and cost estimates for layout modeling for Oyster Point Marina that would evaluate the following:  Existing market data from market surveys;  Factors potentially affecting rental rates for Oyster Point Marina, including location, demographics, draft of the harbor, recreational use of the Bay, recent trends, and other information as may be relevant;  A proposed range of slip fees for Oyster Point Marina (assuming renovations take place) which will be used to inform future modeling. 4) Fire Change Billing Specialist and Office Specialist to Full Time (No additional cost) Staff requests that the Billing Specialist and Office Specialist positions that are currently budgeted as contract employees with benefits be converted to full time positions. The contract positions have been part of the Fire Department functions for several years and are an integral part to daily operations. The conversion to full time permanent status does not impact the General Fund as the positions are currently budgeted with full benefits. Fire Recruitment +$32,000 The additional budget would cover the cost of recruitment for vacancies. This includes testing materials, testing rooms and a consultant to help administer and manage the test. Emergency Operations Center (EOC) Second Story Design +$50,000 (one-time) A second story addition to the City’s Emergency Operations Center (EOC) will expand the footprint of the EOC and include an elevator. Expanded space will allow for storage of Staff Report Subject: APPROVAL OF FY 2015-16 MID-YEAR FINANCIAL REPORT AND RESOLUTION AMENDING THE FY 2015-16 BUDGET Page 7 of 10 additional resources and allow for EOC strategy and tactics meetings during an event at which the EOC has been activated. 5) Library Change Part Time Librarian II to Full Time Librarian II Cost for remainder of FY 2015-16: +$13,600 | Cost for FY 2016-17: +$28,600 Change Part Time Library Assistant I to Full Time Library Assistant II Cost for remainder of FY 2015-16: +$17,300 | Cost for FY 2016-17: +$36,500 Change Admin Assistant I to Admin Assistant II Cost for remainder of FY 2015-16: +$2,200 | Cost for FY 2016-17: +$4,700 Staff recommends converting one part-time Librarian II position to a full-time Librarian II, upgrading one part-time Library Assistant I position to a full-time Library Assistant II, and upgrading one Administrative Assistant I position to an Administrative Assistant II. These changes are requested to support the increase in library programming, including expansion of STEM programming, and improving employee retention. 6) Public Works Change Admin Assistant I and Office Specialist to Admin Assistant II Cost for remainder of FY 2015-16: +$6,800 | Cost for FY 2016-17: +$14,400 Staff recommends replacing one Administrative Assistant I position and one Office Specialist position with two Administrative Assistant II positions. The proposed reorganization is an effort to better align job responsibilities with job classifications and provide promotional opportunities for clerical staff. Paint Downtown Streetlight and Traffic Light Poles +$60,000 (one-time) Streetlights and traffic light poles in the downtown area were last painted in 2007. New paint on the streetlights will improve aesthetics and promote revitalization of the downtown area. Clean Team Trailer and Supplies +$30,000 (one-time) Beginning FY 2016-17, as part of the City’s strategic plan, Public Works and Parks and Recreation will promote and support operation of a Clean Team. The requested one-time funds will position the team to begin their efforts immediately, pending approval by the City Council through the FY 2016-17 budget process. The trailer will be stocked and maintained in a ready state with tools and materials to perform cleanup, weed abatement, and graffiti abatement. The trailer will also have signs or graphics on the side with public messaging on keeping South San Francisco beautiful. Acquisition of the trailer will improve the speed and efficiency of the team’s response to illegal dumping, graffiti and other needs. Staff Report Subject: APPROVAL OF FY 2015-16 MID-YEAR FINANCIAL REPORT AND RESOLUTION AMENDING THE FY 2015-16 BUDGET Page 8 of 10 E. Other Funds Capital Improvement Plan (CIP) Fund Municipal Services Building (MSB) Bathroom Upgrade +$100,000 (one-time) Funds are needed for renovation of the restrooms in the Municipal Services Building atrium. The project was originally part of the FY 14-15 Capital Improvement Program, but was put on hold and its funding transferred to other projects due to the uncertainty of the future use of the building. Sewer Fund Water Quality Control Plant (WQCP) Transformers +$275,000 (one-time) Additional funds are requested to replace of two transformers at the WQCP that were installed in 1992. One transformer failed in December 2015, and a rental unit is in place until a permanent replacement can be purchased. Independent engineering inspections performed in 2010 and again in November 2015 recommended replacement. Self Insurance Fund Workers Compensation Excess Coverage Insurance +$220,000 Staff recommends additional appropriations of $220,000 to cover the cost of Workers Compensation excess insurance premium. The FY 2015-16 Adopted Budget includes $840,000 in appropriations for General Liability. Unfortunately, estimates from the City’s Workers’ Compensation excess coverage carrier indicate the premium for FY 2016-17 will be significantly higher due to the City’s historical losses through accidents and injuries. Implementation of the requested Safety Program Consultant would serve to reduce the frequency and magnitude of employee injury, thereby reducing the City’s premium rate for its Workers’ Compensation excess coverage. Equipment Replacement Fund Replace Senior Center Bus with Smaller Senior Van +$75,000 (one-time) Bus driver wages in the region have vastly outpaced the City's van driver wages, making it very difficult to find drivers with Class B license. The smaller van with wheelchair lift does not require a Class B license with passenger endorsement, allowing any staff person with a valid Class C license to operate it. The bus could also be made available for other recreation programs, and city uses. Staff Report Subject: APPROVAL OF FY 2015-16 MID-YEAR FINANCIAL REPORT AND RESOLUTION AMENDING THE FY 2015-16 BUDGET Page 9 of 10 Computer Server and Storage Area Network (SAN) Replacement +$95,000 (one-time) The Police Department uses automated systems to manage all aspects of its operation, starting with the Computer Aided Dispatch system used by police dispatchers to track in-progress 9-1-1 incidents. The system stores all police incident and case reports, digital photographs, and PDF copies of thousands of old cases that were converted from paper. The current computer server is due for replacement due to its age. City Council approval of the new computer server will ensure that the Police Department has reliable information technology infrastructure for the next five years. Information Technology (IT) Fund Telecommunications Audit +$20,000 (one-time) In the next 3-5 years, the City will replace its phone and related telecommunications system equipment with Voice Over Internet Protocol (VOIP) or newer technology in coordination with the new city facilities funded by Measure W. As a precursor to the VOIP implementation process, staff requests that the City Council authorize an additional $20,000 for telecommunications audit services to identify the phone and fax lines that are necessary to convert to VOIP, and maximize the City’s telecommunications savings. III. FISCAL IMPACT Staff estimates that with City Council approval of the FY 2015-16 mid-year budget adjustments, the General Fund will end the year with a surplus of $7.2 million. Staff recommends allocation of the surplus as follows:  $1.1 million to General Fund Reserves  $1.5 million to a new Measure W Reserve  $4.6 million to Infrastructure Reserves With City Council approval to allocate the surplus as requested, staff estimates that the City will have $34.3 million in General Reserves at the end of FY 2015-16:  General Fund Reserves - $18.2 million  Infrastructure Reserves - $14.6 million  Measure W Reserves - $1.5 million IV. CONCLUSION The recommended mid-year budget amendments are financially prudent. The projected General Fund reserves conform to the City’s Reserves Policy, with 20% set aside for General Fund Reserves, and the City is fiscally sound. StatrReport Subjecc APPROVAL OF FY 2015-16 MID-YEAR FINAIIChL REPORT AND RESOLUTTON AMENDING TIIE Fy 20lp-16 BTJDGET Page looflO I 2/ ^J***Lichard Lee Xrector ofFinanc" , Budget AmendmeNrt Resolution I Prezi Presentation I FY 2015-16 Mid-year General Fund $ummary I I I I Prcpared by: Anacbmens: RL:kj 2Mt6.r Director ofFinance RESOLUTION NO.