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HomeMy WebLinkAboutAgenda Packet - CC - 2016.01.19City of Burlingame Meeting Agenda - Final City Council BURLINGAME CITY HALL 501 PRIMROSE ROAD BURLINGAME, CA 94010 Tuesday, January 19, 2016 7:00 PM Council Chambers CITY COUNCIL AND BURLINGAME FINANCING AUTHORITY MEETING AGENDA CLOSED SESSION - 5:30 p.m.'Conference Room A a. Approval of the Closed Session Aqenda Closed S on Communitv F l\Iembers of the blic [\Iav Address Councilb. c. d. on anv ltem on the Closed Session Aqenda at this Time. Adiournment into Closed Session Section with .9(dX1)): Montqo erv Countv. Marvl Petitioner. Citv of Burlinoame. et al, lnte rvenors v. Federal Commun ications Comm (U.S. Ct. App.Cir. No 15-1240\ e. H Berkheimer ( I EDA). Emplovee orqan ization : BAMMiTeamsters STUDY SESSION - 6:40 p.m. 'Conference Room A a. Compensation and Benefits for Department Heads and Unrepresented Note: Pubtic comment is permitted on all action ifems as noted on the agenda below and in the non-agenda public comment provided for in item 7. Speakers are asked to fill out a'request to speak' card located on the table by the door and hand it to staff, although the provision of a name, address or other identifying information is optionat. Speakers are limited to three minutes each; the Mayor may adiust the time limit in light of the number of anticipated speakers. All votes are unanimous unless separately noted for the record. 1. CALL TO ORDER - 7:00 p.m.'Council Chambers 2. PLEDGE OF ALLEGIANCE TO THE FLAG 3. ROLL CALL City of Burlingame Page 1 Printad on 1/14/2016 Meeting Agenda - Final January '19,2016 4. REPORT OUT FROM CLOSED SESSION 5. UPCOMING EVENTS 6. PRESENTATIONS a.Update on Broadwa v Grade Seoaration b. Presentation on Enerov E fficiencv lmorovements 7. PUBLIC COMMENTS, NON-AGENDA Members of the public may speak about any item not on the agenda. l/tembers of the public wishing to suggest a, item for a future Council agenda may do so during this public comment period. The Ralph lvl. Brown Act (the State local agency open meeting law) prohibits the City Council from acting on any matter that is not on the agenda. 8. APPROVAL OF CONSENT CALENDAR Consent calendar items are usually approved in a single motion, unless pulled for separale dlscuss/on. Any member of the public wishing to comment on an item listed here may do so by submitting a speaker slip for that item in advance of the Council's consideration of the consent calendar. a. Approval of Ci Council Meetinq Minutes of Ja nuarv 4. 2016 9. PUBLIC HEARINGS (Public Gomment) a.Resolution of the Citv Co uncil of the Citv of Burlinoame Aoorovi h el ssuance bv the Burlinoame Financino Authoritv of Not To Exceed $11.000.000 Aooreoate Princioal torm Drain e Reve U n a ital lm rovements to Storm Drainaoe Svstem of the Citv:thorizino Execution and Deliverv of an lnstallment Sale Aqre ement and a Bond Purchase Aqreement:Aoorovino Form of Officral Statement: an d Authorizino Execution of Documents a d the Takino of All Necessary Actions Rela ti n o to the Financino with the Burlinoame Financin Authorio tv Attachments:Staff Reort Resolution 10. STAFF REPORTS AND COMMUNICATIONS (Public Comment) City of Bu ingame Page 2 Pnnted on 1/14/2016 City Council Atlachments: Citv Council l\ileetino l\,4inutes 1.4.16 b. Aporoval of Citv Council lt/eetino Minutes of Januarv 6. 2016 Attachnents: CltvCouncilMeetinql\,4inutes'1.6.16 City Council Meeting Agenda - Final January 19,2016 a Update on P rooosed Flood lnsuran Rate l\ilap Attachfients: Staff Reoort Staff Reoort D mbet 1 . 2014 Current and Proposed FIRMs b, Acceptance of the Comprehensive Annual Financial Report for the Year End€d J!!q 30, 2015 Attachfients:Staff Report 2014-15 CAFR 11. COUNCIL COMMITTEE AND ACTIVITIES REPORTS AND ANNOUNCEMENTS Council Members repoft on committees and activities and make announcements. 12. FUTURE AGENDA ITEMS 13. ACKNOWLEDGMENTS a.Decembe r Permit Activitv 14. ADJOURNMENT TO BURLINGAME FINANCING AUTHORITY '1. Call to Order 2. Roll Call 3. Board Action Resolution Authorizin o the lssuance of Sto rm Drainaqe Revenue Bonds to Financea CaDital lmpro vements to the Storm Drainaoe Svstem of the Citv;Authorizinq Execution and Delivery of a Trust Aqreement,lnstallment Sale Aoreement, a Bond Purchase Aoreement an an Official Statement; and Authorizinq Execution of Documents and the Takinq of All N ecessarv Actions Relatinq to the lssuance of the Bonds Allachmenls:Staff Report Resolution lnstallment Sale Aqreement Trust Aqreement PreliminarV Statement 15. ADJOURNMENT City of Burlingame Bond Purchase Aqreement Page 3 Pinted on 1/14/2016 City Council Meeting Agenda - Final January 19, 2016 Notice: Any attendees wishing accommodations for disabilities please contact the City Clerk at (650)558-7203 at least 24 hours before the meeting. A copy of the Agenda Packet is available for public review at the City Clerk's office, City Ha , 501 Primrose Road, from 8:00 a.m. to 5:00 p.m. before the meeting and at the meeting. Visit the City's website at www.burlingame.org. Agendas and minutes are available at this site. NEXT CITY COUNCIL MEETING - 2015116 Goals Session - Saturday, January 30, 2016 9am in the Lane Room, Next regular Gity Council Meeting - Monday, February 1, 2016 VIEW REGULAR COUNCIL MEETING ONLINE AT WWW.BURLINGAME.ORG . GO TO "CITY COUNCIL VIDEOS" Any witings or documents provided to a majority of the City Council regarding any item on this agenda will be made available for public inspection at the Water Office counter at City Hall at 501 Primrose Road during normal business hours. City of Budingafie Pnnted on 1/142016 Agenda Item 8a Meeting Datez t/L9/L6 BURLINGAME CITY COUNCIL Unapproved Minutes Regular Meeting of January 4,2016 1. CALL TO ORDER A duly noticed regular meeting of the Burlingame City Council was held on the above date in the City Hall Council Chambers. 2, PLEDGE OF ALLEGIANCE TO THE FLAG The pledge of allegiance was led by Karen Dittman. 3. ROLL CALL MEMBERS PRESENT: Beach, Brownrigg, Colson, Keighran, Ortiz MEMBERS ABSENT: NONC 4.REPORT OUT FROM STUDY SESSION Mayor Keighran stated that the Council had held a study session on Peninsula Clean Energy and that it would be on an upcoming agenda. 5. UPCOMING EVENTS Mayor Keighran reviewed the upcoming events taking place in the City. 6, PRESENTATIONS There were no presentations. 7. PUBLIC COMMENTS Burlingame resident Cynthia Cornell from B.A.R.P. spoke conceming renter protection and just cause evictions. 8. CONSENT CALENDAR Mayor Keighran asked the Councilmembers and the public if they wished to remove any items from the Consent Calendar. Councilmember Beach asked to pull item 8d. Councilmember Beach and Councilmember Colson abstained from voting on item 8a (as they were not yet on the Council). 1 Burlingame City Council January 4,2016 Unapproved Minutes Agenda It,em 8a Meeting Datet L/1-9/L6 Councilmember Brownrigg made a motion to adopt items 8a, 8b, 8c, 8e, and 8f of the Consent Calendar; seconded by Vice Mayor Ortiz. The motion was approved unanimously by voice vote, 5-0. a. APPROVE THE CITY COUNCIL MEETING MINUTES OF DECEMBER 7. 2015 CC Hassel-shearer requested Council approve the City Council meeting minutes of December 7 ,2015. b. RECOMMENDATION TO CONFIRM MAYOR'S COUNCIL ASSIGNMENTS FOR 2016 CC Hassel-Shearer requested Council approve the Council Assignments for 2016. c. OPEN NOMINATIO N PERIOD TO FILL ONE VACANCY O THE PARKS AND RECREATION COMMISSION City Manager Goldman requested Council open the nomination period to fill a vacancy on the Parks and Recreation Commission. d. ADOPTION OF A RESOLUTION SUPPORTING THE CALIFORNIA DRIVE BICYCLE FACILITIES IMPROVEMENTS PROJECT AND SUBMITTING AN APPLICATION FOR MEASURE A PEDESTRIAN AND BICYCLE PROGRAM FUNDING FOR THE DPW Murtuza requested Council approve Resolution Number l-2016. Councilmember Beach commended staff on applying for Measure A funds for bicycle infrastructure Mayor Keighran asked when the decision concerning the grant would be made. DPW Murtuza stated that the City expected a decision in March. Councilmember Colson asked about the letters of support that the staff report discussed. DPW Murtuza stated that staff reached out to the Bicycle Pedestrian Advisory Committee and the Chamber of Commerce to write letters of support. Vice Mayor Orttz made a motion to approve item 8d; seconded by Councilmember Beach. The motion was approved unanimously by voice vote, 5-0. e. ADOPTION OF A RESOLUTION ACCEPTING THE AIRPORT BOULEVARD FORCE MAIN AND CAROLAN AVENUE UTILITY IMPROVEMENTS PROJECT BY K.J. WOODS CONSTRUCTION.INC.. CITY PROJECT NO. 83670 DPW Murtuza requested Council approve Resolution Number 2-2016 Burlingame City Council Unapproved Minutes 2 January 4,2016 CALIFORNIA DRIVE BICYCLE FACILITIES IMPROVEMENTS PROJECT Agenda Item 8a Meeting Datet l/L9/16 f. ADOPTION OF A RESOL UTION AWARDIN G A CONSTRUCTION CO NTRACT TO JJR CONSTRU ON.INC.. FOR THE 2OI5 SIDEWALK REPAIR RAM. CITYI 83820 G THE CONSTRUCTION CONTRACT DPW Murtuza requested Council approve Resolution Number 3-2016 9. PUBLIC HEARINGS Ga CATI COMMISSI ,S APPROVAL OF THE VAL OF A REDWOOD AT 2325 POPPY DRIVE Mayor Keighran reviewed the process of the hearing stating that the appellant (Chip and Shirin Coleman) and the applicant (Peter Kelly) would each get 10 minutes to state their position, the matter would then be opened to the public, followed by 3 minute rebuttals from both the appellant and the applicant. Mayor Keighran asked the Council to report any ex-parte communication. Councilmember Beach stated that she talked to both the appellant and the applicant, visited the site and talked to some of the neighbors. Vice Mayor Ortiz and Councilmember Brownrigg visited the site. Mayor Keighran and Councilmember Colson stated that they visited the site and talked to the appellant and applicant. City Arborist Bob Disco reviewed the staff report explaining the history of the appeal. He stated that the tree in question is a 70 year old redwood tree with multiple codominant leaders. He explained that the applicant requested a permit to remove the tree and that he asked the applicant to obtain a report on the tree from an independent arborist. The independent report stated that the tree was too large for the small backyard and that the tree's roots were causing damage to the applicant's garage. Moreover, the report stated that only by removing the tree would all hazards and liabilities associated with the tree be eliminated. City Arborist Bob Disco explained that he visited and assessed the tree to see if there were other options including: requiring the homeowners to properly maintain the tree, topping, and removal of one of the leaders. However, he stated that these measures would not solve the problem because of the size of the tree in relation to the size of the backyard and the proximity of the neighbors. Accordingly, based on the structure of the tree, the multiple codominant leaders, included bark, damage to the garage foundation and because the tree met the requirements for removal per Chapter 1i.06.060d(1X2X7) of the Municipal Code, the City Arborist approved removal. Councilmember Colson asked how much time the homeowner is given to replace a tree. City Arborist responded that usually an individual is given 6 months. He further explained that for this redwood tree he required the applicant to plant two 24 inch-box oak trees. Councilmember Brownrigg voiced his concern that approving the removal of the redwood tree would open the door to future removals. Accordingly, he asked if codominant leaders are a nornal growth pattern for redwood trees, what made this situation different as to demand the removal of the tree. The City Arborist stated that the difference was that this redwood tree was located in an area where there was no room for it to safely grow. Councilmember Brownrigg asked about the City's liability when labeling a tree on private property unsafe. City Attorney Kane stated that the risk of loss is born by the homeowner. a Burlingame City Council January 4,2016 Unapproved Minutes Agenda Item 8a Meet,ing Date I L/L9 /16 The appellant, Chip Coleman spoke first. Mr. Coleman stated that at the Beautification Commission hearing the decision to remove the tree was a close vote, 3-2. He stated that from this hearing arose a lot of issues that still need to be evaluated and discussed prior to removing the redwood tree. He explained that he was concerned that the City may base its decision to approve the removal of the tree on liability rather than the enjoyment of the neighborhood. Mr. Coleman asked that the City research the health of the tree prior to approving the tree's removal. He explained that within a 6 block radius of the redwood tree, there were 28 other redwood trees with 1/3 having multiple codominant leaders. He stated that this was a natural growth pattem for redwood trees. Accordingly, he was concerned that if the Council approved the removal of this redwood tree it would set a precedent for the removal of all other redwood trees. He stated that the City should look at other viable options to prevent the removal of the tree. He asked about raising the floor of the garage or moving it 10 feet closer to the street in order to save the redwood tree. Furthermore, he discussed the decision of Council regarding other redwood trees in the neighborhood and the measures the Council previously enacted to save redwood trees, specifically Drake Avenue. In closing, Mr. Coleman asked the Council to: (1) require real estate tree disclosures; (2) keep analytics of tree removals in the City; and (3) research other methods besides removal to protect trees that are in densely populated areas. The applicant, Peter Kelly, spoke about why he requested the removal permit. Mr. Kelly explained that the tree was causing a significant amount of issues and damage to his property. He added that the remodel that the Planning Commission approved for his house was minor and therefore because he was upholding the integrity of the house there was no room to work around the tree. He explained that a structural engineer assessed the tree and stated that the cost of fixing the damage the tree caused the garage was $30,000. Moreover, the structural engineer stated that the $30,000 would not be a one-time cost. Instead, he informed Mr. Kelly that he would need to make repairs regularly and that at some point the garage floor would become unrepairable. Mr. Kelly stated that both the City Arborist and the independent arborist found that there was a safety issue. Mr. Kelly explained that the safety issue was not just a concern for him but because he lived in such a dense neighborhood, the tree's safety was an issue for his neighbors. Therefore, he stated that his close neighbors supported the tree's removal. Mayor Keighran asked CDD Meeker what the scale of the remodel was on Mr. Kelly's house. CDD Meeker stated that it was minor modifications inside the envelope of the structure with none of it trigging the City's design review process. Mayor Keighran asked about the grove of redwood trees on Drake Avenue. CDD Meeker stated that the Drave Avenue project involved new construction and therefore the City was able to require the contractors to work around the redwood trees. However, because Mr. Kelly only requested a minor modification to an existing structure the same requirement could not be made. Mayor Keighran opened the public hearing for comments Burlingame residents Brian Benn, Linda Ryan, Liz Overheul Curry spoke about the beauty of the redwood trees and the need to look at other options to protect the tree such as topping, pruning, or moving the garage forward. Karen Dittman, former Beautification Commissioner, spoke about why she voted against the removal of the tree, stating that the tree was in good health. Two middle school students spoke about the importance of protecting trees. Burlingame resident Dottie Bajnoczi spoke about how she originally wanted her neighbor's tree removed but that she came to love the tree and is glad that it still stands. Burlingame resident Alisa Ruiz-Johnson discussed the issues that Mr. Kelly would face if the tree was not removed. Burlingame resident Brian Chu stated that this tree was affecting his sewer lines and that he regularly had to pay to have the roots removed from the sewer lines. 4 Burlingame City Council January 4,2016 Unapproved Minutes Agenda Item 8a Meeting Datez L/1-9/L6 Mayor Keighran closed the public hearing and asked the appellant and applicant to come forward with their rebuttals. Mr. Coleman stated that the tree's health must be understood before removing the tree. Mr. Kelly stated that this particular tree with this particular set of circumstances requires that the tree be removed. Vice Mayor Ortiz explained that the City established a process for reviewing whether to remove trees and if damage were the only criteria on whether a tree is removed too many trees would be cut down. However, he stated that in this situation there is a question of safety. Accordingly, because Mr. Kelly followed the process and because no new information arose, Vice Mayor Ortiz felt that the Beautification Commission's decision should stand. Councilmember Brownrigg stated that if the City removed every tree that presented a danger, too many trees would be lost in Burlingame. Furtherrnore, Councilmember Brownrigg felt that the decision the Council had to make was whether the City should allow large trees to grow on small lots. He went on to explain that he has a large tree on his property and that he understands the challenges one faces with having a large tree. Councilmember Brownrigg stated that it is important to preserve these trees. Accordingly, he stated that he would vote to protect the tree. Councilmember Colson discussed her desire to protect the trees in Burlingame. However, she stated that she was overwhelmed by the size and magnitude of the multiple codominant leaders on this redwood tree. Accordingly, because Mr. Kelly followed the process and met the necessary requirements to remove the tree she believed the Beautification Commission's decision should be upheld. Councilmember Beach stated that she heard that Mr. Kelly received an anonymous angry letter and that this is not acceptable as there is a system in place by which to voice your opinion and ensure that decisions are properly made. She stated that while she knew the tree well, it is not a tree that she would want to manage and wondered whether others would want that responsibility. Councilmember Beach went on to discuss the tree's cost from repairs to liabilities. Accordingly, because there was due process, Councilmember Beach stated she would vote to uphold the Beautification Commission's decision. Mayor Keighran stated that she was in attendance at the Beautification Commission hearing and that there was thoughtful discussion on the matter. She stated that when she reviewed the matter she looked at the criteria for removal: (1) condition of the tree; (2) danger of the tree falling; (3) proximity of the neighbors to the tree; and (4) whether the tree was limiting/preventing the homeowner's economic enjoyment of the property. Mayor Keighran compared the matter to the Drake Avenue construction. She stated that because Drake Avenue concerned new buildings, the Council was able to require the contractors to work around the trees. However, in this matter, where the lot is small, and the homeowner is not undertaking a major renovation, there was no room to work around the tree. Mayor Keighran stated that because the tree was causing damage and raised safety concerns the Beautification Commission's decision should be upheld. Mayor Keighran asked about the size of the trees the City Arborist proposed planting in the applicant's yard and whether or not the City should require the applicant to plant large trees. The City Arborist stated that larger trees were an option but that he recommended the two 24 inch box landscape trees because they grow quicker and adapt better to their surroundings. Councilmember Brownrigg asked why the City Arborist was requiring two trees and if he was concemed that by planting two trees the applicant might face the same issue. Mr. Disco replied that the applicant may Burlingame City Council t ,anuary 4,2016 Unapproved Minutes Agenda ltem 8a Meeting Date:. L/t9/16 face the same issue but that he was recommending two oak trees to replace the large canopy of the redwood tree. The City Arborist stated that until the tree is 48 inches in circumference, an individual does not need a permit to cut down the tree. Therefore, if the applicant were to sell their house before the new oak trees reached this measurement the trees could be cut down. City Attorney Kane stated that the Council could make it a condition of the removal, that the homeowner obtains a permit prior to cutting down the replacement trees. Councilmember Colson asked if both trees had to be planted in the backyard. The City Arborist stated that the ordinance doesn't require the homeowner to plant both in the backyard. Vice Mayor Ortiz and Councilmember Beach voiced their concern that more information was needed on how and what should replace the redwood tree. Councilmember Brownrigg stated that the City shouldn't require the applicant to put a tree in the front yard if the issue arose from the backyard. Mayor Keighran stated she had concerns about how small the backyard is for two trees City Attorney Kane explained that given the complexity of the issue it may be good to give the staff direction on what the Council is looking for and then staff can make factual determinations and present their findings to the Council at a later date. She stated that if Council wished to make a motion tonight they could focus on the central question of whether or not the tree should be removed but state that the applicant cannot remove the tree until Council authorizes a resolution that memorializes the requirements of the tree's removal. Vice Mayor Ortiz made a motion to uphold the Beautification Commission decision but have the applicant wait to remove the tree until Council determined the conditions; seconded by Councilmember Colson. The motion passed by roll call vote, 4-1 (Councilmember Brownrigg voted against). b. RESOLUTION APPR OVING AND LEVYING 2016 SAN MATEO COUNTY TOURISM BUSINESS IMPROVEMENT DISTRICT ASSESSMENTS ON HOTEL BUSINESSES WITHIN THE DISTRICT Finance Director Augustine reviewed the staff report concerning the levying of the 2016 San Mateo County Tourism Business Improvement District Assessments on hotel businesses within the District. She explained the background of TBID and asked the Council to hold a public hearing on the proposed assessments. Mayor Keighran asked the City Clerk if the City received any protests. City Clerk Hassel-Shearer replied in the negative. Mayor Keighran opened the public hearing for comment. San Mateo County Tourism Bureau CEO Ann LeClair thanked the City for their support. As well, she thanked Police Chief Wollman for the police's efforts to ensure the safety of those staying at the hotels. Mayor Keighran closed the public hearing. Councilmember Brownrigg made a motion to approve Resolution Number 4-2016; seconded by Vice Mayor Ortiz. The motion passed unanimously by voice vote, 5-0. Burlingame City Council Unapproved Minutes 6 January 4, 2016 Agenda Item 8a Meeting Datez t/19/L6 c.ON OFAC PERMIT FOR AUTO RENT STORAGE AND REPAIR FACILITY LOCATED AT BURLWAY ROAD Community Development Director Bill Meeker presented the staff report regarding Vanguard Real Estate Holdings, LLC request for an extension of a conditional use permit ("CUP") for an auto rental, storage and repair facility at778 Burlway Road. Q.{ote: Alamo Rent-A-Car and National Car Rental are owned by Vanguard. Vanguard also owns Enterprise and Enterprise's Vice President Will Withington is the applicant pursuing the CUP extension for the property. To avoid any confusion, Alamo Rent-A-Car, Enterprise and Vanguard will all be referred to as either the applicant or Vanguard in the meeting minutes.) He stated that for 30 years, Vanguard used this piece of property as an auto rental, storage and repair facility. The Community Development Director reviewed the history of Vanguard's requests for CUPs: (1) City Council's decision to uphold the Planning Commission's approval of a 2003 amendment to the CUP; (2) the Planning Commission approving two additional, two-year CUP extensions; and (3) Vanguard's 2013 appeal of the Planning Commission's denial of a 10 year extension which resulted in Council granting them a 2 year extension. The Planning Commission denied the l0 year extension stating that it could deter efforts of the applicant in selling the property and having the property developed fora use consistent with the policy direction of the Bayfront Specific Plan. Community Development Director Meeker stated that now Vanguard is asking for a7 year extension of the CUP to allow San Francisco International Airport ("SFO") to complete an expanded and consolidated car rental facility. Furthermore, Meeker explained that originally the applicant made annual payments of $36,500 to the City. The City required the annual payment to guarantee a minimum revenue stream for the car rental business as long as that activity occurred on the property. Now Vanguard proposes a 7 year extension of the CUP with a one-time payment of $2.1 million to mitigate the continued operation of the facility. The $2.1 million would be earmarked for improvements within the Bayfront Specific Plan Area. Community Development Director Meeker asked the Council to review and provide direction on whether the City should move forward with the proposed extension and offset payment structure. Mr. Meeker advised the Council to consider the ongoing General Plan and Zonrng Ordinance updates. Completion of these work tasks by the end of 2OI7 could change the land-use direction for the property at7l8 Burlway Road and should be considered a factor in determining whether or not an extension of the CUP should be granted. He further noted that any development proposals for the property that would follow adoption of the updated General Plan and Zoning Ordinance would take anywhere from 3 to 5 years to complete the local and state permitting processes. Mayor Keighran asked how Vanguard and the City originally settled on $36,500 for annual payments under the CUP. Community Development Director Meeker stated that he was not there at the time but believed it was based on gross receipts from the auto rental business on the property. Mayor Keighran asked what uses are permitt ed at 778 Burlway Road. Mr. Meeker responded that it is zoned for offices, hotels, destination restaurants or retail shops to service the area. Mayor Keighran asked if a hotel was built on the property how many rooms could the hotel have. Mr. Meeker stated that a hotel is allowed to build 65 rooms per acre, accordingly because the property is 8.4 acres they could have over 500 rooms. Vice Mayor Ortiz asked if there was evidence that the applicant had tried to market the property. Mr Meeker replied that a few years ago they had submitted documents indicating their efforts. Burlingame City Council Unapproved Minutes 7 January 4,2016 Agenda Item 8a Meeting Datez L/L9/L6 Will Withington, General Manager/Vice President of Enterprise, discussed why Vanguard requested an extension. He stated that in 2013, after the Council's decision to only grant them a2 year extension on the CUP, Vanguard started looking for other sites. Vanguard entered into two leases, one located at the Cow Palace property and the other located on Edwards Court in Burlingame. He fuither explained that he had worked with an architecture firm to develop plans for a 5 story parking garage on the Edwards Court property, with an estimated cost of $25 million. Mr. Withington continued by stating that in January, 2015, SFO announced a plan for a new consolidated rental car facility. SFO met with Vanguard and other agencies about the facility and it became clear that once the facility was built Vanguard would no longer need to use the Edwards Court nor the Cow Palace properties. Accordingly, the applicant argued that while they do not want to continue operations at718 Burlway Road, it does not make financial sense to build a $25 million parking facility that will only be used for a few years. As a result, Mr. Withington explained that he met with City staff and the Council's Economic Subcommittee to explain the situation and gather input. Accordingly, from these meetings, Vanguard created their proposal of a one-time payment of $2.1 million to mitigate the extension of the CUP. As well, Vanguard stated that during the propose d 7 year CUP extension, they would work with potential buyers. He explained that the 7 year extension would allow a buyer to obtain all necessary permits to build on the property prior to paying Vanguard for the property at the end of the 7 years. Mayor Keighran asked Mr. Withington how aggressive Vanguard was with their marketing of the property. Mr. Withington stated they had inquiries from many people and were open to all solicitations. However, he stated that in 2012 they had an offer of about half the value of the property that they rej ected. After which they have not received any other substantial proposals. Councilmember Colson asked if the CUP was not renewed would Vanguard plan to build a parking garage at Edwards Court for $25 million and use the Cow Palace property. Mr. Withington stated that originally this was the plan. However, he explained that financially with SFO building a facility it would not make sense for them to spend $25 million on a parking garage. Accordingly, if the CUP was not extended they would be looking at leasing 1-2 acre properties elsewhere for the next 5-7 years. Councilmember Colson asked about the real estate analysis that created the $2.1 million proposal and whether or not he had worked with the City to come up with the optimal use for the property. Mr. Withington responded that he worked with his local team to develop this number. Doug Sullivan, Counsel for Vanguard spoke regarding the $2.1 million payment, stating that it would be used for Bayfront improvements and that it is mitigating the delayed redevelopment of the property. Councilmember Beach asked about the proposed $2.1 million stating that her understanding is that the fee has to be directly related to the harm. Accordingly, she wanted to know that since there hasn't been $2.1 million worth of change in circumstances to the City, if the City needed to review the number. And as a follow up question, Councilmember Beach asked if the City had higher standards than private corporations conceming the correlation between mitigation and a monetary amount. City Attorney Kane responded by stating that yes the City did need to ensure transparency and that there is more identihable criteria. Mayor Keighran opened the public hearing for comments, no one spoke. The public hearing was closed. 8 Burlingame City Council January 4,2016 Unapproved Minutes Agenda Item 8a Meeting Dat,ez L/L9/L6 Councilmember Brownrigg asked if because this is areal estate negotiation if it can be done in closed session. City Attorney Kane replied that it cannot, because closed session for real estate pertains to when the City is selling property. Mayor Keighran asked if the Council could develop an ad hoc committee to discuss this matter. City Attorney Kane replied in the affirmative. Mayor Keighran stated that this would give the staff the time and ability to do an economic analysis to understand the $2.1 million mitigation payment. Councilmember Brownrigg stated his concem that the extension of the CUP could set a precedent with other companies operating long-term parking lots. However, he stated that he understands that this situation is unique because of the shorl-term need. But he wanted to make sure the City is careful to not set a precedent to use empty lots as parking lots. Councilmember Colson asked if the SFO facility was built in 5 years under a7 year CUP if the CUP would continue with the property. Mr. Meeker responded it would unless it was called back to the Council for revocation prior to expiration of the 7 year extension. Councilmember Colson then asked if there was a way to tie the CUP to the user and not the land. Mr. Meeker said no because it was a land issue and could not be tied to a specific operator. City Attorney Kane stated that the Council could structure the CUP for 5 year extension with the option to extend for another 2 years if the SFO facility is not completed' Vice Mayor Ortiz stated that his fear is that after 7 years when Vanguard leaves that the property might stay vacant for another 5 years. Accordingly, he wanted to ensure that the property is advertised and sold during the extension. Mayor Keighran agreed with Vice Mayor Ortiz. As well, she stated that the City is working on a General Plan update that is looking at other uses for this property and others in the Bayfront that may be more beneficial to the community. Accordingly, she thought it would be advantageous to have the ad hoc committee to ensure that they are looking at all options. Councilmember Brownrigg asked what the deadline was for the City to make a determination on the CUP extension. City Attorney Kane said that there isn't a deadline to make a determination in so much as since the applicant had applied for the extension in a timely manner (prior to the expiration of the CUP) any code enforcement action related to the use of the property would be delayed until the Council makes a determination. Mayor Keighran stated that she wanted to assemble an ad hoc committee and bring this matter back within 6 months with recommendations from the staff and the committee regarding the Council's options. Councilmember Brownrigg made a motion to form an ad hoc committee to investigate this matter and come back to the Council with a recommendation within six months, and that during the 6 month period the applicant would be allowed to continue with its use of the property; seconded by Vice Mayor Ortiz. The motion was approved unanimously by voice vote, 5-0. IO. STAFF RTS AND C CATIONS There were no staff reports. Burlingame City Council Unapproved Minutes 9 January 4,2016 Agenda Item 8a Meeting Date2 L/L9/16 11. COUNCIL COMMITTEE AND ACTIVITIES REPORTS AND ANNOUNCEMENTS Council reported on various events and committee meetings they each attended on behalf of the City. 12. FUTURE AGENDA ITEMS Councilmember Brownrigg asked that the Council review the transit projects of San Mateo and Millbrae to better understand their effects on Burlingame' 13. ACKNOWLEDGMENTS ^. NOVEMBER PERMIT ACTIVITY b. COMMISSION MINUTES: TRAFFIC. SAFETY AND PARKING. NOVEMBER 12.2015 14. ADJOURNMENT Mayor Keighran adjoumed the meeting at 10:00 p.m. Respectfully submitted, Meaghan Hassel-Shearer City Clerk Burlingame City Council Unapproved Minutes 10 January 4,2016 l* r .'--l Agenda Item 8b Meeting Datez t/]-9/L6 BURLINGAME CITY COUNCIL Unapproved Minutes Special Meeting with Burlingame School District Board of Trustees to discuss Hoover School Traffic Safefy and Pedestrian Access January 6,2016 1. CALL TO ORDER A duly noticed special meeting of the Burlingame City Council was held on the above date in the Lane Community Room at the Burlingame Public Library. )PLEDGE OF CE TO THE FLAG The pledge of allegiance was led by City Clerk Meaghan Hassel-Shearer. 3. ROLL CALL A. CITY OF BURLINGAME CITY COUNCIL MEMBERS PRESENT: Beach, Brownrigg, Colson, Keighran, Oniz MEMBERS ABSENT: NONE b.BURLINGAME SCHOOL DIS BOARD OF TRUSTEES MEMBERS PRESENT: MEMBERS ABSENT: Coskey, Drabkin, Intrieri, Luftman, Wong None 4. PUBLIC COMMENTS. NON.AGENDA There were no public comments. 5. WELCOME: MAYOR KEIGHRAN AND PRESIDENT COSKEY Mayor Keighran explained that the purpose of the meeting was to update the public and collaborate with Burlingame School District ("BSD") on safety measures conceming Hoover Elementary School opening. Mayor Keighran introduced the two new Councilmembers: Beach and Colson to the Burlingame School District. Board of Trustees President Coskey introduced the Burlingame School District trustees to the Council. Burlingame City Council Unapproved Minutes 1 January 6,2016 Agenda Item 8b Meeting Datez L/1,9/L6 6, PRE ATIONS A. BURLINGAME SCHOOL DISTRICT DIRECTOR OF FACILITIES The Burlingame School District Director of Facilities Tim Ryan made a presentation entitled "Hoover Progress Update" to the Council and Board of Trustees. He discussed the timeline of BSD's decision to reopen Hoover Elementary School. Tim Ryan stated that now that BSD received the necessary encroachment permits, they were working with Public Works and the Traffic, Safety and Parking Commission to identify traffic and pedestrian concerns' Mr. Ryan reviewed the cost and plans for crosswalk and street improvements around Hoover Elementary School. He stated that the estimated cost to make the necessary crosswalk improvements was $ 100,000 - $300,000. b. CITY OF BURLINGAME PUBLIC WORKS DIRECTOR Public Works Director Murtuza made a presentation entitled o'Hoover Elementary School Traffic Safety and Pedestrian Access Summary of Needs Analysis" to the Council and Board of Trustees. DPW Murtuza stated that BSD and the City were working together to ensure traffic and pedestrian safety around the school. DPW Murtuza explained the anticipated vehicle and pedestrian flow to and from Hoover Elementary School. He stated that during the peak morning hours staff estimat ed 125 inbound and 103 outbound trips, while during the peak evening hours staff estimated 71 inbound and 79 outbound trips. Furthermore, he explained that staff anticipates traffrc congestion and parking difficulties during special events such as Back to School Night. Accordingly, he strongly recommended that BSD develop a "Traffic and Parking Management Plan". In researching the traffic and pedestrian implications, DPW Murtuza explained that staff focused on 4 locations: (1) Easton Drive, (2) Summit Drive, (3) Hillside Circle and (4) Hillside Drive at Alvarado Avenue. Easton Drive: DPW Murtuza explained the necessary improvements including: (1) new sidewalk as the pathway is narrow and does not meet City and ADA standards; (2) additional signage; (3) painted crosswalk; (4) ADA ramps; (5) removal of the stone wall; (6) relocation of the power pole that is obstructing the sidewalk; and (7) the City would need to eliminate street parking. He estimated the total cost at $852,000 - $1.3 million. Councilmember Brownrigg asked if there were private property lines up to the street on Easton Drive. DPW Murtuza replied in the affirmative. Accordingly, he stated, the City and BSD would need to work with the homeowners to obtain easements in order to construct ADA compliant sidewalks. Summit Drive: DPW Murtuza explained the necessary improvements including: (1) new sidewalks; (2) traffic signage; (3) crosswalks; (4) ADA ramps; (5) relocation of a power pole and fire hydrant that were obstructing the sidewalk; and (6) repair of a masonry wall at Culvert that restricts the pathway. Furthermore, he explained that a traffic island was necessary in front of the school at the Easton Drive and Summit Drive intersection. Accordingly, he estimated the cost of improvements at $1.5 - $2 million. DPW Murtuza cautioned that a feasibility study should be done prior to any improvements on Summit Drive. Burlingame City Council Unapproved Minutes 2 January 6,2016 Agenda Item 8b Meeting Datez L/]-9/L6 Councilmember Brownrigg asked if the City was required to make sidewalks ADA compliant. DPW Murtuza stated in the affirmative. He explained that under federal law if the City does any work to the sidewalks the City must ensure that the sidewalks are ADA compliant. Mayor Keighran inquired about the masonry wall and whether or not it could be removed. DPW Murtuza stated if the wall was removed the sidewalk would then need to be widened and the street would become a one-way road. Councilmember Brownrigg asked how many students would be coming from the direction of Summit Drive. Mayor Keighran responded that it was approximately 30% of the school population. The Council and Board of Trustees discussed whether or not Summit Drive could be made a one-way street. DPW Murtuza voiced concem that it could create traffic problems. Hillside Circle: DPW Murtuza explained the necessary improvements including: (1) upgrading the crosswalks; and (2) ADA ramps. He estimated the cost of these improvements at $50,000 - $80,000 Hillside Drive at Alvarado Circle: DPW Murtuza explained the necessary improvements including: (1) repairing the crosswalks; (2) stop signs; and (3) ADA ramps. He estimated the cost of these improvements at $33,000 - $38,000. DPW Murtuza stated that the total cost of the identified improvements is $2.5 - $3.4 million. As well, he explained that he divided the identified improvements into short-term and medium to long-term improvements. He stated that the major difference between the short-term and long-term improvements was that prior to undertaking a long-term improvement, staff would need to first monitor the traffic patterns to ensure that they were undertaking the correct course of action. Councilmember Beach asked how long the City would observe traffic pattems prior to making a decision. DPW Murtuza responded that staff would need 9 months to a year. Trustee Luftman asked after the year of monitoring how long it would take to implement the improvements DPW Murtuza stated that the staff would have to look at the scope of work, finances, and the need for easements. Accordingly, he couldn't give an estimate of time. In summary, DPW Murtuza explained the list of priorities that Public Works is currently working on (i.e. 101 Broadway Interchange, Broadway Grade Separation and Neighborhood Storm Drain Project No. 8 and No. 9). As well, he outlined the 5-year general fund CIP needs at a total cost of $15.19 million and the unfunded needs of the City estimated at $98 - $ 1 13 million. 7. DISCUSSION BY C COUNCIL AND BOARD OF TRUSTEES : HOOVER SCHOOL Mayor Keighran opened up the discussion to the Council and the Board of Trustees. aJ Burlingame City Council Unapproved Minutes January 6,2016 Trustee Luftman asked if the City/BSD would need approval from Hillsborough for improvements on Summit Drive. DPW Murtuza replied in the affirmative. He explained that some of the improvements cross into Hillsborough. TRAFFIC SAFETY AND PEDESTRIAN ACCESS Agenda Item 8b Meeting Datet L/t9/L6 Councilmember Colson asked if BSD intended to have a 5th grade class the first year. Superintendent Maclssac stated that the decision had not been made, but if they did it would only be about l5 students. Councilmember Brownrigg stated that he appreciated the City's need to monitor traffic patterns prior to undertaking any long-term improvements. However, he was concerned that some of the projects (such as Easton Drive) should be made a priority. He suggested creating a pedestrian walkway by making Easton Drive, one-way during the AM and PM peak hours. DPW Murtuza responded that usually this was only done for special events as it involved a high cost and a lot of man hours. Councilmember Beach asked for a clarification on the estimated cost for the crosswalk near Hoover Elementary School as the City estimated the cost at $30,000 but BSD estimated the cost at $80-95,000. Director of Facilities Ryan stated that the City's estimate did not include necessary shelving to flatten and even out the road. Mayor Keighran asked how many parking spaces were available at the school for parents during drop-off and pick-up. President Coskey responded that there were none. She stated that during all other hours there would be 8 visitor parking spots. Mayor Keighran asked how many crossing-guards the school would use. Superintendent Maclssac responded that pursuant to the MOU they would have one, but that they foresaw needing an additional crossing-guard. Mayor Keighran asked if BSD considered staggered schedules to alleviate traffic problems. Superintendent Maclssac stated that BSD was concerned about parents needing to drop off their children at Hoover Elementary School and BIS. Mayor Keighran asked if there would be summer programs at Hoover Elementary School. President Coskey r.pii.d in the negative. As a follow up, Trustee Intrieri stated that special events will be held at other schools during the school year to minimize traffic congestion. Trustee Luftman asked about the 50/50 sidewalk improvement program and whether that could be used for repairing and creating ADA compliant sidewalks around the school. DPW Murtuza responded that no, the SOISO program worked on repairing sidewalks on a l5 year cycle. He stated that the expenditures for the new sidewalks around the school were outside the scope of the plogram. Trustee Drabkin asked about the difference in pricing that BSD and the City had for the improvements on Summit Drive. DPW Murtuza stated that it was his opinion that a traffic island was a necessary tool for this intersection. He stated it would drastically improve traffic flow. Trustee Luftman asked what the earliest the City could construct the traffic island. DPW Murtuza stated that it could be done quickly if there was cooperation from Hillsborough. The Board of Trustees and the City discussed the possibility of having a traffic circle for Easton Drive. All seemed optimistic that this could solve some of the traffic flow problems. Mayor Keighran opened the item up to public comment. Burlingame City Council Unapproved Minutes 4 January 6,2016 Agenda ftem 8b Meeting Datez t/L9/16 Burlingame resident Steve Duncan asked if BSD considered shuttle buses to transport students. Mayor Keighran and President Coskey responded that it was discussed but that the decision couldn't be made until BSD studied traffic patterns and completed a survey of eligible students. Traffic Safety and Parking Commissioner Howard Wettan discussed the two priorities that the TSP Commission had: (1) crosswalk at Hillside Drive and (2) crosswalk at Easton Drive. Burlingame resident and future Hoover Elementary School parent Monica McMillan asked about when the Easton Drive sidewalk would be completed. DPW Murtuza stated that Easton Drive sidewalk improvements would take time depending on financing, easements and contracts. Michael Robinson, Joe Rosencrist, Adam Glick, Sandy Comarado and the next 3 speakers (who did not tum in speaker cards nor state their names) expressed their concerns about traffic on the roads around the school and urged BSD and the City to work together to improve the sidewalks. Another speaker asked about the buses and why BSD was not using buses. Trustee Intrieri stated that the School Board was thinking about using buses but that they need to first identify the school population to understand who would be using the buses. Mayor Keighran closed the public comment. 