______ CITY COUNCIL, CITY OF SOUTH SAN FRANCISCO, STATE OF CALIFORNIA A RESOLUTION APPROVING THE MID-YEAR 2015- 16 BUDGET AMENDMENT CHANGES, AMENDING THE CITY’S 2015-16 OPERATING BUDGET IN ORDER TO ADJUST REVENUES AND EXPENDITURES AT MID-YEAR WHEREAS, staff has presented the South San Francisco City Council (“City Council”) with a review of the City of South San Francisco’s (“City”) finances for the Mid-Year of fiscal year 2015-16; and WHEREAS, it is recommended that the City Council review the 2015-16 Mid-Year Financial Report and approve the Mid-Year 2015-16 Budget Amendment Changes as shown in the Mid-Year 2015-16 Budget Update Summary, attached hereto as “Attachment A” and incorporated into this Resolution by reference; and NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of South San Francisco that the City Council hereby takes the following actions: 1. Approves the Mid-Year 2015-16 Budget Amendment Changes as shown in the Budget Update Summary, attached hereto as “Attachment A,” and incorporated into this Resolution by reference; and 2. Amends the City’s 2015-16 Operating Budget consistent with the Mid-Year Budget Update Summary, attached hereto as “Attachment A” and incorporated into this Resolution by reference; and * * * * * * I hereby certify that the foregoing Resolution was regularly introduced and adopted by the City Council of the City of South San Francisco at a regular meeting held on the 24th day of February, 2016 by the following vote: AYES: NOES: ABSTAIN: ABSENT: ATTEST: City Clerk Page 1 of 12 ATTACHMENT A FY 2015-16 MID-YEAR BUDGET UPDATE SUMMARY FUND TYPE DESCRIPTION INCREASE / (DECREASE) AMOUNT ASSET SEIZURE EXPENDITURE TRANSFER FOR POLICE OVERTIME 516,800$ CIP EXPENDITURE MSB BATHROOM UPGRADES 100,000 EQUIPMENT REPLACEMENT EXPENDITURE POLICE SERVER & STORAGE AREA NETWORK 95,000 EQUIPMENT REPLACEMENT EXPENDITURE SENIOR VAN 75,000 GENERAL EXPENDITURE HR SAFETY PROGRAM 125,000 GENERAL EXPENDITURE CITY MANAGER - WEBSITE UPGRADE 100,000 GENERAL EXPENDITURE EAST 101 ENGINEERING ANALYSIS 65,000 GENERAL EXPENDITURE OYSTER PT BUSINESS ASSESSMENT 61,700 GENERAL EXPENDITURE PAINT DOWNTOWN TRAFFIC LIGHTS 60,000 GENERAL EXPENDITURE REAL ESTATE DUE DILIGENCE 57,000 GENERAL EXPENDITURE COMMUNICATIONS - POSTCARDS, NEWSLETTERS, BANNERS 52,000 GENERAL EXPENDITURE EMERGENCY OPERATIONS CENTER SECOND STORY DESIGN 50,000 GENERAL EXPENDITURE ECD - ELECTRONIC PLAN SUBMITTAL 45,000 GENERAL EXPENDITURE ECD - BIO CONFERENCE 37,000 GENERAL EXPENDITURE LIBRARY - PAYROLL 33,100 GENERAL EXPENDITURE FIRE - RECRUITMENT 32,000 GENERAL EXPENDITURE CLEAN TEAM TRAILER & SUPPLIES 30,000 GENERAL EXPENDITURE ECD - PAYROLL 22,300 GENERAL EXPENDITURE FIRE - COUNTY HAZMAT DUES INCREASE 11,200 GENERAL EXPENDITURE FIRE - LASERFICHE CONVERSION 10,000 GENERAL EXPENDITURE POLICE - BULLETPROOF VESTS 8,259 GENERAL EXPENDITURE PUBLIC WORKS - PAYROLL 6,800 GENERAL EXPENDITURE STREAMLINE SEECLICKFIX 4,000 GENERAL EXPENDITURE WEBQA RECORDS MANAGEMENT SOFTWARE 3,600 GENERAL EXPENDITURE PARKS AND REC AUTO ALLOWANCE 2,700 GENERAL REVENUE PERMIT FEES 1,418,000 GENERAL REVENUE TRANSIENT OCCUPANCY TAX 1,371,600 GENERAL REVENUE TRIPLE FLIP 1,302,000 GENERAL REVENUE TRANSFER FOR POLICE OVERTIME 516,800 GENERAL REVENUE OES REIMBURSEMENT 479,500 GENERAL REVENUE POLICE - BULLETPROOF VEST GRANT 8,259 GENERAL REVENUE MEASURE W HALF CENT TRANSACTIONS & USE TAX 1,500,000 IT EXPENDITURE TELECOMM AUDIT 20,000 IT EXPENDITURE LASERFICHE LICENSES 5,000 SELF INSURANCE EXPENDITURE WORKERS COMP EXCESS INSURANCE 220,000 SEWER EXPENDITURE WQCP TRANSFORMER REPLACEMENT 275,000 Page 2 of 12 Page 3 of 12 Page 4 of 12 Page 5 of 12 Page 6 of 12 Page 7 of 12 Page 8 of 12 Page 9 of 12 Page 10 of 12 Page 11 of 12 General Fund Summary FY 2015-16 Mid-year Budget Amended Projected Revenues 2015-16 2015-16 Amount % Property Taxes 16,726,607$ 16,795,027$ 68,420$ 0.4% Frmr RDA Prop Tax Alloc.5,142,750 5,142,750 - 0.0% ERAF Refund from County 2,444,500 2,444,500 - 0.0% Sales Tax 14,534,284 16,034,284 1,500,000 9.4% Triple Flip 1,996,152 3,298,268 1,302,116 39.5% Transient Occupancy Tax 12,000,000 13,371,630 1,371,630 10.3% Other Taxes 4,385,363 4,385,363 - 0.0% Franchise Fees 3,344,000 3,344,000 - 0.0% Building and Fire Permits 3,876,854 5,294,876 1,418,022 26.8% Motor Veh. License & In-Lieu 5,385,045 5,385,045 - 0.0% Rev. from Other Agencies 1,772,762 2,402,272 629,510 26.2% Charges for Services 7,420,843 7,480,843 60,000 0.8% Administrative Charges 1,365,265 1,365,265 - 0.0% Fines 838,500 838,500 - 0.0% Interest & Rent 2,931,500 2,931,500 - 0.0% Other 1,764,696 2,281,464 516,768 22.7% Total Revenues 85,929,122$ 92,795,587$ 6,866,466$ 8.0% Plus PO/CIP Carryover 3,994,820$ 3,994,820$ Amended Projected Expenditures 2015-16 2015-16 Amount % City Council 237,768$ 252,862$ (15,094)$ (6.3%) City Clerk 751,304 751,304 - 0.0% City Treasurer 131,193 118,583 12,610 9.6% City Attorney 782,578 782,578 - 0.0% City Manager 1,601,580 1,513,945 87,634 5.5% Finance 2,054,183 2,069,236 (15,052) (0.7%) Non-Departmental 1,108,998 1,108,998 - 0.0% Human Resources 1,527,383 1,349,952 177,432 11.6% Economic & Community Dev 6,360,156 6,002,042 358,114 5.6% Fire 21,754,722 22,479,815 (725,093) (3.3%) Police 25,331,450 25,905,698 (574,248) (2.3%) Public Works 4,784,788 4,831,147 (46,359) (1.0%) Library 4,882,954 4,546,077 336,877 6.9% Parks & Recreation 14,008,214 12,775,189 1,233,025 8.8% Transfers Out 4,242,720 4,242,720 - 0.0% Total Expenditures 89,559,991$ 88,730,146$ 829,846$ 0.9% Surplus / (Deficit)363,950 8,060,261$ Plus Midyear Requests 816,709$ Proposed Surplus / (Deficit)7,243,553$ (Under) / Over Budget Under / (Over) Page 12 of 12 taff Re ort DA-fE: TO: FROM: SUBJECT:A RESOLUTION APPROVING AN AGREEMENT WITH MAZE AND ASSOCIATES FOR INDEPENDENT AUDIT SERVICES IN AN AMOLTNT NOT TO EXCEED $79,285 PER YEAR FOR A THREE YEAR PEzuOD WITH OPTIONS TO EX'fEND FOR TWO ADDITIONAL FISCAL YEARS AND AUTHORIZING THE CITY MANAGER TO EXECUTE SAID AGREEMENT RECOMMENDATION It is recommended that the City Council adopt a resolution approving an agreement with Maze and Associates for independent audit services in an amount not to exceed $79,285 per year for a three year period with options to extend for two additional fiscal years and authorizing the City Manager to execute said agrcement. BACKGROUNDiDISCUSSION Maze and Associates has been the independent auditor for the City of South San Francisco since FY 2003-04. Govemment Finance Officers Association (GFOA) Best Practices recommend a full-scale competitive process at the end of the term of each audit contract. Given the guidance lrom GFOA and to promote due diligence, the City issued a Request for Proposal for independent audit services on December l, 2015. Direct solicitations were sent to 4l Certified Professional Accounting (CPA) firms. Seven vendors submitted timely proposals, which were evaluated based on the followins criteria: . Comparable govemment agency auditing experience, o Quality offirm personnel to be assigned to the engagement; o Adequacy of the proposed staffing plan, o Firm's approach to audit and review ofthe City's financial statements After review of the proposals using the above criteria, the top three firms, Maze and Associates, Vavrinek, Trine, Day & Co., and Gallina LLP were invited to an interview by an outside evaluation panel comprised of the following members: o Lin-Lin Cheng, Finance Director (Retired) - City of Foster City February 24,2016 Mayor, Vice Mayor and Councilmembers Richard Lee, Director of Finance ft1_ Staff Report Subject: Audit Services Agreement Page 2 of 3 . Jan Cooke, CPA, Finance Director - Town of Hillsborough o Carol Augustine, Finance Director - City of Burlingame Panel members evaluated each prospective CPA firm according to the criteria listed below and weighed each value accordingly: o Qualifications and experience 35% o Proposal Quality/Responsiveness 25% r Fit (Ability to meet City's requirements) 25% e Cost 15% The oanel scored the firms as follows: Points Per Total Evaluation Criteria Qualifications & Experience Proposal Quality/Responsiveness Fit Cost Evaluator 35 25 25 Maze & Associates 105 1@ 75 73 75 70 45 35 Vavrinek, Trine, Day & Co. 87 62 60 28 Gallina l[P 65 58 53 Total Score Maze and Associates is a licensed Califomia Certified Public Accounting firm based in Pleasant Hill, Califomia. With a staff of 47 individuals, the firm has focused its practice on municipalities since its inception in 1986. As a result, they annually audit over 200 municipalities. The firm will provide the following reports on an annual basis: . Comprehensive Annual Financial Reporto Single Audit Report e Transportation Development Act Reporto Measure A Report e GANN Limits Report . State Transportation Improvement Program Reporte Other Reports as Required FUNDING The contract's all-inclusive maximum allowable expenditure is $79,285 per year for a three year period, reflecting an annual savings of $ 11,3 40 or 12.5%o compared to the current audit services annual cost of$90,625. Funds will be appropriated within the FY 2016-17,2017-18 and 2018-19 operating budgets accordingly. StaffReport Subject Audit Services Agreement Page 3 of3 CONCLUSION Approval of the attached resolution positions the City to continue its due diligence efforts by ensuring high quality independent audit services at a competitive rate. PBy: Attachments: Resolution Agr€€ment PowerPoint Presentation 2600544.r Director ofFinance RESOLUTION NO._____ CITY COUNCIL, CITY OF SOUTH SAN FRANCISCO, STATE OF CALIFORNIA A RESOLUTION APPROVING AN AGREEMENT WITH MAZE AND ASSOCIATES FOR INDEPENDENT AUDIT SERVICES IN AN AMOUNT NOT TO EXCEED $79,285 PER YEAR FOR A THREE YEAR PERIOD WITH OPTIONS TO EXTEND FOR TWO ADDITIONAL FISCAL YEARS AND AUTHORIZING THE CITY MANAGER TO EXECUTE SAID AGREEMENT WHEREAS, the City of South San Francisco (“City”) published a Request for Proposals (“RFP”) for independent audit services; and WHEREAS, seven vendors submitted timely proposals, and three vendors were interviewed; and WHEREAS, a panel comprised of external local governmental finance professionals interviewed three of the vendors and determined that and determined that Maze and Associates would best serve the City’s needs; and WHEREAS, both parties now wish to enter into an agreement, whereby Maze and Associates will provide independent audit services commencing FY 2015-16 through FY 2017- 18 with options to extend two additional fiscal years and attached hereto as Attachment A; and WHEREAS, this City Council has examined the Agreement and approves of it as to both form and content, and desires to enter into said Agreement; NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of South San Francisco does hereby take the following action: 1. Approves an Agreement with Maze and Associates for independent audit servcies in an amount not to exceed $79,825 per year for a threee year period, with options to extend for two additional fiscal years, substantially in the form attached hereto as Attachment A. 2. Authorizes the City Manager, or his designee, to execute an Agreement with Maze and Associates, subject to approval as to form by the City Attorney, for and on behalf of the City of South San Francisco, and to take any other actions necessary to carry out the intent of this resolution on behalf of the City Council. * * * * * * I hereby certify that the foregoing Resolution was regularly introduced and adopted by the City Council of the City of South San Francisco at a regular meeting held on the 24th day of February, 2016, by the following vote: Page 1 of 27 AYES: ___________________________________________________________ _ NOES: _____________________________________________________________ ABSTAIN: _____________________________________________________________ ABSENT: _____________________________________________________________ ATTEST: _______________________________ City Clerk 2600547.1 Page 2 of 27 CONSULTING SERVICES AGREEMENT BETWEEN THE CITY OF SOUTH SAN FRANCISCO AND MAZE AND ASSOCIATES THIS AGREEMENT for consulting services is made by and between the City of South San Francisco (“City”) and Maze and Associates (“Consultant”) (together sometimes referred to as the “Parties”) as of February 24, 2016 (the “Effective Date”). Section 1. SERVICES. Subject to the terms and conditions set forth in this Agreement, Consultant shall provide to City the services described in the Scope of Work attached as Exhibit A, attached hereto and incorporated herein, at the time and place and in the manner specified therein. In the event of a conflict in or inconsistency between the terms of this Agreement and Exhibit A, the Agreement shall prevail. 