8.CITY COUN , DIRECTION ON SHORT.IMPROVEMENTS AND NEXT STEPS Mayor Keighran opened up the item by stating that BSD and the City should focus on identifying the next steps. Mayor Keighran explained that it was her position that DPW Murtuza's list of short-term improvements was accurate. Therefore, she stated that this list should be the focus of BSD and the City. The short-term improvements as outlined by DPW Murtuza are: (1) new traffic island in front of Hoover School at the intersection of Easton Drive and Summit Drive; (2) new signs (stop signs, pedestrian crossing waming signs, flashing beacons, turn restriction signs, etc.); (3) striping and roadway legends; (4) curb painting for passenger loading zone and No Parking zones; (5) ADA access ramps; and (6) crossing-guards. The estimated total cost of these improvements is $200,000 - $250,000. Councilmember Brownrigg concurred with the list but stated that he would like to add a couple items. Mayor Keighran responded that if items were added to the list then this would add to the cost. Councilmember Brownrigg agreed but stated that he felt it was important to conduct a feasibility study as soon as possible with respect to sidewalks on Easton Drive and Summit Drive. He stated that he wanted to make it clear that he is not committing any funds to these projects but rather gathering a more detailed report. As well, he said he wanted to see Easton Drive and Summit Drive tumed into one-way streets during pick-up and drop-off. DPW Murtuza stated that for now he agreed that Summit Drive should be turned into a one- way street but until a study was done he didn't think Easton Drive should be made one-way. Councilmember Beach stated that she was in favor of approving the list of short-term improvements but had questions about sidewalk studies on Easton Drive and Summit Drive and which should be done first. DPW Murtuza stated that a study of Easton Drive should be done first. Burlingame City Council Unapproved Minutes 5 January 6,2016 Agenda Item 8b Meeting Datez a/L9/16 Councilmember Colson stated that she agreed with Councilmember Brownrigg but wanted to know how much a feasibility study would cost. DPW Murtuza stated that he would need to get an estimate from consultants but that it would be in the $100,000s and would take 5-6 months. Mayor Keighran asked about the costs associated with turning Summit Drive and/or Easton Drive into one- way streets. DPW Murtuza responded that it would be a minimal cost. Mayor Keighran asked the Council if the Council was in agreement about the list of short-term improvements not including the addition of the feasibility study. The Council replied in the affirmative President Coskey asked her fellow trustees for their feedback. Trustee Intrieri stated that he was in favor of expediting the list of short-term improvements. Mayor Keighran asked if BSD had determined what they could contribute to the cost of the short-term improvements. Trustee Intrieri responded that BSD cannot use bond funds to improve items that are not owned by BSD. Accordingly, he stated that his concern was that the further the traffic safety and pedestrian improvements got from the school, the harder it would be to justify using the bond funds. However, Trustee Intrieri stated that BSD budgeted $ 150,000 toward short-term improvements. Mayor Keighran asked if BSD could use general funds for the necessary improvements. Trustee Intrieri responded that BSD couldn't because the general funds went towards the education of the students. Councilmember Brownrigg suggested that BSD and the City split the costs of the short-term improvements 50/50 with a cap of $300,000. Mayor Keighran asked the Council if they were in agreement. The Council responded in the affirmative. President Coskey asked the Trustees if they were in agreement. The Trustees responded in the affirmative. 9. ADJOURNMENT Mayor Keighran adjourned the meeting at 8:26 p.m. Respectfully submitted, Meaghan Hassel-Shearer City Clerk Burlingame City Council Unapproved Minutes 6 January 6,2016 To: Date: From: STAFF REPORT Honorable Mayor and City Counci! January 19, 2016 Garol Augustine, Finance Director - (650) 558'7222 AGENDA NO:9a ItiIEETING DATE: January 19,2016 Subject:Resolution of the City Council of the City of Burlingame Approving the lssuance by the Burlingame Financing Authority of Not To Exceed $11,000,000 Aggregate Principal Amount of Storm Drainage Revenue Bonds to Finance Capital lmprovements to the Storm Drainage System of the City; Authorizing Execution and Delivery of an lnstallment Sale Agreement and a Bond Purchase Agreement; Approving Form of Official Statement; and Authorizing Execution of Documents and the Taking of All Necessary Actions Relating to the Financing with the Burlingame Financing Authority RECOMM DATION Staff recommends that the City Council adopt the resolution approving all actions relating to the issuance of the Storm Drainage Revenue Bonds, Series 2016. BACKG ROUND ln 2009, the property owners of Burlingame voted to approve a storm drainage fee that is based on the impervious nature of real estate lots. An engineering study was conducted to determine the various categories of fees. The fees are collected annually by San Mateo County as part of the property tax bill. The County then remits the funds to the City. The storm drainage fee revenue is used to make improvements to the City's storm drainage system. On April 19,2010, the City Council approved a resolution authorizing the first issuance of storm drainage revenue bonds and authorizing staff to seek legal validation from the Superior Court of the County of San t\Iateo regarding the validity of this Council resolution. On June 29,2010, the Superior Court of the County of San Mateo entered a default judgment in favor of the City, which validates the issuance of storm drainage bonds. On August 18,2010, the Burlingame Financing Authority issued its first series of storm drainage revenue bonds in the amount of $9,805,000. A second series of bonds was issued in December 2O1Zin the amount of $10,615,000. The series 2016 bonds will be the third component of the storm drainage system's financing program. One final issuance may be necessary before the City can anticipate funding future capital improvements on a pay-as-you-go basis. The blanks in the preliminary Official Statement and Bond Purchase Agreement are intentional and will be filled in once the issuance moves fonrvard and the pricing and sale are completed. 1 Storm Drain Revenue Bonds, Series 2016 - City Council January 19,2016 DISC SION The storm drainage system requires additional capital improvement to modernize the City's aged storm drain infrastructure. The first series of bonds of about $9.8 million were sold in 2010 with a mixture of traditional tax-exempt bonds ($2.6 million) and taxable Build America Bonds (BABs) ($7.2 million). As the City drew down the proceeds of those bonds, the 2012 bonds issuance ($10.2 million) replenished the City's ability to fund further capital improvements; the remainder of this second issuance was encumbered in early November for construction and inspection services for the Neighborhood Storm Drain Project No. 8. The 2016 bonds will provide funding for storm drainage capital improvements that will be needed in the coming years. According to the capital improvement plan adopted as part of the City's budget on June 18, 2015, the City is contemplating $18.4 million of additional projects for this system beyond the current fiscal year. lncluded in these projects are capacity improvements to the Burlingame, Ralston, El Portal and Gilbreth creeks as well as the Trousdale channel. The plan also calls for general improvements and maintenance of catchment basins and pump stations citywide. The 2016 bonds will finance aproximately $10 million in new storm drainage improvements. The final amount of improvements to be financed from the 2016 bonds will be determined closer to the bond sale based on actual funding needs. Stifel Nicolaus will serve as underwriter for the bonds, which will be sold on a negotiated basis. Orrick will serve as Bond & Disclosure Counsel. PFM will serve as the Financial Advisor to review the transaction's interest rates and the undenrvriting fees at the time of the bond sale. lt is expected that the bonds will be sold on February 10, 2016, and the transaction is expected to close on February 24,2016. The proceeds will be deposited in the Bank of New York Mellon Trust Company, the City's trustee bank. Copies of the Resolutions, Preliminary Official Statement and Bond Purchase Agreement are available for public inspection at the Office of the City Clerk. Electronic copies are also available for e-mail to Councilmembers as well as interested members of the public by contacting the City Clerk. FISCAL IMPACT The proposed bond issuance is currently projected to be rated "A+" by the Standard & Poor's rating agency. lf a bond insurance policy is made available, the decision to purchase it will depend on the potential economic benefit it provides (if any). On April 19, 2010, the Council approved storm drainage fund policies to ensure the repayment of the storm drainage debt to the bondholders and aid in buffering investors against potential contingencies that the city may face which may pose a financial risk. The not-to-exceed interest rate is set at 6.500/0, but the actual interest rate is expected to be between 2.0% and 5.Oo/o. The average debt payment for the 2016 bonds is estimated at $725,000, assuming financing $10 million in storm drainage improvements. The combined 2 a Sform Drain Revenue Bonds, Series 2016 - City Council January 19,2016 annual debt payment for the 2016, 2012 and 2010 bonds is projected to be $2,000,000. The final maturity will be 2038 to coincide with the final collection date of the storm drainage revenue fee. Exhibits Resolution of the City Council of the City of Burlingame Approving the lssuance by the Burlingame Financing Authority of Not To Exceed $11,000,000 Aggregate Principal Amount of Storm Drainage Revenue Bonds to Finance Capital lmprovements to the Storm Drainage System of the City; Authorizing Execution and Delivery of an lnstallment Sale Agreement and a Bond Purchase Agreement; Approving Form of Official Statement; and Authorizing Execution of Documents and the Taking of All Necessary Actions Relating to the Financing with the Burlingame Financing Authority lnstallment Sale Agreement between the City of Burlingame and the Burlingame Financing Authority, Dated as of February 1 , 2016 (Provided under Financing Authority Item.) a a a a a Trust Agreement between the Burlingame Financing Authority and The Bank of New York Mellon Trust Company, N.A., Dated as of February 1 , 2016 (Provided under Financing Authority ltem.) Preliminary Official Statement (Provided under Financing Authority ltem.) Bond Purchase Agreement (Provided under Financing Authority ltem.) 3 RESOLUTION NO. RESOLUTION OF THE CITY COLINCIL OF THE CITY OF BURLINGAME APPROVING THE ISSUANCE BY THE BURLINGAME FINANCING AUTHORITY OF NOT TO EXCEED $11,OOO,OOO AGGREGATE PRINCIPAL AMOLINT OF STORM DRAINAGE REVENUE BONDS TO FINANCE CAPITAL IMPROVEMENTS TO THE STORM DRAINAGE SYSTEM OF THE CITY; AUTHORIZING EXECUTION AND DELIVERY OF AN INSTALLMENT SALE AGREEMENT AND A BOND PURCHASE AGREEMENT; APPROVING FORM OF OFFICIAL STATEMENT; AND AUTHORIZING EXECUTION OF DOCUMENTS AND THE TAKING OF ALL NECESSARY ACTIONS RELATING TO THE FINANCING WITH THE BURLINGAME FINANCING AUTHORITY WHEREAS, the City of Burlingame (the "City") and the Redevelopment Agency of the City of Burlingame (the o'Agency") have heretofore executed a Joint Exercise of Powers Agreement, dated as of May 15, 1995 (the "Joint Powers Agreement"), by and between the City and the Agency, which Joint Powers Agreement creates and establishes the Burlingame Financing Authority (the "Authority"); and WHEREAS, pursuant to Article 4 of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California (the ooMarks-Roos Local Bond Pooling Act of 1985") and the Joint Powers Agreement, the Authority is authorized to issue bonds for financing public capital improvements whenever there are significant public benefits to be realized; and WHEREAS, in accordance with Govemment Code Section 6586.5, the City has published notice of a public hearing in a newspaper of general circulation and on the date hereof ireld a public hearing concerning the financing of the Project by the Authority through the issuance of the Bonds as required by Government Code Section 6586.5(a)(2); and WHEREAS, the City desires to approve the Authority's issuance of not to exceed $11,000,000 aggregate principal amount of Burlingame Financing Authority Storm Drainage Revenue Bonds, Series lOtO (tt. "Bonds") for the pulpose of financing improvements to the storm drainage system of the City (the "Projects"); and WHEREAS, in order to finance the Projects, the City desires to execute and deliver an installment sale agreement (the "Installment Sale Agreement") with respect to the Projects; and WHEREAS, the Authority and City will enter into a Bond Purchase Agreement (the "Bond Purchase Agreement") with Stifel, Nicolaus &. Company, Incorporated (the "Underwriter); and WHEREAS, there have been submitted and are on file with the City Clerk proposed forms of the Installment Sale Agreement, Bond Purchase Agreement, an Official Staiement with respect to the Bonds proposed to be issued by the Authority, and a Trust Agreement by and between the Authority and The Bank of New York Mellon Trust Company, N.A. (the'oTrust Agreement"); and OHSUSA:763 796035.3 WHEREAS, the issuance of Bonds by the Authority pursuant to the Trust Agreement and the execution and delivery of the Installment Sale Agreement will result in significant public benefits through demonstrable savings in the effective interest rates and bond issuance costs expected to be paid for the Bonds issued to finance the Projects, and that it furthers the public purpose to assist in such financing; NOW THEREFORE, the City Council of the City of Burlingame hereby finds, determines, declares and resolves as follows: Section l. All of the recitals set forth above are true and correct, and the City Council so finds and determines. Section 2. The City Council hereby approves the issuance of Bonds, titled "Burlingame Financing Authority Storm Drainage Bonds, Series 2016" (the "Bonds") by the Authority, in an aggregate principal amount not to exceed $11,000,000, to finance improvements to the storm drainage system of the City. Section The proposed form of Installment Sale Agreement by and between the Authority and City, on file with the City Clerk, is hereby approved. The City Manager and Finance Director/Treasurer, jointly and severally, are hereby authorized and directed, for and in the name and on behalf of the City, to execute and deliver an installment sale agreement in substantially said form, with such changes therein as such officers may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof; provided, however, that the term of said installment sale agreement shall end no later than July l, 2038 and the interest rate or rates shall not exceed a true interest cost of six and one-half percent (6.5%) pet annum. Section 4. The proposed form of Bond Purchase Agreement, by and among the Underwriter, the Authority and the City, on file with the City Clerk, is hereby approved. The City Manager and the Finance Director/Treasurer, jointly and severally, or any such officer's designee, are each hereby authorized and directed, on behalf of the City, to execute and deliver a bond purchase agreement in substantially said form, with such changes therein as such officer may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof; provided, however, the underwriting discount (not including original issue discount) shall not exceed one percent (l%) of the aggregate principal amount of the Bonds. Section The proposed form of Official Statement relating to the Bonds (the "Official Statement"), on file with the City Clerk, is hereby approved. The City Manager and the Finance Director/Treasurer, jointly and severally, are hereby authorized and directed, for and in the name and on behalf of the City, to execute and deliver an Official Statement in substantially said form, with such changes therein as such officer may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof. The Underwriter is hereby directed to distribute copies of the Official Statement to all actual purchasers of the Bonds. Distribution by the Underwriter of a preliminary Official Statement relating to the Bonds is hereby approved and the City Manager and Finance Director/Treasurer, jointly and severally, are hereby authorized and directed, to execute a certificate confirming that the preliminary Official OHSUSA:763 796035.3 a Statement has been "deemed hnalo' by the City for purposes of Securities and Exchange Commission Rule 1 5c2-12. Section 6. The City Manager and Finance Director/Treasurer, jointly and severally, are hereby authorized on behalf of the City to execute a Continuing Disclosure Certificate containing such covenants of the City as shall be necessary to comply with the requirements of Securities and Exchange Commission Rule l5c2-12. The City hereby covenants and agrees that it will comply with and carry out all of the provisions of such Continuing Disclosure Certifi cate. Section 7. The officers and City Council members of the City are hereby authorized and directed, jointly and severally, to do any and all things and to execute and deliver any and all documents and certificates which they deem necessary or advisable in order to consummate the execution and delivery of the documents mentioned herein and otherwise to effectuate the purposes of this Resolution and the transactions contemplated hereby. Section 8. All actions heretofore taken by the officers and agents of the Council of the City with respect to the f,rnancing of the Projects are hereby ratified, confirmed and approved. Section 9. This Resolution shall take effect from and after its adoption and approval. OHSUSA:763796035.3 3 I hereby certify that the foregoing is a full, true and correct copy of a resolution duly passed and adopted by the City Council of the City of Burlingame at a regular meeting thereof held on the _ day of January,2016, by the following vote of the members thereof: AYES: COLINCILMEMBERS: NOES: COLINCILMEMBERS: ABSENT: COUNCILMEMBERS: ATTEST: City Clerk OHSUSA:763796035.3 -4- CLERK'S CERTIFICATE I, Meaghan Hassel-Shearer, City Clerk of the City of Burlingame, do hereby certify as follows: The foregoing resolution is a full, true and correct copy of a resolution duly adopted by a vote of a majority of the City Council of the City of Burlingame at a regular meeting of said Council duly and regularly and legally held at the Council Chambers, 501 Primrose Road, Burlingame, California, on January _,2016, of which all of such members had due notice, as follows: AYES: NOES ABSTAIN: ABSENT An agenda of said meeting was posted at least 72 hours before said meeting at 501 Primrose Road, Burlingame, Califomia, a location freely accessible to members of the public, and a brief description of said resolution appeared on said agenda. I have carefully compared the foregoing with the original minutes of said meeting on file and of record in my office, and the foregoing is a full, true and correct copy of the original resolution adopted at said meeting and entered in said minutes. Said resolution has not been amended, modified or rescinded since the date of its adoption and the same is now in full force and effect. Dated 20t6. City Clerk of the City of Burlingame OHSUSA:763 796035.3 STAFF REPORT AGENDA NO 9b MEETING DATE: January 19,2016 To:Honorable Mayor and City Council Date: January 19,2016 From: Carol Augustine, Finance Director - (650) 558'7222 Subject: Acceptance of the Gomprehensive Annual Financial Report for the Year Ended June 30,2015 RECOMMENDATION Staff recommends that the City Council accept the Comprehensive Annual Financial Report (CAFR) for the fiscal year 2014-15. BACKGROUND Following the close of each fiscal year, the City's external auditors conduct an audit of the City's financial records and assist in the compilation of the Comprehensive Annual Financial Report (CAFR). The paramount objective of general purpose external financial reporting is accountability. The goal of a financial statement audit is to provide Lrsers with a reasonable assurance from an independent source that the information presented in the statements is reliable. The audit for the fiscal year ended June 30, 2015 was just recently completed. DISCUSSION The 2014-15 fiscal year audit is the fifth annual audit performed by Brown Armstrong Accountancy Corporation as the City's external auditors. The firm conducts their audits in accordance with generally accepted auditing standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. The standards require that the auditors plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. On a sample basis, they examine evidence supporting the amounts and disclosures in the financial statements. The audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall basic financial statement presentation. The auditor's unmodified ("clean") opinion is presented as the first item in the financial section of the CAFR (page 1). ln accordance with Government Auditing Standards, the auditors also issue a report of recommendations to City management identifying any areas for improvement in the City's internal control over financial reporting. The City's Audit Committee, currently comprised of Council Members Michael Brownrigg and Donna Colson, recently met with staff and the auditors to discuss the audit reports, results and recommendations. 1 Comprehensive Annual Financial Report 2014-l 5 January 19,2016 Each year the City participates in the CAFR award program administered by the Governmental Finance Officers of America (GFOA), and has been successful in obtaining the award each fiscal year beginning in 1989-90. Staff has submitted the City's FY 2014-15 CAFR to the GFOA program and is confident that the report will again merit the GFOA Certificate of Achievement for Excellence in Financial Reporting. The 14-15 CAFR is posted to the City's web site (Finance Department web page) at http://www.burlinqame.orq/index.aspx?paqe=22. Management's Discussion and Analvsis Governmental Accounting Standards require a Management's Discussion and Analysis (referred to as MD&A) to be included with the audited financial statements, with the intent of giving readers an objective and easily readable analysis of the City's financial performance for the year. The [MD&A includes a discussion of the basic financial statements, some condensed financial information, an analysis of the City's financial position and results of operations on both a City- wide and Fund basis. The Management's Discussion and Analysis begins on page 5 of the CAFR. As noted in the document, the financial standing of the City remains relatively strong. The City's total revenues increased $2.8 million over the prior year, and total expenses increased slightly over $2.1 million. For the most part, departmental expenses increased due to the inclusion of retiree medical obligations, both current costs and an amortization of prior year costs, now included in the department's budgets. New GASB standards that relate to the recording and reporting of pension costs and liabilities were implemented in this 2015-16 CAFR. As a result, prior year governmental net position (reported in the government-wide financial statements) was reduced $66.5 million, and the beginning net position of businesstype activities (largely enterprise funds) was reduced $8.5 million. This significant reduction in net position creates a negative balance in the unrestricted net position of the City's governmental activities. As the net pension liability diminishes, the unrestricted portion of the City's net position will improve. Note that all governmental agencies that conform to governmental accounting standards are impacted by this change, which reflects only a change in accounting principle, not an actual change in financial condition. As the new GASB reporting scheme has been broadly anticipated, the change will not materially affect the credit ratings of impacted public agencies, as there has been no change in the already apparent realities of the marketplace. The government-wide financial statements, which provide a broad overview of the City's finances, indicate that the City's net position increased $24.6 million (18.6 percent) during the fiscal year ending June 30, 2015'. $17 million due to governmental activities and $7.6 million due to businesstype activities (largely comprised of the City's Water and Wastewater utilities operations). Governmental revenues were up nearly $5.3 million from the prior year - due largely to increases in transient occupancy, property and sales tax revenues - as the Bay Area continued to lead the state in economic growth. The largest improvement in net position for business-type activities ($3.5 million) was in the wastewater utility. Changes within each of the City's Enterprise Funds, which are reported as business-type activities, are explained in the MD&A. 2 Comprehensive Annual Financial Report 2014-1 5 January 19,2016 General Fund Status General Fund highlights for the 2014-15 fiscal year are also summarized in the MD&A. A separate disclosure, the Budgetary Comparison Schedule for the General Fund, is included in the CAFR (page 132) as Required Supplementary lnformation, Note 6. The General Fund experienced a surplus for the year, as revenues of the fund exceeded expenditures and net transfers by nearly $6.6 million. The largest positive budget variance was reported for Transient Occupancy Tax revenues, which totaled $23.7 million, over $2,3 million higher than in the previous fiscal year. Property and sales tax revenues were up a combined $2.1 million over the prior year, an additional reflection of strong tourist demand and improved consumer confidence. Many of these revenue increases were anticipated at mid-year and were reflected in the adjusted budget for the year. Still, actual revenues came in nearly $2.0 million higher than the adjusted budget, a positive variance o13.2 percent. Budgetary savings (positive expenditure variances) within the General Fund were experienced in all departments, resulting in expenditures of $3.5 million (roughly 7.3 percent) less than budgeted for the fiscal year. This is a fairly large variance: Over $1 million budgetary savings in salaries and wages alone (6.8 percent) and an additional $.5 million in retirement and health benefits (9.4 percent) indicate a higher than usual vacancy rate. (The budget is established assuming full staffing throughout the year.) The highest percentage of budgetary savings was in Public Works, largely due to the amount of resources, in both the Engineering and Street and Storm Drainage Divisions, charged to the City's on-going projects in the Capital Projects Fund rather than to General Fund operations. Higher budgetary savings were also experienced in the Planning Department, as certain development activities were reimbursed by applicants. Since local government expenditure budgets (appropriations) serve as the legal level of budgetary control, some level of savings will be realized in any fiscal year. ln addition, budgets are developed based on year-round occupancy of all authorized staff positions. ln periods of high turnover or other reasons for an increased level of staff vacancies, higher budgetary savings may be experienced. Storm Drain Fund Status Unlike prior fiscal year reports, the Storm Drainage Fund is shown as a major governmental fund in the CAFR for fiscal year 2014-15. Although fee revenues to the fund (over $2.7 million) were slightly higher than in the prior year, transfers of only $355 thousand (as compared to the $7.0 million in fiscal year 2013-14) were made to support capital improvements to the City's storm drain infrastructure. The additional transfer of $1.4 million for debt service on previously issued bonds resulted in a fund balance of nearly $2.6 million, an increase of slightly over $1 million. As all of the remaining bond proceeds have been appropriated for current storm drain projects, the City plans to issue a third bond series in 2016 so that these projects are appropriately funded without interruption or the need to borrow from other funds. 3 Comprehensive Annual Financial Report 201 4-1 5 January 19, 2016 Proprietarv Funds Proprietary Funds are used to account for activities that are fueled by charges for the services provided by each fund. Enterprise Funds account for external activities (largely utilities), while lnternal Service Funds (SFs) account for internal (interdepartmental) activities. The City maintains enterprise funds to account for the activities of its water and wastewater operations. Charts depicting the historical financial performance of these two funds are included in the MD&A. The funds are self-supporting: the sale of water and provision of wastewater services to customers generates the revenue needed to support the operations and capital needs of these utilities. Both utilities experienced an increase in net position in fiscal year 2014-15: $2.0 million (11.8 percent) for the Water Fund, and $3.5 million (9.2 percent) for the Sewer Fund. The Solid Waste Management Fund and Landfill Fund are both fueled by a surcharge on garbage rates. The Solid Waste Fund accounts for City costs of street cleaning, the household hazardous waste program, steam cleaning of City receptacles and other related activities, and provides a rate stabilization reserve for rate payers. Conversely, the Landfill Fund accounts for post closure maintenance and monitoring of the City's old landfill site. The City reports its obligation to ensure that the City's landfill site is properly maintained going fonrard as a post-closure liability, which results in a deficit position for the fund. However, the landfill surcharge should serve not only to maintain the site, but reduce the unfunded portion of the post-closure liability in future years. Other enterprise funds consist of the Parking Fund and the Building Fund. These funds also ended the fiscal year with increased net positions. The City's six lnternal Service Funds (lSFs) are utilized to report activities that provide insurance, facilities, vehicles and equipment, and information technology services to support the City's various programs and functions. The City's OPEB (Other Post Employee Benefits) Fund was created in fiscal year 2Q13-14 to account for funding of the external trust account established to meet the City's retiree medical obligations. Beginning in the 2014-15 fiscal year, surcharges on departmental payrolls provide revenue to the OPEB ISF; retiree medical premiums and monthly contributions to the trust account comprise the fund's expenditures. This fund retains a relatively small balance as the City fonruards any remaining departmental charges to the trust fund, where higher interest earnings are obtained than can be achieved in the City's investment portfolio. The combined net positions reported in all of the lSFs increased in fiscal year 2014-15 due largely to the favorable claims development within both the City's general liability and workers compensation programs. The City strives to maintain additional reserves to protect against unusual losses beyond normal experience. Charges to the departments are calibrated so as to cover costs of insurance and the payment of claims, though demands of these funds have varied considerably in recent fiscal years. As of June 30, 2015, all of the lSFs maintain adequate balances, and internal (departmental) charges for services should require only small adjustments in future years. 4 Comprehensive Annual Financial Report 201 4-1 5 January 19,2016 Other Funds The MD&A discusses changes in the City's Capital Projects Fund and Debt Service Fund, which are considered major funds for financial statement purposes. Capital project expenditures totaled $13.9 million. Leading the list of spending on capital projects during the fiscal year was the Library Millennium Project ($3 million), followed by completion of the Burlingame Avenue Streetscape Project ($1.9 million). Debt activities for the year were limited to debt service payments on the City's outstanding debt, which included $5.1 million in principal payments and $2.6 million in interest and administrative costs. As noted in the document's Letter of Transmittal, the City's AA+ general obligation credit rating was last re-affirmed by Standard & Poor's in March 2014. The City also has nine non-major governmental funds, all of which are considered Special Revenue Funds. (Special revenue funds are used to account for the proceeds of governmental revenues that are restricted or committed for purposes other than debt service or capital projects.) Details of these funds are reported in the Combining Financial Statements beginning on page 138 of the CAFR. The City's largest special revenue funds are the Gas Tax and measure A Funds. Transactions in these funds consist largely of transfer to the Capital Projects Fund for street and transportation related projects. The impact of the 2014-15 fiscal year results for the City's General Fund on the current year budget continues to be analyzed in conjunction with a monthly budget-to-actual review. A review of all of the City's funds, an update on the status of major projects and priorities, and an update of economic conditions will be presented to the Council with the mid-year report and budget adjustments in March. At that time, the longterm financial forecast will also be revised. FISCAL IMPAGT Acceptance of the City's CAFR has no direct impact on City resources. However, obtaining an unqualified opinion from the auditor is an important independent verification and validation of the City's financial management practices and a prerequisite to receive the GFOA award. An award- winning CAFR contributes to the City's excellent bond rating. Exhibit: City of Burlingame Fiscal Year 2014-15 Comprehensive Annual Financial Reporta 5 t- tiflTttI !.,-flxxt"F(it *e.l: , t; ! ?? .l "qI a..'...., a a ,v*, , t, + ?" , , i; 1 L : ", i. .?r7.a.aaa:. .,7-'-//-.: & -a aaZ il 5Ylr E ,', @ffiu# l"- €\ f t L 1 : , I ff'=f, ,%gil S/ City of Burlingame, California COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Fiscal Year Ended June 30,2015 Prepared by City of Burlingame Finance Department CITY OF BURLINGAME, CALIFORNIA COMPREHENSIVE ANNUAT FINANCIAT REPORT JUNE 30, 2015 TABTE OF CONTENTS INTRODUCTORY SECTION Finance Director's Letter of Transmittal Certificate of Achievement - Government Finance Officers Association.......... Elected and Appointed Officia1s........... City of Burlingame Organizational Chart.......................... City Organization by Critical Service Area.... City of Burlingame Commissioners City of Burlingame Finance Department.... City of Burlingame Finance Department Organization Chart........... Organizational Compass ..,,,................. FINANCIAT SECTION lndependent Auditor's R e po rt ............. lvlanagement's Discussion and Analysis.......... Basic Financial Statements: Government-Wide Financial Statements: Statement of Net Position................................ Page 7 5 Statement of Activities.................. Fund Financial Statements: 29 30 34 35 36 Balance Sheet - Governmental Funds..................... Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position ... Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds ................ Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities...... Statement of Net Position - Proprietary Funds ..... Statement of Revenues, Expenses, and Changes in Fund Net Position - Proprietary Funds Statement of Cash Flows - Proprietary Funds Statement of Fiduciary Net Position - Fiduciary Funds Notes to the Basic Financial Statements (The Notes to the Basic Financial Statements are an integral part of the basic financial statements.) Requlred Supplementary lnformation: Cost-Sharing Defined Benefit Pension Plan Schedule of the City's Proportionate Share of the Net Pension Liability cost-Sharing Defined Benefit Pension Plan Schedule of contributions............. Agent Multiple Employer Defined Benefit Pension Plan schedule of Changes in the Net Pension Liability and Related Ratios....... Agent Multiple Employer Defined Benefit Pension Plan Schedule of Contributions............. 40 42 44 46 47 L2! L22 t23 L24 I vii viii ix x xi xiii xiv Page FINANCIAL SECTION, Continued Required Supplementary lnformation (Continued): Other Post-Employment Benefits . Budget and Budgetary Accou nting Modified Approach for the City's lnfrastructure....... Budgetary Comparison Schedule - General Fund Budgetary comparison Schedule - Storm Drainage Fund Combining Financial Statements: Combining Balance Sheet - Nonmajor Governmental Funds................ Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - Nonmajor Governmental Funds.......... Combining Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual- Nonmajor Governmental Funds.................. Combining Statement of Net Position - lnternal Service Funds....... Combining Statement of Revenues, Expenses, and Changes in Fund Net Position - lnternal Service Funds........ Combining Statement of Cash Flows - lnternal Service Funds......................... combining Statement of Changes in Assets and Liabilities - All Agency Funds......................... STATISTICAL SECTION Net Position by Com ponent ....... t26 L27 t28 t32 133 138 Change in Net Position......... Fund Balance of Governmental Funds ................... Changes in Fund Balance of Governmental Funds.................... Assessed Values of Taxable Property Net Taxable Assessed Value History.................. Property Tax Rates - Direct and Overlapping Governments ............... Top Ten Property Taxpayers............... Property Tax Levies and Collections............ General Government Tax Revenues by Source,...... Ratios of Outstanding Debt by Type Ratios of General Bonded Debt Outstandin9................. Computation of Direct and Overlapping Debt Legal Debt Margin 1nformation........................... Pledged Revenue Coverage................ Demographic and Economic Statistics Principal Employers Full-Time Equivalent City Government Employees by Function...... Operating lndicators by Fu nction........... 140 142 747 148 749 151 158 160 163 t64 166 168 1.59 t70 t7t L73 L74 775 1l t) 777 178 t79 180 r.83 184 186Capital Asset Statistics by Function page lndependent Audito/s Report on lnternal Control over Financial Reporting and on Compliance and other Matters Based on an Audit of Financial Statements Performed in Accordance with Govern ment Auditing Standords .......................................'...'..... 