1.1 Term of Services. The term of this Agreement shall begin on the Effective Date and shall end on March 31, 2019, the date of completion specified in Exhibit A, and Consultant shall complete the work described in Exhibit A prior to that date, unless the term of the Agreement is otherwise terminated or extended, as provided for in Section 8. The time provided to Consultant to complete the services required by this Agreement shall not affect the City’s right to terminate the Agreement, as provided for in Section 8. 1.2 Standard of Performance. Consultant shall perform all services required pursuant to this Agreement in the manner and according to the standards observed by a competent practitioner of the profession in which Consultant is engaged in the geographical area in which Consultant practices its profession. Consultant shall prepare all work products required by this Agreement in a substantial, first-class manner and shall conform to the standards of quality normally observed by a person practicing in Consultant's profession. 1.3 Assignment of Personnel. Consultant shall assign only competent personnel to perform services pursuant to this Agreement. In the event that City, in its sole discretion, at any time during the term of this Agreement, desires the reassignment of any such persons, Consultant shall, immediately upon receiving notice from City of such desire of City, reassign such person or persons. 1.4 Time. Consultant shall devote such time to the performance of services pursuant to this Agreement as may be reasonably necessary to meet the standard of performance provided in Sections 1.1 and 1.2 above and to satisfy Consultant’s obligations hereunder. Section 2. COMPENSATION. City hereby agrees to pay Consultant a sum not to exceed $237,855.00 (TWO HUNDRED THIRTY SEVEN THOUSAND EIGHT HUNDRED FIFTY FIVE DOLLARS), notwithstanding any contrary indications that may be contained in Consultant’s proposal, for services to be performed and reimbursable costs incurred under this Agreement. In the event of a conflict between this Agreement and Consultant’s proposal, attached as Exhibit A, regarding the amount of compensation, the Agreement shall prevail. City shall pay Consultant for services rendered pursuant to this Agreement at the time and in the manner set forth herein. The payments specified below shall be the only payments from City to Consultant for services rendered pursuant to this Agreement. Consultant shall submit all invoices to ATTACHMENT A Page 3 of 27 City in the manner specified herein. Except as specifically authorized by City, Consultant shall not bill City for duplicate services performed by more than one person. Consultant and City acknowledge and agree that compensation paid by City to Consultant under this Agreement is based upon Consultant’s estimated costs of providing the services required hereunder, including salaries and benefits of employees and subcontractors of Consultant. Consequently, the parties further agree that compensation hereunder is intended to include the costs of contributions to any pensions and/or annuities to which Consultant and its employees, agents, and subcontractors may be eligible. City therefore has no responsibility for such contributions beyond compensation required under this Agreement. 2.1 Invoices. Consultant shall submit invoices, not more often than once per month during the term of this Agreement, based on the cost for services performed and reimbursable costs incurred prior to the invoice date. 2.2 Monthly Payment. City shall make monthly payments, based on invoices received, for services satisfactorily performed, and for authorized reimbursable costs incurred. City shall have thirty (30) days from the receipt of an invoice that complies with all of the requirements above to pay Consultant. City shall have no obligation to pay invoices submitted ninety (90) days past the performance of work or incurrence of cost. 2.4 Total Payment. City shall pay for the services to be rendered by Consultant pursuant to this Agreement. City shall not pay any additional sum for any expense or cost whatsoever incurred by Consultant in rendering services pursuant to this Agreement. City shall make no payment for any extra, further, or additional service pursuant to this Agreement. In no event shall Consultant submit any invoice for an amount in excess of the maximum amount of compensation provided above either for a task or for the entire Agreement, unless the Agreement is modified prior to the submission of such an invoice by a properly executed change order or amendment. 2.5 Hourly Fees. Fees for work performed by Consultant on an hourly basis shall not exceed the amounts shown in Exhibit A. 2.6 Reimbursable Expenses. . Reimbursable expenses are included in the total amount of compensation provided under this Agreement that shall not be exceeded. 2.7 Payment of Taxes. Consultant is solely responsible for the payment of employment taxes incurred under this Agreement and any similar federal or state taxes. Contractor represents and warrants that Contractor is a resident of the State of California in accordance with California Revenue & Taxation Code Section 18662, as may be amended, and is exempt from withholding. Contractor accepts sole responsible for Page 4 of 27 verifying the residency status of any subcontractors and withhold taxes from non-California subcontractors as required by law. 2.8 Payment upon Termination. In the event that the City or Consultant terminates this Agreement pursuant to Section 8, the City shall compensate the Consultant for all outstanding costs and reimbursable expenses incurred for work satisfactorily completed as of the date of written notice of termination. Consultant shall maintain adequate logs and timesheets in order to verify costs incurred to that date. 2.9 Authorization to Perform Services. The Consultant is not authorized to perform any services or incur any costs whatsoever under the terms of this Agreement until receipt of authorization from the Contract Administrator. Section 3. FACILITIES AND EQUIPMENT. Except as set forth herein, Consultant shall, at its sole cost and expense, provide all facilities and equipment that may be necessary to perform the services required by this Agreement. City shall make available to Consultant only the facilities and equipment listed in this section, and only under the terms and conditions set forth herein. City shall furnish physical facilities such as desks, filing cabinets, and conference space, as may be reasonably necessary for Consultant’s use while consulting with City employees and reviewing records and the information in possession of the City. The location, quantity, and time of furnishing those facilities shall be in the sole discretion of City. In no event shall City be obligated to furnish any facility that may involve incurring any direct expense, including but not limited to computer, long-distance telephone or other communication charges, vehicles, and reproduction facilities. Section 4. INSURANCE REQUIREMENTS. Before beginning any work under this Agreement, Consultant, at its own cost and expense, unless otherwise specified below, shall procure the types and amounts of insurance listed below against claims for injuries to persons or damages to property that may arise from or in connection with the performance of the work hereunder by the Consultant and its agents, representatives, employees, and subcontractors. Consistent with the following provisions, Consultant shall provide Certificates of Insurance, attached hereto and incorporated herein as Exhibit B, indicating that Consultant has obtained or currently maintains insurance that meets the requirements of this section and under forms of insurance satisfactory, in all respects, to the City. Consultant shall maintain the insurance policies required by this section throughout the term of this Agreement. The cost of such insurance shall be included in the Consultant's bid. Consultant shall not allow any subcontractor to commence work on any subcontract until Consultant has obtained all insurance required herein for the subcontractor(s). 4.1 Workers’ Compensation. Consultant shall, at its sole cost and expense, maintain Statutory Workers’ Compensation Insurance and Employer’s Liability Insurance for any and all persons employed directly or indirectly by Consultant. The Statutory Workers’ Compensation Insurance and Employer’s Liability Insurance shall be provided with limits of not less than ONE MILLION DOLLARS ($1,000,000) per accident. In the alternative, Consultant may rely on a self-insurance program to meet those requirements, but only if the program of self-insurance complies fully with the provisions of the California Labor Page 5 of 27 Code. Determination of whether a self-insurance program meets the standards of the Labor Code shall be solely in the discretion of the Contract Administrator (as defined in Section 10.9). The insurer, if insurance is provided, or the Consultant, if a program of self- insurance is provided, shall waive all rights of subrogation against the City and its officers, officials, employees, and volunteers for loss arising from work performed under this Agreement. 4.2 Commercial General and Automobile Liability Insurance. 