187 Comprehensive Annual Financial Report June 30,201.5 INTRODUCTORY SECTION Comprehensive Annual Financial Report June 30,2015 Burlingame Finaace Department 50l Primrose Road Burlingame, CA 9481&.3997 65&558-7200 Fax 65&342{386 www.trurlingame.org January 7 ,2016 To the Honorable Mayor, Members of the Council, and Citizens of Burlingame I am pleased to present the City of Burlingame's (the City) Comprehensive Annual Financial Report (CAFR) for the fiscal year ended June 30, 2015. This financial report contains a complete set of audited financial statements prepared in accordance with Generally Accepted Accounting Principles (GAAP) as promulgated by the Governmental Accounting Standards Board (GASB). Responsibility for the accuracy of the data, and the completeness and fairness of the presentation, including all disclosures, rests with the City, and in particular, the Finance Department. lnformation contained in this report is based upon a comprehensive framework of internal controls that has been established for this purpose. The objective of internal controls is to provide reasonable, rather than absolute, assurance that the CAFR information is accurate in all material aspects. The Management's Discussion and Analysis section of the financial report provides information on the City's financial position and should be read in conjunction with the financial statements. As required by GAAP, the financial statements present the government and its component units that are considered to be fiscally interdependent. For financial reporting purposes, the City's basic financial statements include all funds, boards, commissions, and authorities that are controlled by or are dependent upon the Burlingame City Council. The California Government Code requires an annual audit of the basic financial statements of the City. The accounting firm Brown Armstrong performed the audit for the fiscal year ended June 30, 2015. The independent audito/s report on the basic financial statements is included in the financial section of this report and states that the City's basic financial statements present fairly, in all material respects, the financial position of the City as of June 30,20L5, and the results of its operations and the cash flows of its proprietary fund types for the year then ended, in conformity with generally accepted accounting principles. For the year ended June 30, 20L5, single audits were not required in accordance with the provisions of the Single Audit Act, as threshold expenditure requirements from federal funding were not reached during the fiscal year. Government Profile The City is a California general law City incorporated in 1908 that operates under the Council-Manager form of government. A five-member City Council is elected at large to four-year terms and serves as the Board of Directors. The City Council selects a Mayor and Vice Mayor from its members annually. A City Manager is appointed by the City Council and serves as the chief executive officer. The City Manager is responsible for all municipal functions. A City Attorney is appointed by the City Council to serve as chief legal advisor for the governing body and the administration. The City's municipal services include: police and fire protection; public works; community development; parks and recreation; library services; i water, sewer, parking, solid waste and storm drainage. General government activities include finance, human resources, legal services and city administration. The city employs approximately 200 full-time employees. An executive team helps the City Manager lead the city organization. lt includes eight department directors, the City Attorney and the City Clerk. The Burlingame City limits contain approximately six square miles. The City is located in San Mateo County, on the western shore of the San Francisco Bay approximately 10 miles south of San Francisco. According to the State Department of Finance, the population for the city of Burlingame is 29,700. The population has remained fairly level, increasing by 1.2% over the past five years. Budset Process The City adopts an annual budget for all funds. Major funds include the General, Storm Drainage, Capital Projects, Debt Service, Water, Sewer, Parking, Waste Management, Landfill and Building Funds. Budgets are prepared on the same basis of accounting as the associated financial statements. The City's formal budget is employed as a management control device during the year, and it is adopted annually for all City funds, except for the fiduciary funds and certain special revenue funds where appropriate. consistent with most governmental entities, the City's budget is based on a modified accrual basis of accounting under which revenues are recognized in the period they become available and measurable, and expenditures are recognized in the period the related liability is incurred. The City budget includes information regarding estimated costs (or outlays) and revenue (or cash inflows) for identified programs, projects, and levels of service to meet the needs of the City. All annual appropriations lapse at the end of the fiscal year except in the Capital Projects Fund, because capital improvement projects typically span more than one fiscal year. Appropriations for capital projects lapse when projects are completed, placed into service, accounted for as capital assets or abandoned at the discretion of the City and/or City Council. Budget amendments that increase a fund's appropriations require majority approval by the City Council. Certain budgetary re-allocations within departments require approval by the Finance Director and department heads. Budget amendments between departments are approved by the Finance Director and City Manager. A mid-year budget status report and a long-term financial forecast for the next five years are presented to the City Council as part of an ongoing assessment and evaluation of budgetary performance, with special attention to the General Fund and certain other major funds. The City Council encourages all City residents and business community members to participate in the development of the City budget. The City Council holds three public meetings to provide guidance on the budget: a goal-setting session in January, and budget study sessions in March and May. The City Council solicits input at each of the meetings. Community members may also submit their ideas directly to City staff. Under these policy directives and guidance, departments prepare their budget requests in support of their programs for submission in early April. Expenditure assumptions are based on known factors such as collective bargaining agreements, current pay and benefit policies, consumer price indices, and other information available from expert third-parties or governing authorities. Budget requests are reviewed by the Finance Department for technical compliance to City budget instructions. The Proposed Budget is prepared and delivered to the City Council in May. The City Council reviews the Proposed Budget before the final budget is formally adopted in June at a public hearing, which gives residents an additional opportunity to comment on the spending plan. Along with most cities along the 5an Francisco peninsula, the city has fully recovered from the 2008- 2010 recession, as evidenced by rebounds in the City's largest revenue sources. ln fact, the City's top three revenues streams (from transient occupancy tax, property tax and sales taxes) have far surpassed pre-recessionary amounts, and now constitute ovet 83yo of the City's General Fund revenues. Key indicators of the City's economic health are job growth, real estate values, and retail activity. Employment The San Francisco Bay Area continues to lead the state in job expansion; the unemployment rate remains one of the lowest in the State of California, based upon recent Employment Development Department (EDD) data. The unemployment rate in San Mateo County was 3.1% in November 2015, which is below last year's 'ale of 4.0%. comparatively, the State of California's unemployment rate also improved; it is now 5.7% as of November 20L5, a L.5 percent decline since last year. The total number of jobs located in the counties of San Francisco and San Mateo combined rose by 42,200, or 4.1% between November 2014 and November 2015. The highest job growth occurred in professional and business service employment (18,800), followed by the trade, transportation and utilities sector (s,6OO jobs). Real personal income growth is also slated to grow by 4.5% by the end of calendar year 2015, with projected growth rates of 4.4% in 2016 and 3.5% in 2077, as reported by the University of California, Los Angeles Anderson School of Business in its Ju ne 2015 economic forecast. Property taxes, which are based on assessed value, are one of the City's largest revenue sources, accounting for approximately 27% ol the City's General Fund revenue. Fiscal year 2014-15 property tax receipts were 515.7 million, up 7.6% f,om the prior year. According to data obtained from the San Mateo County Assessor, the City has 8,570 parcels with a total assessed value of S8.4 billion, an increase of 5568.4 million, or 7.3% since last year. Residential assessed values grew by 7.9%, while commercial assessed values grew by 9.5%. According to DataQuick, the median price of homes sold in the City during the month of October 2015, was 51,928,000, which is a 3.9% increase compared to the same time last year. However, only 30 homes were sold. County-wide, 599 homes were sold, with a median value of 5930,000, a 6.3% year-over-year increase in sales price since October 20L4. The area's housing supply shortage is a primary driver of high housing costs. Combined with the increase in real income, it is increasingly apparent that lower income residents are getting priced out of the San Mateo County. The City is a highly desirable residential community and upscale commercial location with attractive shopping districts. The City borders the Town of Hillsborough, an affluent community that is L00% residential. Therefore, in many cases, Burlingame businesses have the opportunity to serve the commercial needs of Hillsborough residents, and benefit from the additional disposable income from neighboring communities. Numerous national retailers are located in the Burlingame Avenue Business District, making the area competitive with regional shopping malls. ln addition, the City is known for its upscale restaurants and businesses that attract patrons from throughout the entire San Francisco Bay Area. The City owns and manages most of the parking spaces located within the shopping districts and works with local merchants to maximize the shopping experience. iii Assessment of Economic condition Real Estate and Propertv Taxes Sales and Use Taxes The City heralded the completion of the Burlingame Avenue Streetscape lmprovement Pro.iect with a ribbon cutting in November 2014. The project provided significant upgrades to sidewalks, parking, street lights, street furniture, parking meters and landscaping throughout downtown Burlingame. Sales and use taxes accounted for an additional 18% of General Fund revenue in fiscal year 2014-15. Sales and use tax revenues were S11.1 million, which is an 8.9% increase over the prior year's receipts of 510.2 million. The top 25 sales tax producers in Burlingame account for approximately 50% oftotal sales tax revenue, and include several auto dealers, hotels, and general merchandise stores. Heightened activity in both casual and fine dining also fueled sales tax gains. Other gains were seen in electronics/appliance and specialty stores. Accounting System, Budgetory Contrcl, dnd Fund Accounting: All governmental and fiduciary fund types use the modified accrual basis of accounting. Revenues are recorded when measurable and available, rather than when received, and expenditures are recorded when the liability is incurred, rather than when paid. Conversely, the accrual basis of accounting is used for proprietary funds. All governmental fund types are accounted for on a spending (or funds flow) measurement focus. Only current assets and current liabilities are generally included on the governmental fund balance sheets. lntemal Controls: City management is responsible for establishing and maintaining adequate internal controls to ensure that City assets are protected from loss, theft or misuse and to assure that adequate accounting data is compiled to allow for the preparation of financial statements that conform to generally accepted accounting principles. lnternal controls are designed to provide reasonable, but not absolute assurance that these objectives are met. The concept of reasonable assurance recognizes that the cost of a control should not exceed the benefits to be derived, and that cost-benefit analysis requires prudent estimates and judgments by management. The Finance Department establishes internal accounting controls to provide management reasonable assurance regarding the safeguarding of assets and the reliability of financial records for preparing financial statements and maintaining asset accountability. The City's finance staff and the independent auditor consider the internal controls over financial reporting in planning and performing the annual audit. The independent auditors test the City's internal controls and make inquiries into the staff's knowledge of fraud or the occurrence of fraud. Cdsh Mdndgementr The City pools cash from all operating sources to manage cash flow and invest idle funds. The Finance Director serves as the City's Treasurer and manages the portfolio of funds in accordance with the City Council's adopted lnvestment Policy and Government Code Sections 53501 and 55535. The Finance Director submits a quarterly investment report to the Council. The Council also reviews and approves the City's lnvestment Policy early in each fiscal year. Tourism and Business Travel The City's 13 major hotels provide convenient overnight accommodations for business travelers and tourists using 5an Francisco lnternational Airport (SFO), with a total of approximately 3,742 rcoms available for rental. Hotel occupancy rates are indicative of continued improvement in the economy. As the City's largest revenue source, transient occupancy tax revenues account for ovet 38o/o of all General Fund revenues, and grew by S2.3 million (11%) compared to the prior year. Although combined occupancy rates leveled off to 83.8% (from 85.3% in the prior year), average room rates within the City increased neatly t2%, thanks to the success of many Bay Area sports teams and increased tourism. As reported by SFO, total domestic and international airport passengers increased by 5.7% since fiscal year 20L3-t4. Financial lnformation Risk Mdndgement'The City is a member of the Association of Bay Area Governments Pooled Liability Assurance Network Corporation (ABAG PLAN), a non-profit public benefit corporation established to provide liability insurance, claims, risk management and legal defense services to participating members. The program provides the City with liability coverage up to a maximum of $10 million, with the City maintaining a self-insured retention of $250,000. The City also maintains workers' compensation coverage to a maximum of 55 million, with a self-insured retention of $500,000 per claim. The City maintains reserves for all claims below its self-insured retention in separate lnternal Service Funds, and charges the costs ofthe program to operating departments. An actuarialstudy ofthe current obligations for the General Liability and Worker/s Compensation Funds was completed in May 2015, and the related accruals for current and expected claims have been included in the year-end results for these funds. The City has implemented and is in compliance with GASB Statement No. LO, Accounting dnd Findncial Reporting Ior Risk Finoncing dnd Related lnsurdnce lssues. Debt Administrationi The City has an AA+ underlying general obligation credit rating, an AA+ rating for its water and wastewater debt, and an A+ rating for the storm drain debt as issued by Standard & Poor's Rating Service. The AA+ general obligation credit ratin8 was re-affirmed in March 2014. ln fiscal year 2013-14, the City had 14 outstandin8 bonds or loans, including a taxable bond issue for pension obligations, two loans from the State of California Water Resources Control Board for improvements to the Burlingame Wastewater Treatment Plant, one capital lease, a loan from the California Energy Commission, and a storm drain revenue bond issued under the lnternal Revenue Service's Build America Bond program. The City annually evaluates each outstanding debt obligation that is subject to arbitrage rebate requirements and determined that there was no arbitrage rebate liability as ofJune 30, 2015. As of June 30, 20L5, the City's general obligation debt limit was 5316.7 million, which represents 3.75% of total assessed valuation based on assessments at 100% ol full market value, in accordance with California Government Code Section 43605. With only the 2006 Pension Obligation Bonds (517.7 million outstanding) considered to be general obligation debt, the City's legal debt margin was 5299 million. Additional information pertaining to the City's outstanding long-term debt can be found under Long- Term Debt (Note 5) in the Notes to the Basic Financial Statements and in the Statistical Section under Legal Debt MarBin information. Certificate of Achievement The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City for its comprehensive annual financial report for the fiscal year ended June 30, 2014. The City has received the award for 14 consecutive years. To receive the award, a government must publish a readable and well organized annual financial report. The report must satisfy both U.5. GAAP and applicable legal requirements. The certificate is valid for one year. Staff believes that the City's current CAFR continues to meet the Certif icate of Achievement Program's requirements. Acknowledgments Special thanks go to Amy Bernardo, Senior Accountant, and Sabrina Lee, Accountant, for their work in overseeing the fiscal year-end close, annual audit and compilation of these financial reports. Their dili8ent work, as well as the contributions of other members of the Finance Department, was instrumental in ensuring the successful completion ofthis document. The City Council's continued support in fiscal matters, especially in the maintenance of a long-term, sustainable financial vision, is essential and sincerely appreciated. The financial health of the City is a direct result of their vigilant fiduciary stewardship. Respectfu lly su bm itted, ff*ri efi^**,rX Lisa K. Goldman City Manager CarolAugustine Finance Director & Treasurer vt ** Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to City of Burlingame California For its Cornprehensive Annual Financial Report for the Fiscal Year Ended June 30,2014 4w #r'rF** Executive Director/CE0 vil CIW OF BURLINGAME, CALIFORNIA ELECTED AND APPOlNTED OFFICIALS FISCAL YEAR ENDED JUNE 30, 2015 CITY COUNC!L Terry Nagel, Mayor.......... .................November 201-5 Ann Keighran, Vice Mayor .............November 2017 Michael Brownrigg.... .November 2017 John Root.... .................November 2015 Ricardo Orti2............. .November 2017 CITY MANAGER Lisa K. Goldman DEPARTMENT DIRECTORS Community Deve1opment...............,.... ........William Meeker Finance Director and Treasurer.................. .Carol Augustine Central County Fire (JPA) C ...John Kammeyer Human Resources.... .....................1es1ie Loomis Library.......... .....Bradley McCulley Parks and Recreation... ......Margaret Glomstad Police Eric Wollman CITY CLERK Mary Ellen Kearney CIW ATTORNEY Kathleen Kane vilt CITY OF BURLINGAME, CALIFORNIA ORGANIZATIONAL CHART tx cITY OF BURLINGANIE I FISCAL YEAR 2014-15 CITY ORGANIZATTON BY CRITICAL SERVICE AREA General Government Ciw Attorney In-house corursel, risk managenreot, and code eoior'cemerrt Cit"v Clerk Electiorrs, Cirv tecords, pr.rblic noticing, arrd rnai-rrterrarrce of mruricipal code City Manager Supen ision oi depaltrneuts and implerneotation of Citr policv atd stlategy, includirre sustainabilitr etlbrts Finance Reternre lnarragelne{rt, disbursernelts, budget aod iorecasting, pat-roll, tl.nancial reportirrg, trea suq', pulchasing. iniorma tion teclxrologr, u,ater utili$ billing, busioess l-icenses, cashierirrg arrd ti'ont-desk customer serr-ice, arrd sol-icl \l,aste colrtracts Human Resources Salarr-' and beuetits administration, ernplovmeot, healdr and sat'etr., enrplot'ee trairrirrg and',vellres s, and collective bagairiog Public Safew - Police Cornrnunit\.- patrol, 9 1 L cornmunica tioos and dispatch, crirne preverrtion, special rveapons ar.rd tactics (S\{'AT), K-9 Prograrrq trattic safelv, par-king eniorcemerrt, arrd cornrnunin outreach Central Counry Fire Department flPA) Fi-re suppression and prerention, ernergerlc\- nredical sen'ices, and disaster preparedness tbr the To.,r.n of Hillsborough and the Citv of Burlingame Leisure and Neighborhood Services Library Ciq'literacy adr-ocacr., cir-culation of srritterr and digital media, special progrtuns, arrd communitv edrrcatiorr fbr citizens, children, arrd teens Parks Operation and mairterance oirubarr fbrest, laodscaping, Cin parks, ald ilfiastructure Recreation Recteational, educational arrd atter-school progranrs tbr pre-school childrerr, r-outh, arrd serriors Public $florks Engineering Aclnirristration oi capital irnproverneut prograln incltrdirg uraior and nrinor tepair aud replacernent of cin' ioti'astflrcnue Water & Server Delivery oi potable $ater, treatmeot aod discharge of sanitarl tlos.s irr accordance rvith erwirortrnerttal, heal th and saietr guideline s Streets & Storm Drainage Street srveeping, traosportation al}d reg{onal shuttles, streetlights, al}d storrnr,rater marragernent and compliance Communitv DeveloDment Building Plao checking. ilspectiorr, conrplaint respollse, develop nreot rer.ierlr and consultatiorr, a rrd building res e.*-ch arrd dereloprnerrt Planning Public outreach, Climate Action Plao, land use, economic developrnerrt. plan checks, arrd code and zoning enforcemerrt x CITY OF BURTINGAME COMMISSIONERS Dec 2010 Oct 2016 1Anne Hinckle Feb 2009 Oct 2018 2Mary Hunt Oct 2018Nov 2015Marv Ellen Kearney Oct 2018 2Feb 20L2Richard Kirchner Oct 2016 3Dec 2003Leslie McQuaide Aue 2014 Jun20L7Kerbey Altmann Jun 2013 Jun 2016Debra Donaldson Aue 2015 Jun 2018Randi Murray Aug20t4 Jun2017Mike Nagler 7Jul 2010 Jun 2016Lisa Rosenthal Nov 2013 Oct 2016Julie Baird Oct 2016 7Dec 2010Steven Baum Nov 2013 Oct 2016Donna Wills Colson Dec 2014 Oct20L7Joseph Dito Dec 2014 Oct 2017Shari Lewis Dec 2014 Oct 2018Claire Schissler Oct 2018Nov 2015Karen Malekos Smith April2013 April20t7Nirmala Bandrapalli April2013 April2017Jeff DeMartini April 2015 April2019Michael Gaul April 2014 April2018Peter Gum April2018April2014William Loftis Mav 2012 April 2016Richard Sargent Jan 2005 April2018 2Richard Terrones N DATE APPOINTED TERM EXPIRES TERMS SERVED Nicklas Akers Feb 2010 Nov 2017 2 Christopher Bush Nov 2015 Nov 2018 Jeffrey Londer Oct 2008 Nov 2017 2 John Martos Dec 2013 Nov 2016 Howard Wettan Dec2072 Nov 2018 1 Feb2074 Feb 2016GallnJose xt Meets 1't Thursday, Recreation Center, 6:30 pm; Appointed 3-year term DATE APPOINTED TERM EXPIRES TERMS SERVED DATE APPOINTED TERM EXPIRES TERMS SERVED PARKS & RECREATION COMMISSION Meets 3'o Thursday, Recreation Center, 7:00 pm; Appointed 3-year term DATE APPOINTED TERM EXPIRES TERMS .SERVED PLANNING COMMISSTON Meets 2nd and 4th Monday, City Hall, 7:00 pm; Appointed 4-year term - DATE.. APPOINTED TERM EXPIRES ,TERMS SERVED 1351 Rollins Road, 344-8592, Board Rep. Appointed 2-year term r,.'DATE APPOINTED TERM EXPIRES TERMS SERVED Jan 2010 Nov 2018 7Rudy Horak Rosalie O'Mahony Jan 2010 Jan 2015 1 Kevin Osborne Nov 2014 Nov 2018 xil DATE APPOINTED TERM EXPIRES TERMS SERVED CITY OF BURLINGAME, CALIFORNIA FINANCE DEPARTMENT FISCAL YEAR ENDED JUNE 30, 2015 Carol Augustine.............. . Finance Director and Treasurer Diana Truong Narahara.. ............Deputy Finance Director *** Sandra Barocio.....................Office Assistant to the Finance Director Amy Bernardo................ Senior Accountant Sabrina 1ee............... Accountant Margaret Ono ............. ................Accounting Technician Geeta Nair-Parsons................... ....Accounting Technician Lisa Rancatore ................ ...........Accounting Assistant lll Andrea Brown .....Accounting Assistant !/ll Elaine Wong .........Accounting Assistant l/ll Kirsten 1va2es.......... ............Office Assistant Ed Gigliotti.. lnteroffice Mail & Administrative Services xilt Accounting Operations Geeta Nair-Parsons Accounting Technician Payroll Lisa Rancatore Accounting Assistant lll Cash Disbursements - A/P Margaret Ono Accounting Technician Revenues - A/R CITY OF BURLINGAME, CALIFORNIA FINANCE DEPARTMENT ORGANIZATION CHART FOR FISCATYEAR 2014-15 Financial fteporting, Budget & Treasury Amy Bernardo Senior Accountant Sabrina Lee Accountant Carol Augustine Finance Director & Treasurer lnlormation Technology Administration - Office Support, Interdept. Mail, Finance Clerk Sandra Barocio Office Assistant Diana Truong Narahara Deputy Finance Director Redwood Staff Larry Ha.kman Senior Analyst, Host System Sid Jackson Senior Analyst, Desktop Systems Redwood City Staff Ed Gigliotti lnterdepartmental Mail Agenda Delivery utility Biuing & Business License Andrea Brown Accounting Assistant ll utilitY Billing Business License Elaine Wong Accounting Assistant I utility Billing & Customer Service xrv AN ETHICAL OAGANIZATION THfi INTTRAC?SWLTTI THT TUBTIC AND ;ACH OTWTT,IN AN HONEST ANP PROTES9'ANAL MANNTR BY: ; / t r Trearing people wirh resPect and dignity t{ f r Tnking responsibility- fcr c-ur deeisianr, slatemerrtx a*& a$cisa* t* the argwizazien a.td community {_' ; s **albg with th€fereac* aad canlbets ia aprafessi*o*l,resgxclful ard authentic faihioa ONT OKGAN1ZATION THAT TOSTERS POSITIVE *"TLATICNSHIT}S AND TEAMWORK BY; sfiei*gpa* af *te ralurion s eteating *ad raai*xirttag eon$lruelive relationships while respectirg indzv id*al c*xtributio:ts r Foeusing on the issues and neccls of the organization and community r EncArirggfo! behavior that builds confidcnce and self.cstcem f 'I ' r dm$tr/sfzing self-initiarivc. constant improvement antl employcc involvemeit ' { ' POSTTIVE LEADERSHIF TTT*T IS NURTURING AND TORWAS.DTHINKING BY: CITY OT BURTINCAME OLGAN TZffiICNAL COfuiPAS S The Citv of Burlingame is a*ergavua*on that exisll to seqveand benefit the comm*nity. We deliver unrurgas*e* municipal seryiee* l*rat estbar*e the quality of life for odr cidzens. As employees of the Cig of Bttslingame, weteeagnitze the leadership role we play in the eommunity and rve hold *urxlves aeeourrtable tc &cse we srrve. 1fe value the parirrctship:&aaexists betrveen *:e organiz*fi*n and eommurily and strive to foster and maintain lhat relatif}*ship. As such, we *r*e*mmitted to the teaets of the Oryanizational Compass: COMMUNITY.$ESyI"CET?1Ar Is &r$PoNsIYE To AND MEETI 7\3_F, NErDs OF THE PUqtlg-BV: l .'i ; " 1{: r Being dedicated to the communiry we sen"e r lnvolvir:g attd aa&e*tzading aur ecmmtrnity s Anucipaoxg *nd adagti*gto he ehanging reeds *t a* eir.z*nx : Recagnieing &e leadership role all emplcyees play ir the comn*nity r EaecuragiRg innov*tion and creativity r., s lxading:by-example , .Jr Beiag s{pprrrtive! humanistic ard ceimpassiorate As City enrpleiyees we embrace rhe Aryaniza*clr:al Corapa*s and ttill be guieled by its pints. XV This Page Intentionally Left Blank xvl FINANCIAL SECTION Comprehensive Annual Financial Report June 30,201.5 BROVN ARMSTRCNC Certf ed Pu b li c ./k nun tan t s INDEPENDENT AUDITOR'S REPORT To the Honorable Mayor and Members of the City Council of the City of Burlingame Burlingame, California Report on the 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 Burlingame, California (City), as of and for the year ended June 30, 20L5, 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 financial statements that are free from material misstatement, whether due to fraud or error. Auditor/s Responsibi lity Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Stondards, 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 of 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. ln 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. L ..r,,. B[ry4{ *J,{ffi*N* I: , 'a Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statement. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions ln our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City as of June 30, 2015, and the respective changes in financial position, and cash flows thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. Emphasis of Matter As discussed in Note 1 to the financial statements, during the year ended June 30, 2015, the City implemented Governmental Accounting Standards Board (GASB) Statement No.68, Accounting ond Finonciol Reportinq for Pensions - on omendment ol GASB Statement No. 27, and GASB Statement No. 7L, Pension Tronsition for Contributions Mdde Subsequent to the Measurement Dote - on omendment of GASB Stdtement No. 58. Our opinion is not modified with respect to this matter. Other Matters Re q u i re d Su p ple me nto ry I nfor mdtio n Accounting principles generally accepted in the United States of America require that the management's discussion and analysis on pages 5 through 28 and the Other Required Supplementary lnformation on pages 123 to 135 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the GASB, 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 lnformdtion Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's basic financial statements. The introductory section, combining and individual nonma.ior fund financial statements and schedules, and statistical section are presented for purposes ofadditionalanalysis and are not a required part ofthe basicfinancial statements. 2 The combining and individual nonmajor fund financial statements and schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such 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 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. ln our opinion, the combining and individual nonmajor fund financial statements and schedules are fairly stated in all material respects in relation to the basic financialstatements taken as a whole. The introductory and statisticalsections have not been subjected to the auditing procedures applied in the audit of the basic financialstatements and schedules and, accordingly, we do not express an opinion or provide any assurance on them. Other Reporting Required by Government Auditing Standards ln accordance with Government Auditing Stondards, we have also issued our report dated January 7, 2016, 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 the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Stondords in considering the City's internal control over financial reporting and compliance. BROWN ARMSTRONG ACCOUNTANCY CORPORATION &?*"' $r*r*r+"*, Bakersfield, California January 7 ,20t6 3 Comprehensive Annual Financial Report June 30,2015 4 CITY OF BURLINGAME, CALIFORNIA MANAGEMENTS DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2015 This is Management's Discussion and Analysis of financial activities for the fiscal year ended June 30, 2015. This information should be read together with the transmittal letter, financial statements, and notes to the basic financial statements to better understand the City of Burlingame's (the City) financial position. The City has prepared its annual financial report in accordance with accounting principles generally accepted in the United States of America (GAAP) and all Governmental Accounting Standards Board (GASB) pronouncements that affect the City. Financial Hiehlishts for Fiscal Year 2014-15 (endins June 30) City assets and deferred outflows of resources exceed liabilities and deferred inflows of resources by S157 million, or a 524.6 million increase compared to beginning (restated) net position. Enterprise Fund net position increased by $7.6 million to nearly S73.0 million. Of this amount, 522.0 million was unrestricted net position and available for use at the City's discretion. Governmental fund balances increased nearly S5.3 million, to $74.7 million. Of this amount, approximately S10.5 million, or 74yo, was u nassigned fund balance and available for spending at the City's discretion. General Fund revenues increased by 56.3 million in fiscal year 2014-15, an increase oI ll.3% ol prior year performance of 555.6 million. The increase in revenue was driven by a 92.3 million increase in current year collections of transient occupancy (hotel) taxes and other tax revenues. Amendments to various revenue sources in the General Fund budget in the amount of 54.6 million were authorized by the City Council at mid-year, as these improved revenues became evident early in the fiscal year. The General Fund ending fund balance increased from $22.9 million to 529.5 million. Of this amount, nearly $18.8 million has been assigned - intended to be used for specific purposes. Note that the City's beginning Net Position (as of .luly 1, 20L4) was restated with the implementation of GASB 68 reporting of pension liabilities. City-wide net position was ad.iusted downward by S75 million: S66.4 million in governmental activities and 58.6 million in the business-type activities. The result ofthis implementation impacts all governmental agencies that conform to governmental accounting standards, and reflects only a change in accounting principle, not an actual change in financialcondition. Overview of the Financial Statements This section introduces the reader to the City's three basic financial statements: 1) government-wide financial statements; 2) fund financial statements; and 3) notes to the basic financial statements. The report also contains supplemental information to help the reader develop a full understanding of the City's financial activities. 5 CITY OF BURLINGAME, CALIFORNIA MANAGEMEN?S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2015 Government-Wide Statements The government-wide financial statements include the Statement of Net Position and the Statement of Activities. These statements provide a broad overview of the City's finances. They are presented in a man ner that is similar to private-sector business. The Statement of Net Position presents complete information on the City's assets and deferred outflows of resources, as well as liabilities and deferred inflows of resources, with the difference reported as net position. Changes in net position that occur over time may serve as an indicator of the City's financial position. The Statement of Activities presents information showing how the City's net position changed during the most recent fiscal year. All changes in net position are reported using the "accrual basis of accounting." Changes are reported when the underlying event causing the changes occurs, regardless of the timing of the related cash flows. Therefore, revenue and expenses are reported in this statement for some items that will result in cash flows in future years, such as revenues related to uncollected taxes or earned but unused employee leave. Both government-wide financial statements distinguish between governmental activities, such as City functions that are supported by taxes and intergovernmental revenue, and other activities that are self- supporting. The self-supporting functions are called "business-type activities" or enterprise funds. They are intended to recover all or a significant portion of their costs through user fees and charges for se rvices. Governmental activities include general government administration, public safety (such as police, fire and 911-dispatch), public works, community development, parks, recreation and library, shuttle bus operations, and financing and other activities. The self-supporting, business-type activities include water, sewer service, parkinS, waste management, landfill and building inspection. Fund Financial statements A fund is a grouping of related accounts that are used to maintain control over resources that have been segregated for specific activities or objectives. The City uses fund accounting to ensure and demonstrate compliance with finance-related legal and accounting requirements. The City's funds can be divided into three categories: governmental, proprietary and fiduciary. Governmental Funds Governmental funds account for tax supported functions reported as Bovernmental activities in the governmental-wide financial statements. Governmental funds use the "current financial resources" measurement focus, with an emphasis on having sufficient resources to meet expenditures in the short- term - a L2 month fiscal year. These statements focus on how cash and other financial assets can be readily converted to available resources for spending on City services. They also show fund balances that are left at the end of the fiscal year and distinguish between amounts that are restricted versus funds that are available for spending. 6 CITY OF BURTINGAME, CALIFORNIA MANAGEMENT,S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2015 Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the City's near-term financing decisions. Both the Governmental Funds Balance Sheet and the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances provide a reconciliation to facilitate this comparison between governmental activities and governmental funds. The City has four major governmental fund types: General, Capital Pro.iects, Storm Drainage and Debt Service. lnformation is presented separately in the Governmental Funds Balance Sheet and in the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances for these funds. Financial information for the remaining governmentalfunds is combined into a single, aggregated presentation called Non-Major Governmental Funds. lndividual fund data for each of these non-major governmental funds is provided in the form of combining statements located elsewhere in the report. Proprietary Funds proprietary funds are used to account for services and activities for which a fee is charged to customers in exchange for City provided goods or services. Proprietary funds use the "economic resources" measurement focus, which concentrates on how transactions and events have affected the fund's total economic resources. The city maintains two different types of proprietary funds. Business-TvDe Activities or Enterorise Fundsi These are funds that are used to re port business-type activities in the govern mental-wide financial statements. The City has six enterprise funds: Water, Sewer, Parking, Waste Management, Landfill and the Building Fund. nol Service Fun These funds are used to allocate costs internally among the City's functions. The City uses internal service funds to account for the maintenance and replacement of its fleet and rolling stock; maintenance of City buildings and facilities; general liability; workers' compensation; and information technology and administrative support. These funds are included in the governmental activities of the government-wide financial statements because their activities support governmental programs. The internal service funds are then combined into a single, aggregated presentation in the proprietary fund financial statements. lndividual data for the internal services funds is provided in the form of combining statements. Fiduciary Funds Fiduciary funds are used to account for financial resources held for the benefit of parties outside the City government. The City holds these funds in a custodial capacity or as an agent for individuals, private organizations, or other governmental units such as the State of California or the United States. Fiduciary funds are not reflected in the government-wide financial statements because the resources of these funds are not available to support the City's governmental activities. 7 Notes to the Basic Financial Statements The notes to the basic financial statements provide detailed information that help the reader gain a full understanding of the data provided in both the government-wide and fund financial statements. Required Supplem€ntary lnformation Required supplementary information is also included in the report. lt provides information about the City's obligation to provide pension benefits to employees, the budget-to-actual information for the City's General Fund, and the disclosure of the modified approach used for reporting infrastructure capital assets. Government-wide Financial Analvsis All financial statements are presented in conformance with GASB Statement No. 34, Bosrc Findnciol Stotements ond Management's Discussion ond Analysis (MD&A) - for Stote ond Locol 6overnments. Prior year information is made available for a comparative analysis of government-wide data. Analysis of Net Position The City had a total net position of S157 million as of June 30, 2015. Net position increased by L8.6% from beginning total net position (as restated) of 5132.4 million. Note, however, that implementation of GASB Statements No. 68 and No. 71, which require recognition of net pension liability and associated deferred inflows and outflows of resources, caused a significant drop (over 555 million) in the beginning net position. Assets and deferred outflows of resources as of the end of June 30, 2015 were 5355.1 million, reflecting a 7.7yo negalive change from the prior year. The 510.4 million decrease in assets was due to the elimination of the prior year's 525.3 million net pension asset (also the result of GASB Statements No. 68 and No. 71 implementation), offset by an increase in current assets of S9.7 million and a 55.2 million growth in capital assets. Liabilities and deferred inflows of resources increased by 28.7% (544.2 million), due largely to the recognition of a net pension liability of 541.8 million, and associated deferred inflows of resources of Su.6 million. An offsetting decrease in long-term debt (S7.8 million) is reported, as well as an $880 thousand decrease in claims payable. The largest portion of the City's net position is its net investment in capital assets totaling 5124.8 million. Capital assets are the aggregate value of land, buildings, and improvements that are used to provide services. Their value is reported net of related debt because the funds to repay the debt come from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. An additional portion of the City's net position, 536.9 million (23.5%) represents resources that are subiect to restrictions that may only be used for debt service, to construct specified capital projects or within the confines of special revenue programs. These resources include amounts held by the City's trustee (S4.4 million). The remaining 532.5 million is restricted for storm drain capital improvements, contributions for improvements to the Burlingame Avenue Special Assessment District, and street repair and maintenance. CITY OF BURLINGAME, CATIfORNIA MANAGEMENTS DISCUSSION AND ANALYSIS FOR THE FISCAT YEAR ENDED JUNE 30, 2015 8 CITY OF BURLINGAME, CALIFORNIA MANAGEMENT'S DISCUSSION AND ANATYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2015 Unrestricted net position can be used to finance day-to-day operations without constraints established by debt covenants or other legal requirements or restrictions. Due to the implementation of GASB Statement No. 68 and the recoding of a net pension liability, the City's unrestricted net position on June 30, 2015 was a negative S4.7 million. As the net pension liability will likely remain a long term liability for several decades, unrestricted net position will remain negative for quite some time. At the end of the fiscal year, both governmental and business-type activities had positive net positions. City of Burlingame's Comparative Statement of Net Position June 30,2015 and 2014 (Amounts ln Millions) Governmental Activlties Business"Type Activities Totals 2014 2015 2074 2015 2015 Assets; Current and other assets Capital assets s 116.63 s 106.82 98.33 7L0.49 s 36.80 s 100.46 39.57 101.95 s 1s3.43 s 207.28 137,90 272.44 Totalassets: 223-45 208.82 737.26 141.52 360.77 3s0.34 Deferred outflows:3.44 0.69 1.35 0.69 4.19 Liabilitiesl Current liabilities Other Iiabilities Long-term liabilities 13.35 0.93 75.62 13.59 0.81 LO4.!4 4.83 0.70 58.54 4.32 0.86 62.82 18.18 1.63 134.16 77.97 L.67 166.96 Total liabilities 89.90 118.54 64.O7 68.00 753.97 186.54 Deferred inflows:9.69 1.90 11.59 Net position: Net investment in capital assets Restricted Unrestricted 72.96 45.86 74.73 74.35 36.45 (26.77r. 46.34 0.45 27.09 50.48 0.45 22.O4 119.30 46.37 47.82 124.83 36.90 (4.73) Total net position S 133.ss S 84.03 S 73.88 S 72.97 * 5 207.43 S 157.00 * * Note that net position was restated as ofJune 30, 2014, for the implementation of GASB Statements No. 68 and No. 71 9 20L4 CITY OF BURLINGAME, CALIFORNIA MANAGEMENTS DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2015 City Burlingame Statement of Activities For the Fiscal Years Ended June 30, 2015 and 2014 (Amounts in Millions) Governmental Activities 2014 2015 20L4 201s 2014 Business-Type Activities Total 48.66 s o.74 L.25 Revenues: Program revenues: Charges for services Operating grants and contributions Capital grants and contributions I revenues: Property taxes Sales taxes Transient occupancy taxes Other taxes Other general revenue rnmental activities General government Public safety Public works Community development Parks, recreation, and library Shuttle bus operations Financing and other activities Business-type activities Water Sewer service Waste management Landfill Parking Building inspection lncrease/(decrease) in net position before transfers and special item lnvestment income (expenses) Special item: OPEB pre-funding Transfers Change in net position Net position, as restated + Net position - ending + Note that net was s 9.13 s o.74 1.25 9.08 1.13 0.74 46.t3 1.13 o.74 16.68 11.10 23.70 4.70 4.23 23.0L 8.27 1.15 15.83 0.13 2.42 25.55 (0.e7) s 3s.s3 s sz.os s 7.29 L9.74 t2.97 1.01 11.16 0.19 2.8L 4.23 23.01 8.27 1.15 15.83 0.13 2.42 7.29 79.L4 72.97 1.01 L7.16 0.19 2.8t L7.47 LO.L4 0.48 0.07 1.30 L.37 Total expenses, _g3::L 55.04 23.LG 24.83 77.73 79.87 8.54 0.58 L3.34 0.48 16.37 (1.33) L2.22 (1.4s) (6.60) - L7.56 24.59 24.9L (0.7s) 189.87 s 207.43 (5.50) s.77 3.13 (s.77l. (3.13) 8.29 16.95 9.27 7.64 125.26 67.08 54.6L 65.33 S 133.ss S 84.03 S 73.88 S 22.97 of GASB Statements No. 68 and No. 71. L32.41 s 1s7.00 10 15.50 16.58 15.50 10.20 11.10 10.20 2L.36 23.70 2L.36 4.59 4.70 4.59 0.34 t.2s -- 0.34 Totalrevenues:g 68.38 39.53 37.05 t02,64 70.75 tt.47 10.75 9.33 10.14 9.33 0.47 0.48 0.47 0.18 0.07 0.18 1.18 1.30 1.18 1.25 L.37 1.25 clTY oF BURLTNGAME, CALTFORNTA MANAGEMENTS DISCUSSTON AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2015 Governmental Activities Governmental activities increased the City's net position by over St6.9 million, with a total net position of S84 million at the end of the fiscal year. The increase was attributable to total governmental revenues that exceeded total expenses by Sf:.f million, prior to net transfers in of S3.1 million. Program revenues decreased slightly (1.5%), despite a higher level of operating grants and contributions, due to a lesser amount of capital grants than last year and slightly lower volumes of activities in Community Development and Public Works. 