4.2.1 General requirements. Consultant, at its own cost and expense, shall maintain commercial general and automobile liability insurance for the term of this Agreement in an amount not less than ONE MILLION DOLLARS ($1,000,000.00) per occurrence, combined single limit coverage for risks associated with the work contemplated by this Agreement. If a Commercial General Liability Insurance or an Automobile Liability form or other form with a general aggregate limit is used, either the general aggregate limit shall apply separately to the work to be performed under this Agreement or the general aggregate limit shall be at least twice the required occurrence limit. Such coverage shall include but shall not be limited to, protection against claims arising from bodily and personal injury, including death resulting there from, and damage to property resulting from activities contemplated under this Agreement, including the use of owned and non- owned automobiles. 4.2.2 Minimum scope of coverage. Commercial general coverage shall be at least as broad as Insurance Services Office Commercial General Liability occurrence form CG 0001 or GL 0002 (most recent editions) covering comprehensive General Liability and Insurance Services Office form number GL 0404 covering Broad Form Comprehensive General Liability. Automobile coverage shall be at least as broad as Insurance Services Office Automobile Liability form CA 0001 (ed. 12/90) Code 8 and 9. No endorsement shall be attached limiting the coverage. 4.2.3 Additional requirements. Each of the following shall be included in the insurance coverage or added as a certified endorsement to the policy: a. The insurance shall cover on an occurrence or an accident basis, and not on a claims-made basis. b. Any failure of Consultant to comply with reporting provisions of the policy shall not affect coverage provided to City and its officers, employees, agents, and volunteers. 4.3 Professional Liability Insurance. 4.3.1 General requirements. Consultant, at its own cost and expense, shall maintain for the period covered by this Agreement professional liability insurance for Page 6 of 27 licensed professionals performing work pursuant to this Agreement in an amount not less than ONE MILLION DOLLARS ($1,000,000) covering the licensed professionals’ errors and omissions. Any deductible or self-insured retention shall not exceed ONE HUNDRED FIFTY THOUSAND DOLLARS $150,000 per claim. 4.3.2 Claims-made limitations. The following provisions shall apply if the professional liability coverage is written on a claims-made form: a. The retroactive date of the policy must be shown and must be before the date of the Agreement. b. Insurance must be maintained and evidence of insurance must be provided for at least five (5) years after completion of the Agreement or the work, so long as commercially available at reasonable rates. c. If coverage is canceled or not renewed and it is not replaced with another claims-made policy form with a retroactive date that precedes the date of this Agreement, Consultant must provide extended reporting coverage for a minimum of five (5) years after completion of the Agreement or the work. The City shall have the right to exercise, at the Consultant’s sole cost and expense, any extended reporting provisions of the policy, if the Consultant cancels or does not renew the coverage. d. A copy of the claim reporting requirements must be submitted to the City prior to the commencement of any work under this Agreement. 4.4 All Policies Requirements. 4.4.1 Acceptability of insurers. All insurance required by this section is to be placed with insurers with a Bests' rating of no less than A:VII. 4.4.2 Verification of coverage. Prior to beginning any work under this Agreement, Consultant shall furnish City with complete copies of all policies delivered to Consultant by the insurer, including complete copies of all endorsements attached to those policies. All copies of policies and certified endorsements shall show the signature of a person authorized by that insurer to bind coverage on its behalf. If the City does not receive the required insurance documents prior to the Consultant beginning work, it shall not waive the Consultant’s obligation to provide them. The City reserves the right to require complete copies of all required insurance policies at any time. 4.4.3 Notice of Reduction in or Cancellation of Coverage. A certified endorsement shall be attached to all insurance obtained pursuant to this Agreement stating that coverage shall not be suspended, voided, canceled by either party, or reduced in coverage or in limits, except after thirty (30) days' prior written notice by certified Page 7 of 27 mail, return receipt requested, has been given to the City. In the event that any coverage required by this section is reduced, limited, cancelled, or materially affected in any other manner, Consultant shall provide written notice to City at Consultant’s earliest possible opportunity and in no case later than ten (10) working days after Consultant is notified of the change in coverage. 4.4.4 Additional insured; primary insurance. City and its officers, employees, agents, and volunteers shall be covered as additional insureds with respect to each of the following: liability arising out of activities performed by or on behalf of Consultant, including the insured’s general supervision of Consultant; products and completed operations of Consultant, as applicable; premises owned, occupied, or used by Consultant; and automobiles owned, leased, or used by the Consultant in the course of providing services pursuant to this Agreement. The coverage shall contain no special limitations on the scope of protection afforded to City or its officers, employees, agents, or volunteers. A certified endorsement must be attached to all policies stating that coverage is primary insurance with respect to the City and its officers, officials, employees and volunteers, and that no insurance or self-insurance maintained by the City shall be called upon to contribute to a loss under the coverage. 4.4.5 Deductibles and Self-Insured Retentions. Consultant shall disclose to and obtain the approval of City for the self-insured retentions and deductibles before beginning any of the services or work called for by any term of this Agreement. Further, if the Consultant’s insurance policy includes a self-insured retention that must be paid by a named insured as a precondition of the insurer’s liability, or which has the effect of providing that payments of the self-insured retention by others, including additional insureds or insurers do not serve to satisfy the self- insured retention, such provisions must be modified by special endorsement so as to not apply to the additional insured coverage required by this agreement so as to not prevent any of the parties to this agreement from satisfying or paying the self- insured retention required to be paid as a precondition to the insurer’s liability. Additionally, the certificates of insurance must note whether the policy does or does not include any self-insured retention and also must disclose the deductible. During the period covered by this Agreement, only upon the prior express written authorization of Contract Administrator, Consultant may increase such deductibles or self-insured retentions with respect to City, its officers, employees, agents, and volunteers. The Contract Administrator may condition approval of an increase in deductible or self-insured retention levels with a requirement that Consultant procure a bond, guaranteeing payment of losses and related investigations, claim administration, and defense expenses that is satisfactory in all respects to each of them. Page 8 of 27 4.4.6 Subcontractors. Consultant shall include all subcontractors as insureds under its policies or shall furnish separate certificates and certified endorsements for each subcontractor. All coverages for subcontractors shall be subject to all of the requirements stated herein. 4.4.7 Wasting Policy. No insurance policy required by Section 4 shall include a “wasting” policy limit. 4.4.8 Variation. The City may approve a variation in the foregoing insurance requirements, upon a determination that the coverage, scope, limits, and forms of such insurance are either not commercially available, or that the City’s interests are otherwise fully protected. 4.5 Remedies. In addition to any other remedies City may have if Consultant fails to provide or maintain any insurance policies or policy endorsements to the extent and within the time herein required, City may, at its sole option exercise any of the following remedies, which are alternatives to other remedies City may have and are not the exclusive remedy for Consultant’s breach: a. Obtain such insurance and deduct and retain the amount of the premiums for such insurance from any sums due under the Agreement; b. Order Consultant to stop work under this Agreement or withhold any payment that becomes due to Consultant hereunder, or both stop work and withhold any payment, until Consultant demonstrates compliance with the requirements hereof; and/or c. Terminate this Agreement. Section 5. INDEMNIFICATION AND CONSULTANT’S RESPONSIBILITIES. Consultant shall indemnify, defend with counsel selected by the City, and hold harmless the City and its officials, officers, employees, agents, and volunteers from and against any and all losses, liability, claims, suits, actions, damages, and causes of action arising out of any personal injury, bodily injury, loss of life, or damage to property, or any violation of any federal, state, or municipal law or ordinance, to the extent caused, in whole or in part, by the willful misconduct or negligent acts or omissions of Consultant or its employees, subcontractors, or agents, by acts for which they could be held strictly liable, or by the quality or character of their work. The foregoing obligation of Consultant shall not apply when (1) the injury, loss of life, damage to property, or violation of law arises wholly from the gross negligence or willful misconduct of the City or its officers, employees, agents, or volunteers and (2) the actions of Consultant or its employees, subcontractor, or agents have contributed in no part to the injury, loss of life, damage to property, or violation of law. It is understood that the duty of Consultant to indemnify and hold harmless includes the duty to defend as set forth in Section 2778 of the California Civil Code. Acceptance by City of insurance certificates and endorsements required under this Agreement does not relieve Consultant from liability under this indemnification and hold harmless clause. This indemnification and hold harmless clause shall apply to any damages or claims for damages whether or not such insurance policies shall have been Page 9 of 27 determined to apply. By execution of this Agreement, Consultant acknowledges and agrees to the provisions of this Section and that it is a material element of consideration. In the event that Consultant or any employee, agent, or subcontractor of Consultant providing services under this Agreement is determined by a court of competent jurisdiction or the California Public Employees Retirement System (PERS) to be eligible for enrollment in PERS as an employee of City, Consultant shall indemnify, defend, and hold harmless City for the payment of any employee and/or employer contributions for PERS benefits on behalf of Consultant or its employees, agents, or subcontractors, as well as for the payment of any penalties and interest on such contributions, which would otherwise be the responsibility of City. Section 6. STATUS OF CONSULTANT. 