6.0 5.0 4.0 3.0 2.0 1.0 0.0 General Government Public Safety Public Works Community Development Parks, Recreation, and Library Shuttle Bus Operations I 2014 I 2015 Governme ntal Activities Two-YearComparative Program Revenues Fiscal Years 2014 and 2015 (Amounts in millions) General revenues increased over S5.4 million, led by a SZ.g million increase in transient occupancy tax revenues, which totaled523.7 million overthe year. ln addition, property and sales tax revenues were up a combined S2.f million over the prior year. The robust growth in these tax revenues was a result of a continued strengthening in tourist demand and improved consumer confidence when compared with the prior year. ln total, revenues from governmental activities increased nearly S5.3 million, approximately 8.3%, LI CITY OF BURL!NGAME, CALIFORNIA MANAGEMENT,S DISCUSSION AND ANALYSIS FOR THE FTSCAL YEAR ENDED JUNE 30, 2015 Govemmental Expenses- byProg6m Fiscal Year201+15 I Public Safety I Public Works I Community Oevelemed I Parks, Recreation, and [ibrary lShutth BusOperations I Financing and Other r(tiviti6 5.5% Governmental Activities - NetExpense byProgram Fiscal Year 201+15 26.8% lGeneral Gov€rhment I Publicsafety I PublicWorks lCommunity Develehefr :P.rkt Recreation, and tibrary lShuttle BusOperationr t Financin8 and Other klivities 7.O% Expenses from governmental activities increased approximately $+ZO thousand for a total of SSS million for the fiscal year. Although expenses in the general government category decreased, most departments showed increased spending as the payments for the City's retiree medical obligations were allocated with each payroll. This is particularly true in Public Safety activities: the Police Department incurred a combined current (normal) cost and amortization of prior year retiree medical costs of nearly St.9 million. ln the prioryear, much of this expense was categorized as a generalgovernment activity. Accelerated depreciation of fire vehicles contributed to the 5900 thousand increase in the cost of fire services. The larger increase in parks, recreation and library activities was due to the Millennium Project, a 53.5 million renovation of the historic Burlingame Public Library's main branch, for which the Library raised S1 million in donations over the past two years. The overall departmental spending increase across all departments was 1.7%; there was very little year over year change in financing activities, which represents debt service and amortization of premiums and discounts on previously issued debt. The majority of these governmental activities are financed from City taxes. However, the Sg.1 million collected in charges for services (reported as program revenues) for these various activities served to offset the departmental spending associated with some services. Program revenues overall covered approximately L9S% of governmental expenses over the fiscal year. The above charts of expenses and net cost of the City's various governmental activities have been derived from the Statement of Activities. The first pie chart reflects expenses incurred in each area as a percentage of the total expense of governmental activities (S55 million in fiscal year 2014-15). This compares with the relative net cost after applying program revenues derived from each area's activity. The total net cost of governmental activities (S44.1 million in fiscal year 2OL4-15) must be funded out of the City's general revenues - primarily taxes and investment earnings. Areas with the highest program revenues (i.e, Public Works; Parks, Recreation and Library) are able to offset relatively more costs than activities that have fewer opportunities to derive program revenues (such as Public Safety). t2 I 75,O EE CITY OF BURLINGAME, CALIFORNIA MANAGEMENTS DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2015 Business-Type Activities The net position for business-type activities increased by SZ.0 million, or ll.7%, frcm a beginning (restated) net position of 565.3 milllon. ln fiscal year 2014-15, enterprise operations produced total operating revenue (consisting largely of revenues from charges for services) of over S37 million, a decrease of nearly S2.5 million or a 6.3o/o reduction from fiscal year 2013-14 operating revenues of 539.5 million. The Water and Sewer enterprises experienced the greatest decrease in revenues (S1.8 million combined) due to a reduction in water consumption and sales in response to the state's severe drought. ln addition, revenues in the Solid Waste Fund reflected an adjustment in the prior year of S1.1 million for operational surpluses since 2012 previously held by the Solid Waste Hauler. Business-type expenses totaled nearly 526.3 million and included operating expenses of S24.8 million. Net non-operating expenses of S1.8 million consist of interest on long-term debt and amortization of premiums and discounts, net of investment income and expenses. Operating expenses increased by 91.7 million or 7 .2%o from prior year expenses of 523.2 million. This increase was largely attributable to operating expenses of the Water and Sewer activities, which experienced higher water wholesale rates 25%1, and increases in personnel costs. The cost of insurance for these enterprises also went up a com bined S325 thousand. Still, the changes in net position (the year-over-year difference between business-type revenues plus deferred outflows of resources, and expenses plus deferred inflows of resources) reported a healthy increase for these enterprise activities. Unlike the governmental activities, program revenues cover total expenses in the business-type activities, with no contribution from City taxes. The City is able to adjust water, sewer, solid waste, parking rates, and building permit fees to cover expenditures and future liabilities. Governmental Funds The Governmental Funds financial statements provide information on the short-term inflows, outflows, and balances of resources that are available for spending over the 12-month fiscal period. The goals of the funds are to have sufficient resources available to finance City services within each fiscal year. ln particular, the unassigned fund balance may serve as a measure of City funds that are available for spending in the short-term. The General Fund, Capital Proiects Fund, and the Debt Service Funds, or collectively, the 'major funds' are reported separately in the basic Financial Statements. A separate accounting of the City's ten non-major governmentalfunds can be found in the Combining Statements located in the Other Supplementary lnformation section of the CAFR. 13 Financial Analysis of Citv Funds CITY OF BURLINGAME, CALIFORNIA MANAGEMENT,S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2015 Governmental Funds (Continued) General Fund The General Fund is the City's main operating fund. Revenues and expenditures are monitored year- round to maintain a balanced budget. General Fund revenues were 561.9 million in fiscal year 20L4-L5, reflecting a S5.3 million increase from prior year performance of S55.6 million. Expenditures totaled $44.4 million, which is S4.3 million more than prior year. Revenues were sufficient to cover all operating expenditures. Revenues less operating expenditures before transfers were $17.5 million. The General Fund transferred S5.3 million out to the Debt Service Fund to pay for governmental debt, and 57.9 million to the Capital Projects Fund to pay for project-related expenditures. Detailed notes on the transfers can be found in the lnterfund Transfer section (Note 10 in the Notes to the Basic Financial Statements). The General Fund balance as of June 30, 2015, was S29.5 million, representing an increase of S6.6 million from the prior year fund balance of $22.9 million. Only $0.2 million of the fund balance was categorized as "nonspendable"; the City Council assigned S18.3 million as reserves for specific purposes as described in Note 1-O of the Notes to the Basic Financial Statements, and approximately $473 thousand represents contractual obligations which will carry forward to the next fiscal year (encumbrances). The remaining S10.5 million represents unassigned amounts. The chart below illustrates the amounts of General Fund balance assigned as various reserves for the past five years. ln January 2015, the Council adopted a General Fund Reserve Policy which established reserve levels based on an analysis of risks specific to the City, including vulnerability to extreme events and public safety concerns, revenue source stability, expenditure volatility, liquidity, leverage, and adequacy of infrastructure funding. The policy established targeted levels for an Economic Stability Reserve and a Catastrophic Reserve (24% and 2%-9% of budgeted revenues, respectively), as well as a Contingency Reserve amount of 5500 thousand. The actual reserve levels are adopted by resolution with each annual budget, but may be modified by resolution throughout the year based on recommendations by the Finance Director as economic forecasts or other changes dictate. Each reserve is reported as an assignment ofthe City's General Fund balance. Total Governmental Funds Fund Description 6130/2OLS Balance 6l30l20rs 11112014 Fund Ealance 7lt/2O14 l'lonspendable Yr-over-Y, Change - Net Posilion / Fund Bahnc€ General Fund Storm Drainage Fund Capital Projects Fund Debt Service Fund Nonmajor Funds Total s 29,467,566 2,579,720 33,095,500 3,955,447 5,576,382 s 223,936 375,035 s 22,88s,423 1,571,860 31,852,500 8,328,362 4,151,179 5 227,2rj 383,152 s 6,576,743 1,007,860 1,234,000 14,372,9751 825,203 $ 74,669,715 $ s98,971 s 69,399,424 s 504369 s s,270,291 L4 CITY OF BURTINGAME, CALIFORNIA MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2015 General Fund (Continued) As a measure of the General Fund liquidity, it is useful to compare its unrestricted fund balance (including commitments and assignments of fund balance) to annual operating expenditures. As of June 30, 2015, the unrestricted fund balance of 529.2 million (529.4 million less non-spendable fund balance of 5224 thousand) represents 65.8% of General Fund operating expenditures of 544.4 million. Capital Proiects Fund The Capital Projects Fund accounts for the resources used to acquire, develop, and construct capital improvements or to purchase major capital equipment. The City capitalizes equipment with a cost basis of at least 55,000 and has an estimated useful life in excess of one year. Structures, improvements, and infrastructure with a value of at least 5250,000 are also capitalized. All capital assets are valued at historical cost. Major outlays for capital assets and improvements are capitalized as projects are constructed. For more information on capital assets, please refer to the Notes to the Basic Financial Statements under Capital Assets or Note l(i). The Capital Projects Fund had revenues of 5742,486, received in large part from state and local grants (5328 thousand) including the State-Local Partnership Program (SLPP) and the One Bay Area (Federal) Grants, which funded streetlight upgrades, street resurfacing and repair. Other government entities, such as the Town of Hillsborough, shared in the cost of the Sanchez Area Sewer Rehabilitation effort (S240 thousand). Private entities participated in the City's 50/50 Sidewalk Program, funding nearly S175 thousand in sidewalk repairs. Projects were funded mainly by S22.1 million in transfers from other funds to support ongoing construction costs and to set aside funds for previously appropriated projects. ln fiscal year 2014-15, 54.5 million of bond proceeds were transferred in to the Capital Projects Fund for City of Burlingame City CouncilAssitned General Fund Reserves FYl1 FYLZ FY13 FY14 fY15 Economic Stability Reserve Catastrophic Reserve OPEB Reserve GeneaalPlan Reserve Contingency Reserve TotalAssigned Fund Balance s 5,000,000 5 2,000,000 2,700,000 6,000,000 s 2,000,000 3,000,000 5,000,000 s 2,ooo;ooo 4,800,000 6,000,000 2,000,000 S 13,3oo,ooo 4,500,000 500,000 500,000 s00,000 500,000 500,000 500,000 10,200,000 11,500,000 12,300,000 9,000,000 18,300,000 Encumbrances 412,941 472,578 TotalAssigned tund Balance: S 10,200,000 5 11,500,000 5 12,3 00,000 j____2,4n2!_ j____1811283_ City of Burlingame GeneralFund Bal.nce as a Percentage o, Operating Expenditu.es FY11 FYI2 FY13 FY14 FY15 Expenditures: S Fund Balance: % of Expenses: 34,s33,995 5 11,864585 34.4% 36,683,828 s fi,5L4,212 42.3% 40,139,163 22,885,423 51.0% 44,405,064 29,46t,566 66.3% s 15 37,673,343 5 19,941,703 53.0% CITY OF BURLINGAME, CALIFORNIA MANAGEMENT,S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2015 Capital Projects Fund (Continued) storm drain, facllities, and street projects; the General Fund contributed S7.9 million; the Measure A and Gas Tax special revenue funds provided a combined total of 91.3 million; and the Water and Sewer Funds contributed a combined total of S7.2 million for construction projects. Capital project expenditures totaled S13.9 million, an increase of S2.5 million from expenditures of 511.4 million in fiscal year 2013-14. The Capital Projects fund balance at the end of the fiscal year was S33.1 million, or an increase of S1.2 million from the prior year ending balance. The entire fund balance is assigned for the construction of specific capital projects, plus a $3 million reserve for Renewal and Replacement. During fiscal yeat 2014-L5, major governmental capital project expenditures, exceeding 9250,000 in a slngle project included: . Library Millennium Pro.iect - $3.0 million . Burlingame Avenue Streetscape (Streets lmprovements) - S1.9 million. Laguna Area Storm Drain lmprovements - S1.8 million . US 101 Broadway lnterchange - $1.7 million . Annual Street Resurfacing Program 2014 - S1.5 million . 2012 Annual Curb Gutter ADA Sidewalk Program - $0.7 million . Citywide Neighborhood Storm Drain lmprovements - S0.5 million During fiscal year 2014-15, major business-type capital project expenses, exceeding $250,000 in a single project included: o 2013 Sanchez Area Sewer Rehabilitation Proiect, Phase 3 - S1.7 million . Adeline Dr./Peninsula Ave (Main Replace) - S0.7 million o 2014 Sanchez Area Sewer Rehabilitation Project, Phase 4 - S0.7 million . Treatment Plant And 33'd Force Main Upgrade - S0.7 million o Burlingame Ave west of ECR Main Replace - S0.5 million . Burlingame Avenue Streetscape (Water Main and lnfrastructure lmprovements) - $0.4 million . Emergency water Main Replacement - $0.3 million . Large Meter Replacement Program - S0.3 million . Burlingame Avenue Streetscape (Sewer lnfrastructure lmprovements) - 50.3 million Debt Service Fund The Debt Service Fund is used to account for resources used to repay general long-term debt and to record the payment of principal and interest as well as other expenditures related to debt administration. Principal payments on outstanding debt reduced general government debt by 55.1 million for the year. The General Fund contributed nearly S5.3 million to the Debt Service Fund for governmental debt service payments, and the Storm Drainage Fund contributed S1.4 million required to meet obligations relating to the Storm Drain Revenue Bonds, Series 2010 and 2012. A significant portion of the 2010 Storm Drain Bonds were taxable Build America Bonds; the lnternal Revenue service provided an interest 75 CIW OF BURTINGAME, CALIFORNIA MANAGEMENTS DISCUSSION AND ANAIYSIS FOR THE FISCAT YEAR ENDED JUNE 30, 2015 Debt Service Fund (Continued) subsidy of approximately $154 thousand for the 2010 issuance. Debt service expenditures represent principal payments, interest charges, and administrative costs of debt such as fiscal agent fees on existing governmental debt. A more detailed description of the City's outstanding debt and the long-term obliBations associated with each issue can be found in the Notes to the Basic Financial Statements under Long-Term Debt (Note 5). The Storm Drainage Fund was added as a special revenue fund in fiscal year 2009-10 to fund needed improvements to the City's infrastruciure and to pay debt service on certain revenue bonds issued to fund storm drain capital projects. The voter-approved initiative requires that the funds be accounted for separately, given their intended purpose. The voters approved the new fee in May 2009, and revenues are collected through an assessment on property tax bills. The storm drain fee will sunset after 30 years. Neighborhood storm drainage improvements continued in fiscal year 2013-14. As in the prior year, the storm drain fee generated 52.7 million in revenue. The funds are dedicated to debt service on the use of storm drain revenue bonds and to fund improvements on a poy-as-you-go basis. Revenue bonds issued with a pledge of storm drain fee revenues are used as a funding source for these projects in the Capital Projects Fund. With assets and liabilities that now exceed the 10% threshold, the Storm Drainage Fund qualifies as a major governmental fund, and is therefore presented separately in the fund financial statements. The fund balance increased S1.0 million, to nearly 52.6 million as revenues from the storm drain fee exceeded combined capital appropriations and debt service expense for the fiscal year. Non-Major Governmental Funds The Measure A and Gas Tax Funds are the largest of the City's non-maior governmental funds, together constituting approximately 63.5o/o of non-major fund balance. The revenues for these two funds remained level with the prior year at nearly S1.7 million, and served to fuel traffic and street improvements in the Capital Projects Fund. Non-major governmental fund balances in total increased 50.8 million, as revenues received in these funds exceeded the expenditures associated with the legally specified purpose of each of the funds. Proprietarv Funds The City's proprietary fund statements provide the same type of information found in the government- wide financial statements. Proprietary funds consist of the City's six enterprise funds (Water, Sewer, Waste Management, Landfill, Parking, and the Building Enterprise funds) and six lnternal Service Funds (General Liability, Workers' Compensation, Facilities Services, Equipment Services, OPEB and lnformation Technology Services funds). Operations of the City's Enterprise funds are accounted for as business activities. 17 Storm Drainage Fund clTY oF BURLTNGAME, CALTFORNTA MANAGEMENTS DISCUSSION AND ANALYSIS FOR THE FtSCAt YEAR ENDED JUNE 30, 2015 Proprietarv Funds (Continued) lnternal Service Funds The lnternal Revenue Funds are allocated among the City's various functions and are therefore considered to account for governmental activities for financial statement purposes. The internal revenue funds experienced an increase in net position of 52.1 million. St.g million of this increase was due to changes in actuarial estimates of current and expected claims for general liability, based on an actuarial study completed in August 2015. The Facilities Services Fund reported a net negative ending position, as the prior year's position was restated to include a SZSO thousand pension liability for the fund. Water Fund The Water Fund continues to maintain a stable financial position as in the prior year. Despite lower sales volumes due to calls for conservation as a result of drought conditions, the ending net position of the fund including net investment in capital assets increased S2.O milllon (11.8%). Unrestricted net position (which excludes net investment in capital assets) totaled 58.9 million, a decrease of S0.3 million from prior year. Total Enterprise Funds Fund Description 6ltol20ts Net lnvestment in Capital Assets 6l30laots Net Position 7lL/20t4 Net Position 7lLl2OL4 Net lnvestment in Capital Assets Yr-over-Yr Change - Net Position / Fund Balance Water Sewer Waste Management tandfill Parking Building Total 18,921,575 42,059,760 3,728,921 (2,543,2791 8,738,52L 2,069,550 6,937,674 S ro,ooz,a+o 33,551,180 5 79,940,248 41,055,976 3,719,660 (2,916,087) 9,262,367 2,822,529 S a,g+z,ags 30,980,878 7,072,596 s (1,018,573) 1,003,184 9,261 372,808 (s23,840) (752,979l. S 72,974,u9 S 50,485,294 S 73,994,697 S 46,341,369 s (910,2391 City of Burlingame Historical Water Fund Net Position (excluding net investment in capital assets) FY11 FYLZ FY13 FY14 Net Position, excluding net investment in capital assets: Dollar Change: PercentaBe Change: S 12,087,11s S (7,23t,472l, -9.2s% tL,378,437 s (768,678], -6.36% 9,993,644 s (7,324,793], -77.70% 11,592,353 s 1,598,709 16.o0% FY15 8,919,135 (2,673,218\ -23.O5% FY11 City of Burlingame Historical Water Fund Revenues FYLz FY13 FY14 Operating Revenue: S Nonoperating Revenue: Total Revenue: Dollar Change: Percentage Change: 72,734,554 s 37,815 L2,772,369 7,237,O83 10.72% L3,708,448 2L3,379 t3,927,827 t,749,458 9.O0% S L4,874,7o5 $ 74,874,705 952,878 5.84% 16,023,092 s 209,231 L6,232,323 L,357,6t8 9.L3% FY15 15,425,237 119,103 75,544,340 (687,983) -4.24% 18 CITY OF BURLINGAME, CALIFORNIA MANAGEMENT,S DISCUSSION AND ANATYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2015 Water Fund (Continued) Water revenues decreased in fiscal year 20L4-I5 by 5688 thousand, a 4.2% decrease, largely reflective of the decreased sales volumes (approximately 23% - nearly 248 million gallons less than in the prior fiscal year). The decrease volume was offset in part by a7.8o/o rate increase that went into effect on January L,20\5, for all customer classes. FY11 City of Burlingame Historical Water Fund Expenses FY12 FY13 FY14 Operating Expenses: Nonop€rating Expenses: Total Expenses: Dollar Change: Percentage Change: s 9,s69,097 s 637,L97 70,206,294 836,239 8.92% LL,082,98L S 1,003,988 12,086,969 1,880,675 18.43% t2,t27,0t2 s L,204,976 13,331,988 7,245,0t9 to.30% L0,844,723 s 759,558 1,L,604,287 (1,727,707l. -72.960/o FY15 7t,470,958 853,285 12,324,243 7L9,962 6.20% Water Fund Historical Financial Performance FiscalYears 1OLL-L5 Millions + Total Revenue:+ Total Expenses:* Net Position, net invesment in €pital assetsi 18 16 L4 L2 10 8 5 4 2 FYl1 PIL2 FY13 FYL4 FY15 19 CITY OF BURLINGAME, CALIFORNIA MANAGEMENT,S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2015 Sewer Fund The Sewer Fund continues to maintain a stable financial as in the prior year. The fund's overall net position (including capital assets) grew by 9.2% from 538.5 million to nearly S42.1 million. Net investment in capital assets increased nearly $2.6 million as associated debt payable decreased by 51.5 million, and assets were placed in service from construction in progress (54.5 million). The largest portion of net position (533.6 million) relates to net investment in capital assets, representin g79.8% of total net position. An unrestricted net position of 58.1 million reflects an increase of S1.6 million from the prior year, a reflection of the positive results of operations for the year. Approximately 29% of net revenue is irrevocably pledged to the prompt payment of debt service relating to future payments of principal and interest on revenue bonds previously issued. City of Burlingame Historical Sewer Fund Ending Net Position (er.ludlng net Investment in capital assets) FY11 FYL2 FY13 FY14 FY15 Net Position, excluding net investment in capital assets: S Dollar change: Percentage Change; 4,534,544 s (346,630) -7.10% 6,858,775 s 2,324,237 s7.26% 8,770,977 s 7,252,202 78.26% 10,075,098 s 1,9U,121 24.22% 8,507,980 (1,s67,118) -Ls.55v. As sewer charges are based largely on water consumption, sewer service revenue decreased by sf.e million or 7.6%. Unlike water utility service, there was no annual rate increase for sewer service imposed in calendar years 2013 through 2015. City of Burlintame Historical Sewer Fund Revenues FY11 FY13 FY14 FY15 TotalRevenue: S Dollar Change: Peraentate Chante: 14566,587 s 2,028,080 16.t7% L6,1si,287 S 1,590,700 L0.92% L6,79t,449 $ 634,L62 3.92% 17,088,958 5 297,509 15,786,250 (1,302,708) 1.62% Total expenses of the Sewer Fund increased 5770 thousand from the prior fiscal year, due largely to increased maintenance activities performed throughout the year. As with the Water Fund, the Sewer Fund will also finance future capital improvements on a pay-os-you- go basis. The sewer rate structure includes an annual set-aside of 54.7 million for a capital FY11 City of Burllntame llistoriaal Sewer Fund Expenses FYL2 TY13 FY14 FY15 Operating Expenses: S Nonoperating Expenses: TotalExpenses: Dollar change: Percentage Change: 9,6A5,a77 s 724,754 10,410,631 356,535 3.55% 9,508,659 s s45,437 10,054,095 1112,140) -1.11% 10,143,891 910,172 11,054,063 770,536 7.4904 9332,23s s 957,292 ro,283,527 1s72,73s) -4.75% 20 FY12 9,553,446 s 1,242,816 10,796,262 385,631 3.10% clrY oF BURLINGAME, CALTFORNIA MANAGEMENT,S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2015 Sewer Fund (Continued) improvements reserve to pay for capital improvements to the Burlingame Wastewater Treatment Plant and repair and maintenance of the sewer collection system. Sewer Fund Historical Financial Performance FiscalYears 2011'Ls Millions * Total Expenses:+ N€t Position, n€t investm€nt in 6pital assets: Srs $rs $14 $12 Sro $s Se 5a Sz s- -v FY11 FlIL2 FY13 FY14 FY15 Parking Fund The goals of the Parking Fund are to cover the costs of operating and improving the City's parking districts and to produce sufficient revenue to re-invest in the capital assets of the Burlingame and Broadway Avenue shopping districts, which are served by the City's parking lots. The fund's overall ending net position, including capital assets, increased by LO.9% or $861thousand over the prior year ending net position of S7.9 million. Because much of thefund (56.9 milllon)is invested in capitalassets, the increase is reported in unrestricted net position, and largely reflected in highercash balances. Revenue in the Parking Fund increased by Sgl thousand (3.6%), due primarily to an increase in parking activity. Largely concentrated in the City's retail centers, the increase is reflective of continued economic growth as well as the completion of the Burlingame Avenue Streetscape Project. City of BurlinBame Historical Parking Fund Revenues FY11 FYT2 FY13 FY14 FY15 Total Revenue: S Dollar Change: Percentage Change: 1,801,535 s 156,308 9.50% !,950,260 s L48,725 8.25/o 2,427,521 s 477,261 24.47% 2,511,056 s 83,535 3.44% 2,50t,597 90,535 3.6L% 27 CITY OF BURTINGAME, CALIFORNIA MANAGEMENTS DISCUSSION AND ANALYSIS FOR THE FISCAT YEAR ENDED 'UNE 30, 2015 Parking Fund (Continued) Parking expenses increased by 9.5% due to increased due to higher employee benefit costs, which now include contributions to the retiree health liability. Waste Management and Landfill Funds The City is a member of the South Bayside Waste Management Authority (SBWMA), a joint powers authority that contracts with external vendors for solid waste collection and disposal as well as collection of inert recyclable materials, yard waste and other organic materials. The Waste ManaBement Fund accounts for certain other services that are provided or paid for directly by the City. The costs of these services, which include the cleaning of sidewalks, parking lots and garbage cans/liners, door-to- door hazardous waste pickup and street sweeping, are built into garbage collection rates for both residential and commercial customers. Operating revenues ofthe fund totaled 5943 thousand. ln addition, a surcharge on garbage collection rates fund the costs associated with the long-term monitoring requirements of the former city tandfill. ln fiscal year 2013-L4, landfill operations were separated out from other waste management activities and are now accounted for in a separate fund. The Landfill Fund reports a deficit position of 52.5 million due to the status of the City's obligation to mediate closure and post-closure activities relating to the City's old landfill. On an annual basis, the City reports to CalRecycle (Department of Resources Recycling and Recovery) the estimated costs of post- closure and corrective action as adjusted for inflation and current year expenditures pertaining to mediation. The landfill closure and post closure liability decreased only slightly (S52 thousand) during the fiscal year, and the ending net position was improved by 5378 thousand. Detailed information on variances can be found in the Budgetary comparison Schedule - General Fund, Note 6 in the Required Supplementary lnformation section ofthis report. The adopted fiscal year 2014-15 General Fund budget assumed fairly robust gains in operating revenue, based on economic recovery evidenced in the prior two years. Revenue growth of 9.4% was forecast overthe revenues anticipated inthe prior year's adopted budget. Final collections totaled S61.9 million, an increase of nearly 11.3% over prior year actuals. Several key revenue budgets were adjusted upward at mid-year to reflect improvements in General Fund receipts. Still, overall revenues exceeded the year's adjusted budget by $2 million (3.3%). FY11 City of gu.lingame Historical Parking Fund Expenses FY12 FY13 FY14 FY15 Total Expenses: S Oollar Chante: Pe.centage Change: 1,453,636 s L55,571 tL39% 1,435,069 $ (18,s67) -L.28% r,350,574 5 (84,49s) -s.89% !,L82,827 s l.167,747l -t2.42% L,295,741 1t2,9L4 9.55% 22 General Fund Budsetarv Hishlishts CITY OF BURLINGAME, CALIFORNIA MANAGEMENT,S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2015 General Fund Budsetarv Hiphlishts (Continued) lncreases in General Fund revenue were due largely to the following: Transient occupancy tax revenue performed nearly 51.2 million better than budget, with an 11% growth over prior year results. Property tax revenues for the year increased over $1.2 million (7.6%) over the prior year results, in line with the budget as adjusted at midyear. Sales and use tax revenue ended the year at 51L.L million, also performing slightly better than budget, with an 8.9% growth over prior year results. FY11 City of Burlingame Historical General Fund Revenues FYLz FY13 FYL4 FY15 TotalRevenue S Dollar chante Peraentate Change 43,266,203 5 6,540,468 17.87% 46,313,538 s 3,047,335 7.O4% 51,287,003 s 4,973,465 70.14% 55,627,628 s 4,340,625 8A6% 61,909,081 6,287,453 tt.29% General Fund revenues are expected to continue an upward trend over the next fiscal year as the economy continues to improve, especially through growth in the travel and tourism industry, and increased consumer confidence. City of Burlingame Histo.ical General Fund Expenditures FYl1 FY12 FY13 FY14 FY15 Total Operating Exp€nditures Dolla, Change Peraentate Change S 34,533,995 S 17,283,1821 -3.58% 36,683,828 s 2,749,433 6.23% 37,673,343 5 929,575 2.53vo 40,139,163 2,525,820 6.72% 44,405,064 4,26s,901 10.63% s The fiscal year 20L4-L5 adopted General Fund budget assumed operating expenditures of 547.9 million, a growth of L2.6% from the prior year budget. The increase was largely due to the inclusion of the full cost of retiree medical benefits in the departmental budgets. During the fiscal year, the City did not have any significant mid-year budget adjustments; budgets were closely monitored City wide, as reflected in positive budget variances in all departments. Total budgetary savings for the fund were approximately 93.5 million (7.3%). 23 CITY OF BURLINGAME, CALIFORN!A MANAGEMENTS DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2015 General Fu nd Budeetarv Hiehliehts (Conti nu ed ) Capital Assets and Debt Administration Capital Assets lmprovements that lengthen an asset's useful life are not capitalized unless the improvements increase its service potential, Furthermore, maintenance costs are expensed in the period incurred. The City maintains an inventory of roads and parking lots and performs periodic assessments to establish the condition levels. The City uses the modified approach for roads and parking lots as alternative to depreciation. Additional information can be found in the CAFR's Required Supplementary lnformation, Note 5 - Modified Approach for the City's lnfrastructure. As reported in the Statement of Net Position, capital assets for the governmental and business-type activities totaled 5212.4 million on June 30,20L5, net of depreciation. Capital assets increased by 2.5% from priorfiscalyear. The investments in capitalassets include:land, construction in progress, buildings, improvements, machinery and equipment, facilities, roads, streets, and storm drains. General Fund Historical Revenues and Expenditures Fiscal Years 2011-15 Millions .-a- Total Revenue + Total Operating Expenditures S64 Soz s60 Ss8 ss6 Ssa Ssz Sso s48 s46 544 s42 s40 S38 Sso S:+ S32 S3o s28 FY11 FYL2 FY13 FYL4 FY15 /- -r-7 z- d.-- 24 -.= CITY OF BURLINGAME, CALIFORNIA MANAGEMENTS DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2015 Capital Assets (Continued) All depreciable capital assets were depreciated from their acquisition date to the end of the current fiscal year for the government-wide financial statement presentation. Governmental fund financial statements record capital asset purchases as expenditures during the year. Ongoing projects are accounted for as "construction in progress." Additional information about Capital Assets can be found in the Notes to the Basic Financial Statements under Note 4 - Capital Assets. Long-Term Obligations Due to implementation of the (GASB) Governmental Accounting Standards Board's new pension reporting rules, encapsulated in GASB Statements No. 68 and No. 71, the City's Statement of Net Position reflects unfunded pension liabilities. The GASB standards now require the City to compute its unfunded liabilities by ascertaining "net pension liability" or the difference between a plan's total pension liability and the assets available to pay for such liability at a specific time. ln implementing this standard and reporting a net pension liability for the first time, a restatement of prior year's net position was required. As of June 30,2075, the net pension liability for the City was computed to be 541.8 million. Capital Assets, Net of Accumulated Depreciation June 30, 2015 (Amounts ln Millions) Total 3.4% s100.46 s101.9s 1.5% 5207.28 5212.44 Governmental Activities 20L4 20rS % Change 20L4 2015 % Change 2014 2015 % ChanSe S 40.s2 S 40.33 -:-2% 5 7.30 S o.gs -s.L./. S 48.12 $ 47.26 -t.8% 66.00 70.t6 6.3% 93.15 95.02 2.0% s rSg.r0 s 165.18 3.8% Land and other assets not being depreciated Facilities, infrastructure, and equipment 2.5%Total:s 106.82 s 110.49 Outstanding Long-Term Obligations June 30, 2015 (Amounts ln Mllllons) Businessr Activities Total 2014 2015 %Change 2OL4 2015 % Change 2OL4 2015 % Chante Bonds Due in More than one Year Bonds Due Within One Year Claims and Litigation Landfill Closure OPEB Obligation Compensated Absences Net Pension Liability(1) s 54.93 4.87 7.90 s 50.01 4.73 7.O2 -s.o% S -2.9% -lt.7% o.o% -2.O% 4.2% 100.0% 52.35 2.46 s 49.ss -5.4% 3.8% o.o% -r.7% -1.7% -3.O% too.o% s 707.28 7.33 7.90 3.13 L6.27 1.60 s 99.56 7.28 7.O2 3.08 15.96 7.64 47.77 -7.2% -0.8% -LL,L% -7.7% -7.9% 2.2% 100.0% 2.55 L3.27 1.31 13.01 1.36 34.56 3.13 3.00 o.29 3.08 2.95 0.28 7.2t Total:s 82.28 s 110.69 34j%5 67.23 S 5s.52 7.2%5L43.57 S176.31 22.9% {1)Duringfiscal year2014-15,theCityimplementedGASBStatementsNo.63and No.Tl,whichrequiretherecordingofnetpensionliabilityand pension related deferred inflows and outflows of resources on the financial statements. 25 Governmental Activities CITY OF BURTINGAME, CALIFORNIA MANAGEMENT'S DISCUSSION AND ANATYSIS FOR THE FISCAT YEAR ENDED JUNE 30, 2015 Long-Term obligations (Continued) As of June 30, 2015, the City had total long-term debt obligations of 5176.3 million, an increase of 532.8 million from the prior year. The increase was due to the posting of a net pension liability of $41.8 million. Most other long-term obligations decreased in the fiscal year. Nearly 80% of all long-term obligations relate to long-term debt; approximately half of this is due to loans and revenue bonds previously issued to support various capital pro.lects overseen by the Water and Sewer enterprises. Short of additional debt financings, these obligations will decrease over time as principal amounts are paid off. ln addition, the City has several other long-term obligations. Landfill closure and post-closure liabilities are determined in order to capture the estimated cost of municipal solid waste landfill closure and post- closure care as required by federal and state regulations. Funds are then set aside to ensure adequate funding for the post-closure costs of the former Burlingame landfill, including the annual costs of monitoring and maintaining the former landfill, as the costs are incurred. Funding for this liability is currently provided through a portion of solid waste rates charged to City ratepayers. Although the liability for landfill post-closure care costs increased slightly due to change in anticipated future costs, revenues to the fund were sufficient to offset this increase and provide a slight positive change of net position in fiscal yeat 20l4-t5. The City has an AA+ underlying general obligation credit rating, an AA+ rating for its water and wastewater debt, and an A+ rating for the storm drain debt as issued by Standard & Poor's Rating Service. The AA+ general obligation credit rating was last re-affirmed in March 2014. ln fiscal year 201.4- 15, the city had fourteen outstanding bonds or loans, including a taxable bond issue for pension obligations, two loans from the State of California Water Resources Control Board for improvements to the Burlingame Wastewater Treatment Plant, one capital lease, a loan from the California Energy Commission, and a storm drain revenue bond issued under the lnternal Revenue Service's Build America Bond program. The City annually evaluates each outstanding debt obligation that is subject to arbitrage rebate requirements and determined that there was no arbitrage rebate liability as of June 30, 2015. Burlingame Flnancing Authority Debt FY1l FYI2 FY13 FY14 FY15 Governmental Activities Debt: S Business-Type Actlvities Debt: 49,690,340 5 46,982,203 5 64,529,755 5 59,799,589 5 54,736,489 60,723,aO6 5A,a63,327 57,622,844 54,811,570 52,101,893 rotar ti:!l!t!!L!l!_ _i__-19:c$,s.39_$ 722,1,52,599 s 114,511,159 s 105,838,382 Because the pension obligation bonds constitute debt to be repaid with general government resources, they are considered to be a form of general obligation debt. As of June 30, 2015, the City's general obligation debt was comprised of only these outstanding bonds, totaling $17.7 million. The debt limit was calculated to be $299.0 million, based on total assessed valuation, in accordance with California Government Code Section 43605. 26 Debt Administration CITY OF BURLINGAME, CALIFORNIA MANAGEMENTS DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, ZO15 Debt Adminirtration (Continued) Additional information pertaining to the City's outstanding long-term debt can be found under Long- Term Debt Note 5 - Long-Term Debt in the Notes to the Basic Financial Statements and in the Statistical Section under Legal Debt Margin information. Economic Factors and Next Year's Budget and Rates The following factors were taken into consideration in preparing the fiscal year 2015-16 budget Revenue Projections: The City prepared a five-year forecast of revenues and expenditures for the General Fund. The adopted budget for 2015-16 assumed growth of approximately 10.1% in total General Fund revenue before transfers compared to the prior year adopted budget, largely due to positive changes in the economy evident in the 2014-15 fiscal (prior) year to date. Expenditures: General Fund operating expenditures are expected to grow approximalely 3.9%. 20t5-16 departmental budgets of 549.4 million provides for increases in pension costs, health care premiums for active employees, and slight increases in capital outlay. overall appropriations including transfers (559.9 million) rctlecl a 9.L% increase from the 2014-15 adopted budget, as the City Council also set aside 53 million to fuelthe City's new Renewal & Replacement Reserve in the Capital Projects Fund. General Fund Capital lmprovements: The City Council earmarked S4.0 million for capital improvements in the Five Year CIP Plan. Water and Sewer Rate Adiustments: Water and sewer rate adjustments, usually implemented early in the calendar year, are awaiting the completion of rate studies for these utilities. The draught has had significant impact on both water and sewer operations, and increases in the cost of wholesale water would indicate that future rate increases are to be expected to increase. Note that a progressively tiered rate structure is in place for most single-family residential customers. The tiered structure allows for increased volumetric charges for higher water units consumed. Sewer charges are largely based on water consumption. Solid Waste Rate Adjustments: The City provides solid waste services through a joint exercise of powers agreement (JPA) and a franchise with a private contractor. Rates are adjusted each calendar year based on updated costs of solid waste collection and material processing service, including landfill post-closure costs, street sweeping, recycling and other diversion programs. No solid waste rate adjustment is proposed for calendar year 2016. 27 CITY OF BURLINGAME, CALIFORNIA MANAGEMENTS DISCUSSION AND ANATYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2015 Requests for lnformation The financial report is designed to provide our citizens, taxpayers, investors, and creditors with a general overview of the City's finances and to demonstrate the City's accountability for the money it receives. lndividuals are encouraged to make inquiries or requests for additiona I fina ncia I information at: Burlingame Department of Finance City Hall 501 Primrose Road, Burlingame, CA 94010 (6s0) ss8-7200 28 CITY OF BURLINGAME, CALIFORNIA STATEMENT OF NET POSITION JUNE 30,2015 ASSETS Cash and investments Receivables (net of uncollectible amounts of 50 for business-type activities): Due from consumers and customer accounts Due from other governments Other receivables lnventory Prepaid items and deposits Cash and investments, restricted lnternal balance Capital assets: Land and other assets not being depreciated Facillties, infrastructure, and equipment, net of depreciation Total assets DEFERRED OUTFTOWS OF RESOURCES Deferred amount of bond refunding Deferred outflows related to pension Total deferred outflows of resources UABtUTtES Accounts payable Retentions payable Accrued payroll Accrued interest Deposits Unearned revenue Claims and litigation: Due in one year Due in more than one year Compensated absences: Due in one year Due in more than one year Landfill closure and post-closure costs: Due in one year Due in more than one year Net OPEB obligation: Due in more than one year Long-term debt: Due in one year Due in more than one year Net pension liability Total liabilities DEFERRED INFTOWS OF RESOURCES Total deferred inflows of resources related to pension NET POSITION Net investment in capital assets Restricted for: Restricted cash held with trustee Capital projects BurlinBame Avenue Special Assessment District Public safety and traffic Street and sidewalk repair and maintenance Total restricted net assets U nrestricted Total net position Governmental Activities Business-Type Activities Total s 81,8s6,034 s 32,678,804 s 114,s34,838 207,907 1,63t,822 s,834,288 69,297 598,97L 8,722,388 11,280 4,558.104 436,584 L,456,983 4,766,Olt 2,068,406 7,297,2t1 69,297 598,97L 8,573,600 47,256,483 165,L87,777 350,340,054 457,272 (11,280) 40,323,499 6,932,98470,L62,764 95,078,4L3 208,818,250 141,521,804 3,442,216 635,790 7L4,028 635,790 4,156,244 3,442,276 1,349,818 4,792,034 3,942,528 891,96s r,629,674 582,794 772,387 40,625 1,639,000 s,375,000 180,372 t,L84,tt4 13,008,608 4,725,074 50,011,415 34,555,652 823,488 69s,9s6 821,358 39,571 44,703 239,08s 202,394 2,880,s33 2,945,702 2,552,463 49,549,430 7,206,740 4,766,076 891,96s 1,629,674 7,278,750 t,593,749 80,196 1,639,000 5,376,000 225,075 L,423,799 202,394 2,880,533 15,954,310 7,277,537 99,560,845 47,762,392 778,540,t42 68,001,433 786,547,575 9,69L,377 L,895,747 7L,587,7t8 74,345,477 50,485,294 45r,2t2 L24,830,77L 4,406,659 28,520,952 380,509 48,232 3,547,295 36,446,435 457,212 36,897,647 (4,72s,0231 $ 84,028,947 S 72,974,448 5 157,003,395 See accompanying Notes to the Basic Financial Statements. 29 3,955,447 28,520,9s2 380,s09 48,232 3,547,295 22,037,942 CIW OF BURLINGAME, CALIFORNIA STATEMENT OF ACTIVITIES FOR THE FTSCAL YEAR ENDED JUNE 30, 2015 Program Revenues Expenses Charges for Services Operating Grants and Contributions TotalFunctions/Progra ms Governmental activities: General government Public safety Public works Community development Parks, recreation, and library Shuttle operations Financing and other activities Total governmental activities Business-type activities: Water Sewer Waste management Landfill Parking Building Total business-type activities Total government-wide ss,036,976 9,O87,337 1 740,748 10,948,319 L5,425,237 L5,679,345 943,2t0 444,949 2,572,870 1,979,866 5 4,230,626 23,005,L78 8,267,L6s L,745,423 15,832,106 L34,579 2,42t,899 S 11s,s23 1,066,1s8 3,870,225 6s7,223 3,372,208 s 12,16s 700,597 130,156 69,413 152,503 62,000 127,688 1,766,755 4,257,764 726,636 4,073,476 62,000 s ) L7,470,958 t0,743,897 480,844 67,200 L,295,747 7,367,695 L5,425,237 15,679,345 943,270 444,949 2,572,870 L,979,866 24,826,329 37,045,477 37,045,477 s 79,863,305 s 46,726,8L4 5 7,726,834 S 740,148 5 47,993,796 General revenues Taxes: Property taxes Sales taxes Transient occupancy taxes Other taxes Other general revenue Total general revenues lnvestment income (expense) Transfers Total general revenues and transfers Change in net position Net position beginning, as restated Net position ending See accompanying Notes to the Basic Financial Statements. 30 Capital Grants and Contributions 251,383 488,765 Net (Expense) Revenue and Changes in Net Position CITY OF BURLINGAME, CALIFORNIA STATEMENT OF ACTIVITIES (Continued) FOR THE FTSCAL YEAR ENDED JUNE 30, 2015 Total s (4,102,938) 12L,238,4231 (4,01s,401) (4t8,78tl. (11,818,630) (72,s791 (2,421,8991 (44,088,6s71 3,954,279 5,535,454 462,366 377,749 7,277,L29 612,t7r 72,279,748 72,2L9,t48 (44,088,6s7)t2,279,t48 (31,869,509) Governmental Activities Business-Type Activities s (4,102,938) (2L,238,4231 (4,01s,401) (418,787l (11,818,630) (72,s7e! (2,42L,8991 s (44,088,6s7) 3,954,279 5,535,454 462,366 377,749 t,277,129 672,t7L 76,677,387 11,100,900 23,698,396 4,696,567 L,254,463 16,677,38L 11,100,900 23,698,396 4,696,567 L,254,463 57,427,707 480,859 3,L27,203 (1,4s1,348) (3,127,203). 61,035,763 (4,578,ss1) s6,457,2t2 76,947,LO6 67,O8r,84t 7,640,597 65,333,851 24,587,703 t32,475,692 s 7572,974,448S1s7,003,39s See accompanying Notes to the Basic Financial Statements. 31 57,427,70t (970,489) This Page Intentionally Left Blank 32 GOVERN M ENTAL F UN D F'NANCIAL STATEM ENTS fhe General Furd accounts for all financial resources necessary to carry out basic governmental activities of the City that are not accounted for in another fund. The General Fund supports essential City services such as police and fire protection, street maintenance, libraries, parks, and recreation. The Storrn Drdinage Fund - This fund is to account for the storm drainage fees collected due to an assessment approved by the majority of the parcel owners in the City voting at a special election on May 5,2009. The Debt SeNice Fund is used to account for the accumulation of resources for, and the payment of, general long-term debt principal, interest, and related costs (other than those paid for by the Proprietary Funds). fhe Copitol Prcjects Fund accounts for City capital projects funded by the General Fund or other governmental funds, or any projects funded by multiple sources. 33 CIW OF BURLINGAME, CALIFORNIA BAIANCE SHEET GOVERNMENTAL FUNDS JUNE 30, 2015 General Fund Storm Drainage Fund Debt Service Fund Capital Pro.iects Fund Nonmajor Governmental Funds Total Governmental Funds ASSETS AND DEFERRED OUTFTOWS OF RESOURCES Assets: Cash and investments Receivables (net of allowance for collectibles of S0) Due from other fund Prepaid expenditures Cash and investments, restricted Total assets Deferred outflows of resources Total assets and deferred outflows of resources LIABITITIES, DEFERRED INFTOWS OF RESOURCE' AND FUND BATANCES Lia bilities: Accounts payable Due to other funds Retentions payable Accrued payroll Oeposits Advanced from other funds Unearned revenue Total liabilities Deferred inflows of resources Fund balances: Nonspendable Restricted Committed Assigned Unassigned Total fund balances Total liabilities, deterred intlows ot resources, and fund balances S 25,9s9,2s8 S 5,829,015 42,688 223,936 S 708,s28 S 25,s38,138 S 17,280 375,035 7,393,493 954,039 9,776,430 6,608,693 125,803 5,504,137 695,551 s 6s,318,7s4 697,867 7,604,408 9,230,398 598,97L 8,091,350 33,054,897 6,734,496 36,366,474 6,199,588 90,843,891 s 33,0s4,897 5 6,734,496 5 36,366,474 s 5,199,688 s 90,843,891S 5 gqaJzt 5 5 S 2,377,909- 891,96s 91,853 531,4s3 3,418,483 9,279,t18 891,96s r,629,614 772,38L 20L,990 40,625 5 4,t54,776 4,532,889 1,629,6t4 772,381 201,990 40,625 3,593,331 4,L54,776 4,s32,889 3,269,874 623,306 16,774,1"76 223,936 18,772,578 to,46s,os2 2,s79,720 37s,035 3,580,4L2 4,690,9t6- 885,465 598,971 10,851,048 2s,220,352 27,534,292 10,465,052 25,220,352 7,876,248 720 3,955,447 33,096,600 5,576,382 74,669,7L5 s 33,0s4,897 5 6,734,496 s 8,488,336 5 35,366,474 s 5,199,588 s 90,843,891 See accompanying Notes to the Basic Financial Statements 34 CITY OF BURLINGAME, CALIFORNIA RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION JUNE 30,2015 Fund balance -total governmental funds Amounts reported forgovernmental activities in the statement of net position are different because: CAPITAL ASSETS Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the governmental funds. LONG-TERM ASSETS AND LIABILITIES Long-term liabilities are not due and payable in the current period and, therefore, are not reported in the governmental funds. Compensated absences Long-term debt Net other post-employment benefits obligation Net pension liability lnterest on long-term debt is not accrued in the governmental funds, but rather is recognized as an expenditure when due. ALLOCATION OF INTERNAL SERVICES FUND NET POSITION DEFERRED INFLOWS OF RESOURCES AND OUTFLOWS OF RESOURCES Deferred outflows are not current assets or financial resources; and deferred inflows are not due and payable in the current period and therefore not reported in the governmental funds. Deferred outflows of resources Deferred inflows of resources lnternal service funds are used by management to charge the costs of fleet management, building maintenance, information technology, and risk management to individual funds. The assets and liabilities of the internal service funds are included in the governmental activities in the statement of net position. Net position of governmental activities See accompanying Notes to the Basic Financial Statements. 