6.1 Independent Contractor. At all times during the term of this Agreement, Consultant shall be an independent contractor and shall not be an employee of City. City shall have the right to control Consultant only insofar as the results of Consultant's services rendered pursuant to this Agreement and assignment of personnel pursuant to Subparagraph 1.3; however, otherwise City shall not have the right to control the means by which Consultant accomplishes services rendered pursuant to this Agreement. Notwithstanding any other City, state, or federal policy, rule, regulation, law, or ordinance to the contrary, Consultant and any of its employees, agents, and subcontractors providing services under this Agreement shall not qualify for or become entitled to, and hereby agree to waive any and all claims to, any compensation, benefit, or any incident of employment by City, including but not limited to eligibility to enroll in the California Public Employees Retirement System (PERS) as an employee of City and entitlement to any contribution to be paid by City for employer contributions and/or employee contributions for PERS benefits. 6.2 Consultant No Agent. Except as City may specify in writing, Consultant shall have no authority, express or implied, to act on behalf of City in any capacity whatsoever as an agent or to bind City to any obligation whatsoever. Section 7. LEGAL REQUIREMENTS. 7.1 Governing Law. The laws of the State of California shall govern this Agreement. 7.2 Compliance with Applicable Laws. Consultant and any subcontractors shall comply with all laws applicable to the performance of the work hereunder. 7.3 Other Governmental Regulations. To the extent that this Agreement may be funded by fiscal assistance from another governmental entity, Consultant and any subcontractors shall comply with all applicable rules and regulations to which City is bound by the terms of such fiscal assistance program. 7.4 Licenses and Permits. Consultant represents and warrants to City that Consultant and its employees, agents, and any subcontractors have all licenses, permits, qualifications, Page 10 of 27 and approvals, including from City, of what-so-ever nature that are legally required to practice their respective professions. Consultant represents and warrants to City that Consultant and its employees, agents, any subcontractors shall, at their sole cost and expense, keep in effect at all times during the term of this Agreement any licenses, permits, and approvals that are legally required to practice their respective professions. In addition to the foregoing, Consultant and any subcontractors shall obtain and maintain during the term of this Agreement valid Business Licenses from City. 7.5 Nondiscrimination and Equal Opportunity. Consultant shall not discriminate, on the basis of a person’s race, religion, color, national origin, age, physical or mental handicap or disability, medical condition, marital status, sex, or sexual orientation, against any employee, applicant for employment, subcontractor, bidder for a subcontract, or participant in, recipient of, or applicant for any services or programs provided by Consultant under this Agreement. Consultant shall comply with all applicable federal, state, and local laws, policies, rules, and requirements related to equal opportunity and nondiscrimination in employment, contracting, and the provision of any services that are the subject of this Agreement, including but not limited to the satisfaction of any positive obligations required of Consultant thereby. Consultant shall include the provisions of this Subsection in any subcontract approved by the Contract Administrator or this Agreement. Section 8. TERMINATION AND MODIFICATION. 8.1 Termination. City may cancel this Agreement at any time and without cause upon written notification to Consultant. Consultant may cancel this Agreement for cause upon 30 days’ written notice to City and shall include in such notice the reasons for cancellation. In the event of termination, Consultant shall be entitled to compensation for services performed to the date of notice of termination; City, however, may condition payment of such compensation upon Consultant delivering to City all materials described in Section 9.1. 8.2 Extension. City may, in its sole and exclusive discretion, extend the end date of this Agreement beyond that provided for in Subsection 1.1. Any such extension shall require a written amendment to this Agreement, as provided for herein. Consultant understands and agrees that, if City grants such an extension, City shall have no obligation to provide Consultant with compensation beyond the maximum amount provided for in this Agreement. Similarly, unless authorized by the Contract Administrator, City shall have no obligation to reimburse Consultant for any otherwise reimbursable expenses incurred during the extension period. Page 11 of 27 8.3 Amendments. The parties may amend this Agreement only by a writing signed by all the parties. 8.4 Assignment and Subcontracting. City and Consultant recognize and agree that this Agreement contemplates personal performance by Consultant and is based upon a determination of Consultant’s unique personal competence, experience, and specialized personal knowledge. Moreover, a substantial inducement to City for entering into this Agreement was and is the professional reputation and competence of Consultant. Consultant may not assign this Agreement or any interest therein without the prior written approval of the Contract Administrator. Consultant shall not assign or subcontract any portion of the performance contemplated and provided for herein, other than to the subcontractors noted in the proposal, without prior written approval of the Contract Administrator. 8.5 Survival. All obligations arising prior to the termination of this Agreement and all provisions of this Agreement allocating liability between City and Consultant shall survive the termination of this Agreement. 8.6 Options upon Breach by Consultant. If Consultant materially breaches any of the terms of this Agreement, City’s remedies shall include, but not be limited to, the following: 8.6.1 Immediately terminate the Agreement; 8.6.2 Retain the plans, specifications, drawings, reports, design documents, and any other work product prepared by Consultant pursuant to this Agreement; 8.6.3 Retain a different consultant to complete the work described in Exhibit A not finished by Consultant; or 8.6.4 Charge Consultant the difference between the cost to complete the work described in Exhibit A that is unfinished at the time of breach and the amount that City would have paid Consultant pursuant to Section 2 if Consultant had completed the work. Section 9. KEEPING AND STATUS OF RECORDS. 9.1 Records Created as Part of Consultant’s Performance. All reports, data, maps, models, charts, studies, surveys, photographs, memoranda, plans, studies, specifications, records, files, or any other documents or materials, in electronic or any other form, that Consultant prepares or obtains pursuant to this Agreement and that relate to the matters covered hereunder shall be the property of the City. Consultant hereby agrees to deliver those documents to the City upon termination of the Agreement. It is understood and agreed that the documents and other materials, including but not limited to those described above, prepared pursuant to this Agreement are prepared specifically for the City and are Page 12 of 27 not necessarily suitable for any future or other use. City and Consultant agree that, until final approval by City, all data, plans, specifications, reports and other documents are confidential and will not be released to third parties without prior written consent of both parties unless required by law. 9.2 Consultant’s Books and Records. Consultant shall maintain any and all ledgers, books of account, invoices, vouchers, canceled checks, and other records or documents evidencing or relating to charges for services or expenditures and disbursements charged to the City under this Agreement for a minimum of three (3) years, or for any longer period required by law, from the date of final payment to the Consultant to this Agreement. 9.3 Inspection and Audit of Records. Any records or documents that Section 9.2 of this Agreement requires Consultant to maintain shall be made available for inspection, audit, and/or copying at any time during regular business hours, upon oral or written request of the City. Under California Government Code Section 8546.7, if the amount of public funds expended under this Agreement exceeds TEN THOUSAND DOLLARS ($10,000.00), the Agreement shall be subject to the examination and audit of the State Auditor, at the request of City or as part of any audit of the City, for a period of three (3) years after final payment under the Agreement. 9.4 Records Submitted in Response to an Invitation to Bid or Request for Proposals. All responses to a Request for Proposals (RFP) or invitation to bid issued by the City become the exclusive property of the City. At such time as the City selects a bid, all proposals received become a matter of public record, and shall be regarded as public records, with the exception of those elements in each proposal that are defined by Consultant and plainly marked as “Confidential,” "Business Secret" or “Trade Secret." The City shall not be liable or in any way responsible for the disclosure of any such proposal or portions thereof, if Consultant has not plainly marked it as a "Trade Secret" or "Business Secret," or if disclosure is required under the Public Records Act. Although the California Public Records Act recognizes that certain confidential trade secret information may be protected from disclosure, the City may not be in a position to establish that the information that a prospective bidder submits is a trade secret. If a request is made for information marked "Trade Secret" or "Business Secret," and the requester takes legal action seeking release of the materials it believes does not constitute trade secret information, by submitting a proposal, Consultant agrees to indemnify, defend and hold harmless the City, its agents and employees, from any judgment, fines, penalties, and award of attorneys fees awarded against the City in favor of the party requesting the information, and any and all costs connected with that defense. This obligation to indemnify survives the City's award of the contract. Consultant agrees that this indemnification survives as long as the trade secret information is in the City's possession, which includes a minimum retention period for such documents. Section 10 MISCELLANEOUS PROVISIONS. Page 13 of 27 10.1 Attorneys’ Fees. If a party to this Agreement brings any action, including arbitration or an action for declaratory relief, to enforce or interpret the provision of this Agreement, the prevailing party shall be entitled to reasonable attorneys’ fees in addition to any other relief to which that party may be entitled. The court may set such fees in the same action or in a separate action brought for that purpose. 10.2 Venue. In the event that either party brings any action against the other under this Agreement, the parties agree that trial of such action shall be vested exclusively in the state courts of California in the County San Mateo or in the United States District Court for the Northern District of California. 10.3 Severability. If a court of competent jurisdiction finds or rules that any provision of this Agreement is invalid, void, or unenforceable, the provisions of this Agreement not so adjudged shall remain in full force and effect. The invalidity in whole or in part of any provision of this Agreement shall not void or affect the validity of any other provision of this Agreement. 10.4 No Implied Waiver of Breach. The waiver of any breach of a specific provision of this Agreement does not constitute a waiver of any other breach of that term or any other term of this Agreement. 10.5 Successors and Assigns. The provisions of this Agreement shall inure to the benefit of and shall apply to and bind the successors and assigns of the parties. 10.6 Use of Recycled Products. Consultant shall prepare and submit all reports, written studies and other printed material on recycled paper to the extent it is available at equal or less cost than virgin paper. 10.7 Conflict of Interest. Consultant may serve other clients, but none whose activities within the corporate limits of City or whose business, regardless of location, would place Consultant in a “conflict of interest,” as that term is defined in the Political Reform Act, codified at California Government Code Section 81000 et seq. Consultant shall not employ any City official in the work performed pursuant to this Agreement. No officer or employee of City shall have any financial interest in this Agreement that would violate California Government Code Sections 1090 et seq. Consultant hereby warrants that it is not now, nor has it been in the previous twelve (12) months, an employee, agent, appointee, or official of the City. If Consultant was an employee, agent, appointee, or official of the City in the previous twelve (12) months, Consultant warrants that it did not participate in any manner in the forming of this Agreement. Consultant understands that, if this Agreement is made in violation of Government Code §1090 et.seq., the entire Agreement is void and Consultant will not be entitled to any compensation for services performed pursuant to this Agreement, including Page 14 of 27 reimbursement of expenses, and Consultant will be required to reimburse the City for any sums paid to the Consultant. Consultant understands that, in addition to the foregoing, it may be subject to criminal prosecution for a violation of Government Code § 1090 and, if applicable, will be disqualified from holding public office in the State of California. 10.8 Solicitation. Consultant agrees not to solicit business at any meeting, focus group, or interview related to this Agreement, either orally or through any written materials. 10.9 Contract Administration. This Agreement shall be administered by the Director of Finance ("Contract Administrator"). All correspondence shall be directed to or through the Contract Administrator or his or her designee. 10.10 Notices. All notices and other communications which are required or may be given under this Agreement shall be in writing and shall be deemed to have been duly given (i) when received if personally delivered; (ii) when received if transmitted by telecopy, if received during normal business hours on a business day (or if not, the next business day after delivery) provided that such facsimile is legible and that at the time such facsimile is sent the sending Party receives written confirmation of receipt; (iii) if sent for next day delivery to a domestic address by recognized overnight delivery service (e.g., Federal Express); and (iv) upon receipt, if sent by certified or registered mail, return receipt requested. In each case notice shall be sent to the respective Parties as follows: Consultant Maze and Associates 3478 Buskirk Avenue, Suite 215 Pleasant Hill, CA 94523 City: City Clerk City of South San Francisco 400 Grand Avenue South San Francisco, CA 94080 10.12 Integration. This Agreement, including all Exhibits attached hereto, and incorporated herein, represents the entire and integrated agreement between City and Consultant and supersedes all prior negotiations, representations, or agreements, either written or oral pertaining to the matters herein. 10.13 Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be an original and all of which together shall constitute one agreement. 10.14 Construction. The headings in this Agreement are for the purpose of reference only and shall not limit or otherwise affect any of the terms of this Agreement. The parties have had Page 15 of 27 an equal opportunity to participate in the drafting of this Agreement; therefore any construction as against the drafting party shall not apply to this Agreement. The Parties have executed this Agreement as of the Effective Date. CITY OF SOUTH SAN FRANCISCO Consultants ____________________________ _____________________________________ City Manager NAME: TITLE: Attest: _____________________________ Krista Martinelli, City Clerk Approved as to Form: ____________________________ City Attorney 2051688.4 Page 16 of 27 FF,E TOCONIINI'D PROVIDE PROXESSIONAL smvlcrs FORIqECITYOF saNrRAltclltco MAZE& 347E Buddrk TES Sritc 215 Plerrut Hill,91523 Decenber 3O 2015 Conbct Penour Kafherinc Yuen - e'mail address - kelherine)@r''ez€csocietes,com Itlut Wmg - o.mail ad&ms - nrrtvr@azassocidescm (9,r9804p,02 EXHIBIT A Page 17 of 27 Total All-inclusive Maximum Price Our Total All-Inclusive Maximum Prices for the services specified in the Request for Proposal for the fiscal years ending June 30, 2016 through June 30, 2018 are detailed at the end of this section. Whal Our Pfice Includes Our price includes all the basic audit work and reports, statements and other deliverables specified in your request for proposal. Our price also includes the items below at no additional cost: 1) year-round support and telephone consultation on pertinent issues affecting your City, 2) copies of our joumal entries and our leadsheets used to support the amounts in your financial statements, 3) a Study Session for the Council to discuss the audit process, frnancial statements and recommendations. 4) active Partner involvement in your work every year, 5) our Interim Audit Checklist, 6) our Arurual Closing Checklist, 7) our interim Accounting Issues Memorandum, 8) preliminary draft financial statements at interim, 9) overviews and summaries of upcoming pronouncements and regulations affecting the audited financial statements, 10) direct dump of general ledger data into our ProSystems ftial balance software which is fully linked to frnancial statement formats, and associated roll-up reports, 1 l) annual on-line training classes. Fees and Billings Our fees are on a not-to-exceed basis. In determining our fees, we understand that the City's records will be in condition to be audited; that is, transactions will be properly recorded in the general ledger and subsidiary records, these accounting records and the original source documents will be readily available to use, we will be fumished with copies of bank reconciliations and other reconciliations and analyses prepared by the City and City personnel will be reasonably available to explain procedures, prepare audit conespondence and obtain files ald records. We do not post sepanle rate structure for municipal audit work We view this work as being every bit as important and valuable as the work we perform for other clients and we put our best people on it Any consulting work you request will be performed at the same rates as our audit work. Cosl Rationale We have always completed our work in the time budgeted and for the agreed upon fee. We have never requested additional fees after our work was