35 5 74,669,71s 108,830,035 (1,291,486) (s4,736,4891 (13,008,608) (33,379,44L1 1582,794l' 3,319,635 (9,365,927) 9,513,305 s 84,028,947 CITY OF BURTINGAME, CALIFORNIA STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2015 Storm General Drainage Fr rnd Fr rnd Debt Service Fund Capital Projects Fund Nonmajor Total Governmental Governmental Fu nds Fu nds REVENUES: Property taxes Sales and use taxes Transient occupancy taxes Other taxes Charges for services - fees Charges for services - licenses and permits Fines, forfeitures, and penalties lnvestment income lntergovernmental taxes Grant revenue Other revenue Total revenues EXPENDITURES: Current: General government Public safety Public works Community development Parks, recreation, and library Shuttle bus operations Capital outlay Debt service: Principal lnterest Total expenditures REVENUES OVER (UNDER} EXPENDITURES OTHER FINANCING SOURCES (USESI: Transfers in Transfer out Total other financing sources {uses) Net change in fund balances FUND BALANCES: Beginning of year End of year 5 t6,671,38L 11,100,900 23,698,396 3,048,374 4,481,678 83,840 837,704 260,740 2,720,776 67,824 516,677,38L 11,100,900 23,698,396 3,048,314 8,076,339 83,840 921,158 373,6s3 t,648,247 1,866,982 1,254,463 s S s S 6,659 4!4,475 460,130 3 28,01 1 83,454 38,430 7,648,247 1,073,246465,725 7,254,463 61,909,081 2,787,940 6,659 742,486 3,303,507 68,749,673 4,t27,895 22,773,494 4,769,873 7,244,t99 11,495,603 28,690 4,964,284 2,547,939 245,073 84,828 3,490,606 3,497,573 6,594,044 38,739 372JgA 50,673 152,356 734,578 4,434,397 23,230,520 8,311,152 t,244,799 L5,745,472 734,578 6,594,044 4,964,284 2,547,939 44,405,064 7,540,913 73,972,064 748,544 56,506,585 1ry9LQ77 2,787.949 (7,534,254],(13,169,s78) 2,ss4,963 2,74!,088 3,386,7s9 (14,374,6331 7,694,228 (4,s32,889) 22,1O8,576 (7,704,9981 504,360 (2,234,120]. 33,693,923 (30,566,720)(1,780,080) (10,927,874r. (1,780,080)3,161,339 74,403,s78 (1,729,7601 3,127,203 6,576,t43 1,007,860 14,372,9151 1,234,000 82s,203 s,27O,297 27,885,423 1,571,860 9,328,362 31,862,600 4,7s!,779 69,399,424 5 29,457,566 S 2,379,720 S 3,9ss,447 S 33,096,600 5 s,s76,382 5 74,669,7ts See accompanying Notes to the Basic Financial Statements 36 CITY OF BURTINGAME, CALIFORNIA RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BAIANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE FISCAL YEAR ENDED JUNE 30, 2015 Net change in fund balances - total governmental funds Amounts reported for governmental activities in the statement of activities are different because: CAPITAL ASSETS TRANSACTIONS Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. The capital outlay expenditures are added back to fund balance. Depreciation expense on capital assets is reported in the government-wide statement of activities, but it does not require the use of current financial resources. Therefore, depreciation expense is deducted from the fund balance. LONG.TERM DEBT PROCEEDS AND PAYMENTS Governmental funds report the effect of issuance costs, premiums, discounts, and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. This amount is the net effect of these differences in the treatment of long-term debt and related items. Accrued interest calculated on bonds payable Amortization of bond premium Pension Expense - GASB 68 The repayment of the principal of long-term debt consumes the current financial resources of governmental funds. This transaction, however, has no effect on net position: Principal payments ACCRUAL OF NONCURRENT ITEMS Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. This change reflects a decrease in compensated absences that occurred during the year. Net other post-employment benefits obligation expense ALLOCATION OF INTERNAL SERVICE FUND ACTIVITY lnternal Service Funds are used by management to charge the costs of certain activities, such as fleet management, building maintenance, information technology, and risk management, to individualfunds. The portion of the net revenue (expense) of these lnternal Service Funds arising out of their transactions with governmental funds is reported with governmental activities because they service those activities. Change in net position - All lnternal Service Funds Change in net position of governmental activities See accompanying Notes to the Basic Financial Statements. 37 S s,zto,zgt 6,s94,044 (2,7s0,767l. 27,224 98,877 378,230 4,964,284 (47,3681 251,329 2,767,022 5 L6,947,106 This Page Intentionally Left Blank 38 PROPRI ETARY F UN D FI NANCIAL STATEM ENTS fhe Wdter Fund is used to account for the provision of water services to residents of Burlingame and some residents of areas adjacent to the City. All activities necessary to provide such services are accounted for in this fund, including administration, operations, maintenance, financing, and billing/collections. fhe Woste Monagement Fund is used to account for the provision of solid waste services to the residents of Burlingame, excluding the revenues and expenditures associated with the collection, processing, and disposal of solid waste and recyclable materials which are provided by a solid waste provider servicing member cities of the South Bay Waste Management Authority. fhe Landfill Fund is used to account for the landfill closure costs a nd post-closu re monitoring services. fhe Porking Fund is used to accou nt for the activities of the City's parking districts. The Building Fund was established to account for the activities of the City's building permits and inspection division. 39 The Sewer Fund is used to account for the provision of sewer services to the residents of Burlingame and some residents of areas adjacent to the City. All activities necessary to provide such services are accounted for in this fund, including administration, operations, maintenance, financing, and billing/collections. ctTY oF BURTTNGAME, CALIFORNTA STATEMENT OF NET POSITION PROPRIETARY FUNDS JUNE 30,2015 Enterprise Funds Water Fund ASSETS AND DEFERRED OUTFTOWS OF RESOURCES Current assets: Cash and investments Receivables (net of uncollectible amounts of S0) Due from consumers Due from other governments other receivables Advances to other funds lnventory Total current assets Noncurrent assets: Cash and investments, restricted Capital assets: Land and other assets not being depreciated Facilities, infrastructure, and equipment, net of depreciation Total noncurrent assets Total assets Deferred outflows of resources: Deferred amount on bond refunding Deferred outflows related to pension Total deferred outflows of resources Total assets and deferred outflows of resources LIABILITIES, DEFERRED INFTOWS OF RESOURCES, AND FUND BATANCES current liabilities: Accounts payable Due to other funds Accrued interest Deposits Unearned revenue Claims and litigation due in one year Bonds and loans payable due in one year Compensated absences due in one year Landfill closure and post-closure liability Total current liabilities Noncurrent liabilities: Bonds payable Landfill closure and post-closure liability Other post-employment benef its obligation payable claims and litigation compensated absences Net pension liability Total noncurrent liabilities Total liabilities Deferred inflows of resources Total liabilities and deferred inflows of resources NET POSITION Net investment in capital assets Restricted amounts held with trustee Unrestricted Total net position 1,298,555 13,882,838 12,r4t,t68 4,228,437 3,228 447,9A4 s 7L,807,567 2,O23,tO3 52,168 s 9,72s,762 s 2,929,876 2,535,001 436,544 43,827 894,035 6L,r72,747 62,514,767 74,655,33s 4,228,437 247,700 32,666,440 32,956,768 46,839,606 427,656 252,r75 573,437 5 47,sr3,437 274,734 272,068 34,524 426,202 34,524 s 7s,081,s37 s 4,262,9ss s 596,340 s 5,5& 229,550 9,900 39,571 83,058 s 5,540 466,406 407 346 1,051,694 19,396 1,500,759 13,998 1,952,091 2,069,471 753 22,321,062 1,002,439 101,52; 2,545,223 25,970,247 21,922,334 LO,OO2,44O 3,224 8,915,907 27,22A36A- 949,635 71,038 89,435 3,733 30,389,455 44r,620 32,459,336 442,373 669,524 553,041 97,661 2A,59r,A62 33,022,377 534,034 2,L40,424 348,452 33,551,180 M7,944 8,059,996 3,728,927 s 42,0s9,150 5 3,728,92718,921,575 See accompanying Notes to the Basic Financial Statements. 40 Waste Sewer Management Fund Fund CITY OF BURLINGAME, CALIFORNIA STATEMENT OF NET POSITION (Continued) PROPRIETARY FUNDS JUNE 30,2015 Enterprlse Funds Landfill Fund Parking Building Fu nd Fun d Total s sr7,871 s 3,692,4s9 s 4,60s,263 s 32,678,804 s 16,s37,280 36,359 12,543 !3,497 4,558,104 436,584 1,456,983 554,236 3,705,042 4,51A,760 39,730,475 787 25,425 43,997 201,990 69,297 76,874,776 5,751,A4A 7,t79,A26 457,2L2 6,932,984 95,018,413 31,028 r,656,227 6,937,674 554,236 tO,636,776 4,618,750 115,605 99,243 473 115,605 99,243 s ss4,649 s 7O,7s2,327 s 4,718,003 702,402,609 7,647,255 18,565,431147,533,444 635,790 774,024 1,349,818 5 742,882,902 r22,580 722,580 s 18,688,011 5 9,772 S 8,05s S 125,846 S 811,458 823,488 11,280 595,956 821,368 39,57r 2,552,463 44,703 202,394 524,045 1,639,000 2,4628,455 2,508 202,394 272,166 76,520 939,422 5,!97,223 2,765,507 2,880,533 49,549,430 2,880,533 2,945,702(30) 2,AA4,667 3,096,833 1,095 3,O9'1,924 496,275_ 27,323 1,166,811 1,590,349 7,706,469 305,931 2,013,800 408,008 35,468 1,001,666 7,445,!42 2344,964 263,449 2,644,453 239,085 7,206,740 5,376,000 70,538 7,237,277 6,643,749 4,849,256 325,450 9,774,705 62,82t,490 64,072,7!3 !,495,747 59,908,454 - 6,937,674 - 50,485,294 r,656,227 - 451,2!2 - 12,s43,279) 1,806,841 2,069,550 22,03?,942 7 ,857,078 5 i.2,s43,27sl, s 8,738,s21 s 2,069,ss0 5 72,974,448 _g___?f1iE9!_ See accompanying Notes to the Basic Financial Statements. 4t Governmental Activities - lnternal Service Funds CITY OF BURLINGAME, CALIFORNIA STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION PROPRIETARY FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2015 Enterprise Funds Water Sewer Waste Management Fu ndFundFund OPERATING REVENUES: Water sales Sewer seryice charges: city of Burlingame users Other agencies special surcharges Parking fee Charges for seruices Other revenue Total operating revenues OPERATING EXPENSES: Salaries and benefits supplies and services Water purchase Depreciation lnsurance claims and expenses Total operating expenses Operatint income NONOPERATING REVENUES (EXPENSES): lnvestment income lnterest expense Net nonoperating revenues (expenses) lncome before transfers Transfers in Transfers out Net change ln net position NET POSITION: Net position - beginning (deficit), as restated Net position - end of year (deficit) 14,6lO,336 1,069,009 786,644 205,580 14,008 156,566 15,425,237 15,679,345 943,270 2,467,186 2,172,956 339,347 7,130,246 4,674,666 738,424 5,818,385 !,963,125 3,O7L,920 97,375 344,349 2,673 77,470,958 10,143,891 440,844 3,954,279 5,535,454 462,365 119,103 106,905 24,228(8s3,28s) (s1O,7721 l.734,182]. (803,267) 24,228 3,220,097 4,732,747 445,s94 2,562,726 4,551,385 57,030 13,?8O,97s) ls,7so,764l (130,923) 2,007,244 3,542,809 422,707 76,920,327 38,516,351 3,306,220 s 18,921,s7s s 42,0s9,160 s 3,728,927 s 1s,204,649 s s See accompanying Notes to the Basic Financial Statements. 42 CITY OF BURTINGAME, CALIFORNIA STATEMENT OF REVENUES, EXPENSES, AND CHANGES !N FUND NET POSITION (Continued) PROPRIETARY FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2015 Enterprise tunds Governmental Activities - lnternal s Landfill Parking Euilding Fund Fund Fund Total Service Funds s rs,204,649 s 444,949 7,23L,593-- 2's72'87o- ,,rrr,r.o 1:,Zlr1:,11X ,r,ror,r.i _ t44,3O2 374,876 13,468 444,949 2,572,a70 1,979,866 37,045,477 77,759,43L 3,136 977,866 836,945 6,732,036 5,966,457 64,064 231,960 s2s,6s2 6,705,452 !,620,046 - 5,818,386 - 80,922 - 5,115,957 600,273 4,993 5,098 454,488 918,839 67,200 7,295,74L 1,367,695 24,826,329 9,105,615 377,749 7,277,729 6L2,L7t !2,279,748 2,053,816 28,72L 33,L52 312,109 tO7,206 17.763,457) 28,721 33,1s2 (1,451,348) tO7,2O6 377,749 1,305,850 645,323 LO,767,800 2,767,022 377,749 860,587 435,503 7,640,597 2,767,O22 (2,927,028) 7,877 ,934 7,634,041 65,333,851 7,352,283 j---p;43'nrt- -!--il!!41- -s 2,0!9Eq j--12'r7!,448- -t---9Il:t91 s s See accompanying Notes to the Basic Financial Statements, 43 crrY oF BURLTNGAME, CALTFORNIA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE FTSCAL YEAR ENDED JUNE 30, 2015 Water Fund Sewer Fund s 1s,s35,077 s Ls,469,970 s 831,3s6 (7,506,3221 (s,125,4s8) (141,1s8) (2,s00,099) l2,ts2,66!l (3s1,910) (394,3 14)p!4844 (63,893) s,135,342 7,826,008 274,395 (82s,s08) (862,073) (934,685)(t,t78,oo7l (1,s31,670) (2,47s,t681 14,t28,6771 (4,s1s,248)(6,s9s.032) 119,103 106,905 24,228 119,103 106.905 512,373 24,228 (86,3 11)298,523 11,897,tO6 9,061,373 2,631,,253 5 3,9s4,279 S s,s3s,4s4 5 462,366 Funds Waste Ma nagement Fund CASH FTOWS FROM OPERATING ACTIVITIES: Receipts from consumers Payment to suppliers Payment to employees for services Payment for interfund services provided Net cash provided by operatinB activities CASH FTOWS FROM NONCAPITAI. FINANCING ACTIVITIES: Advances from other funds Transfers tofrom other funds Net cash provided by (used in) noncapital financing activities CASH FTOWS FROM CAPITAI" AND RELATED FINANCING ACTIVITIES: lnterest expense Principal paid on long-term debt Capital expenditures Gain (Loss) on disposal of asset Net cash used in capital and related financing activities CASH FI.OWS FROM INVESTING ACTIVITIES: lnvestment and rental income received Net cash provided by investing activities Net increase (decreasel in cash and cash equivalents CASH AND CASH EQUIVATENTS: Beginning of year End of year RECONCITIATION OF OPERATING INCOME TO THE NET CASH PROVIDEO BY OPERATING ACTIVITIES: Operating income Adjustments to Reconcile Operating lncome to net cash provided by operating activities Depreciation and amortization Changes in assets and liabilities Decrease in receivables Decrease in inventory in Deferred Outflows Decrease) in landfill liabilityncrease ncrease ncrease ncrease ncrease Decrease) Decrease) Decrease) Decrease) in claims and litigation in OPEB in accounts payable in deposits L,963,t25 L07,997 (215,659) (18,s02) 1460,27s], l2,z7sl 669,524 1474,6981 2,033 5,Lt7 (394,314) 3,07L,920 (209,37s) (193,943) 04,7sgl (L67,4431 s53,041 (399,201) 5,157 (364,843) (111,854) (34,s241 12,672]. 9t,66L (64,988) (2,040) (63,8e3) 339 ncrease in Deferred lnflows ncrease (Decrease) in net pension liability ncrease (Decrease) in compensated absences ncrease (Decrease) in unearned revenue ncrease (Decrease) in interfund transfers Total adjustments Net cash provided by operating activities RECONCITIATION OF CASH AND CASH EQUIVATENTS TO THE STATEMENT OF NET POSITION: Cash and investments - current Cash and investments - restricted Cash and cash equivalents on the statement of cash flows 1,181,063 2,290,554 (L87,9771 -S-5J35.342 s 7.826.008 s 274.39s S 11,807,s67 S 3,228 5 2,929,8769,t25,762 447,984 s 11.810.795 s 9.s73.746 s 2.929.876 See accompanying Notes to the Basic Financial Statements. 44 (82s,so;) (82s,s08) - (825.508) s 11.810.795 s 9.573.746 s 2.929.876 CIW OF BURLINGAME, CALIFORNIA STATEMENT OF CASH FLOWS (Continued) PROPRIETARY FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2015 Landfill Fund Parking Building FundFund Total Activities lnternal Services s 44s,O2t I (115,387) (3,261) 2,s63,744 s i.240,970|, ( 1,018,092) (767,2791 2,725,629 s 1474,L201 (874,18s) (209,820) 36,97r,797 s 11,145,802(13,504,41s) (2,264,8481(6,900,208) (6,869,30s) (1,200,089) 326,373 L,737,463 s67,504 15.267,08s ) 077.649 99,498 ( 1,929,060) (1.929.060)99.498 $,796,7s81. (2,709,677r. (6,603,84s)(446,990) 76,337 (430,653)(11,110.280) )a 7)1 33.152 3L2,L09 t07,206 28,727 326,373 888,140 191,504 2,804,379 33,752 312,L09 707.206 600,656 2,s39,8s4 7,787,700 4,004,607 30,s90,162 14,780,608 s \17 R77 s 3.592,4s9 s 4.60s.263 l_33J39.E1s-s 16.q6R 10R $ 377,749 5 1,277,129 5 672,777 5 L2,2L9,L48 S 2,053,816 (413) (s2,0s7) 80,922 (9,126) (11s,60s) (7,s91) 14,0t7l 306,931 l2L7,6t6l (6,34s) t67.2L9\ (8,77tl '99,2431 17,0771 56,630 754,534 263,489 ( 186,816) (7,s93) {209.820) 5,L75,967 (231,0s7) (660,397) (s2,0s7) (30) 734 1,09s (7771 (s0,63 1) 1s74,0321 L5Z,Z59 1,895,74L 17,344,096]. (8,788) 5,L17 (1,200,089) s 326.373 (51.375)(139,666)l44.667\3,047,937 g2,LA7I l-L$Ze3-s s67 SO4 s 1s.267.085 s 2.011.649 517,877- s 3,692,4s9_ s 4,50s,263 trr,Xiir:,tr?l 5 16,s37,280 31.028 s 3.692.459 s 4.605.263 l_33J39p10- l-1g.5E8eg- See accompanying Notes to the Basic Financial Statements. 45 s \17 F.77 Enterprise Funds 1278,044) (278,O44\ 600,273 (13,628) 17,9o4l (122,s80) (88o,ooo) 28L,940 325,4s0 1230,746l. 5,028 LIABILITIES Accounts payable Due to other governments Deposit Total liabilities CITY OF BURLINGAME, CALIFORNIA STATEMENT OF FIDUCIARY NET POSITION FIDUCIARY FUNDS JUNE 30, 2015 s Agen cy Funds 223,677 79t,636 5 1,01s,3L3 S rgs,azs 824,373 2,567 s 1,01s,313 See accompanying Notes to the Basic Financial Statements, 46 ASSETS Cash and investments Accounts receivable Total assets CITY OF BURLINGAME, CALIFORNIA INDEX TO THE NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2015 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis ofAccounting, Measurement Focus, and Presentation Basis of Budgeting Cash, Cash Equivalents, and lnvestments Accounts Receivable ... Deferred Outflows and lnflows of Resources lnterfund Transfers..... lnterfund Receivables and Payables (Due to and Due from Other Funds)........ Capital Assets....... Compensated Employee Absences............................ Long-Term Debt Pollution Remediation Obligations Fund Balance - Governmental Fund Statements Net Position - Government-Wide Flnancial Statements......... Self-lnsurance for Risk Management and Workers' Compensation...... Use of Estimates and Rec|assifications........................... New GASB Pronouncements lmplemented in the Financial Statements Future GASB Pronouncements .......... NOTE 2 - CASH AND INVESTMENTS., Deposits .. lnvestments......... lnvestments in LocalAgency lnvestment Fund (LAIF) lnvestments in San Mateo County Pooled lnvestment Fund (SMCPIF) NOTE4-CAPITALASSETS A. Capital Asset Activity from Governmental Activities.................... B. Capital AssetActivityfromBusiness-TypeActivities.................... C. Depreciation Expense................ NOTE 5 - TONG-TERM DE8T............. Long-Term Debt from Governmental Activities Long-Term Debt from Business-Type Activities................ Future Debt Requirements ...... Legal Debt Limit and Debt Margin......... Arbitrage Rebate Liability ................ Credit Rating .............. Revenue PledBe A. B, c. D. E, F. G. H. L J. K. L. M N. o. P. a. R. S. T. U. Definition of the Reporting Entity...................... Page 49 49 50 55 56 58 58 59 59 59 61 61 61 62 63 63 65 66 66 67 67 68 A. B. c. D. 59 ?0 7L 74 14 76 76 77 78 A. B. c. D. E. F. G. H. 79 80 87 91 92 92 93 93 93 The Notes the Financial Statements are an integral part of the Basic Financial Statements 47 lnventories and Prepaid ltems....... Property Taxes ..... NOTE 6 - OTHER tONG-TERM LIABILITIE5........... Self-lnsurance and Contingent Liabilities............... Compensated Absences Pollution Remediation Obligation..... Commitments and Contingent 1iabi1ities......................... NOTE 7 - PENSTON PLANS-COST-SHAR|NG................... A. General lnformation about the Pension Plans B. Pension Liabilities, Pension Expenses, and Deferred Outflows/lnflows of C. Payable to the Pension Plan .............. NOTE 8 - PENSION PTANS - MULTIPTE EMPLOYER....... General lnformation about the Pension Plans ......... Net Pension Liability Changes in the Net Pension 1iabi1ity............................ Pension Expenses and Deferred Outflows/lnflows of Resources Related to Pensions..... Payable to the Pension Plan NOTE 9 - POST-EMPLOYMENT HEALTHCARE P1AN........ Plan Description .... Funding Policy. Annual OPEB Cost and Net OPEB Ob|igation....................... Funded Status and Funding Progress Actua rial Methods and Assumptions.. NOTE 10 - INTERFUND TRANSFERS AND TRANSACTIONS......................... A. B. C. D. 95 95 97 97 98 99 99 100 105 A. B. c. D. E. A. B. c. D. E. 105 r.05 106 r.09 L10 1L1 A. Transfers..................... TLL 7tt 772 trz 113 L]4 LL4 Lt4 LL6 LL6 B. Advances Between Funds C. lnterfund Receivables and Payables (Due To and Due From Other Funds. NOTE 11 - DEFERRED TNFLOWS (OUTFLOWSI OF RESOURCES NOTE 12 - LANDFITL FUND DEFICIT BAIANCE............... NOTE 13 - RESTATEMENT OF BEGINNING NET POSITION NOTE 14 - SUBSEqUENT EVENTS LL7 118 118 118 48 CITY OF BURTINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2015 NOTE 1 - SUM RY OF SIGNIFICANT ACCOUNTI NG POLICIES A, Definition of the Reporting Entity The City of Burlingame (the city) was incorporated in 1908 as a California general law city. Burlingame is a full-service city providing all municipal services, including police, fire, library, parks, recreation, street and storm drain maintenance, and water and sewage treatment. lt is governed by a five member City Council, whose members are each elected to a four year term. The Mayor of the City is a one-year rotating chair of the City Council. As a government agency, the City is exempt from both federal income taxes and state franchise taxes. The accompanying financial statements present the City and its component units, entities for which the City is considered to be financially accountable. Blended component units, although legally separate entities are, in substance, part of the City's operations and so data from these units are combined with data of the City as the primary government. For financial reporting purposes, the city's financial statements include all funds, boards and commissions, and authorities that are controlled by or are dependent on the City's legislative branch, the City Council. Control by or dependence on the City was determined on the basis of budget adoption, taxing authority, outstanding debt, or the City's obligation to fund any deficits that may occur. Blended Component Units The following unit is a legally separate component unit for which the City is financially accountable, and therefore, the related financial activities have been blended with the City's financial reporting: ln November 1995, the City formed an authority known as the Burlingame Financing Authority (Authority). The Authority provides services entirely to the City. The purpose of this Authority is to issue bonds to finance the construction of public capital improvements through the lease of certain land and existing improvements or a pledge of revenue. Facilities may be leased by the Authority to the City pursuant to a lease agreement. The Authority is comprised of members of the City Council. The City and the Authority have a financial and operational relationship and the financial activities of the Authority have been included in the financial statements of the City as a blended component unit. The Authority's financial activities are presented in the Debt Service Fund as part of the governmental fund statements. The books and records of the Authority are maintained by the city. Additional financial data for the Authority may be obtained from the Finance Department, 501 Primrose Road, Burlingame, CA 94010. 49 Burl i nao me F i no nci no Authoritv NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) A. Definition of the Reporting Entity (Continued) Non-Disclosed Organizations There are other agencies that provide services within the City, which are independently governed, and also maintain financial books and records that are separate from the City. Aoencv Funds The fiduciary fund consists of various agency funds, which account for various programs, activities, or funds held by the City in a custodial capacity or as an agent for individuals, private organizations, and other government units. The City's basic financial statements, except for certaln cash held by the City as a fiscal agent, do not reflect, for example, the operations of the Burlingame School District, the Burlingame Library Trustees, nor the Hotel and Business lmprovement Districts. A complete listing of agency funds can be found in the Fiduciary Fund Financial Statements. Centrol County Fire Depdrtment Effective July 1, 2010, City fire employees became employees of Central County Fire Department (CCFD). CCFD is a Joint Powers Authority (JPA) which provides fire, emergency medical, and disaster preparedness services to the City and the Town of Hillsborough. CCFD is governed by a four member board of directors and a Chief Administrative Officer. Generally, the City is allocated 60% of total direct costs in support of the ongoing operations and maintenance of CCFD, whose administration, books, and records are maintained by the Town of Hillsborough and are therefore, sub.iect to a separate annual audit. This cost allocation is reflected as a receivable (if total actual direct costs are less than budgeted or expected direct costs) or payable (if total actual direct costs exceed budgeted or expected direct costs) on the City's Statement of Net Position. CCFD is a stand-alone employer recognized by the California Public Employees' Retirement System (CaIPERS). B. Basis of Accountin& Measurement Focus, and Presentation The City's basic financial statements are prepared in conformity with accounting principles generally accepted in the United States of America. The Governmental Accounting Standards Board (GASB) is the acknowledged standard setting body for establishing accounting and financial reporting standards followed by governmental entities. GASB requires that the accounts of the City be organized on the basis of funds, each of which is considered a separate accounting entity. Fund accounting segregates funds accordinB to their intended purpose and is used to aid management in demonstrating compliance with finance-related legal and contractual provisions. The operations of each fund are accounted for in a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues, and expenditures or expenses, as appropriate. City resources are allocated to and accounted for in individual funds based upon the purpose for which they are to be spent and the means by which spending activities are controlled. 50 CITY OF EURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2015 CITY OF BURTINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2015 NOTEl-SUMMARYO F SIGNIFICANT ACCOUNTING PO LICIES (Continued) Financial reporting standards established by GASB require that the financial statements described below be presented. The Government-Wide Financial Statements include a Statement of Net Position and a Statement of Activities. These statements present summaries of Governmental and Business-Type Activities, and represent a consolidation of all financial activities for the entire City. Fiduciary activities of the City are not included in these statements. The Government-Wide Financial Statements are presented on an economic resources measurement focus and the accrual basis of accounting, as arethe proprietaryfunds Accordingly, all ofthe City's current and long-term assets and liabilities, including capital assets, infrastructure assets, and long- term liabilities, are included in the accompanying Statement of Net Position as of June 30. The Statement of Activities presents changes in net position since July 1, the beginning of the fiscal year. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred, regardless of the timing of the related cash flows. For example, property tax revenue is recognized in the year of levy, and all other revenue is recognized when services have been rendered. The types of transactions reported as program revenues for the City are reported in three categories: 1) charges for services, 2) operating grants and contributions, and 3) capital grants and contributions. Certain eliminations have been made as prescribed by GASB Statement No.34 in regards to interfund activities, payables, and receivables, including the corresponding unearned revenues. All internal balances in the Statement of Net Position have been eliminated except those representing balances between the governmental activities and the business-type activities, which are presented as internal balances and eliminated in the total primary government column. ln the Statement of Activities, internal service fund transactions have been eliminated. However, transactions between governmentaland business-type activities have not been eliminated. Governmental Fund Financial Statements include a Balance Sheet and a Statement of Revenues, Expenditures, and changes in Fund Balances for all major governmental funds and nonmajor funds aggregated. An accompanying schedule is presented to reconcile and explain the differences in net position as presented in these statements to the net position presented in the Government-Wide Financial Statements. The City has presented all major funds that met the qualifications for major fund reporting. 51 B. Basis of Accounting, Measurement Focus, and Presentation (Continued) G ove rn ment-w ide F i no nciq I Stote me nts Gove rn me nta I F u nd F i nd ncio I Stote me nts CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS {Continued) JUNE 30, 2015 NOTEl-SUMMARYOF SIGNIFICANT ACCOUNTING POTIC IES {Continuedl B. Basis of Accountin& Measurement Focus, and Presentation (Continuedl Governme ntol Fund Fi nonc iol Stotements lcontinuedl Major funds are funds whose revenues, expenditures/expenses, assets, or liabilities (excluding extraordinary items) are at least 10% of corresponding totals for all governmental or enterprise funds and at least 5% of the aggregate amount for all governmental and enterprise funds. The identification and separate reporting of major funds serves to highlight financial activities which may be particularly important to financial statement users. Nonmajor funds are reported in aggregate in a separate column in the Balance Sheet and the Statement of Revenues, Expenditures, and Changes in Fund Balances. The City reports the following major governmental fu nds The General Fund is the general operating fund of the City. lt is used to account for all financial resources and transactions except those required to be accounted for in another fund The Debt Se tce FU nd is used to account for the accumulation of resources for, and the pavment of, general long-term debt principal, interest, and related costs (other than those paid by the proprietary funds). All governmentalfunds are accounted for on a spending or current financial resources measurement focus and the modified accrual basis of accounting. Accordingly, only current assets and current liabilities are included on the Balance Sheet. The Statement of Revenues, Expenditures, and Changes in Fund Balances presents increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in current net position. Under the modified accrual basis of accounting, revenues are recognized in the accounting period in which they become both measurable and available to finance expenditures of the current period. Accordingly, revenues are recorded when received in cash, except that revenues subject to accrual (generally 60 days after year-end) are recognized when due. The primary revenue sources, which have been treated as susceptible to accrual by the City, are taxpayer-assessed tax revenues (such as property taxes, sales taxes, transient occupancy taxes, and franchise taxes), certain grant revenues, and earnings on investments. 52 The Storm Drainaee Fund is used to account for the storm drainage fees collected as a result of an assessment approved by the ma.iority of the parcel owners in the City voting at a special election on May 5, 2009. The Capital Proiects Fund is used to account for resources used to acquire or develop facilities or ma.ior capital improvements. CITY OF BURTINGAME, CATIFORNIA NOTES TO THE BAslc FINANCIAL STATEMENTS (Continued) JUNE 30, 2015 NOTE 1 - SUMMARY OF SIGNIFICANT ACCO UNTING PO UclEs (continued) B. Basis of Accounting, Measurement Focus, and Presentation (Continued) Governmentol Fund Fino ncid I Stdte me nts ( Conti nue d ) Expenditures are recorded in the accounting period in which the related fund liability is incurred, except for principal and interest on general 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 governmentalfunds. Proceeds of general long-term debt and acquisitions under capital leases are reported as other financlng sourceS. Non-exchange transactions, in which the City gives or receives value without directly receiving or giving equal value in exchange, include property taxes, grants, entitlements, and donations. On an accrual basis of accounting, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from grants, entitlements, and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. Other revenues which may be accrued include other taxes, intergovernmental revenues, interest, and charges for services. Again, grant revenues are recognized in the fiscal year in which all eligibility requirements are met. Under the terms of grant agreements, the City may fund certain programs with a combination of cost-reim bu rsement grants and general revenues. Thus, both restrided and unrestricted net position may be available to finance program expenses. lt is the City's policy to first apply restricted resources to such programs, followed by unrestricted resources if necessary. Proprietary Fund Financial Statements include a Statement of Net Position; a Statement of Revenues, Expenses, and Changes in Fund Net Position; and a Statement of Cash Flows for each ma;or proprietary fund. A column representing internal service funds is also presented in these statements, However, internal service fund balances and activities are combined with the Governmental Activities in the Government-Wide Financial Statements. The City reports the following major proprietary (enterprise) funds: The Water Fund is used to account for the activities of the city's water su pply system. The Sewer Fund is used to account for the activities of the C ity's sewage collection system and the Wastewater Treatment Plant The Waste Management Fund is used to account for the activities of the c garbage collections and recycling program. 53 ity's franchised Pro prieto rv F u nd F i no n cio I State m e nts CIW OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FlNANclAt STATEMENTS (Continued) JUNE 30, 2015 1 - SUMMARY OF 516NIFICANT ES Continu B. Basis ofAccounting, Measurement Focus, and Presentation (Continued) nd Finonciol StatemenF The Landfill Fund is used to account for the landfill closure costs and post-closure monitoring services. The Landfill Fund was created in 2014 by separating landfill activities from the Waste Management Fund. 53,088,654 of the Waste Management Fund beginning fund balance was moved to the Landfill Fund in the year it was created. The Bu ilding Fund is used to account for the activities of the C ity's building division. Proprietary funds are accounted for using the economic resources measurement focus and the accrual basis of accounting. Accordingly, all assets and liabilities (whether current or noncurrent) are included on the statement of Net Position. The Statement of Revenues, Expenses, and Changes in Fund Net Position present increases (revenues) and decreases (expenses) in total net position. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred. ln these funds, receivables have been recorded as revenue and provisions have been made for uncollectible amounts. ln accordance with GASB Statement No.52, Accounting ond Finonciol Reporting for Proprietory Funds ond Other Government Entities thot Use Proprietdry Fund Accounting, the City applies all GASB pronouncements currently in effect as well as FASB Statements and lnterpretations, APB Oplnions, and ARBS of the Committee on Accounting Procedure issued on or before November 30, 1989. Operating revenues in the proprietary funds are those revenues that are generated from the primary operations of the fund. The primary operating revenues of the City's enterprise and internal service funds include water and sewer service, connection fees, sewer discharge permits, garbage and recycling collection surcharges, building inspections, parking fees and permits, information technology support, vehicle and facillties maintenance, and risk management activities provided to the various departments in the City. All other revenues are reported as nonoperating revenues. Operating expenses are those expenses that are essential to the primary operations of the fund. All other expenses are reported as nonoperating expenses. The lnternal Service are used to account for the servicing of self-insurance, allocation of funding for the retiree medical benefit trust fund, vehicle maintenance and acquisition, facilities maintenance, and information technology maintenance and acquisitions made for city departments or agencies on a cost-reim bu rsement basis. 54 The Parkins tund is used to account for the activities of the City's parking districts. CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2015 1 - SUMMARY OF tFt ACCOUNTING Continu B. Basis ofAccountins, Measurement Focus, and Presentation (Continued) F id ucio rv F un d F i n o ncio I State me nts The Fiduciarv Funds are used to account for the resources held by the City in a custodial capacity or as an agent for individuals, private organizations, other government units such as the State of California, and/or other funds. The City maintains agency funds for the Library Trustees, the State of California for seismic fees, Hotel and Broadway Business lmprovement Districts (BlDs) fees, building standards administration, the elementary and high school districts, Emergency Medical Services for County-wide training, Quality of Work Life Committee and for the Downtown Business lmprovement District, and unclaimed property from the police department and City. Fiduciary Fund Financial Statements include a Statement of Net Position and represent the related activity for the City's Agency Funds. C. Basis of Budgeting A formal budget is employed as a management control device during the year for the City, and is adopted annually for all City funds, except for the fiduciary funds and certain special revenue funds where appropriate. Consistent with most governmental entities, the City's budget is based on a modified accrual basis of accounting under which revenues are recognized in the period they become available and measurable, and expenditures are recognized in the period the related liability is incu rred. The city budget includes information regarding estimated costs (or outlays) and revenue (or cash inflows) for identified programs, projects, and levels of service to meet the needs of the City. All annual appropriations lapse at the end of the fiscal year except in the Capital Pro.iects Fund because capital improvement projects typically span more than one fiscal year. Appropriations for capital projects lapse when projects are completed, placed into service, accounted for as capital assets, or abandoned at the discretion of the City and/or City Cou ncil. Budget amendments that increase a fund's appropriations require ma.iority approval by the City Council. Certain budgetary re-allocations within departments require approval by the Finance Director and department heads. Budget amendments between departments are approved by the Finance Director and City Manager. A mid-year budget status report and long-term financial forecast for the next five years is presented to the City Council as part of an ongoing assessment and evaluation of budgetary performance, with special attention to the General Fund and certain other major funds. Budgetary financial data is included in the basic financial statements for the General Fund and storm Drainage Fund. Final budgetary data excludes the amount reserved for encumbrances in order to properly compare these amounts to actual expenditures. 55 CITY OF BURTINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAI STATEMENTS (Continued) JUNE 30, 2015 MMARY OF SIGNIFICANT ACCOL-continued C. Basis of Budgeting (Continued) Budoet Development ond Adoption The City Council encourages all Burlingame residents and business community members to participate in the development of the City budget. The Council holds three public meetings to provide guidance on the budget: a goal-setting session in January, and budget study sessions in March and May. The City Council solicits input at each of the meetings. Community members may also submit their ideas directly to City staff. Under these policy directives and guidance, departments prepare their budget requests in support of their programs in January for submission in early April. Expenditure assumptions are based on known factors such as collective bargaining agreements, current pay and benefit policies, consumer price indices, and other information available from expert third-parties or governing authorities. Budget requests are reviewed by the Finance Department for technical compliance to City budget instructions. The Proposed Budget is prepared and delivered to the City Council in May. The City Council reviews the Proposed Budget before the final budget is formally adopted in June at a public hearing, which gives residents an additional opportunity to comment on the spending plan. Expenditures exceeded budgetary appropriations for the year ended June 30, 2015, as follows: Nonmajor Governmental Funds LocalGrants Fund 153,061 The City does not include an estimated revenue assumption in the budget for local grants because these amounts represent one-time revenues. As such, the related expenses are treated as one-time in nature. Therefore, no annual appropriation is assumed. D. Cash, Cash Equivalents, and lnvestments Cash ofthe respective funds is pooled and invested principally in U.s. Treasury and agency securities and short-term investments such as the State of california (State) Local Agency Investment Fund (LAIF) and the San Mateo County lnvestment Pool. The LAIF is a pool of State cash and investments and those of California cities and local agencies. The State's investment policy is consistent with the City's policy, and, although State and City investments are pooled, the state does not have access to city funds. The State Treasurer administers [AlF, which charges for the service by retaining a percentage of investment earnings, not to exceed 0.25%. State regulations permit the city to place up to $50,000,000 in LAIF, plus any bond proceeds related to construction of a City facility. s 56 Pooled lnvestments ond lnvestment bv CiN Treosurv CITY OF BURLIN6AME, CALIFORNIA NOTEs TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2015 MMARY OF SIGNIFICANT ACCOUNTING POtI1- Pooled lnvestments and lnvestment b v Citv Tredsurv lContinued) The San Mateo County (the County) Pooled lnvestment Fund is managed by the County Treasurer, and, as required by State law, an investment advisory committee made up of representatives of those cities and local agencies who invest in the pool meets quarterly with the County Treasurer to review the investment portfolio. The County's investment policy is consistent with the City's policy, and although the City's and County's investments are pooled, the County does not have access to City funds. For the purposes of the Statement of Cash Flows, the City considers cash and cash equivalents to be cash on hand, demand deposits, and highly liquid investments with original maturities of three months or less at the time of acquisition. ln accordance with GASB Statement No.37, Accounting ond Findncidl Reportinq for Certain lnvestments ond for Externol lnvestment Pools, highly liquid market investments with maturities of one year or less at time of purchase are stated at amortized cost. All other investments are stated at fair value. Market value is used as fair value for those securities for which market quotations are readily available. lnterest income from investment of pooled cash is allocated to the funds based on monthly cash balances. lnvestments are presented at fair value except as noted below. The fair value of participants' position in the investment pools is the same as the value of the investment pools' shares and investment income includes changes in fair value (i.e., realized and unrealized gains or losses). Money market funds (such as short-term, highly liquid debt instruments including bankers' acceptances and securities notes, bills, and bonds of the U.S. government and its agencies), and participating interest-earning investment contracts (such as negotiable certificates of deposit, certificates of deposit, and repurchase agreements) that have a remaining maturity at the time of purchase of one year or less, are carried at amortized cost which approximates fair value. ln accordance with GASB Statement No.40, Deposit dnd lnvestment Disclosures (Amendment of 6A58 Stotement No. 3/, certain disclosure requirements, if applicable, for deposits and investment risks such as interest rate risk and custodial credit risk are required to be disclosed in the financial statements. . lnterest Rate Risk. Credit Risk o Overall o CustodialCredit Risk o Concentrations of credit Risk ln addition, other disclosures are specified, including use of certain methods to present deposits and investments, highly sensitive investments, credit quality at year-end, and other disclosures. 5'7 D. Cash, Cash Equivalents, and lnvestments (Continued) Voluotion CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2015 NOTE 1 - SUMMARY OF SIGNIFICANT AccoUNTING POLICIES (Continued) D. Cash, Cash Equivalents, and lnvestments (Continued) ton on tinued For purposes of the Statement of Cash Flows of the proprietary fund types, cash and cash equivalents include all investments, as the City operates an internal cash management pool which maintains the general characteristics of a demand deposit account. Please refer to Note 2 for additional information about the City's cash and investments E. Accounts Receivable The City accrues revenue at fiscal year-end, and receivables are shown net of an allowance for uncollectible accounts. The City periodically evaluates outstanding receivables to identify those that are more likely than not to be uncollected. The water and sewer utilities are billed bi-monthly. Revenue is recorded as billed to customers on a cyclical basis. The City accrues for earned but unbilled water and sewer services at June 30. The policy of the City is not to recognize an allowance for uncollectible accounts for the Water and Sewer Funds due to historically high collectability rates and the ability of the City to seek collection of delinquent service charges as a special assessment lien. Please refer to Note 3 for additional information about the City's accounts receivable F, Deferred Outflows and lnflows of Resources Pursuant to 6458 Statements No.63, Finonciol Reporting of Deferred Outflows of Resources, Delerred lnflows ol Resources, and Net Position, GASB Statement No. 65, /terns Previously Reported as .Assets ond Liabilities, GASB Statement No. 68, Accounting and Findnciol Reporting for Pensions - on amendment ol GASB Stqtement No. 27, and GASB Statement No. 77, Pension Tronsition for Contributions Mode Subsequent to the Measurement Ddte - on omendment of GASB Stotement No. 68, Accounting ond Financiol Reporting Ior Pensions, the City recognizes deferred outflows and inflows of resources. A deferred outflow of resources is defined as a consumption of net position by the City that is applicable to a future reporting period. A deferred inflow of resources is defined as an acquisition of net position by the City that is applicable to a future reporting period. The Statement of Net Position includes an itemized listing of deferred inflows and outflows of resources the City has recognized. Please refer to Notes 7, 8, and 11 for additional information about the City's deferred outflows and inflows of resources. 58 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2015 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING P OLICIES IContinuedl G. lnterfund Transfers lnterfund transfers are generally recorded as transfers except for the following types of transactions: Charges for services are recorded as revenues of the performing fund and expenditures of the requesting fund. Unbilled costs are recognized as unbilled receivables at the end of the fiscal year. Reimbursements for costs of services performed are recorded as a reduction of expenditure in the performing fund, and an expenditu re of the requesting fund. Please refer to Note 10 for additional information about interfund transfers. H. lnterfund Receivables and Payables (Due to and Due from Other Funds) During the course of operations, transactions may occur between funds to account for goods received or services rendered. Transactions between funds that are representative of lending or borrowing arrangements outstanding at the end of the fiscal year are referred to as qdyg!!g! to/from other funds, which represent the noncurrent portion of any interfund loans. All other outstanding balances between funds are reported as due to/from other funds. Any other residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as jq!eMlbqb!!9!. Please refer to Note L0 for additional information about interfund receivables and payables l. Capital Assets Capital assets, which include land, roads and parking lots, buildings and structures, improvements other than buildings, machinery and equipment, infrastructure assets, and construction in progress, are reported in the applicable governmentalor business-type activities columns in the government- wide financial statements. The City capitalizes equipment and improvements having an estimated useful life in excess of one year and acquisition cost of at least 55,000. All capital assets are valued at historical cost or estimated historical cost if actual historical cost is not available. contributed and donated capital assets are valued at their estimated fair market value on the date contributed. Furthermore, the book value of grant-funded assets is shown net of any grant reimbursement revenue. Capital outlay is recorded as expenditures in the General, Capital Projects, and other governmental funds and as an asset in the government-wide financial statements to the extent that the City's capitalization threshold is met. Major outlays for capital assets and improvements are capitalized as projects are constructed. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. lnterest incurred during the construction phase of the capital assets of business- type activities is reflected in the capitalized value ofthe asset constructed, net of interest earned on the invested proceeds over the same period. (o CITY OF BURTINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continuedl JUNE 3q 201s MMARY F IGNIFICANT ACCOUNTING POLICIES Continu l. Capital Assets (Continued) Except for roads and parking lots covered by the modified approach, depreciation has been provided on capital assets excluding land and construction in progress. 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 Statement of Net Position 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 City has assigned the useful lives listed below to capital assets. Type of Asset Years Buildings and structures lmprovements Machinery and equipment lnfrastructure 10-100 10-100 10-100 The modified approach is an alternative to depreciation that may be applied for eligible infrastructure capital assets. The City has elected to follow the modified approach for paved roads and parking lots. No depreciation is reported for these assets nor are amounts capitalized in connection with improvements that lengthen the lives of the roads and parking lots, unless the improvements also increase their service potential. Rather, costs for both maintenance and preservation of these assets are expensed in the period incurred. The City maintains an inventory of the roads and parking lots and performs periodic condition assessments to establish the condition levels of the systems. Additional information regarding the condition of paved roads can found in the required supplementary information. Please refer to Note 4 for additional information about capital assets. lntonqible Assets Artwork and historical artifacts of the City held for public exhibition or promotion of education and public service rather than financial gain are not capitalized and are expensed when incurred. As of June 30, 2015, the City does not have intangible assets. 50 ln 2010, the City adopted GASB Statement No. 51, Accounting ond Financiol Reporting for lntangible Assets. GASB Statement No.51 established accounting and financial reporting requirements for intangible assets to reduce inconsistencies, enhancing the comparability of the accounting and financial reporting of such assets among state and local governments. The statement also provides authoritative guidance that specifically addresses the nature of the intangible assets that are internally created by the governmental entity. Examples of intangible assets include easements, land use rights, and computer software. The City capitalizes intangible assets with an acquisition cost of at least 55,000 and an estimated useful life in excess of one year. CITY OF BURLINGAME, CATIFORNIA NOTES TO THE BASIC FtNANCIAL STATEMENTS (Continued) JUNE 30, 2015 NOTE 1 - SUMMARY OF SI GNIFICANT ACCOUNTING POTICIES Continued J. Compensated Employee Absences The City permits its employees to accumulate vacation hours up to a maximum of two years of entitlement. Sick leave had been accumulated up to 1,440, 1,550, 2,080, or unlimited hours depending on the bargaining unit. Effective December 1,2011, memorandums of understanding with collective bargaining units capped sick leave accruals at 2,000 hours. lf vacation is not used by the employee during the term of employment, compensation is payable to the employee at the time of retirement or termination. Such compensation is calculated at the employee's prevailing rate at the time of retirement or termination. At retirement, vacation is compensated at 100% of accumulated hours. Effective December 1, 2011, cash payouts of accumulated and unused sick leave were eliminated. Upon termination only accrued vacations are compensated. Such cash payments are recognized as expenditures of the govern menta I fu nds in the year of payment. Estimated unpaid vacation pay and sick pay at June 30 is accrued and recorded in the government- wide and proprietary fund financial statements. The estimated obligation includes an amount for salary-related payments (i.e., payroll taxes) associated with the vacation pay or sick leave. All retired or terminated employees as of June 30 have been compensated for any accumulated vacation or sick leave. Please refer to Note 6 which includes information about the City's liability for compensated absences for governmental and business-type activities. K. lnventories and Prepaid ltems lnventories are reported at a cost basis. The cost is recorded, using a weiShted average, as an expenditure at the time an individual item is consumed rather than when purchased. lnventories are reflected as nonspendable in the General Fund balance and are, therefore, unavailable for appropriation. The City's inventory consists of small tools, supplies, and fuel. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both the government-wide and fund financial statements. The inventories and prepaid items recorded in the governmental funds do not reflect current appropriable resources and, thus, are reported as part of nonspendable fund balance. L. Property Taxes Property taxes are collected for a twelve-month period effective July 1 by the County Tax Collector. Property tax is levied each September 1 on the assessed values as of the prior January 1 for all real and personal property located in the City. Once the levy rates are approved, the actual claim to property taxes arises and is enforceable. Taxes are billed once a year in late October and are payable in two equal installments due by Decemberl0 and April 10 (of the following year). Taxes are considered delinquent if paid after the due dates. 61 CITY OF BURTINGAME, CATIFORNIA NOTES TO THE BASIC FINANCIAI STATEMENTS (Continued) JUNE 30, 2015 NOTE 1 - SUMM OF SIGNIFICANT ACCOUNTING PO UclEs (Continued) L. Property Taxes (Continued) As a result of the implementation of Article Xlll (a) of the California State Constitution in fiscal year L978-7979, the City does not have the power to levy property taxes or to set property tax rates based on the financial requirements of the various funds. lnstead, the City receives remittances from the county. These remittances are based either on a llat 1o/o rate applied to the fiscal year Lg75-1976 full value of the property, or on 7Yo of the sales price of the property on sales transactions and construction which occur after the fiscal year 1975-f976 valuation. Values on properties (exclusive of increases related to sales transactions and construction) can rise at a maximum of 2o/o per year or the amount of increases to the California Consumer Price lndex, whichever is less. city property tax revenues are recognized when levied to the extent that they result in current receivables. Article xlll (a), section 18, of the california state constitution allows property taxes in excess of the 1% limit to fund general obligation bond debt service when such bonds are approved by two-thirds of the local voters. On October L2, 1993, the County Board of Supervisors adopted and implemented the Alternative Method of Tax Apportionment (Teeter Plan). The Teeter Plan applies to secured taxes only and provides a consistent predictable cash flow for taxes since they are apportioned to the City as if the tax levy had been collected in full. ln 2009, the State shifted 8% of local property tax revenue as part of a long-term borrowing tactic to balance the State budget, under Proposition 14. M. Long-Term Debt Government-Wide Finoncidl Stdtements ln the government-wide financial statements, long-term debt and other financial obligations are reported as liabilities in the appropriate activities or proprietary funds. Bond premiums, discounts, and deferred gains and losses at refunding are deferred and amortized over the life of the bonds using the straight-line method. lssuance costs are expensed in the year incurred. The governmentalfund financial statements do not present long-term debt, which is shown in the Reconciliation ofthe Governmental Funds Balance Sheet to the Government-Wide Statement of Net Position. 62 Gove rn me nto I F u nd F i no nci o I stdte me nts CIW OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30,2015 NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) M. Long-Term Debt (Continued) G overn me nta I F u n d Fi n o ncio I Stote me nts ( Co nti n ue d I Governmental funds recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuance are reported as other financing sources while discounts on debt issuance reported as other financing uses. lssuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. Please refer to Note 5 for additional information about the City's long-term debt N. Pollution RemediationObligations The City has adopted GASB Statement No. 49, Accounting ond Finonciol Reporting for Pollution Remediotion Obligations, which includes instructions for governments on the financial reporting and disclosure of a liability relating to pollution remediation. According to GASB Statement No. 49, the City is required to estimate its expected outlays for pollution remediation and accrue for the corresponding liability if any obligating events requiring reporting and disclosure occur: o The City is compelled to take pollution remediation action because of an imminent endangerment. o The City violates a pollution prevention-related permit or license. o The City is named, or evidence indicates that it will be named, by a regulator as a responsible party or potentially responsible party for remediation, or as a government entity responsible for sharing costs. r The City is named, or evidence indicates that it will be named, in a lawsuit to compel participation in pollution remediation. o The City commences or legally obligates itself to commence pollution remediation. The City has included a provision for landfill closure and post-closure costs relating to the activities of the Landfill Fund as a noncurrent liability in its Statement of Net Position. Corrective action costs for minor pollution remediation at the landfill are treated as a short-term obligation and post- closure remediation costs are treated as a long-term obligation. O. Fund Balance - Governmental Fund Statements GASB Statement No. 54, Fund Bolonce Reporting and Governmentol Fund Type Definitions, attempts to improve the usefulness of governmental fund balance information by providing the users of financial information clearly defined categories of fund balance and the constraints placed on the City's fund balances. 63 CIry OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2015 NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) O. Fund Balance - Governmental Fund Statements (Continued) GASB Statement No. 54 requires governmental fund balances to be reported using five categories, which take into consideration the makeup and intended use of the various fund balances. The hierarchy of the five possible classifications of fund balance is: Nonspendable fund balance generally means that it is not expected to be converted to cash (e.9., inventories, prepaid expenses, land held for resale) for use by the government, or the amount is required to be maintained intact (e.9., the principal of an endowment). Restricted fund balance includes amounts that can be spent only for the specific purposes stipulated by external resource providers (e.g., creditors, grantors), constitutional provisions or laws (e.9., State law, city charter, or voter referendum), or through enabling legislation (i.e., legislation that creates a new revenue source and restricts its use). Effectively, restrictions may be changed or lifted only with the consent of resource providers (including voters). Unrestricted fund balance consists of three categories o Committed fund balance includes amounts that can only be used for specific purposes determined by formal action of the City's highest level of decision-making authority (e.9., the City Council). Commitments may be changed or lifted only by the government taking the same formal action that imposed the constraint originally. o Assiqned fund balance comprises amounts intended to be used by the government for specific purposes. lntent can be expressed by the governing body or by an official to whom the governing body delegates the authority. ln governmental funds other than the General Fund, assigned fund balance represents all amounts that are not classified as restricted or committed. This is because resources in governmentalfunds other than the General Fund a re to be used for the specific purpose of that fund. o Unassiened fund balance is a residual (surplus) classification used for the General Fund only and includes amounts not contained in the other classifications. Unassigned amounts in the General Fund are technically available for anv ouroose. However, if a governmental fund, other than the General Fund, has a fund balance deficit, il will be reported as a negative amount in the unassigned classification in that fund. GASB Statement No.54 prohibits reporting any excess balances in other funds. Balances must be assigned to a specific purpose in all but the General Fund. When both restricted and unrestricted resources are available for use, it is the City's policy to use restricted resources first, followed by unrestricted committed, assigned, and unassigned resources as they are needed. The aggregate balance of unassigned fund balance was $10,465,052 as of June 30,201,5. 64 CITY OF BURLINGAME, CATIFORNIA NOTES TO THE BASIC FINANCIAI STATEMENTS (Continuedl JUNE 30, 2015 NIFI NT UNTING POLICIES Continued O. Fund Balance -Governmental Fund Statements (Continuedl ln January 2015, the City Council adopted a General Fund Reserve Policy by resolution. The policy, based on an analysis of risks specific to the City, establishes targeted levels for an Economic Stability Reserve and a Catastrophic Reserve (24% and 2o/o-9Yo of budgeted revenues, respectively), as well as a Contingency Reserve amount of 5500,000. The actual reserve levels are adopted by resolution with each annual budget, or as recommended by the Finance Director based upon an update of the City's fiscal needs or forecasts during the year. As the City Council and management can only use reserves for purposes consistent with the purposes described in the policy, these reserve amounts are reported as assignments of the General Fund's balance. The Economic Stabilitv Reserve is available to protect and preserve City services from dramatic drops in General Fund revenues that are highly sensitive to economic conditions, mainly sales taxes and transient occupancy taxes. The balance at June 30, 2015, was S13,300,000. The Catastrophic Reserve is available to make re pairs and reconstruct City buildings and facilities that may be damaged by natural disasters or acts of war and terrorism. The balance at June 30, 2015, was 54,500,000. The Contingency Reserve is available to cover une xpected expenses that may arise during the course of the fiscal year that were not considered during budget planning. The balance at June 30, 2015, was S500,000. Encumbrances re present amounts set aside for purchase requisitions and related vendors. The balance at June 30,20L5,was 5472,578. P, Net Position - Government-Wide Financial Statements ln the government-wide financial statements, net position is classified in the following categories: Net lnvestment in CaDital Assets - This amount consists of all capital assets net of accumulated depreciation and reduced by outstanding debt that is attributed to the acquisition, construction, or improvement of the assets. 65 Committed ond Assioned Fund Bolance The aggregate balance of the General Fund's assigned fund balance was 5L8,772,578 as of June 30, 2015. The breakdown is shown below: CITY OF BURLINGAME, CATIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continuedl JUNE 30, 2015 NOTE 1 - SUMMARY OF SIGN IFICANT ACCOUNTING POLICIES Continued P. Net Position - Government-Wide Financial Statements (Continued) . Restricted - This amount is restricted by external creditors, grantors, contributors, laws or regulations of other governments, or enabling legislation. . Unrestricted - This amount consists of all net position that does not meet the definition of net investment in capital assets or restricted. This represents the remaining net position of the City which is not restricted for any purpose stated above. Pursuant to the terms of the City's lndentures, certain revenues are irrevocably pledged to the punctual payment of debt service on certain outstanding revenue and refunding bonds. Such revenues are not used for any other purpose while any revenue and refunding bonds are outstanding, except as expressly permitted by the lndentures. These amounts are recorded on the Statement of Net Position as restricted, and may include principal and interest amounts set aside to pay for debt service, unspent bond proceeds, and amounts that have been restricted for future capital projects. The City also maintains certain restricted amounts that are held in trust, which primarily consist of various project and construction funds held by an outside fiscal agent. These typically relate to previously issued revenue bonds for the Water and Sewer proprietary funds. The City treats net position created from specially designated revenues for street repair and maintenance as restricted, which relate to revenues from Measure A and the City's local share of gas tax. Net position created by revenues received from federal and State grants and subventions are treated as restricted by the outside agency. Q. Self-lnsurance for Risk Management and Workers' Compensation The City is self-insured for general liability, property damage, and workers' compensation claims. lnternal service funds are used to account for the City's self-insurance activities. lt is the City's policy to provide in each fiscal year, by premiums charged to affected operating funds, amounts sufficient for self-insurance program expenses and reserves associated with claims. Additional reserves are maintained to protect against unusual losses beyond normal experience. The estimated liability for claims and contingencies stated in the General Liability and Workers'Compensation lnternalService Funds is actuarially determined and includes claims incurred but not reported. R. Use of Estimates and Reclassifications The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. 66 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continuedl JUNE 30, 2015 1-MMARY OF SIGNIFICANT ACCOU nued R. Use of Estimates and Reclassifications (Continued) Furthermore, certain prior year balances may have been reclassified in order to conform to current year presentation. These reclassifications had no effect upon reported net position. S. New GASB Pronouncements lmplemented in the Financial Statements The following GASB Statements have been implemented in the current financial statements: GASB Statement No. 68, Accounting ond Finonciol Reporting for Pensions - an amendment of GASB Stotement No. 2Z (effective for fiscal years beginning after June 15, 2014). This statement's objective is to lmprove accounting and financial reporting by state and local governments for pensions. The City implemented the provisions of Statement No. 68 in the current year. Refer to Notes 7 and 8 for the expanded pension disclosures for the City's cost- sharing and multi-employer pension plans and Note L3 for detailed discussion of the effects on the City's current and prior period financial statements as a result of the adoption of this standard. GASB Statement No.69, Government Combinotions ond Disposols of Government Operations. This statement establishes accounting and financial reporting standards related to Sovernment combinations and disposals of government operations. There was no effect on the City's accounting or financial reporting as a result of implementing this standard. The following GASB Statements will be implemented in future financial statements: GASB Statement No, 72 - Foir Volue Measurement ond Applicotion. The statement provides guidance for applying fair value to certain investments and disclosures related to all fair value measurements. The provisions of this statement are effective for financial statements for reporting periods beginning after June L5, 2015. The City does not anticipate significant effects of the implementation of GASB Statement No. 72 as of the date of the basic financial statements. GASB Statement No.73 - Accounting and Findnciol Reporting Ior Pensions ond Reloted Assets thot ore not within the Scope oJ GASB Stotement No. 68, ond Amendments to Certain Provisions oJ GASB Statements No. 67 and No.68. The provisions of this statement are effective for fiscal years beginning after June 15, 2015. As the City recently implemented GASB Statement No. 68 with no interpretive issues, the City does not anticipate significant effects from the im plementation of GASB Statement No. 73 as of the date of the basic fina ncial statements. GASB Statement No. 77, Pension Tronsition for Contributions Mode Subsequent to the Meosurement Dote - on omendment of GASB Statement No. 68, was issued in November 20L3. This statement addresses an issue related to the application of the transition provision of GASB Statement No.68, Accounting ond Financiol Reporting for Pensions. The City implemented the provisions of Statement No. 71 along with GASB Statement No. 68. 57 T. Future GASB Pronouncements CITY OF BURTINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continuedl JUNE 30, 2015 NOTE 1 - SUMMARY OF SIGNIFI ACCOU NTING POLICIES (Continued) T. Future GASB Pronouncements (Continued) GASB Statement No.74 - Finoncidl Reporting Ior Postemployment Benefits Other than Pension Plons. fhe provisions of this statement are effective for fiscal years beginning after June 15, 2016. This statement focuses primarily on enhanced note disclosures and schedules of required supplementary information. The City has not fully judged the effect of the implementation of GASB Statement No. 74 as of the date of the basic financial statements. GASB Statement No. 75 - Accounting ond Finoncial Reporting for Postemployment Benelits Other than Pension Plons. The provisions of this statement are effective for fiscal years beginning after June 15, 2017. This statement replaces GASB Statement No. 45, implemented by the City in 2009, and focuses primarily on enhanced note disclosures and schedules of required supplementary information. The City has not fully judged the effect of the implementation of GASB Statement No. 75 as of the date of the basic financial statements. GASB Statement No.76 - Hierarchy of oenerolly Accepted Accounting Principles Ior Stote ond Locol 5overnments. The provisions of this statement are effective for fiscal years beginning after June 15, 2015. This statement identifies the sources of guidance that state and local governments follow when preparing financial statements in conformity with accounting principles generally accepted in the United States of America and lists the order of priority for these sources. The City has not fully judged the effect ofthe implementation of GASB Statement No. 76 as of the date of the basic financial statements. GASB Statement No,77 - Tox Abotement Disclosures. The requirements of this statement are effective for reporting periods beginning after December 15, 2015. This statement requires disclosure of tax abatement information about (1) a reporting government's own tax abatement agreements and (2) those that are entered into by other governments and that reduce the reporting governments tax revenues. The City has not fully judged the effect of the implementation of GASB Statement No. 77 as of the date of the basic fina ncial statements. GASB Statement No.78 - Pensions Provided through Certoin Multiple-Employer Delined Benefit Pension Plons. The requirements of this statement are effective for reporting periods beginning after December 15, 2015. This statement addresses certain issues regarding the scope and applicability of GASB Statement No. 68, Accountinq ond Finonciol Reporting for Pensions. fhe City has not fully judged the effect of implementation of GASB Statement No. 78 as of the date of the basic financial statements. U. Pensions For purposes of measuring the net pension liability and deferred outflows/inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the City's California Public Employees' Retirement System (CaIPERS) plans (Plans) and additions to/deductions from the Plans'fiduciary net position have been determined on the same basis as they are reported by CaIPERS. For this purpose, benefit payments (including refunds of employee contribulions) are recognized when due and payable in accordance with the benefit terms. lnvestments are reported at fair value. 68 ctTY oF BURLTNGAME, CALIFORNTA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2015 NOTE 2 - CASH AND INVESTMENTS The City maintains a cash and investment pool, which includes cash balances and authorized investments of all funds. This pooled cash is invested to enhance interest earnings in accordance with City investment policy guidelines established by the City Treasurer. The pooled interest earned is allocated to the funds based on cash and investment balances in these funds at the end of each accounting period. The City has the following cash and investments at June 30: Government-Wide Statement of Net Position Fund Financial Statements Business-Type Fiduciary Funds Statement of Net PositionActivitiesTotal Total Governmental Activities Cash and investments held with Treasury Restricted cash held with Treasury Restricted cash held by fiscal agent Total cash and investments _s 8,1rr,388_ _5 3,228_ 5 89,978,422 S 33,130,015 S 8,12s,616 S s 81,8s5,034 s 32,678,804 s 114,s34,838 5 223,677 5 rt4,7s8,sLs s 447,984 s 447,984 s 447,984-5 5 8,125,515 s 123,108,438 223,677 5 123,332,11s The City's cash and investments at June 30 in more detail: City Treasury: Deposits: Deposits - unrestricted Deposits - restricted Total deposits lnvestments: U.S. Government Securities Certificates of Deposit Corporate Notes BNY Short-Term lnvestment Cash San Mateo County Pooled lnvestment Fund LAIF Total investments Total City Treasury Restricted Cash and lnvestments: Cash held by fiscal agent (Bank of New York) Cash held by fiscal agent (Deutsche Bank) Cash held by fiscal agent (First Republic Bank) Cash held by fiscal agent (J.P. Morgan Chase) Cash held by fiscal agent (Bank of Sacramento) Total restricted cash and investments Total cash and investments (including fiduciary funds) Fair Value s 5,347,47L 447,984 5,795,395 46,277,067 3,026,93t 2L,345,891 237,436 3,500,522 257 L09,47t,L04 1t5,206,499 7,207,446 L89,276 96,109 31,029 601,756 616 69 5 r23,332,tL5 CITY OF BURLIN6AME, CALIFORNIA NOTES TO THE BASIC FINANCIAt STATEMENTS (Continued) JUNE 30, 2015 custodidl credit Risk Custodial credit risk for depos,b is the risk that the City will not be able to recover its deposits or will not be able to recover collateral securities in the possession of an outside party if a depository institution fails. The California Government Code and the city's investment policy do not contain legal or policy requirements that would limit exposure to custodial credit risk for deposits or investments, other than the following provision applicable to deposits: The carrying amounts of the City's cash deposits were 55,795,395 at June 30. Bankbalances before reconciling items were 57,202,657 at that date, the total amount of which was collateralized or insured with securities held by the pledging financial institutions in the City's name as discussed above. 70 NOTE 2 - CASH AND INVESTMENTS (Continued) A. Deposits The California Government Code requires California banks and savings and loan associations to secure the City's cash deposits by pledging securities as collateral. This code states that collateral pledged in this manner shall have the effect of perfecting a security interest in such collateral superior to those of a general creditor. Thus, collateral for cash deposits is considered to be held in the City's name. The fair value of pledged securities must equal at least 110% of the city's cash deposits. State law also allows institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the City's total cash deposits. The City may waive collateral requirements for cash deposits, which are fully insured up to 5250,000 by the Federal Deposit lnsurance Corporation. The City, however, has not waived the collateralization requirements. The City follows the practice of pooling cash and investments of all funds, except for funds required to be held by fiscal agents under the provisions of bond indentures. lnterest income earned on pooled cash and investments is allocated on an accounting period basis to the various funds based on the period-end cash and investment balances. lnterest income from cash and investments with fiscal agents is credited directly to the related fund. CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2015 NOTE2-CASHAND ENTS (Continued) B. Investments lnterest Rote Risk To minimize exposure to fair value losses caused by rising interest rates and to meet the liquidity needs of the City, the City's investment policy limits its investment portfolio to a maturity of less than 5 years. lnvestment Maturities in Years Less Than I Year 1-2 Years 2-3 Years 3-4 Years Fair Va lue 5 3,21s,818 S r.,640,185 4,0s8,663 3,998,700 t,601,,221, 998,540 1,016,960 4,997,550 s 2,987,680 6,980,820 995,480 795,469 1,010,880 3,036,300 t,778,445 L,780,992 4-5 Years 4,750,872996,383 25r,797 2s0,233 250,067 1,,766,8L7 U.S. Agencies Federal Home Loan Bank Federal Home Loan Mortgage Corp Federal National Mortgage Association (Fannie Mae) Federal Farm Credit Bank U.S. Treasury Bond/Note United States Treasury Certificates of Deposit American Express Co BMW Financial Seruices CIT Group LLC Compass Bank Discover Financial Services First Bancorp of Puerto Rico General Electric Co Goldman Sachs Group lnc JP Morgan Chase & co Safra National Bank Waupaca Bancorp lnc Corporate Notes American Express Co Bank of New York Co Caterpillar lnc Exxon Mobil Corp General Electric Co Glaxosmithkline PLC IBM Corp Johnson & Johnson JP Mortan Chase & Co Texas lnstruments lnc Toyota Motor Co US Bankcorp Wells Fargo Co External Pool Bank of New York lnvestment Cash State of California - LAIF San Mateo County Pooled lnvestment Fund Total s 8,21.3,368 s 5,538,745 19,223,O38 4,995,180 8,205,735 255,027 252,587 252,550 254,243 254,53L 250,657 s06,33s 254,531 245,t70 250,233 2s0,061 t,766,8tL t,783,804 t,735,677 r.,704,503 L,7L8,779 846,468 1,733,363 7,745,620 1,60L,22L 1,794,009 L,778,445 2,797,952 s02,930 1,996,s50 2,663,256 3,043,990 255,O27 252,587 252,550 254,243 254,531, 250,657 254,544 254,531, t,783,804 7,735,677 939,239 L,704,503 L,7L8,779 846,458 1,733,363 7,t45,620 237,436 35,O23,257 3,500,522 s 109,4r.1,104 5 42,276,s00 S 18,893,748 S 2s,3s7,894 5 13,904,296 S 8,978,666 237,436 35,O23,257 3,500,522 7L 246,L70 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAI STATEMENTS (Continued) JUNE 30, 2015 B. lnvestments(Continued) lnterest Rdte R isk lContinued) GASB Statement No.3L, Accounting and Findncidl Reporting for Certoin lnvestments and lor Externol lnvestment Pools, applies to all the City's investments, even if they are held to maturity and redeemed at full face value. Since it is the City's policy is to hold all investments to maturity, the fair value adjustments required by GASB Statement No. 31 result in accounting gains or losses (called "recognized" gains or losses) which do not reflect actual sales of the investments (called "realized" gains or losses). Thus, recognized gains or losses on an investment purchased at par will not reflect changes in its value at each succeeding fiscal year-end, but these recognized gains or losses will net to zero if the investment is held to maturity. By following the requirements of GASB Statement No. 31, the City is reporting the amount of resources which would actually have been available if it had been required to liquidate all its investments at any fiscalyear-end GASB Statement No. 31 further requires that the City's investments be carrled at fair value instead of cost. under GASB statement No. 31, the city must adjust the carrying value of its investments to reflect their fair value at each fiscal year-end, and it must include the effects of these adjustments in income for that fiscal year. GASB statement No. 31fair value adjustment for the City's investments as ofJune 30, 2015, was a decrease of 5335,80L. Credit Risk State law limits investments in commercial paper and corporate bonds to be rated in a category "A" or its equivalent or better by nationally recognized statistical rating organizations (NRSROs). lt is the City's policy to limit its investments in these investment types to the top rating issued by NRSROs, including raters Standard & Poor's, Fitch Ratings, and Moody's lnvestors Service (Moody's). 72 NOTE 2 - CASH AND INVESTMENTS (Continuedl CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2015 NOTE 2 -H AND INVESTMENTS Continued B. lnvestments (Continued) Credit Risk Continued The City's investments are rated by Moody's as follows: lnvestment Type Fair Value Moody's Rating Federal Home Loan Bank Federal Home Loan Mortgage Corp Federal National Mortgage Association (Fannie Mae) Federal Farm Credit Bank U.s. Treasury Bond/Notes Certificates of Deposit Corporate Notes - American Express Co Corporate Notes - Bank of New York Co Corporate Notes - Caterpillar lnc Corporate Notes - Exxon Mobil Corp Corporate Notes - General Electric Co Corporate Notes - Glaxosmithkline PLC Corporate Notes - IBM Corp Corporate Notes - Johnson & Johnson Corporate Notes - JP Morgan Chase & Co Corporate Notes - Texas lnstruments lnc Corporate Notes - Toyota Mtr Cr Corp Corporate Notes - US Bankcorp Corporate Notes - Wells Fargo Co State of California - LAIF San Mateo County Pooled lnvestment Fund BNY lnvestment Cash Balance s 8,2t3,368 5,638,7 45 19,223,038 4,995,180 8,206,736 3,026,931 L,766,87r 1,783,804 L,735,677 939,239 7,704,503 7,7 18,779 846,468 7,733,363 \,745,620 L,607,22! 7,794,009 7,778,445 2,797,952 35,023,257 3,500,522 237,436 Aaa Aaa Aaa Aaa Aaa FDIC lnsured A2 A1 A? Aaa A1 A2 Aa3 Aaa A3 A1 Aa3 A1 A2 Not Rated Total s 109,411,104 Custodiol Credit Risk For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty, the City will not be able to recover the value of its investments or collateral securities thatareheld bythe counterparty. All of the City's investments in securities are held in the name of the City. The City's custody agreement policy prohibits counterparties holding securities not in the City's name. 73 CITY OF BURLINGAME, CATIFORNIA NOTES TO THE BASIC FINANCIAI STATEMENTS (Continued) JUNE 30, 2015 NOre z - casu aruo truves C, lnvestments in LAIF LAIF is a voluntary program created by statute in 1977. LAIF is part of the Pooled Money lnvestment Account (PMIA). The PMIA began in 1955 and oversight is provided by the Pooled Money lnvestment Board (PMIB) and an in-house lnvestment Committee. The PMIB members are the State Treasurer, Director of Finance, and State Controller. The Local lnvestment Advisory Board (LIAB) provides oversight for LAIF. LIAB consists of five mem bers as designated by statute. The City's investments with LAIF at June 30 included a portion of the pooled funds invested in Structured Notes and Asset-Backed Securities. These investments included the following: Structured Notes are debt securities (other than asset-backed securities) whose cash flow characteristics (coupon rate, redemption amount, or stated maturity) depend upon one or more indices and/or that have embedded forwards or options. Asset-Bocked Securities, which primarily consist of mortgage-backed securities, entitle their purchasers to receive a share of the cash flows from a pool of assets such as principal and interest repayments from a pool of mortgages (such as Collateralized Mortgage Obligations (CMO)) or credit card receivables. As of June 30, the City had $35,023,257 invested in LAIF. The LAIF fair value factor of 1.000375979 was used to calculate the fair value of the investments in LAIF. The fair value of the City's position in the pool is materially equivalent to the value of the pool shares. The financialstatements for LAIF areavailable in the State Treasure/s Office website at www.treasurer.ca.gov. D. lnvestments in San Mateo County Pooled lnvestment Fund The City invests in the San Mateo County Pooled lnvestment Fund (SMCPIF), an external investment pool. The pool determines fair value on its investment portfolio based on market quotations for those securities where market quotations are readily available, and valuations are based on amortized cost or best estimate for those securities where market value is not readily available. The responsibility for managing the SMCPIF resides with the County Treasurer. The County Board of Supervisors, in consultation with the Treasurer, establishes an eight member County Treasury Oversight Committee pursuant to California Government Code Section 27130. The investment program is supervised within the guidelines set forth in the investment policy developed by the Treasurer, reviewed and approved annually by the County Treasury Oversight Committee and the county Board of Supervisors. As of June 30, the City had 53,500,522 invested in sMCPlF. The SMcPlF fair value factor is determined by dividing all SMCPIF participants' total agBregate fair value by total aggregate amortized cost resulting in a factor of 0.99990. The financial statements for the San Mateo County website at www.co.sanmateo.ca.usare available in the San Mateo County 74 CITY OF BURTINGAME, CAL!FORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2015 NOTE 3 - RECEIVABLES Government-Wide Receivables as of year-end for the City's individual major funds and nonmajor, internal service, and fiduciary funds in the aggregate, including the applicable allowances for uncollectible accounts, are as follows: @ SusineslTyp.A.ttoitig Storm Aplbl W.ste lntern.l General Dralnage Proj.ds ilonmajor water s.w.r Euilding Parklnt t.ndffll Management seNlce Fund Fund Fund Funds tund Fund Fund Fund Fund Fund Funds Totals salcsbr Real properly transfar t.x Publi. etoty eles tax lnter€st Busln6stax6 s202,45s99Ss,26ss2,023,10332,$s,m155SS918754,756,011 2,925,2A2 - 2,926,242 1,496,433 1,496,433 237'472 231'4n lj,@S 77,095 llm 11,090 1G 755 27,6s - 15,854 49,O3E 43,821 13,497 11,555 - 9,116 43,997 325,957 2m,23S 26,235 396.628 98,149 99,039 183,ffi - 436,59 36,359 65,028 25,425 2,195,218 1G,370 1m,3rc s5,S29,015 s 12s,8O3 s 9s,039 s5es,ss1 s 2,075,271 5 3,01s,ffi s13,497 12,5E3 3 36,3s9 s 74.W 569,509 s12,S1,937Net total receivables Woste Monaoement Fund - Rote Yeor Surplus ond Shortfolls The City is a member of the South Bayside Waste Management Authority, a joint powers authority having oversight over a service agreement with Recology for garbage and recycling collections. The City will have a receivable due from Recology if there is an excess of revenues collected over expenses (a rate year surplus) or a liability if expenses exceed revenues collected (a rate year shortfall). As of June 30,2015, the City had a receivable of 5t,223,75L due from Recology for rate years 201L through 2015. 