completed. As always, we finish what we star! regardless of the accuracy of our budgets. Since the City would be a continuing client we are olfering an 8.00% discount to the 2016 audit fees, which would carry forward to subsequent years. That represents a $6,900 savings in 2016 alone - and a cumulative savings of $20r7fi) over the next three fiscal years! Page 18 of 27 Addilional Semices Any additional services will be performed and billed only on the City's prior authorization at our standard billing rates. Manner of Paymenl Progress billings will be sent on the basis of actual hours work completed during the course of the engagement. We do not bill for out-of-pocket expenses as they are included in our stated all-inclusive maximum price. Hours Jtandarq Hourly Rates quoIeo Hourly Rates lotal f r 2015-i6 Audit IOU -FY 2Qt6-17 Audit I OIal I r 20t7-tE Audit For All Audits/Reoorts Partner 71.00 s 300 s 300 s 21.300 $ 21.300 $ 21.300 Matraaer s 160 s 160 $ Supervisorv Staff 201.00 ll5 s lls $ 23.1l5 23.1 l5 23.1 l5 Staff 372.00 85 $E5 $ 31.620 $ 31.620 31.620 AdminisFative 50.00 $64 $65 s 3.250 s 3.250 s 3.250 Out-ofPocket. Exoenses. Lrcludinp. Printins of Reports $- Total A.tl-Inclusive Maximum Price $ 79.285 $ 79.285 $ 79.285 All-lnclusive Price Total FY 2015-16 Audit Total FY 2016-t7 Audit Total FY 2017-18 Audit Basic Citv Audit/CAFR 52,900 52,900 $ 52,900 Sinsle Audit 5.E05 5.E055.805 TDA Fund 3,0403,040 3,040 Measure A 1.505 1.505 1.505 GANN ReDort 670670670 CAFR Preoaration 6,8606.E606,E60 State TransDortation ImDrovement ProFam 1,505 1.505 1.505 Cities Financial Transactions ReDort 7.000 7.000 7.000 Other Recommended/Suqqested Reports (List Separately) Total $ 79.285 s 79.285 $ 79.285 Page 19 of 27 Independent Audit Services February 24, 2016 Page 20 of 27 Recommendation Background | Discussion RFP Process Page 21 of 27 That the City Council adopt a resolution approving an agreement with Maze and Associates for independent audit services in an amount not to exceed $79,825 per year for a three year period with options to extend for two additional fiscal years and authorizing the City Manager to execute said agreement. Page 22 of 27 Independent Auditor since FY 2003-04 GFOA Award every year since FY 2001-02 GFOA Best Practice Page 23 of 27 41 CPA Firms 7 proposals 3 interviewed by external panel Page 24 of 27 Criteria Total Possible Points Maze & Associates Vavrinek, Trine, Day & Co. Gallina LLP Qualifications & Experience 105 100 87 65 Proposal Quality 75 73 62 58 Fit 75 70 60 53 Cost 45 35 28 30 Total Score 300 278 237 206 Page 25 of 27 That the City Council adopt a resolution approving an agreement with Maze and Associates for independent audit services in an amount not to exceed $79,825 per year for a three year period with options to extend for two additional fiscal years and authorizing the City Manager to execute said agreement. Page 26 of 27 Page 27 of 27 Government Code Section 54957.5 SB 343 REVISED DRAFT AGENDA ITEM NO. 13 Agenda CCv,j Item # MASTER AGREEMENT FOR TAXING ENTITY COMPENSATION This MASTER AGREEMENT FOR TAXING ENTITY COMPENSATION (this "Agreement"), dated as of , 2016, is entered into by and among the City of South San Francisco, a municipal corporation (the "City"), and the following public agencies (each, a "Taxing Entity," collectively referred to herein as the "Taxing Entities," and together with the City the "Parties"): County of San Mateo, a political subdivision of the State of California ("County") San Mateo County Community College District San Mateo County Flood Control District Colma Creek Flood Control Zone and Subzones San Mateo County Harbor District San Mateo County Resource Conservation District County Education Tax South San Francisco Unified School District Willow Gardens Parks and Parkways Maintenance District Bay Area Air Quality Management District RECITALS A. The Successor Agency to the Redevelopment Agency of the City of South San Francisco ("Successor Agency") is the owner of certain real property ("Agency Properties") located in the City of South San Francisco ("City"); and, B. On June 29, 2011, the Legislature of the State of California(the "State") adopted Assembly Bill xl 26 ("AB 26"), which amended provisions of the State's Community Redevelopment Law (Health and Safety Code sections 33000 et seq.); and, C. Pursuant to AB 26 and the California Supreme Court decision in California Redevelopment Association, et al. v.Ana Matosantos, et al.,which upheld AB 26(together with AB 1484,the"Dissolution Law"),the former Redevelopment Agency of the City of South San Francisco was dissolved on February 1, 2012; and, D. Pursuant to the Dissolution Law, the Agency Properties were transferred to the Successor Agency; and, E. Pursuant to the Dissolution Law,the Successor Agency prepared a Long Range Property Management Plan("LRPMP"), which was approved by a resolution of the Oversight Board for the Successor Agency to the Redevelopment Agency of the City of South San Francisco ("Oversight Board") on May 21, 2015 and was approved by the California Department of Finance ("DOF") on October 1, 2015; and, 1 2/23/2016 REVISED DRAFT AGENDA ITEM NO. 13 F. The approved LRPMP identifies nineteen (19)properties to be transferred from the Successor Agency for disposition and development consistent with the LRPMP; and, G. Eleven (11) of the nineteen (19)properties are to be conveyed by the Successor Agency to the City for the redevelopment activities consistent with the Redevelopment Plan and the LRPMP and the remaining eight (8).of the nineteen (19) properties are slated for redevelopment activities that are currently under contract with private developers through Oversight Board-approved Disposition and Development Agreements(DDA),Purchase and Sale Agreements(PSA)or Exclusive Negotiating Rights Agreements(ENRA)and will be conveyed by the Successor Agency to third-party purchasers pursuant to the Oversight Board-approved agreements; and, H. The LRPMP also identifies nine(9)parcels to be transferred from the Successor Agency to the City for governmental uses; and, I. Pursuant to the LRPMP,the Successor Agency's transfer of real property assets to the City for future development is subject to entering into this Agreement with the Taxing Entities for the distribution of funds received, if any, from the sale of such properties; and, J. The Oversight Board-approved Purchase and Sale Agreements (PSA) for the conveyance of the nine (9) properties by the Successor Agency to third-party purchasers will provide for the distribution to the Taxing Entities of the net funds received,if any, from the sale of the nine (9)properties. NOW THEREFORE, the Parties agree as follows: 1. Purpose. This Agreement is executed with reference to the facts set forth in the foregoing Recitals which are incorporated into this Agreement by this reference. The purpose of this Agreement is to address the allocation of certain prospective revenues among the Taxing Entities that share in the property tax increment("Tax Increment") for property located within the City of South San Francisco, South San Francisco Redevelopment Project (the "Project Area") formerly administered by the Redevelopment Agency,a list of all of the Taxing Entities and the applicable tax rate apportioned to each individual entity is contained in Exhibit B, attached hereto. 2. Special Districts and Funds. The governing boards of certain of the Taxing Entities administer certain special districts and funds that receive allocations of property taxes from the Tax Increment, and are authorized to execute this Agreement on behalf of such special districts and funds as described below. 3. County Funds. The County administers the following special districts and funds, and in addition to entering into this Agreement for the County itself, the County is authorized to, and has entered into and executed this Agreement on behalf of the following: County of San Mateo San Mateo County Flood Control District Colma Creek Flood Control Zone and Subzones 4 i -. - - ; San Mateo County Resource Conservation District 2 2/23/2016 REVISED DRIFT AGENDA ITEM NO. 13 County Education Tax 4. Parcels to be Conveyed for Development Consistent with Plans. Pursuant to the LRPMP, eleven (1 1) parcels formerly owned by the Redevelopment Agency will be transferred by the Successor Agency to the City for disposition consistent with the Redevelopment Plan adopted for the Project Area, the Implementation Plans adopted in connection with the Redevelopment Plan, and the City of South San Francisco General Plan (all of the foregoing, collectively, the "Plans"). These 11 parcels (collectively, the Properties") are more fully described in Exhibit A. 5. Parcels to be Conveyed to the City for Governmental Uses. The LRPMP also provides that nine(9)parcels formerly owned by the Redevelopment Agency will be transferred by the Successor Agency to the City for continued governmental uses. No compensation will be paid to the City or to the Taxing Entities in connection with the foregoing transfers. The properties and their uses,. and the applicable deed restrictions are described in the LRPMP,a copy of which has been provided to each Taxing Entity. 6. Compensation to Taxing Entities. The City agrees that, consistent with the LRPMP, in connection with the conveyance of any of the parcels comprising the Properties, the City will remit the Net Unrestricted Proceeds (defined below) to the San Mateo County Auditor-Controller for distribution to the Taxing Entities in accordance with each Taxing Entity's pro-rata share of Tax Increment. For purposes of this Agreement, "Net Unrestricted Proceeds" means the sale proceeds received by the City for the sale of any parcel included in the Properties, less: (i) costs incurred by the City for expenses incurred in connection with the management and disposition of the Properties, including without limitation, reasonable and actual costs incurred for property management, maintenance, insurance, marketing, appraisals, brokers' fees, escrow, closing costs, survey, title insurance,attorneys'and consultants'fees,and other reasonable costs incurred,including reasonable compensation for City staff performing functions associated with the management,maintenance and disposition of the Properties provided that the City shall first apply any revenue generated from license or lease agreements (of less than one year per term) received by the City to offset the management, insurance and maintenance costs of the Properties, and(ii) any proceeds of sale that are restricted by virtue of the source of funds (e.g. grant funds or the proceeds of bonds) that were I used for the original acquisition of the Properties. Upon request, tThe City shall deliver to the Taxing Entities an accounting of all such costs, expenses and restricted proceeds. 7. Sales Procedure and Proceeds. The Parties acknowledge that City is obligated to convey the Properties for development consistent with the Plans. 8. City as Taxing Entity. The Parties hereby acknowledge that the City is also a Taxing Entity for purposes of receiving funds pursuant to Section 6 of this Agreement. 9. Compensation Agreement. Health and Safety Code Section 34191.3 provides that once an LRPMP has been approved by DOF, the LRPMP supersedes all other provisions of the statute relating to the disposition and use of the former redevelopment agency's real property assets. The Parties intend this Agreement to satisfy the foregoing provision of the LRPMP. If a court order, legislation or Department of Finance policy reverses this requirement, the Parties 3 2/23/2016 REVISED DRAFT AGENDA TI"EM NO. 13 Agreement has not been executed by all Taxing Entities. Notwithstanding the foregoing,the City agrees that it will comply with the provisions of the LRPMP that require payment of Net Unrestricted Proceeds to the Taxing Entities upon sale of the Properties. 10. Miscellaneous Provisions. 10.1 Notices. Except as otherwise specified in this Agreement, all notices to be sent pursuant to this Agreement shall be made in writing, and sent to the Parties at their respective addresses specified on the signature pages to this Agreement or to such other address as a Party may designate by written notice delivered to the other Parties in accordance with this Section. All such notices shall be sent by: (i) personal delivery, in which case notice is effective upon delivery; (ii) certified or registered mail,return receipt requested,in which case notice shall be deemed delivered on receipt if delivery is confirmed by a return receipt; or (iii) nationally recognized overnight courier,with charges prepaid or charged to the sender's account,in which case notice is effective on delivery if delivery is confirmed by the delivery service. 10.2 Headings; Interpretation. The section headings and captions used herein are solely for convenience and shall not be used to interpret this Agreement. The Parties agree that this Agreement shall not be construed as if prepared by one of the Parties,but rather according to its fair meaning as a whole, as if all Parties had prepared it. 10.3 Action or Approval. Whenever action or approval by City is required under this Agreement, the City Manager or his or her designee may act on or approve such matter unless specifically provided otherwise,or unless the City Manager determines in his or her discretion that such action or approval requires referral to City Council for consideration. 10.4 Entire Agreement. This Agreement, including Exhibit A attached hereto and incorporated herein by this reference,contains the entire agreement among the Parties with respect to the subject matter hereof, and supersedes all prior written or oral agreements, understandings, representations or statements between the Parties with respect to the subject matter hereof. 10.5 Counterparts. This Agreement maybe executed in counterparts,each of which shall be an original and all of which taken together shall constitute one instrument. The signature page of any counterpart may be detached therefrom without impairing the legal effect of the signature(s) thereon provided such signature page is attached to any other counterpart identical thereto having additional signature pages executed by the other Parties. Any executed counterpart of this Agreement maybe delivered to the other Parties by facsimile and shall be deemed as binding as if an originally signed counterpart was delivered. 10.6 Severability. If any term,provision,or condition of this Agreement is held by a court of competent jurisdiction to be invalid or unenforceable, the remainder of this Agreement shall continue in full force and effect unless an essential purpose of this Agreement is defeated by such invalidity or unenforceability. 4 2/23/2016 REVISED DRAFT AGENDA ITEM NO. 13 10.7 No Third Party Beneficiaries. Except as expressly set forth herein,nothing contained in this Agreement is intended to or shall be deemed to confer upon any person,other than the Parties and their respective successors and assigns, any rights or remedies hereunder. 10.8 Parties Not Co-Venturers;Independent Contractor;No Agency Relationship.Nothing in this Agreement is intended to or shall establish the Parties as partners, co-venturers, or principal and agent with one another. The relationship of the Parties shall not be construed as a joint venture, equity venture, partnership or any other relationship. 10.9 Governing Law; Venue. This Agreement shall be governed by and construed in accordance with the laws of the State of California without regard to principles of conflicts of laws. Any action to enforce or interpret this Agreement shall be filed and heard in the Superior Court of San Mateo County,California or in the Federal District Court for the Northern District of California. SIGNATURES ON FOLLOWING PAGES. 5 2/23/2016 REVISED DRAFT AGENDA ITEM NO. 13 IN WITNESS WHEREOF, the Parties have executed this Agreement by their authorized representatives as indicated below. CITY OF SOUTH SAN FRANCISCO,A MUNICIPAL CORPORATION By: City Manager Attest by: City Clerk Approved as to form: City Attorney Address for Notices: City of South San Francisco 400 Grand Avenue South San Francisco, California Attention: City Manager SIGNATURES CONTINUE ON FOLLOWING PAGES. 6 2/23/2016 REVISED DRAFT AGENDA ITEM NO. 13 The undersigned authorized signatory hereby executes this Agreement on behalf of the County of San Mateo and the entities and funds set forth in Section 2 of this Agreement: By: Name: Title: Attest by: Approved as to form: County Counsel Address for Notices: San Mateo County 400 County Center Redwood City, CA 94063 Attention: SIGNATURES CONTINUE ON FOLLOWING PAGES. 7 2/23/2016 REVISED DRAFT AGENDA ITEM NO. 13 The undersigned authorized signatory hereby executes this Agreement on behalf of the San *ateo County Harbor District: By: Name: Title: Attest by: Approved as to form: Nneral Counsel Address for Notices: General Manager 40) Oyster Point Boulevard, Suite 300 South San Francisco, CA 94080 SIGNATURES CONTINUE ON FOLLOWING PAGES. 8 2/23/2016 REVISED DRAFT AGENDA ITEM NO. 13 The undersigned authorized signatory hereby executes this Agreement on behalf of the San Mateo County Community College District: By: Name: Title: Attest by: Approved as to form: County Counsel Address for Notices: Director of Community/Government Relations San Mateo Community College District 3401 CSM Drive San Mateo, Ca 94402-3651 SIGNATURES CONTINUE ON FOLLOWING PAGES. 9 2/23/2016 REVISED DRAFT AGENDA ITEM NO. 13 The undersigned authorized signatory hereby executes this Agreement on behalf of the South San Francisco Unified School District: By: Name: Title: Attest by: Approved as to form: Counsel Address for Notices: Mt. Michael Krause Assistant Superintendent, Business Services South San Francisco USD 398 B Street South San Francisco, CA 94080 SIGNATURES CONTINUE ON FOLLOWING PAGES. 10 2/23/2016 REVISED DRAFT AGENDA ITEM NO. 13 The undersigned authorized signatory hereby executes this Agreement on behalf of the Willow Parks and Parkways Maintenance District By: Name: Title: Attest by: Approved as to form: Counsel Address for Notices: Willow Parks and Parkways Maintenance District SIGNATURES CONTINUE ON FOLLOWING PAGES. 11 2/23/2016 The undersigned authorized signatory hereby executes this Agreement on behalf of the Bay Area Air Quality Management District: By: Name: Title: Attest by: Approved as to form: Counsel Address for Notices: Bay Area Air Quality Management District 939 Ellis St. San Francisco, CA 94109 Attention: Executive DirectorJack Broadbent 12 EXHIBIT A PROPERTIES Parcels to be conveyed consistent with the Plans: Number Disposition Address APN 1. Future Development Former PUC Properties 093-312-050 2. 093-312-060 3. 011-326-030 4. Future Development 1 Chestnut Avenue 011-322-030 5. Future Development 227 Grand Avenue 012-316-060 6. Future Development 200 Linden 012-334-130 7. Future Development 212 Baden Avenue 012-334-040 8. Future Development 216 Baden Avenue 012-334-030 9. Future Development 905 Linden Avenue 012-101-100 10. Future Development 616 Linden Avenue 012-174-300 11. Future Development 700 Linden Avenue 012-145-370 A. Governmental Use Former PUC Properties 093-331-050 B. 093-331-060 C. Governmental Use 80 Chestnut Avenue 011-324-190 D. Governmental Use 480 N. Canal 014-061-110 E. Governmental Use 296 Airport Blvd. 012-338-160 F. Governmental Use 323 Miller Avenue 012-312-070 G. Governmental Use 356 Grand Avenue 012-312-300 H. Governmental Use 306 Spruce Avenue 012-302-140 I. Governmental Use 468 Miller Avenue 012-301-020 13 EXHIBIT B TAXING ENTITIES AND TAX-ALLOCATION Tax Entity/Fund % Total County of San Mateo 25.77% City of South San Francisco 16.73% South San Francisco Unified School District 43.91% San Mateo County Community College District 7.38% San Mateo County Flood Control District Colma Creek Flood Control Zone and Subzones 1.64% Willow Gardens Parks and Parkways Maintenance District 0.12% Bay Area Air Quality Management District 0.23% San Mateo County Harbor District 0.38% San Mateo County Resource Conservation District 0.00% San Mateo County Education Tax 3.84% Total 100.00% 2613182.1 14 + - - m A W O O < co D Gl m n Po Z E o v co co C0 —I 0 v o rD = o (D 0 000 -0 * a, 2, O O O O a�i Oa r- 00 ° 0_ rD 0 '_3'P. ' M 0 0 rD 3 c 5 3• 3 +S P CD r(D o ° co o o m y v, rn 3 D Oa aJ rD o v, 5• ._r 3 rr = o o n x -a 0 rD n M = 5- vv, rr - � cDD = Z = = y; CD rr,5. 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