75 clw oF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2015 NOTE4-CAPITALASSETS A. Capita! Asset Activity from Governmental Activities Capital asset activity for the year ended June 30, 2015, relating to governmental activities was as follows: Governmental Activities Balance )uly 7,2074 Transfers lncreases Decreases ln/Out Balance June 30, 2015 Capital assets not being depreciated: Land Pavement accounted for using the modified approach Construction in progress Total capital assets, not being depreciated Capital assets, being depreciated: Buildings and structures lmprovements other than buildings Machinery and equipment lnfrastructure Total capital assets, being depreciated Less accumulated depreciation for: Bulldings and structures lmprovements other than buildings Machinery and equipment I nfrastructure 7,467,371 6,456,817 - (6,955,874) 40,822,ss6 S 6,407,198 S 32,947,987 s s S 6,407,198 32,947,987 968,3 14 6,456,817 16,9ss,874)40,323,499 39,101,311 31,659,409 16,980,791 50,522,856 2,746,796 78,626 7,290,477 2,840,03s 47,848,707 31,738,035 78,672,097 s3,362,891 738,264,367 sa4,277 (183,334) s84,277 (183,334) 6,9ss,874 745,627,724 74,967,920 27,043,977 13,524,972 L6,736,977 834,644 460,526 1,205,147 850,723 75,796,564 27,504,437 14,569,659 77,587,7@ (160,460) Total accumulated depreciation 72,267,780 3,351,040 (160,460)75,458,360 Total capital assets, being depreciated, net 65,996,587 (2,756,8231 |.22,874l 6,9ss,874 70,162,764 Governmental activities capital assets, net 5 106,819,143 S 110,486,263 76 ctTY oF BURLTNGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2015 NOTE 4 - CAPITAL ASSETS (Continued) B. Capital Asset Activity from Business-Type Activities Capital asset activity for the year ended June 30, 20L5, relating to business-type activities was as shown below. Assets completed in the Capital Projects Fund for the Water and Sewer Funds were previously funded by those proprietary funds, and are therefore not true capital contributions. Capital assets completed (from Construction in Progress) for the Water and Sewer Funds totaled $2,455,745 and 54,293,t74, respectively, and are included in operating transfers. Busi ness-Type Activities Balance Julv t,2Ot4 Transfer lncreases Decreases lnlOut Balance June 30, 2015 Capital assets not being depreciated Land Construction in progress Total capital assets, not being depreciated Capital assets, being depreciated: Buildings and structures lmprovements other than bulldings Machinery and equipment Total capital assets, being depreciated Less accumulated depreciation for: Buildings and structures lmprovements other than buildlngs Machinery and equipment 947,590 6,387,725 (6,758,919) 7,304,778 S 6,357,188 S -s -s -s 6,357,788 575,796 6,387,725 (6,758,919)6,937,984 2,949,994 749,604,387 5,455,186 795,174 27,547 5,935,624 823,295 2,949,994 155,735,779 6,300,028 158,009,s61 721 6,758,919 764,985,20L !,279,722 64,L37,417 4,550,249 7,218,467 s9,408,301 4,224,053 60,6ss 4,729,776 326,796 Total accumulated depreciation 64,850,827 q 69,966,7.88 Total capital assets, being depreciated, net 93,7s8,740 14,899,246)6,7s8,919 9s,018,413 Business-type activities capital assets, net s 100,463,s18 5 7,487,879 s s s 101,9s1,397 77 CIW OF BURTINGAME, CALIFORNIA NOTES TO THE BASIC FINANcIAL STATEMENTS (Continued) JUNE 30, 2015 NOTE 4 - CAPITAI sETs {continuedl C, DepreciationExpense Depreciation expense was charged to functions and programs based on their usage of the related assets. The amounts allocated to each function or program for the current year were as follows: Depreciation Current Year Governmental activities: General government Public safety Public works Parks, recreation, and library Total depreciation expense - governmental activities s 3,3s1,040 s Business-type activities: Water Sewer Parking 118,883 446,908 1,605,747 7,779,502 5 r,963,72s 3,O7r,920 80,922 l____Irfgz_Total depreciation expense - business-type activities 78 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2015 NOTE5-LONG.TERMDEBT The following is a summary of changes in long-term debt related to governmental and business-type activities during the fiscal year ended June 30, 2015: Beginning Balance June 30, 2014 Additions Ending Balance Reductions June 30, 2015 Amounts Due Within One Year s 730,000 (1,49s) 2,64s,000 17,790], (10,657) 955,000 (s4,36s) 210,000 (8,066) 220,773 46,674 _5 4J2s,o?4 Governmental Activities: Lease Revenue Refunding Bonds, Series 2004 - Unamortized Premium Pension Obligation Bonds, 2006 SeriesA Bond Storm Drainage Revenue Bondt Series 2010 - Unamortized Premium Storm Drainage Revenue Bondt Series 2012 - Unamortized Premium Lease Revenue Refunding Bonds, Series 2010 - Unamortized Premium Lease Revenue Bonds, Series 2012 - Unamortized Premium Master Equipment Lease Purchase Agreement, February 2011 California Energy Commission LED Streetlight Turnkey, 2012 Total Governmental Activities Business-Type Activities: State Water Resource Control Board Loan - 2003 State Water Resource Control Board Loan - 2010 Water and Wastewater Revenue Bonds, Series 2007 - Unamortized Premium - Unamortized Discount Water and Wastewater Refunding Revenue Bonds, Series 2011 - Unamortized Premium Water and Wastewater Revenue Refunding Bonds, Series 2013 - Unamortized Premium Total Business-Type Activities S 1,42s,ooo $ 79,434 20,095,000 8,940,000 180,820 10,215,000 267,704 7,140,000 380,554 9,69s,000 229,877 897,598 320,209 s (69s,000) (17,9391 (2,400,000) (22s,000) (7,7901 (270,000) (10,6s7) (91s,000) (s4,36s) (200,000) (8,066) (213,959) (4s,32s) s 730,000 7,495 17,695,000 8,715,000 173,030 9,945,000 250,447 6,225,OOO 326,789 9,495,000 221,805 683,639 274,884 S 59,799,590 s 5 7,842,827 S 5,242,L65 21,315,000 21,201 (3,968) 5,070,000 486,102 13,485,000 101) s Sa,,736,489s 767 s (s18,00s) '227,0O7r,(870,000) (8e4) (280,000) 134,722l (69s,ooo) s 7,324,822 5,021,158 20,445,000 20,307 (3,801) 4,790,000 451,380 72,790,000 530,955 227,416 920,000 (7,194\ 224 290,000 (34,722) 710,000 t,353,243 S roz54,877,570 7,263,027 (90,216) 5 Q,7O9,8441 S s2,101,893 j_];:2,463_S 79 (eo,2t6) CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2015 A. Long-Term Debt from Governmental Activities Lease Revenue Refun Bonds 5 e tes 2004 - Originol lssue 56,705,000 On August 4, 2004, lhe Burlingame Financing Authority (Authority) issued bonds to refund and defease all ofthe Authority's outstanding Lease Revenue Bonds, Series 1995, which financed certain improvements to the City's Main Library, purchased a Reserve Facility for deposit in the reserve fund for the bonds, and paid costs of issuance of the bonds. The bonds are limited obligations of the Authority payable solely from revenues, consisting primarily of base rental payments to be paid by the City and from amounts on deposit in certain funds and accounts held under the trust agreement. A premium of S197,330 was paid and will be amortized over the life of the bonds. lnterest on the bonds is payable semiannually on June l and December 1, commencing on December 1, 2004. Principal is due annually on December 1, commencing December 1, 2005. During fiscal yeat 2074-75, principal and interest payments totaled 5695,000 and 553,875, respectively. The bonds mature on December 1,2015, and the underlying serial and term bonds carry an interest rate that varies from 2.5% to 5.0%. Governmental Activities Year Ending June 30 Principal lnterest Total 2076 s 730,000 s 18,2s0 s 748,2sO 730,000 7,495 18,2s0 748,250 1,49sPlus unamortized premium s 731,49s s 18,2s0 5 749,74s Pension Obliqotion Bonds, 2006 Series A Bonds - O riginol lssue 5i2,975,000 ln September 2006, the City issued S32,975,000 in taxable pension obligation bonds. The City is obligated to make payments to the California Public Employees' Retirement System (CaIPERS) as a result of retirement benefits accruing to members of CaIPERS. The City's statutory obligation includes, among others, the requirement to amortize the unfunded accrued actuarial liability (UAAL) and to make contributions with respect to such retirement benefits. The proceeds of the bonds were used to provide funds to allow the City to refund its current UAAL with respect to retirement benefits accruing to members of CaIPERS and to prepay a portion of its contribution to CaIPERS for the fiscal year ended June 30, 2007. The obligation of the City to make payments with respect to the bond is an absolute and unconditional obligation of the city, and payment of principal and of interest is not limited to any special source of funds. Principal on the bonds is payable annually on June 1. lnterest on the bonds is payable semi-annually June 1 and December 1. During fiscal year 2014-15, the City made principal and interest payments totaling S2,400,000 and S1,101,345, respectively. The bonds mature on June 1, 2036, and the underlying serial and term bonds carry an interest rate that varies from 5.2% lo 5.5o/o. 80 NOTE 5 - LONG-TERM DEBT [Continued) CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continuedl JUNE 30, 2015 NOTE 5 - LONG-TER DEBT (Continuedl A. Long-Term Debt from Governmental Activities (Continued) Pension Obliqotion Bo s.2006 Series A Bonds - Originol lssue $32,975,00O (Continued) Governmental Activities Year Ending June 30 Principal lnterest Total 2076 2017 2078 2079 2020 2027-2025 2026-2030 2031-2035 2036 2,645,000 2,905,000 3,175,000 460,000 505,000 3,335,000 1,68s,000 2,39s,000 590,000 972,O57 829,O42 670,225 496,648 47 7,500 1,883,821 L,t2L,024 581,190 32,750 3,677,057 3,734,042 3,845,225 956,648 976,500 5,278,82r 2,806,O24 2,916,790 622,750 s ss l___y,6rr999_ l_____zp$z!9_s 24,7s3,2s6 ln 2010, the Authority issued 58,205,000 of Lease Revenue Refunding Bonds, Series 2010 to refund and defease all of the Authority's outstanding Lease Revenue Bonds, Series 2001, which financed certain improvements to the City's Corporation Yard and paid the costs of issuance of the bonds. The bonds are limited obligations of the Authority payable solely from revenues, consisting primarily of base rental payments to be made by the City, and amounts on deposit in certain funds and accounts on deposit in certain funds and accounts held under the trust agreement. A premium of S579,892 was paid and will be amortized over the life of the bonds. The transaction resulted in an economic gain of 51,L50,926 and a reduction of $2,575,952 in future debt service payments. Principal is due annually on June 1, commencing on June 1, 2007. lnterest on the bonds is payable semiannually on June 1 and December 1, commencing on December L, 201.0. During fiscal year 2014-15, the City made principal and interest payments totaling 5915,000 and 5248,775, respectively. The bonds matu re on June L, 202t, and the underlying serial and term bonds carry an interest rate that varies from 2.5o/o to 4.O%. 81 Ledse Revenue Refundinq Bonds, Series 2O7O - Originol lssue $8,205,000 CITY OF BURLINGAME, CATIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continuedl JUNE 30, 2015 NOTE 5 - LONG-TERM DEBT (Continued) A. Long-Term Debt from Governmental Activities (Continued) Leose Revenue Refundina Bonds, Series 2010 - Original lssue $8,205,000 (Continued) Year Ending June 30 Principal lnterest Total 2076 2077 2018 2019 2020 2021 ss 2r2,715 773,915 744,875 7L4,275 82,775 39 375 6,225,000 767 450 6,992,4sO 326 189 326,789 S 6,ss1,189 5 767,4sO S 7,318,639 9s5,000 990,000 1,020,000 1,050,000 1,085,000 1,125,000 s t,L67,775 L,L63,975 7,L64,875 L,L64,215 7,L67,715 7,164,375 Plus unamortized premium Storm Droinooe Revenue Bonds, Series 2O1O - Originol lssue $9,805,000 Se ries 2070A- L Tax-Exem pt 52, 635,000 Series 20704-2 Toxoble - Build Americo Bonds 57,t 7o,ooo The Authority issued Storm Drainage Revenue Bonds, Series 2010 to provide funds to the City to finance ceftain improvements to the City's Storm Drainage System and fund a reserve account for the bonds. The bonds are llmited obligations of the Authority payable solely from revenues generally consisting of installment payments to be made by the City and from amounts on deposit in certain funds and accounts held under the trust agreement. The installment payments are special obligations of the City under the 2010 lnstallment Sale Agreement and are separately secured by a pledge of the system revenues of the Storm Drainage System. System revenues are required to be at least equal to 110% of the maximum annual debt service for all outstanding installment payments and all outstanding parity obligations during each fiscal year. The system revenues consist primarily of Storm Drainage Fees approved by a majority of the parcel owners in the City voting at a special election May 5, 2009. The bonds include 52,635,000 in tax-exempt bonds and 57,170,000 in taxable Build America Bonds under the American Recovery and Reinvestment Act of 2009 (Recovery Act). Pursuant to the Recovery Act, the City expects to receive a cash subsidy payment from the United States Treasury equal to 35% of the interest payable on the Series 20104-2 bonds on or about each interest payment date. The Refundable Credits received by the City constitute system revenues and are pledged to the payment of installment payments under the lnstallment Sale Agreement. The tax-exempt series was issued at a premium of 52L0,326, which will be amortized over the life of the bonds. Principal is due annually on July 1, commencing July 1, 2011. lnterest on the bonds is payable semiannually on January l and July 1, commencing on.,anuary 1, 2011. During fiscal year 2014-15, the City made principal and interest payments on the tax-exempt series totaling 5225,000 and 574,575, respectively. Principal and interest payments on the taxable series totaled S0 and 5479,545, respectively, net ofthe Build America Bonds interest subsidy. The bonds mature on July 1, 2038, and the underlying serial and term bonds carry interest rates which vary from 3.0%to 6.8%. CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continuedl JUNE 30, 2015 NOTE5-IONG-TERMDEBT lContinued) A. Long-Term Debt from Governmental Activities (Continued) Storm Droinoae Revenue Bonds, Series 2010 - Orig i nol lss ue 59, 805,000 (Co ntin ued ) Storm Drainage - Series 2010A -1- Tax Exempt Governmental Year Ending lune 30 Principal Total 2076 2077 2078 2079 2020 2027-2022 s 230,000 240,000 250,000 26s,000 560,000 67,825 56,325 46,72s 34,225 20,97 5 9,9't5 67,825 286,325 286,72s 284,225 285,975 569,975 s s Plus unamortized premium 1,545,000 173,030 1,781,050 173,030 s 1,718,030 s 236,0s0 s 1,9s4,080 Storm Draina e - Series 20108 Taxable - Build America Bonds Year Ending lune 30 Governmental lnterestPrincipal Subsidy Total 2076 2077 2078 2079 2020 2027-2025 2026-2030 2031-203s 2036-2039 (166,336) (166,336) (166,336) (166,336) (166,336) 1792,9901 (614,008) 137 7,777|, (80,s39) 308,909 308,909 308,909 308,909 308,909 2,397,695 2,9ss,301 2,939,377 925,000 1,815,000 2,2s0,000 2,180,000 $ 47s,24s 475,245 475,245 415,245 415,245 2,265,685 1,754,309 1,060,488 230,772 2 573 s s s 7,170,000 s 7,686,819 s (2,690,388)5 r2,L66,437 83 lnterest 236,050 s CIW OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2015 NOTE 5 - LONG-TERM DEBT (Continued) A. Lont-Term Debt from 6oyernmental Activities (Continued) Moster Equipment Lease Purchose Aqreement, Februory 2011- Pri'ncipdl 51,500,000 ln February 2011, the City (Lessee) entered into a lease purchase agreement with Holman Capital in the amount of S1.5 million, as authorized by a resolution of the City Council, for replacement of existing technology infrastructure that had exceeded its useful life. The agreement provides for placement of funds in escrow with a Trustee, and project expenditures are submitted to the Trustee for reimbursement to the City. The Clty has accounted for the lease purchase agreement as a capital lease, which includes an option to purchase the equipment prior to the end of the lease term. The agreement includes a provision which requires transfer of ownership of the equipment to the City at the end of the lease term, and a purchase option during the term of the lease. The lease purchase agreement requires bi-annual rental payments to the lessor during the lease term beginning February 24, 2011, at an interest rate of 3.2%. Principal and interest payments are payable on September 1 and March L. During fiscal year 2O14-L5, the City made principal and interest payments totaling S213,959 and 526,587, respectively. Governmental Activities Year Ending June 30 Principal lnterest Total 2076 2077 2078 s s s220,773 227 ,805 19,873 L2,847 5,585 240,646 240,646 240,64623s061 s 683,639 s 38,299 s 721,938 Colifornio Fnerqv Commission. LED Streetlioht Turnkev, 2012 - Principol 5405,i00 ln May 2012, the City received a loan from the California Energy Commission to finance an energy efficiency initiative to retrofit City maintained streetlights. The interest rate on the loan is 3.00%, which was below-market at the time of the loan. This interest rate was made possible through stimulus funds made available to the California Energy Commission via the Recovery Act. Principal and interest are payable in semi-annual installments in December and June, commencing December 2012 and ending in December 2020. During fiscal year 2014-L5, the City made principal and interest payments totaling s45,325 and s9,257, respectively. 84 CITY OF BURTINGAME, CATIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2015 NOTE 5 - LONG-TERM DEBT (Continued) A. Lont-Term Debt from Governmental Activities (Continued) Cdlifornid Enerov Commission, LED Steetliqht Turnkev, 2072 - Principol 5405,300 (Continued) Governmental Activities Year Ending lune 30 Principal lnterest Total 2076 2077 2018 2019 2020 2027 s s s s4,s9s 54,594 54,594 54,594 54,595 27,298 s 300,270 46,67 4 48,105 49,5s9 57,057 52,596 26,893 7,927 6,489 5,035 3,537 405 s 2s,386 Leose Revenue Bonds, Series 2012 - Originol lssue 510,030,000 ln December 2012, the Authority issued the Lease Revenue Bonds, Series 2012 to finance certain improvements to Downtown Burlingame Avenue in accordance with the City's Downtown Burlingame Avenue Streetscape Project and to pay the costs of issuance of the bonds. The bonds are limited obligations of the Authority payable solely from revenues, consisting primarily of base rental payments to be made by the City, pursuant to a facilities sublease dated October 2, 2012. The bonds were issued at a premium of 5237,936, which will be amortized over the life of the bonds. Principal and interest are due annually on June 1, commencing on June L, 2013. During fiscal year 2014-15, the City made principal and interest payments totaling S200,000 and $349,888, respectively. The bonds mature on June 1,2042, and the underlying serial and term bonds carry an interest rate that varies from 2.0o to 5.O%. Year Ending June 30 Principal lnterest Total 2076 2071 2018 2079 2020 2027-202s 2026-2030 2037-2035 2036-2040 2047-2042 s s 5210,000 215,000 225,OOO 235,000 245,000 1,375,000 1,575,000 1,955,000 2,315,000 1,045,000 341,888 333,488 324,888 31s,888 306,488 1,369,888 1,069,s13 7q? 4?1 431,725 55,t22 551,888 548,488 549,888 550,888 551,488 2,7 44,888 2,'144,573 2,748,437 2,7 46,725 7,700,722 9,495,000 227,805 5,342,379 74,837 ,3L9 22r,805 _t__949.q9!_ l____81?.319_ Plus: Unamortized premium 85 s 15,059,124 _s n4,884_ Governmental Activities CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANcIAL STATEMENTS (Continued) JUNE 30, 2015 NOTE5-LONG.TERMD EBT (continued) A. Lont-Term Debt from Governmental Activities (Continued) Storm Dro Revenue Bonds. Series 2012 - Originol lssue $70,615,000 ln December 2012, the Authority issued Storm Drainage Revenue Bonds, Series 2012 to provide funds to the City to finance certain improvements to the City's Storm Drainage System and fund a reserve account for the bonds. The bonds are limited obligations of the Authority payable solely from revenues generally consisting of installment payments to be made by the City and from amounts on deposit in certain funds and accounts held under the trust agreement. The installment payments are special obligations of the City under the 2012 lnstallment Sale Agreement and are separately secured by a pledge of the system revenues of the Storm Drainage System System revenues are required to be at least equal to 110% of the maximum annual debt service for all outstanding installment payments and all outstanding parity obligations during each fiscal year. The system revenues consist primarily of Storm Drainage Fees approved by a majority of the parcel owners in the City voting at a special election May 5, 2009. Principal is due annually on July 1, commencing July 1, 2013. lnterest on bonds is payable semiannually on January 1 and July 1, commencing on July 1, 2013. During fiscal year 2014-15, the City made principal and interest payments totaling 5270,000 and 5358,344, respectively, which represent prepaid amounts due on July 1, 2015. The bonds mature on July L, 2038, and the underlying serial and term bonds carry interest rates which vary from 2.0% lo 5-O%. Governmental Activities Principal Total 2016 2077 20L8 2079 2020 202L-2025 2026-2030 2031-2035 2036-2039 5 773,172 340,7 44 329,344 3L7,544 305,344 7,295,O94 922,7 66 577,LO6 152,831 s 773,772 620,7 44 619,344 677,544 615,344 3,085,094 3,087,?66 3,082,106 2,457,431, S 280,000 290,000 300,000 310,000 1,790,000 2,16s,000 2,505,000 2,305,000 Plus: Unamortized premium 9,945,000 25O!447 4,4L3,945 14,358,945 250 441 10 795,447 5 4,473,945 86 Year Ending June 30 lnterest j____1!,6os,3e2_ CIry OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2015 NOTE 5 - LONG.TERM DEBT (Continued} B. Long-Term Debt from Business-Type Activities Stote Woter Resources Control Boord Loon,200i - Princ ipdl 51L,0i0,407 ln 2003, the City entered into an agreement with the State of California Water Resources Control Board (CWRCB) to receive financial assistance for the improvement of the wastewater treatment plant which consists of upgrading the performance of several unit processes and increasing their reliability to help the plant meet discharge requirements. The loan is due in annual installment payments at an interest of 1.5%. lnstallment payments will start August 2007 and shall be fully amortized August 2026. The City is required to maintain compliance with all provisions of the loan. During fiscal year 20L4-15, the City made principal and interest payments of 5518,005 and S196,071, respectively. Business-Type Activities Year Ending June 30 Principal lnterest Total 2076 2077 2078 2079 2020 2027-202s 2026-2027 774,O76 774,O76 774,076 774,076 714,076 3,570,380 783,727 769,847 756,247 742,295 128,001 472,760 51,825 1 428 152 s 7,324,822 8,568,912 s s30,9ss 544,229 557,835 57L,787 586,075 3,757,620 L,376,327 5 s s 87 s r,244,O90 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continuedl JUNE 30, 2015 NOTE 5 - tONG-TERM DEBT (Continued) B. Long-Term Debt from Business-Type Activities (Continuedl Woter ond Wastewoter Revenue Bonds, Series 2007 -OriginaI lssue S25,L80,000 The Authority issued Water and Wastewater Revenue Bonds, Series 2007 to provide funds to the City to finance certain improvements to the City's water system and wastewater system, to fund a reserve fund surety for the bonds, and to pay the costs of issuance of the bonds. The bonds are limited obligations of the Authority payable solely from revenues generally consisting of separate installment payments to be made by the City which are secured by a pledge of the net revenue generated from the water system and the wastewater system and from amounts on deposits in certain funds and held under the trust agreement. Net system revenues will be equal to at least 120% of the installment payments and debt service on any parity obligations during each fiscal year and such that system net revenues (excluding connection fees and money transferred from any rate stabilization fund) will be equal to at least L00% of the installment payments and debt service on other parity obligations during each fiscal year. Principal is payable annually on April 1, commencing April 1, 2008. lnterest on the bonds is payable semiannually on April L and October 1, commencing October L, 2007. The bonds mature on April L, 2031, with serial and term bonds carrying an interest rate that varies from 4.0% to 5.0%. For the current year, principal and interest paid on the Water and Wastewater Bonds, Series 2007 were 5870,000 and 5932,883, respectively. Of this amount, principal and interest payments made by the Water Enterprise Fund were 5455,000 and $487,L50. Principal and interest payments made by the Sewer Enterprise Fund were $415,000 and S445,733. Year Ending June 30 Total 2076 2077 2078 2079 2020 2027-2025 2026-2030 2037 920,000 9s0,000 1,000,000 1,0s0,000 1,085,000 6,140,000 7,575,000 r,725,O00 s 889,383 852,583 872,208 762,208 71't,583 2,875,70L r,443,388 78,484 s 1,809,383 1,802,583 7,872,208 1,8!2,208 1,802,s83 9,015,701 9,018,388 1,803,484 5 Plus unamortized premium Less unamortized discount 20,445,000 20,307 (3,801) 8,431,538 28,876,s38 20,307 (3,801) _L_?q4qr99_s 28,893,044 88 Business-Type Activities Principal lnterest l_g41r3g_ CITY OF BURLINGAME, CATIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continuedl JUNE 30, 2015 NOTE 5 - tONG-TERM DEBT (Continued) B. Long-Term Debt from Eusiness-Type Activities (Continued) Stote Woter Resources ntrol Boord Loon. 2070 - Principol 55,456,943 'ln 2010, the City entered into an agreement with CWRCB to receive financial assistance for the lnfluent Storm Water Retention Easin project at the City's wastewater treatment facility, which involves the construction of an influent storm water retention basin and associated pumping svstem, commencing in July 2011. The loan is due in annual installments payments at an interest of 2.9%, and the net revenues of the Sewer Fund are pledged for the prompt payment of debt service on the loan. lnstallment payments commenced July 2012 and shall be fully amortized in July 2031. The City is required to maintain compliance with all provisions of the loan. During fiscal year 2014- 15, the City made principal and interest payments of S221,007 and 5L52,023, respectively. Business-Activities Year Ending June 30 Principal lntere5t Total 5 227,416 234,0t7 240,797 247,780 2s4,966 7,390,723 7,603,726 822,339 _t__l!?11!!_ 5 t45,674 139,019 132,232 L25,249 118,063 475,024 261,427 37,s69 5 L,434,791 s 373,030 373,030 373,029 373,029 373,079 1,865,t47 7,865,747 8s9,908 s 6,4ss,349 Woter ond Wdstewdter Refund ino Revenue Bonds. Series 2077 - Origindl lssue 55,935,000 ln 2011, the Authority issued S5,935,000 of Water and Wastewater Refunding Revenue Bonds, Series 2011 to refund and defease all of the Authority's outstanding Water and Wastewater Revenue Bonds, Series 2003, which financed certain improvements to the city's water and wastewater system, and to pay the costs of issuance of the bonds. The bonds are a limited obligation of the Authority payable solely from revenues generally consisting of separate installment payments to be made by the City which are secured by a pledge of the net revenue generated from the water system, wastewater system, and from amounts on deposits in certain funds and held under the trust agreement. Net system revenues will be equal to at least 120% ol lhe installment payments and debt service on any parity obligations during each fiscal year, and net system revenues (excluding connection fees and money transferred from any rate stabilization fund) will be equal to at least 100% of the installment payments and debt service on other parity obligations during each fiscal year. Principal is payable annually on April 1, commencing April 1, 2012. lnterest on the bonds is payable semiannually on April 1 and October 1, commencing April 1, 2012. The bonds mature on April 1, 2028, with an interest rate that varies from 4.00 to 4.75%. A premium of 5575,800 was paid and will be amortized over the life of the bond. The refunding transaction resulted in an economic gain of 5450,734 and a reduction of 51,429,732 in future debt service payments. For the current year, principal and interest paid on the Water and Wastewater Bonds, series 2011 were 5280,000 and 5219,750, respectively. Of this amount, principal and interest payments made by the Water Enterprise Fund were 5180,000 and $139,962. Principal and interest payments made by the Sewer Enterprise Fund were S100,000 and S79,788. 89 20t6 20t7 2018 2019 2020 2027-2025 2026-2030 203L-2032 CITY OF BURTINGAME, CATIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2015 NG-TERM DEBT Continued B, Long-Term Debt from Business-Type Activities (Continued) (Continued) Woter ond Wostewoter Revenu Refundino Bonds. Series 2011 Origindl lssue 55,9i5,000 Business-e Activities TotalPrincipallnterest 2016 2077 20L8 2019 2020 2027-202s 2026-2028 s 290,000 290,000 300,000 310,000 330,000 1,900,000 1,370,000 s 274,rsL 208,351 796,757 1,87 ,7 57 712,25L 597,751 r28,445 7,705,45L 504,151 498,3s1 496,7 57 497 ,7 57 502,257 2,497,75L s 1,4 98,445 4,790,000 451,380 6,495,45L 451,380Plus: Unamortized Premium s s,241,380 s 7,7Os,4sL s 6,946,831 ln 2013, the Authority issued 514,260,000 of Water and Wastewater Revenue Refunding Bonds, Series 2013 to advance refund the Authority's outstanding Water and Wastewater Revenue Bonds, Series 2004, which financed certain improvements to the City's water and wastewater system, and to pay the costs of issuance of the bonds. The bonds are a limited obligation of the Authority payable solely from revenues generally consisting of separate installment payments to be made by the city which are secured by a pledge of the net revenue generated from the water system, wastewater system, and from amounts on deposit in certain funds and held under the trust agreement. Net system revenues will be equal to at least Lzo% of the installment payments and debt service on any parity obligations during each fiscal year, and net system revenues (excluding connection fees and money transferred from any rate stabilization fund) will be equal to at least 100% of the installment payments and debt service on other parity obligations during each fiscal year. Principal is payable annually on April 1, commencing April 1, 2013. lnterest on the bonds is payable semi-annually on April 1 and October 1, commencing October 1, 2013. During fiscal year 2014-15, the City made principal and interest payments of 5695,000 and 5507,150, respectively. Of this amount, principal and interest payments made by the Water Enterprise Fund were 5460,000 and $337,038. Principal and interest payments made by the Sewer Enterprise Fund were 5235,000 and S170,112. The bonds mature on AWil L, 2029, with underlying serial and term bonds carrying an interest rate that varies frcm 2.00% lo 5.OO%. The bond was issued a premium of S1,533,676 which will be amortized over the life of the bond. The refunding transaction resulted in an economic eain of $584,903 (5389,501 for the Water Enterprise Fund and 5195,402 for the sewer Enterprise Fu nd). 90 Year Ending June 30 water ond wastewdter Revenue Refundina Bonds, Series 2073 - Originol lssue 514,260,000 5 - IONG.TERM DEBT B. Long-Term Debt from Business-Type Activities (Continued) woter ond Wds tewoter Refundina Revenue B (Continued) Business-e Activities Year Ending June 30 lnterest ds. Series 2013 originol lssue 5L4,260,000 Principal Total 2016 2017 2018 2019 2020 2027-2025 2026-2029 2076 2017 20ra 2020 2027-2025 2025-2030 2031-203s 2036-2040 204r-2042 Less: premiums/discounts Plus unamortized premium s 710,000 73s,000 755,000 785,000 815,000 4,575,000 4,415,000 12,790,OO0 7,263,027 5 493,2s1 47 7,957 449,907 419,707 388,301 7,438,376 403,994 4,065,475 5 7,203,2s7 !,206,9s7 7,204,90r 7,204,70t 1,203,301 6,O73,376 4,878,994 16,855,475 7,263,O27 l---1!.49,so'z-j____ 14,0s3,o2?_ j___!!6s,47 s C. Future Debt Requirements The future outstanding debt of the City, net of amortized costs as of June 30, 20L5, for governmental activities is as follows: Governmental Activities Year Endin iune 30 Principal Subsidies Tota I s 4,807,447 4,595,970 5,234,620 2,346,057 2,462,596 9,136,893 7,340,000 9,105,000 7,390,000 1,045,000 972,966 2,288,404 2,228,148 2,001,927 1,757,362 7,664,325 6,a64,247 4,467,671 3,01.2,27s 847,478 55,722 s 6,929,s1s 6,957,722 7,010,205 3,937,083 3,960,58s L5,204,744 11,593,603 77,745,044 8,1s6,879 r,700,722 972,966 s s (166,336) (166,336) (166,336) (166,336) (165,335) 1792,990) (614,008) 137 7,77 7l (80,s39) j___2si8616?_ l_g.q99r9q_ j____ll_,632868_5 s4,736,489 97 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2015 lnterest CIW OF BURTINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAI- STATEMENTS (Continuedl JUNE 30, 2015 NOTE 5-LONG-TERM D EBT (Continued) C. Future Debt Requirements (Continued) The future outstanding debt of the City, net of amortized costs as of June 30,20L5, for business- type activities is as follows: Business-Ty pe Activities Year Ending June 30 Principal lnterest Total 2016 20L7 20L8 2019 2020 2027-2025 2026-2030 2031,-2032 5 2,678,371 2,753,240 2,8s3,632 2,964,56L 3,O7r,O4t t7,762,743 16,340,053 2,547,339 4,603,890 4,594,990 4,600,965 4,60r,765 4,595,240 22,962,355 78,629,126 2,663 392 s L,925,579 7,84L,750 7,741,333 t,637,204 r,524,799 5,799,672 2,289,O73 116 053 s s0,370,980 16,880,743 67,25r,723 Less: premiums/discounts, net L,730,973 7,130 913 _t____!?r91493_s 16,880,743 s 68,982,636 D. Legal Debt Limit and Debt Margin As of June 30, the City's debt limit was 5316,704,685. california Government Code, Section 43605 sets the debt limit at 15% of assessed value. The legal requirement was enacted when assessed valuations were based on 25% of full market value. This has since changed to 100% of full market value. Thus, the limit shown is 3.75% (one-fourth the limit of 15%). The total amount of debt applicable to the debt limit, or outstanding general obligation debt, was S17,695,000. The resulting legal debt margin was S299,009,685. E, Arbitrage Rebate Liability Under U.S. Treasury Department regulations, all governmental tax-exempt debt issued after August 31, 1986, is subject to arbitrage rebate requirements. The requirements stipulate, in Seneral, that the excess of earnings from the investment of tax-exempt bond proceeds over related interest expenditures on the bonds must be remitted to the federal government on every fifth anniversary of each bond issue. The city has evaluated each outstanding debt obligation that is subject to arbitrage rebate requirements and has determined that there is no arbitrage rebate liability as of June 30,2015. 92 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 201s NOTE 5 - IONG-TE DEBT (Continuedl F. Credit Rating As of June 30, 2015, the City carried underlying ratings of AA+ for the Water and Sewer Funds, A+ for the Storm Drainage Fund, and AA+ as the City's institutional credit rating for general obligation debt. These ratings were affirmed by Standard & Poot's. G, Revenue Pledge The City has pledged future revenues to debt service on previously issued revenue bonds to finance the capital programs related to the Water and Sewer Funds or defease previously issued revenue bonds: (1) Water and wastewater Revenue Bonds, Series 2007; (2) Water and Wastewater Refunding Revenue Bonds, Series 2011; (3) Water and Wastewater Refunding Revenue Bonds, Series 2013. Debt service on certain bonds are payable solely through the net revenue of the activities of the Water and Sewer Funds. Under the provisions of GASB Statement No. 48, the City's net revenue for the year ended June 30, 2015, and net amounts available to pay debt service on the revenue bonds are as follows: Water Fund Sewer Fund Pledged revenue required for future principal and interest Principal and interest paid during the year Net revenue, excluding depreciation and amortization Percentage of revenue pledged Term of commitment s 30,4L4,735 2,O59,r49 5,977,407 3480% 2037 s 36,837,s88 2,532,738 8,607,374 29.43./" 2031 H. Debt Service Coverate Under the terms of the City's lndenture, the water and Sewer Funds are required to collect sufficient net revenues each fiscal year, which may include any other unappropriated enterprise funds available for expenditure on debt service. The lndenture requires that net revenues are, at minimum, equal to 1.20 times annual debt service for the applicable fiscal year. For the year ended June 30, 2015, the Water and Sewer Funds had sufficient net revenues to satisfy the requirements ofthe lndenture. U nder the terms of the City's lndenture, the Storm Drainage Fu nd is required to collect sufficient net revenues each fiscal year, which may include any other unappropriated funds available for expenditure on debt service. The lndenture requires that net revenues are, at minimum, equal to 1.10 times annual debt service for the applicable fiscal year. For the year ended June 30, 2015, the Storm Drainage Fund had sufficient net revenues to satisfy the requirements of the lndenture. Other obligations relating to governmental activities are paid solely from available revenue of the City, such as the Lease Revenue Bonds Series 201"0 and the Pension ObliBation Bonds Series 2006, which are subordinate to previously issued parity debt relating to the Water and Sewer Funds. 93 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (continued) JUNE 30, 2015 NOTE 5-LONG.TERM DEBT (continued) H. Debt Service Coverage {Continued} The following table summarizes debt service coverage levels for the Water Fund for the fiscal year ending June 30, 2015: Water Fund 2015 Gross operating revenue Less: Operating expenses, except depreciation and amortization Net revenue Debt Service Water Revenue Bond, Series 2007 Water Refunding Bonds, Series 2011 Water Refunding Bonds, Series 2013 Parity Debt Service Lease Revenue Bonds, Series 2010 Pension Obligation Bonds, 2006 Total Debt Service Parity Debt Service CoveraBe Total Debt Service Coverage s 75,425,234 (9,s07,833) 5,977,40\ 942,750 379,96r 797,038 2,0s9,r49 384,046 437,568 l_:Esq4q_ 2.87 2.05 The following table summarizes debt service coverage levels for the Sewer Fund for the fiscal year ending June 30, 2015: 2015 Gross operating revenue Less: OperatinB expenses, except depreciation and amortization Net revenue Debt Service State Water Resource Control Board Loan, 2003 Wastewater Revenue Bond, Series 2007 State Water Resource Control Board Loan, 2010 Wastewater Refunding Bonds, Series 2011 Wastewater Refunding Bonds, Series 2013 Parity Debt Service Lease Revenue Eonds, Series 2010 Pension Obligation Bonds, Series 2006 Total Debt Service Parity Debt Service Coverage Total Debt Service Coverage $15,679,345 17,071.,971) a,607,37 4 7 t4,O76 860,733 373,029 179,788 405,113 2,s32,139 384,046 437,668 s 3,3s4,4s3 94 3.40 2.57 Sewer Fund CIW OF BURLINGAME, CAL]FORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2015 NOTE 5 - LONG-TERM DEBT (Continuedl H. Debt Service Coverage (Continued) The following table summarizes debt service coverage levels for the Storm Drainage Fund for the fiscal year ending June 30, 2015: Storm Drainage Fund 20t5 s 2,787,940Net Revenue, Excluding Depreciation and Amortization Debt Service Storm Drain Revenue Bond, Series 2010 Storm Drain Revenue Bond, Series 2012 779,120 628,344 Parity Debt Service S 1,407,464 Parity Debt Service Coverage 1.98 NOTE 6 - OTHER LONG-TERM LIABILITIES The following table summarizes the City's government-wide other long-term liabilities and the short- term portion as ofJune 30,2015: Beginning Balance )uly 1,2014 Additions Red uctions Ending Balance June 30, 2015 Amounts Due Within One Year Governmental Activities: Self-lnsurance and Contingent Liabilities Compensated Absences Total Governmental Activities Business-Type Activities: Compensated Absences Landfill Post-Closure Care Costs 5 g,zo+,att S 2,202,876 _s (3,018,1611_s 5 292,s76 S 4s2,734 S (461,s22) S S 7,89s,ooo S 7,309,871 911,838 s 1,297,038 (1,791,838) s 11,236,4231 7,015,000 s L,364,486 1,639,000 180,372 283,788 s 3,082,927 44,703 202,3943,734,984 47,024 (99,081) Total Business-Type Activities 5 3,427,s6o S 499,7s8 S (s60,603) S 3,366,71s 5 247,097 A. Self-tnsurance and Contingent Liabilities Effective July 1, L976, and December 2, 1976, respectively, the City implemented a self-insurance program for workers' compensation and general liability. The City is a member of the Associated Bay Area Governments Pooled Liability Assurance Network Corporation (ABAG PLAN), a public-entity risk pool. ABAG PLAN provides liability insurance coverage, claims management, risk management services, and legal defense to its participating members. ABAG PLAN is governed by a board of directors, which comprises officials appointed by each participating member. Premiums paid to ABAG PLAN are subject to possible refund based on the results of actuarial studies and approval by ABAG PLAN's board of directors. Premiums are assessed to the participants based on their individual loss experience. General liability insurance coverage has been purchased by ABAG PLAN for losses exceeding 5250,000 up to a maximum of 510,000,000. 95 Description _5 1,819,3?2_ CITY OF BURTINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2015 NOTE 5 - OTHER LONG-TERM TIABILITI ES (Continuedl A. Self-lnsuranceand Contintent Liabilities(Continued) The workers' compensation program is administered by a third-party administrator (TPA), Athens Administrators. The TPA sets reserve levels for reported claims. Excess workers' compensation insurance has been purchased by the city for losses exceeding 5500,000 up to the maximum statutory limit. The ABAG PLAN claim administrators set the reserve levels for known liability claims. The City's liabilities are reported when it is both probable that a loss has occurred and the amount of the loss can be reasonably estimated. The claims and litigation liabilities are reported in the governmental activities of the government-wide financial statements and in the internal service fund and include an amount for claims that have been incurred but not reported. The liabilities are re-evaluated annually using the results of actuarial studies. The estimated liability for claims and litigation is calculated considering recent claim settlement trends, amounts for claims incurred but not reported, current settlements, frequency of claims, past experience, and economic factors. Changes in the balances ofthe City's claims liabilities were as follows Outstanding Liabilities Balance July 1 Payments for Current and Prior Fiscal Years Balance June 30 2009 10 2010-11 2077-72 2072-73 2073-74 2074-75 6,344,000 6,640,000 6,640,000 7,077,OOO 6,77 4,OO0 7,895,000 2,7 76,139 2,s24,265 7,576,265 1,59s,000 2,873,959 911,838 12,420,739|, s 12,s24,26s], (1,08s,000) (1,892,000) (1,692,9s9) (1,791,838) 6,640,000 6,640,000 7,07 7,265 6,77 4,000 7,89s,000 7,015,000 ss There have been no significant reductions in any insurance coverage, nor have there been any insurance related settlements that exceeded insurance coverage during the past six fiscal years. 96 Current Year Claims and Changes in Estimates ) CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAt STATEMENTS (continued) JUNE 30, 2015 NOTE 6 - OTHER LONG-LIABILITIES (Continued) A. self-lnsurance and Contingent Liabilities (Continued) ln August 2015, an actuarial study was conducted by the firm of Bickmore Risk Services to identify the estimated liability for the City's Self-lnsured General Liability Program as well as determine the various funding confidence levels to cover that liability. The study estimated the expected liability for outstanding claims to be 5852,000 as of June 30, 2015. The study recommends thatthe city set aside an amount in addition to the discounted expected loss costs to be set aside as a margin for contingencies. As of June 30, 2015, the City has funded the general liability program at the 90% confidence level noted in the actuarial report or 5852,000. ln August 2015, an actuarial study was conducted and completed by the firm of Bickmore Risk Services to identify the estimated liability for the city's Self-lnsured Workers' Compensation Program as well as determine the various funding confidence levels to cover that liability as of lune 30, 2015. The study estimated that the outstanding claims at June 30, 2015, were S6,163,000. The study also recommends that an amount be set aside as a margin for contingencies. As of June 30, 2015, the City has funded the workers' compensation program at the 70% confidence level noted in the actuarial report or S6,163,000. B. CompensatedAbsences The city's compensated absences consist of accumulated vacation, compensatory time, and administrative leave for management employees. The estimated unpaid compensated absences at June 30 are recorded in the government-wide and proprietary fund financial statements. Additional information about significant accounting policies over compensated absences can be found in Note 1(J ). C. Pollution RemediationObligation Londfill Closure ond Post-Closure Costs The City closed the Burlingame Landfill located on Airport Boulevard in accordance with the California Code of Regulations under the jurisdiction of the California lntegrated Waste Management Board in 1987. The landfill had been filled to capacity and has been reconstructed as a multi-use recreational facility. State and federal laws and regulations require that the City perform certain maintenance and monitoring functions at the landfill site. These same regulations require the City to make annual contributions and/or provide an alternative funding mechanism to finance closure and post-closure costs. The City has collected a surcharge on solid waste collection fees in order to cover these costs. The City was also required by the Bay Area Air Quality Management Board to install a gas collection system. 97 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAT STATEMENTS (Continued) JUNE 30, 2015 NOTE 5 - OTHER LONG-TERM TIABILITIES lCon ti nuedl C. PollutionRemediationObligation(Continued) Lo ndfi I I Closu r e o n d Post-Cl osu re Co sts (Co nti n u ed ) ln 1997, the City developed a post-closure plan that met all regulatory requirements. The post- closure estimate was 53,660,000. ln 2008, the city recognized an additional liability, as required by the State, for corrective action. The corrective action cost estimate was S733,100. Consequently, the City recorded 100% of its closure and post-closure costs based upon these estimates. At June 30, 2015, the City's outstanding future post-closure and corrective action costs were estimated at S3,082,927. This estimate is based upon the original estimates for post-closure and corrective action costs as reported to the California Department of Resources Recycling and Recovery (CalRecycle) as adjusted, based on changes in the implicit price deflator for the gross national product in accordance with Title 27 of the California Code of Regulations, reduced by any permitted 15 year amortization of post-closure costs, and adjusted for incurred costs and expected costs of remediation. The City will fund ongoing post-closure costs with a combination of revenues from the surcharge and interest earnings. However, if these revenues are inadequate or additional post-closure care requirements are determined, these costs may need to be covered by additional garbage surcharges or from future tax revenue. D. Commitments and Contintent Liabilities Grdnt Prooroms The City may, from time to time, participate in Federal and State grant programs. No cost allowances were proposed as a result of the City's financial audit. As of June 30, 2075, the City has not made an allowance for expenditures which may be disallowed by the granting agencies. Any disallowance for expenditures is expected to be immaterial. Litiaation The City is subject to litigation arising in the normal course of business. ln the opinion of the City Attorney, there is one case pending in which there is at least a possibility that the plaintiff could be entitled to monetary damages. However, the City believes that its financial position would not be adversely affected due to the availability of reserves in the remote event that the plaintiff prevails. 98 CITY OF BURLINGAME, CATIFORNIA NOTES TO THE BASIC FINANCIAt STATEMENTS (Continued) JUNE 30, 2015 NOTE 7 - PENSION PLANS -COST-SHARING A. General lnformation about the Pension Plans Plon Descriptions - All qualified permanent and probationary employees are eligible to participate in the City's separate Safety (police and fire) Employee Pension Plans, cost-sharing multiple employer defined benefit pension plans administered by Ca|PERS. Benefit provisions under the Plans are established by State statute and the City resolution. CaIPERS 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 CaIPERS website. Benelits Ptovided - CaIPERS 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 California Public Employees' Retirement Law. The Plans' provisions and benefits in effect at June 30, 2015, are summarized as follows: Safety - Police Hire Date Benefit Formula Benefit Vesting Schedule Benefit Payments Retirement Age Monthly Benefits, as a Percentage of Eligible Compensation Required Employee Contribution Rates Required Employer Contribution Rates Hire Date Benefit Formula Benef it Vesting Schedule Benefit Payments Retirement Age Monthly Benefits, as a Percentage of Eligible Compensation Required Employee Contribution Rates Required EmployerContribution Rates 3.O./" @ 50 5 Years Service Monthly for life 50 3.00'/. 9.O0% 3.0% @ 50 5 Years Service Monthly for life 50 3.O0% 9.00% 29.6% Safety - PEPRA N/A N/A N/A 2.7vo @ s7 5 Years Service Monthly for life 57 2.70% 72.25vo o.0% 99 Prior to On or after January 1,2013 January 1, 2013 Prior to On or after January 1,2013 .lanuary 1,2013 CITY OF BURTINGAME, CATIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2015 NOTE 7 - PENSION PLANS - COST-SHARING Contin uedl A. General lnformation about the Pension Plans (Continued) 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 CaIPERS. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The City is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. For the year ended June 30, 2015, the contributions recognized as part of pension expense for each Plan were as follows: Safety - Police Safety - PEPRA Contributions - Employer Contributions - Employee (Paid by Employer) s 1,918,542 s 9 B. Pension liabilities, Pension Expenses, and Deferred Outflows/lnflows of Resources Related to Pensions As of June 30, 2015, the City reported net pension liabilities for its proportionate shares of the net pension liability of each Plan as follows: Safety Safety - PEPRA Total Net Pension Liability 15,465,681 The City's net pension liability for each Plan is measured as the proportionate share of the net pension liability. The net pension liability of each of the Plans is measured as of June 30, 2014, and the total pension liability for each Plan used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2013, rolled forward to June 30, 2014, using standard update procedures. The City's proportion of the net pension liability was based on a projection of City's long-term share of contributions to the pension plans relative to the projected contributions of all participating employers, actuarially determined. s 100 Proportionate Share of Net Pension Liability 5 15,465,610 7r CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30,2015 NoTE 7 - PENSION PLANS - COST-SHARING (Continued) B. Pension liabilities, Pension Expenses, and Deferred Outflows/lnflows of Resources Related to Pensions (Continued) The City's proportionate share of the net pension liability for each Plan as of June 30, 201.3 and 2014, was as follows: Safety - Police Safety - PEPRA Proportion - June 30, 2013 Proportion - June 30, 2014 change - lncrease (Decrease) Penslon Contributions Subsequent to Measurement Date Differences between Actua! and Expected Experience Changes in Assumptions Change in Employer's Proportion and Differences between the Employer's Contributions and the Employer's Proportionate Share of Contributions Net Differences between Projected and Actual Earnings on Plan lnvestments Adjustments due to Differences in Proportions Total Deferred Outflows of Resources Deferred lnflows of Resources S 20,479,026 15,465,610 s 94 77 s s,013,416 s 23 For the year ended June 30, 2015, the City recognized a pension expense of S1,312,251. At June 30, 2015, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: S 1,288,226 S (4,669,747]. 262,602 s 1,ss0,828 s 14 ,669 ,7 47], 5t,288,226 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: Pension Expense to be Recognized 2015 2076 2077 2018 2079 2020 Thereafter s 1,073,66s 7,O73,665 7,O92,409 7,767,400 sTotal 101 4,407 ,739 Year Ended June 30 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAI STATEMENTS (Continuedl .tuNE 30, 2015 N PTANS - COST-SHARING Continued B. Pension Liabilities, Pension Expenses, and Deferred Outflows/lnflows of Resources Related to Pensions (Continued) Actudriol Assumptions - The total pension liabilities in the June 30, 2013 actuarial valuations were determined using the following actuarial assumptions: Safety Valuation Date Measurement Date Actuarial Cost Method Actuarial Assumptions Discount Rate lnflation Payroll Growth June 30, 2013 lune 30, 2014 Entry Age Normal Mortality 7s% 2.75% 3.OO% Varies by Entry Age and Service {') 7 .SYo l2l Derived using CaIPERS' membership data for allfunds13) {1) Depending on age, service, and type of employment. {') Net of pension plan investment expenses, including inflation. 13)The mortality table used was developed based on CalPERS' specific data. The table includes 20 years of mortality improvements using Society of Actuaries Scale BB. The underlying mortality assumptions and 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. Further details ofthe Experience Study can found onthe CaIPERS website. Discount Rate - The discount rate used to measure the total pension liability was 7.50% for each Plan. To determine whetherthe municipal bond rate should be used in the calculation of a discount rate for each plan, CaIPERS 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% discount rate is adequate and the use of the municipal bond rate calculation is not necessary. The long term expected discount rate of 7.5O% will beappliedtoall plansinthe Public Employees Retirement Fund (PERF). The stress test results are presented in a detailed report that can be obtained from the CaIPERS website. Projected 5alary lncrease (1) lnvestment Rate of Return(2) 702 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2015 NOTE 7 - PENSION PLANS - COST-SHARING (Continued) B. Pension Liabilities, Pension Expenses, and Deferred Outflows/lnflows of Resources Related to Pensions (Continued) According to Paragraph 30 of GASB Statement No. 68, the long-term discount rate should be determined without reduction for pension plan administrative expense. The 7.50ok 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%. Using this lower discount rate has resulted in a slightly higher Total Pension Liability and Net Pension Liability. CaIPERS checked the materiality threshold for the difference in calculation and did not find it to be a material difference. CaIPERS 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, CaIPERS expects to continue using a discount rate net of administrative expenses for GASB Statements No. 67 and No. 58 calculations through at least the 2017-18 fiscal year. CaIPERS will continue to check the materiality of the difference in calculation until such time as it has changed its 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. ln determining the long-term expected rate of return, CaIPERS took into account both short-term and long-term market return expectations as well as the expected pension fund cash flows. Using historical returns of all the funds' asset classes, expected compound returns were calculated over the short-term (first 10 years) and the long-term (11-60 years) using a building-block approach. Using the expected nominal returns for both short-term and long-term, the present value of benefits was calculated for each fund. The expected rate of return was set by calculating the single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated using both short-term and long-term returns. The expected rate of return was then set equivalent to the single equivalent rate calculated above and rounded down to the nearest one quarter of one percent. 103 CITY OF BURLIN6AME, CATIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2015 NOrE 7 - PENSTON PTANS - B, Pension Liabilities, Pension Expenses, and Deferred Outflows/lnflows of Resources Related to Pensions (Continued) The table below reflects the long-term expected real rate of return by asset class. The rate of return was calculated using the capital market assumptions applied to determine the discount rate and asset allocation. These rates of return are net of administrative expenses. Asset Class New Strategic Allocation Real Return Yearsl-10(") Real Return Years 11+(b) Global Equity Global Fixed lncome lnflation Sensitive Private Equity Real Estate lnfrastructure and Forestland Liquidity 5.25% 0.99 0.45 6.83 4.50 4.50 (0.ss) 5.7L% 2.43 3.36 6.9s 5.13 s.09 (1.0s) Total (") An expected inflation of 2.5% used for this period. (b) An expected inflation of 3.0% used for this period. Sensitivity of the Proportiondte Shdrc of the Net Pension Lidbility to Chdnges in the Discount Rate - The following presents the city's proportionate share of the net pension liability for each Plan, calculated using the discount rate for each Plan, as well as what the City's proportionate share of the net pension liability would be if it were calculated using a discount rate that is one percentage point lower (6.5%) or one percentage point higher (8.5%)than the current rate: Safety - Police Safety - PEPRA 5 26,67437r S 722 Current Discount Rate Net Pension Liability s 1s,46s,610 s 1t 1% lncrease Net Pension Liability s 6,279,s61 s 29 Pension Pldn Fiducidry Net Position - Detailed information about each pension plan's fiduciary net position is available in the separately issued CaIPERS financial reports. 104 41 .O% 79.0% 6.0% L2.Ov. tt.0% 3.Ov. 2.0v. LOO.Ov. L% Decrease Net Pension Liability CIW OF BURTINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS {Continued} JUNE 30, 2015 NOTE 7 - PENSION PLANS - COST-SHARING (Continued) C, Payable to the Pension Plan At June 30, 2015, the City reported a payable of 563,865 for the outstandinB amount of contributions to the pension plan required for the year ended June 30, 2015. NOTE 8 - PENSION PLAN S - MULTIPTE EMPTOYER A. General lnformation about the Pension Plans Pldn Descriptions - All qualified permanent and probationary employees are eligible to participate in the City's separate Miscellaneous Plans, agent multiple employer defined benefit pension plans administered by CaIPERS, 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 the City resolution. CaIPERS 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 CaIPERS website. Benelits Provided - CaIPERS 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 California Public Employees' Retirement Law. Miscellaneous Benefit Formula Benefit Vesting schedule Benefit Payments Retirement Age Monthly Benefits, as a Percentage of Eligible Compensation Required Employee Contribution Rates Required Employer Contribution Rates 2s%@55 5 years service Monthly for life 55 2.50.,4 8.00./" 2.s%@ss 5 years service Monthly for life 55 2.50./" a.oo% 79.9L% 105 The Plans' provisions and benefits in effect at June 30, 2015, are summarized as follows: Prior to On or after January 1,2013 January 1, 2013Hire Date CIW OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAt STATEMENTS (Continued) JUNE 30, 2015 NOTES-PENSIONPLANS-M LTIPLE EMPLOYER lContinuedl A. General lnformation about the Pension Plans (Continued) Hire Date Benefit Formula Benefit Vesting Schedule Benefit Payments Retirement Age Monthly Benefits, as a Percentage of Eligible Compensation Required Employee Contribution Rates Required Employer Contribution Rates Miscellaneous PEPRA Prior to lanuary 1,2013 on or after January 1, 2013 N/A N/A N/A N/A 2.O./" @ 62 5 years service Monthly for life 62 2.000/. 6.75./" Employees Covered - At June 30, 2015, the following employees were covered by the benefit terms for each Plan: Miscellaneous lnactive Employees or Beneficiaries Currently Receiving Benefits lnactive Employees Entitled to but not yet Receiving Benefits Active Employees Total 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 L 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 CaIPERS. 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. 106 356 !92 764 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2015 NOTE8-PENSIONPTA NS - MULTIPLE EMPLOYER Continued B. Net Pension Liability (continued) Actuo al Assumpt ons - The total pension liabilities in the June 30, 2013 actuarial valuations were determined using the following actuarial assumptions: Miscellaneous June 30,2013 June 30,2014 Entry Age Normal N.4ortaiity lt) 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 20 years of mortality improvements using Society of Actuaries Scale 88. The underlying mortality assumptions and 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 f997 to 2011. Further details of the Experience Study can found on the CaIPERS website. Discount Rdte - The discount rate used to measure the total pension liability was 7.50% for each Plan. To determine whetherthe municipal bond rate should be used in the calculation of a discount rate for each plan, CaIPERS 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% discount rate is adequate and the use of the municipal bond rate calculation is not necessary. The long-term expected discount rate of 7.50o/o 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 GASB Statement No. 68, the long-term discount rate should be determined without reduction for pension plan administrative expense. fhe 7.5O% 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%. Using this lower discount rate has resulted in a slightly higher Total Pension Liability and Net Pension Liability. CaIPERS checked the materiality threshold for the difference in calculation and did not find it to be a material difference. 707 7.5% 2.75% 3.OOv. Varies bY Entry Age and Service (') 7 .50/6 t2l Derived using CaIPERS' Membership {3) Data for all Funds Valuation Date Measurement Date Actuarial Cost Method Actuarial Assumptions: Discount Rate tnflation Payroll Growth Projected Salary lncrease (1) lnvestment Rate of Return(2) - PENSION PTANS - M E EMPLOYER Continu B. Net Pension Liability (Continued) CaIPERS 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, CaIPERS expects to continue using a discount rate net of administrative expenses for GASB Statements No. 67 and No. 58 calculations through at least the 2017-18 fiscal year. CaIPERS will continue to check the materiality ofthe difference in calculation until such time as it has changed its 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. ln determining the long-term expected rate of return, CaIPERS took into account both short-term and long-term market return expectations as well as the expected pension fund cash flows. Using historical returns of all the funds' asset classes, expected compound returns were calculated over the short-term (first 10 years) and the long-term (11-50 years) using a building-block approach. Using the expected nominal returns for both short-term and long-term, the present value of benefits was catculated 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 lonB-term expected real rate of return by asset class. The rate of return was calculated using the capital market assumptions applied to determine the discount rate and asset allocation. These rates of return are net of administrative expenses. Asset Class New Strategic Allocation Real Return Years 1- 10{") Real Return Years 1.1+{b) Global Equity Global Fixed lncome lnflation Sensitive Private Equity Real Estate lnf rastructure and Forestland Liquidity Total (') An expected inflation of 2.5% used for this period. (b) An expected inflation of 3.0% used for this period. 47.O% t9.o% 5.O% 12.oo/o 77.O% 3.O% 2.O% 0.99 0.45 6.83 4.50 4.50 (0.ss) 5.7 70/o 2.43 3.35 6.95 5.13 5.09 (1.0s) 108 LOo.0v. CITY OF BURTINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2015 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAt STATEMENTS (Continued) JUNE 30, 2015 NOTE 8 - PENSION PLANS - MULTIPLE EMPLOYER (Continued) lncrease (Decrease) Plan Fiduciary Net Position s !2r,4L9,677 s 88,004,118 s 33,41s,ss3Balance at June 30, 2013 (VO)(1) Changes in the year: Service Cost lnterest on the Total Pension Liability Differences between Actual and Expected Experience Changes in Assumptions Changes in Benefit Terms Contribution - Employer Contribution - Employee (Paid by Employer) Contribution - Employee Net lnvestment lncome ('z) Administrative Expenses Benefit Payments, lncluding Refunds of Employee Contributions Net Changes Balance at June 30, 2014 (MD)I1) Total Pension Liability 2,451,356 8,964,159 2,274,366 1,203,540 15,116,451 (6,246,453)16,246,453) 2,457,356 8,964,159 l'2,274,366\ (1,203,s40) (1s,116,4s1) 5,769,062 5 126,s88,733 72,287,904 17,118.842) 5 roo,292,o22 5 26,296,777 {1)The fiduciary net position includes receivables for employee service buybacks, deficiency reserves, fiduciary self-insurance and OPEB expense. This may differ from the plan assets reported in the funding actuarial valuation report. (') Net of adrinistrative expenses. 109 C. Changes in the Net Pension Liability The changes in the Net Pension Liability for each Plan follow: Miscellaneous Plan Net Pension Liability/(Asset) CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2015 NOTES-PENSION PLANS-M LTIPtE EMPTOYER (Continued) C. Changes in the Net Pension Liability (continued) Sensitivity ol the Net Pension Liobility to Chonges in the Discount Rote -Ihe tollowing presents the net pension liability of the City for each Plan, calcu lated 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 one percentage point lower or one percentage point higher than the current rate: Miscellaneous 1% Decrease Net Pension Liabllity s 42,428,027 Current Discount Rate Net Pension Liability s 26,296,777 1% lncrease Net Pension Liability s 72,A92,464 Pension Plon Fiduciary Net Position - Detailed information about each pension plan's fiduciary net position is available in the separately issued CaIPERS financial reports. D. Pension Expenses and Deferred Outflows/lnflows of Resources Related to Pensions For the year ended June 30, 2015, the City recognized a pension expense of $2,012,901. AtJune30, 2015, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Outflows of Resources Deferred Inflows of Resources Pension Contributions Subsequent to Measurement Date Differences between Actual and Expected Experience Changes in Assumptions Net Differences between Projected and Actual Earnings on Plan lnvestments Total 5 2,60s,476 S 16,9L7,317], s 2,60s,416 110 j______p4rr,3?l)_ CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (CONtiNUEd} JUNE 30, 2OI5 NOTE 8 - PENSION PLANS - MULTIPTE EMP LOYER (Continued) D. Pension Expenses and Deferred Outflows/lnflows of Resources Related to Pensions (Continued) 52,605,4L4 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: Year Ended lune 30 2076 2017 2018 2079 2020 Thereafter s 7,129,344 7,729,344 r,729,344 7,729,345 Total s 6,977,377 E. Payable to the Pension Plan At June 30, 2015, the City reported a payable of 5L42,490 for the outstanding amount of contributions to the pension plan required for the year ended June 30, 2015. E - POST-EMPLOYMENT HEATTHCARE P A. Plan Description The City of Burlingame Retiree Healthcare Plan (Plan) is a single-employer defined benefit healthcare plan administered by the City. The Plan provides healthcare benefits to eligible retirees and their dependents. Benefit provisions are established and may be amended through agreements and memorandums of understanding between the City, its management employees, and unions representing City employees. The Plan does not issue a financial report. The City provides certain retirees that are eligible with retiree medical benefits through the Catifornia Public Employees' Retirement System Healthcare Program (PEMHCA). The City pays retiree healthcare benefits up to a cap for eligible retirees, dependent on bargaining unit and hire date. No dental, vision, or life insurance benefits are provided. The plan is closed to new employees. Employees hired after November L,20LL, arc enrolled in a retiree health savings plan (RHS Plan) after five years of service. Upon enrollment, the City contributes 2.0% of annual base bay into the RHS Plan. After nineteen years of service, the City contributes 2.5% of annual base pay into the RHS Plan. 111 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2015 NOTE 9 - POST.EMPLOYMENT EALTHCARE PLAN (Continued} B. Funding Policy The contribution requirements of the Plan participants and the City are established and may be amended by the city. ln September 2013, the City established an irrevocable trust to prefund its unfunded actuarially accrued liability for retiree health care benefits. The California Benefit Trust Fund (CERBT), a multi- employer trust, is administered by calPERS which also invests trust fund deposits made by the City on behalf of retirees. The City pre-funds the Plan by contributing the City's ARC every year to the CERBT. During fiscal year 2014-15, the City made deposits of 52,026,518 to the trust. As of June 30, 2015, the cash balance was S9,358,499. C. Annual Other Post-Employment Benefits (OPEB) Cost and Net OPEB ObliSation The ARC is an amount actuarially determined in accordance with the parameters of GASB Statement No. 45. The ARC is equal to the normal cost, or proiected cost to cover the related obligation during the year, plus a 23-year amortization of the unfunded actuarial liability at June 30, 2015. The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the Plan, and the net OPEB obligation for fiscal year 2015 and the two preceding fiscal years were as follows: Fiscal Year Ended Annual OPEB Cost Net OPEB Obligation 6/3012073 s 6/30/2OL4 6l30l20Ls 6,730,s31 5,390,703 5,083,274 36% 766% 706% s 19,844,779 76,265,O25 15,954,310 7t2 CERBT is a tax qualified irrevocable trust, organized under lnternal Revenue Code (lRC) Section 115, established to pre-fund OPEB as described in GASB Statement No.45. The CERBT issues a publicly available financial report that includes financial statements and required supplementary information in aggregate with all CERBT participants. That report may be obtained by contacting CaIPERS. Percentage of Annual OPEB Cost Contributed CITY OF BURLINGAME, CALIFORNIA NoTES TO THE BASIC FINANCIAL STATEMENTS (Continuedl JUNE 30, 2015 E MPTOYMENT HEATTHCARE PLAN Continued C. Annual Other Post-Employment Benefits (OPEB) Cost and Net OPEB Obligation (Continued) The following table, based on the City's actuarial valuation as of January 1, 2013, shows the components of the City's annual OPEB cost for the year, the amount actually contributed to the Plan, and changes in the City's net OPEB obligation, shown below at a 7.25% discount rate: 2075 Annual required contribution lnterest on net OPEB obligation Adjustment to annual required contribution Annual OPEB cost (expense) Trust Pre-funding Benefits paid to retirees lncrease in net OPEB obligation Net OPEB obligation - beginning of year 5,045,000 7,779,2L4 (1,141,000) (310,71s) t6,265,O25 s 15,954,310 s Net OPEB obligation - end of year D. Funded Status and Funding Progress A schedule of funding progress for the last three years is presented below in thousands Fiscal Year End Date Actuarial Valuation Date Accrued Liabilities Actuarial Assets Unfunded Liabilities (uL) Annual Covered Payroll ULasa% ofAnnual covered Payroll 6130/20L3 6130/2ot4 6130/20ts 7/!/2011 7/Ll2Or3 7/!/2013 76,402 53,049 53,049 s 5 7,335 9,358 76,402 45,774 43,691 0,0% 14.0% 17.6% 16,961 15,269 18,462 450.5% 299.4% 236.7% s 5 Actuarial valuations of an ongoing plan involve estimates of the value of expected benefit payments and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the Plan and the ARC of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as Required Supplementary lnformation following the Notes to the Basic Financial Statements, presents multi-year trend information about whether the actuarial value of Plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. 113 5,083,2r4 12,026,s78], 13,367,4771 Funded Ratio CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30,2015 NOTE 9. POST-EMPLOYMENT HEALTHCARE PLAN (Continuedl E. Actuarial Methods and Assumptions Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and Plan members to that point. The actuarial methods and assumptions include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. ln the January 1,20L3 actuarial valuation, the entry age normal actuarial cost method was used. The actuarial assumptions included a 7.25% investment rate of return, pre-funding through the CERBT, as well as ARC. An annual pre-Medicare and Medicare medicalcost trend of 8.0% and 8.3% is assumed for HMOs and PPOs applied to actual 2014 premiums, with annual cost escalations decreasing to 5% over 5 years. The UAAL is being amortized as a level dollar amount over 22years on a closed basis, starting June 30,2012. NOTE 10 - INTERFUND TRANSFERS AND TRANSACTIONS A. Transfers Transfers between funds for the year ending June 30, 2015, are as follows Transfers ln General Fund Debt Service Fund Capital Pro.iects Fu nd Nonma.ior Governmental Funds Waste Management Fund Sewer Fund Water Fund Total Out General Fund Debt Service Fund Capital Projects Fund Storm Drainage Fund Nonmajor Governmental Funds Water Fund Sewer Fund Solid Waste Fund Parking Fund Building Fund Total in s S 5,283,924 1,410,304 7,940,209 4,532,889 t67,626 3s4,775 1,863,075 2,s00,000 4,700,000 S go,soo 413,850 S S S 514,314,633_ 4,532,889 4,551,385 - 2,562,L26 7,704,998: : ' ioiitrtiii - 445,263 - 57,030 - 209,820 15,000 37L,044 7,280,975 1,050,764 130,923 39s,253 742,790 s0,000 s3,386,759 s7,694,228 522,L08,s75 S sO4,36O S4,s51,385 S 67,030 52,552,126 S40,884,45s tt4 CITY OF BURTINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2015 NOTE 10 - INTERFUND TRANSFE@ A, Transfers(Continued) The 514.3 million General Fund transfer out includes 55.3 million for the payment of debt service, and 57.9 million in contributions to fund capital improvement projects. A total of 585,000 was transferred out to the Train Shuttle Fund in support of localtransportation programming. The S4.5 million transfer out of the Debt Service tund relates to withdrawals from available capital project proceeds from debt and the transfer of such funds to the facilities, storm drain, and streets capital project programs. Significant withdrawals include $L.7 million from the Lease Revenue Bond, Series 2012 to fund the Burlingame Avenue Streetscape Project and S2.7 million from previously issued taxable and tax-exempt storm drain bonds for storm drain capital improvements. The S7.7 mitlion transfer out of the Capital Projects Fund relates to major repairs, replacements, and/or construction projects under the City's capital improvement program. Due to the nature of these efforts, accounting rules require that these amounts be capitalized as either capital assets or construction in progress (ClP) in the applicable fund. Approximately 54.6 million and 52.6 million relate to capital transfers from the Capital Project Fund to the Sewer and Water operating funds, respectively, for current construction in progress placed in service as capital assets during the fiscal year. Other transfers out of the Capital Projects Fund are the result of deappropriation of excess funding and return of the funds to the initial funding source. The nonmajor funds had 52.2 million in total transfers out. Total transfers out to the Capital Projects Fund totaled 51.9 million, consisting of S1.3 million from the Measure A and Gas Tax Funds to support ongoing streets and traffic capital improvement projects. Transfers totaling S523 thousand reflect donations and the application of impact fees to the Library Millennium Project. Transfers to the General Fund totaled S371 thousand and relate to reimbursements for debt service (5278 thousand) from the Burlingame Avenue Assessment District and administrative services from the Gas Tax Fund and Traffic Safety Fund. The Water Fund had 53.8 million in transfers out, consisting of S1.3 million to the General Fund and 52.5 million to the Capital Projects Fund. The Sewer Fund also had transfers out of 55.8 million, consisting of S1.1 million to the General Fund and $4.7 million to the Capital Pro.iects Fund. ln addition to funding administration and other services provided by the General Fund, transfers to the General Fund from each of the Water and Sewer operating funds relate to reimbursements for each fund's proportionate share of debt service due on the previously issued Pension obligation Bonds, Series 2006 and the Lease Revenue Refunding Bonds, Series 2010 which was issued to construct the Pu blic Works Corporation Yard. 115 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30,2015 NOTE 10 - TNTERFUND TRANSFERS AND TRANSACTIONS (Continuedl A. Transfers (Continued) The Parking Fund had a transfer out of 5395 thousand;5278 thousand to reimburse the General Fund for 50% of the debt service payments due on the Lease Revenue Bond, Series 2012 (which funded the Burlingame Avenue Streetscape Project); and S117 thousand for administration and tree maintenance of parking lots. The Building Fund transferred 567 thousand to the Waste Management Fund in a 50/50 split of revenues related to construction and demolition permitting activity. ln addition, a Sf+g thousand transfer to the General Fund was made to reimburse administrative costs. B. Advances Between Funds Advances between funds for the year ending June 30, 2015, are as follows Advances From Advances To General Fund Debt Service Fund Equipment Services Fund Total Advances To s 207,990 s 201,990 Total Advances From S 201,990 s 201,990 On December 3,2072, the City Council authorized an appropriation of 5400,000 to implement a computer aided dispatch and records management system. Funding for this project was provided by an advance from the Equipment Services Fund to the General Fund. A four year promissory note between funds was executed, which requires annual payments of principal and interest at an interest rate of l.OO%, which is based upon historical investment yields typically earned by the LAIF. During fiscal year 20L4-L5, the General Fund made a payment to the Equipment Services Fund in the amount of 599,500, resulting in an outstanding balance of 5201,990. C. lnterfund Receivables and Payables (Due To and Due From Other Funds) Due From Storm Drainage Fund Nonmajor Funds Water Fund Sewer Fund Total Due FromDue To Capital Projects Fund Debt Service Fund General Fund 5 4,s32,889 5 q,tSq,tte 5 488,76s 42,688 )s S 9,176,430 11,280 42,688 5,540 5,540 Total Advances From S 4,s32,889 116 s s31,4s3 s s,540 5 s,540 5 9,230,398 CIW OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30,2015 NOTE 10 - INTERFUND TRANSFERS AND TRANSACTIONS (Continued) C. tnterfund Receivables and Payables (Due To and Due From Other Funds) (Continued) At June 30, 2015, the Capital Projects Fund had interfund receivables outstanding from the Debt Service Fund (S4.5 million), the Storm Drainage Fund (S4.2 million), and 5489 thousand from the Local Grants Fund. The receivable from the Debt Service Fund relates to pending reimbursements for CIP costs from capital improvement project proceeds from previously issued debt which are held by the City's trustee, including the tax-exempt and taxable storm drain bonds, Master Equipment Lease as well as the Lease Revenue Bond, Series 2012. The receivable from the Storm Drainage Fund relates to reimbursements for CIP costs and/or appropriations for scheduled projects as approved by the City Council. The receivable from the Nonmajor Funds reflects donations collected by the Burlingame Library Foundation as well as local grants obtained for the Library Millennium project. The Debt Service Fund had a total of 56 thousand each in interfund receivables from the Water and Sewer Funds, which relate to accrued interest on the Lease Revenue Refunding Bonds, Series 2010. The General Fund had a total of S43 thousand in interfund receivables from the State/Federal Grants Fund representing amounts that were advanced to fulfill obligations to vendors, pending public safety grant reimbursements from the State of California. NOTE 11- DEFERRED INFLOWS (OUTFLOWS) OF RESOURCES Deferred inflows of resources consisted of the following at June 30, 2015 Governmental ActivitiesDeferred Outflows of Resources Deferred outflows related to pensions-GASB 68 lmplementation Total deferred outflows of resources 0eferred Outflows of Resources Deferred amount on refunding - Water and Wastewater Revenue Bonds, Series 2011 Deferred amount on refunding - Water and Wastewater Revenue 8onds, Series 2013 Deferred outflows related to pensions-GASB 58 lmplementation Total deferred outflows of resources Deferred lnflows of Resouaces Deferred inflows related to pensionS-GASB 68 lmplementation s 8,442,2761 s (3,442,216) water Fund Sewer Fund Waste Managment Fund s (e3,014) s (4s,264) s (328,642) (154,870) (252,17s) (212,068) (34,5241 Total Eusiness-Type Landfill Fund Parking Fund Building Fund Activities sss51742,2781 (493,512) (413)(11s,50s) (99,243) l7t4,o28l (413)s (11s,50s) s (ee,243) s (1,34s,818)s (34,s24) s Governmental _l_@831i l___939:94 S 9,69r,ai7 S 669,524 S 563,041 Total Business-TypeWaste Activities Water Fund Sewer Fund Mana8ment Fund tandfill Fund Parking Fund Building Fund Activities S 91,661 L17 S 1,09s S 306,931 S 263,489 S 1,89s,741 CIW OF BURLINGAME, CALIFORN!A NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2015 NOTE 12 - LANDFILL FUND DEFICIT BALANCE As of June 30, 2015, the Landfill Fund, an Enterprise Fund, had a deficit of 52,543,279. The Landfill Fund deficit relates to the landfill closure and post-closure liability relating to the City landfill located on Airport Boulevard. The City expects to finance these costs with fees derived from surcharges on the City's franchise solid waste collection activities. For additional information regarding the City's landfill closure and post-closure liability, please refer to Note 6C. NOTE 13 - RESTATEMENT OF BEGlNNING NET POSITION The accompanying financial statements reflect adjustments that resulted in the restatement of beginning net position of the Governmental Activities and Business-Type Activities. The adjustments occurred due to a change in accounting principles. Refer to Note 15 - New GASB Pronouncements lmplemented in the Financial Statements. The following schedule summarizes the effect of the restatement of the beginning net position as of July !, 2014, resulting from implementation of GASB Statement No. 68: Governmental Activities Net Position at July 1, 2014 Cumulative Effect of Change in Accounting Principle (1) Net Position at July 1, 2014, as restated S 67,081,841 Waste Water Sewer Management Fund Fund Fund Landfill Fund Parking Fund Building Fund Net Position at July 1, 2014 Cumulative Effect of Change in Accounting Principle (1) Net Position at July 1, 2014, as restated 5 73,8U,687 5 19,940,248 5 41,0ss,976 S 3,719,550 5 (2,915,087) S 9,252,361 5 2,822,s29 (8,ss0,836)(3,01e,92U (2,s3e,62s) (413,440) l4,e41l (1,384,4271 (1,188,482) s 6s,333,8s1 5 76,920,327 5 38,s15,3s1 S 3,305,220 S (2,921,028) 5 7,877,934 5 L,634,047 (1) Pursuant to GASB Statement No. 68, Accounting ond Financiot Reporting for Pension - on omendment of GASB Stotement No. 27, the City restated the beginning balances to reflect the beginning net pension liability. ln addition, the adjustment to the governmental activities includes the elimination of a net pension asset, which as of June 30,2014 had a balance of 525,258,727and followed GASB Statement No. 27. The total adjustments resulted in the Net Position of the Governmental Activities and Business- Type Activities to decrease by $56,469,641 and 58,550,836, respectively. NOTE 14 - SUBSEQUENT EVENTS There were no subsequent events to disclose. Subsequent events were evaluated through January 7, 2016, which is the date the financial statements were available to be issued. 118 s 133,ss1,482 (66,469,64Ll Business-Type Activities REQUIRED SUPPLEMENTARY INFORMATION 119 Comprehensive Annual Financial Report June 30,2015 120 CIW OF BURLINGAME, CALIFORNIA REqUIRED SUPPTEMENTARY INFORMATION FOR THE FISCAL YEAR ENDED JUNE 30, 2015 NOTE 1 - COST.SHARING DEFINED BENEFIT PENSION PLAN CITY OF BURLINGAME A COST.SHARING DEFINED BENEFIT PENSION PLAN SCHEDULE OF THE CITY OF BURLINGAME'S PROPORTIONATE SHARE OI THE NET PENSION LIABILIry AS OF JUNE 30, 2015 LAST 10 YEARS* Safety - Police Safety - PEPRA s ss s o.2485.,4 15,465,610 4,262,272 362a5% 5 67,766,2s2 S 438.710/. 0.0000% 77 81,007 0.o9% 310 436.62% * Fiscal year 2015 was the 1't year of implementation of GASB Statement No. 68; therefore, only one year is shown. Notes to Schedule: Benefit changes. ln 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. ln 2015, amounts reported as changes in assumptions resulted primarily from adjustments to expected retirement ages of general employees. Proportion of the Net Pension Liability Proportionate Share of the Net Pension Liability Covered-Employee Payroll Proportionate Share of the Net Pension Liability as a Percentage of covered-Employee Payroll Plan's Fiduciary Net Position Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 727 CITY OF BURLINGAME, CALIFORNIA REQUIRED SUPPTEMENTARY INFORMATION (Continued} FOR THE FISCAL YEAR ENOED JUNE 30, 2015 NOTE 1 - COST.SHARING DEFINED BENEFIT PENSION PTAN (Continued} CITY OF BURTINGAME A COST.SHARING DEFINED BENEFIT PENSION PLAN SCHEDUTE OF CONTRIBUTIONS AS OF JUNE 30, 201s IAST 10 YEARSI' Safety - Police Safety - PEPRA Contractually Required Contribution (Actuarially Determined) Contributions in Relation to the Actuarially Determined Contributions Contribution Deficiency (Excess) Covered-Employee Payroll Contributions as a Percentage of Covered-Employee Payroll Actuarial Cost Method Asset valuation method lnflation Salary increases lnvestment rate of return Entry Age Normal s-year smoothed market 2.7 5% Varies by Entry Age and Service 7.5%, net of pension plan investment and administrative expense, including inflation Derived using CaIPERS Membership Data for all Funds s 7,796,259 (1,196,2s9) s 20,78s (20.785) s S 4,262,272 28.07% 81,007 25.66./" s * Fiscal year 2015 was the 1't year of implementation of GASB Statement No. 68; therefore, only one year is shown. Notes to Schedule: Valuation date June 30,2013 Methods and assumptions used to determine contribution rates Mortality 722 5- CITY OF BURTINGAME, CALIFORNIA REQUIRED SUPPTEMENTARY INFORMATION (Continued) FOR THE FISCAL YEAR ENDED JUNE 30, 2015 NOTE 2 - MULTIPTE E MP LOYER D EFINED BENEFIT PENSION PLAN CITY OF BURTINGAME AN AGENT MULTIPLE EMPTOYER DEFINED BENEFIT PENSION PLAN SCHEDULE OF CHANGES IN THE NET PENSION TIABILITY AND RETATED RATIOS AS OF JUNE 30, 2015 LAST 10 YEARST Total Pension Liability Service Cost lnterest on Total Pension Liability Differences between Expected and Actual Experience Changes in Assumptions Changes in Benefits Benefit Payments, lncluding Refunds of Employee Contributions Plan Fiduciary Net Position Contributions - Employer Contributions - Employee Net lnvestment lncome Benefit Payments Net Change in Plan Fiduciary Net Position Plan Fiduciary Net Position - Beginning Plan Fiduciary Net Position - Ending (b) Net Pension Liability - Ending [(a) - (b)] Plan Fiduciary Net Position as a Percentage of the Total Pension Liability Covered-Employee Payroll Net Pension Liability as a Percentage of Covered- Employee Payroll * Fiscal year2015 wasthe 1't year of im plementation; therefore, only one year is shown S June 30,2015 2,457,3s6 8,964,1,59 16,246,4s3) 5,169,062 r21,479 617 l___139r!!133_ 5 2,274,366 7,203,540 75,7L6,45! 16,246,4s3], 12,287,904 88,004,118 5 roo,292,o22 s 26,296,717 s 79.23% 13,078,081 207.O7% Net Change in Total Pension Liability Total Pension Liability - BeginninB Total Pension Liability - Ending (a) !23 CITY OF BURI-INGAME, CALIFORNIA REQUIRED SUPPTEMENTARY INFORMATION (Continued) FOR THE FISCAT YEAR ENDEO JUNE 30, 2015 NOTE 2 - MUTTIPLE EMPLOYER DEFINED BENEFIT PENSION PLAN (Continuedl Notes to Schedule: Benefit chantes. ln 2015, there were no benefit changes. changes in assumptions. ln 2015, amounts reported as changes in assumptions resulted primarily from adjustments to expected retirement ages of miscellaneous employees. CITY OF BURLINGAME AN AGENT MUTTIPLE EMPLOYER DEFINED BENEFIT PENSION PLAN SCHEDUIE OF CONTRIBUTIONS AS OF JUNE 30, 2015 LAST 10 YEARS* Fiscal Year 20t3-L4 Actuarially Determined Contributions Contributions in Relation to the Actuarially Determined Contributions Contribution Deficiency (Excess) covered-Employee Payroll S Contributions as a Percentage of Covered-Employee Payroll * Fiscalyear 20L5 was the 1't year of implementation; therefore, only one year is shown. Notes to schedule: Valuation date June 30,2013 Methods and assumptions used to determine contribution rates: s 2,274,366 12,214,3661 s 13,078,081 16s3% Actuarial Cost Method Amortization method/period Asset valuation method lnflation Salary increases Entry age For details, see June 30, 2011 Funding Valuation Report Actuarial value of assets 2.7 50 Varies by Entry Age and Service 724 CITY OF BURTINGAME, CALIFORNIA REQUIRED SUPPTEMENTARY INFORMATION (Continued} FOR THE FISCAL YEAR ENDED JUNE 30, 2015 NOTE 2 - MULTIPLE EMPLOYER DEFINED BENEFIT PENSION PLAN (Continued) Notes to Schedule (Continued): Payroll Browth lnvestment rate of return 3.00% 7.5o/o, nel of pension plan investment expense, including inflation The probabilities of Retirement are based on the 2010 CaIPERS Experience Study for the period 1997 to 2007. Derived using Ca|PERS' membership data for all Fu nds Retirement age Mortality(1) (1) The probabilities of mortality are based on the 2010 CaIPERS Experience Study for the period 1997 lo 2007. Pre-retirement and post-retirement mortality rates include 5 years of projected mortality improvement using Scale AA published by the Society ofActuaries. r25 CITY OF BURLINGAME, CALIFORNIA REQUIRED SUPPTEMENTARY INFORMATION (Continued) FOR THE FISCAT YEAR ENDED JUNE 30, 2015 NOTE 3 - OT+IER POST-EMPLOYMENT BENEFITS (OPEB} The City of Burlingame Retiree Healthcare Plan (Plan) is a single-employer defined benefit healthcare plan administered by the City. The Plan provides healthcare benefits to eligible retirees and their dependents. Benefit provisions are established and may be amended through agreements and memorandums of understanding between the City, its management employees, and unions representing City employees. The City does not issue a separate financial report on the Plan, but additional information can be found at Note 9 in the Notes to the Basic Financial Statements. The City provides eligible retirees with retiree medical benefits through the California Public Employees' Retirement System Healthcare Program (PEMHCA). The City pays retiree healthcare benefits up to a cap for eligible retirees, dependent on bargaining unit and hire date. No dental, vision, or life insurance benefits are provided. The Plan is closed to new employees. ln September 2013, the City established an irrevocable trust to prefund its unfunded actuarially accrued liability for retiree health care benefits. The California Benefit Trust Fund (CERBT), a multi-employer trust, is administered by CaIPERS which also invests trust fund deposits made by the City on behalf of retirees. The CERBT is a tax qualified irrevocable trust, orBanized under lnternal Revenue Code (lRC) Section 115, established to pre-fund OPEB as described in Governmental Accounting Standards Board (GASB) Statement No. 45. The CERBT issues a publicly available financial report that includes financial statements and required supplementary information in aggregate with all CERBT participants. That report may be obtained by contacting CaIPERS. During fiscal year 2014-15, the City made contributions of S5,393,929 to the trust. As of June 30, 2015, the cash balance was 59,358,499. A schedule offunding progress forthe last three valuations is presented below in thousands. schedule of Funding Progress (dollars in thousands) Actuarial Valuation Date Accrued Liabilities Actuarial Assets Funded Ratio Unfunded Liabilities (UU Annual covered Payroll ULAsa% of Payroll 7/7/2009 7/7/2077 7/7/2073 s 67,s18 7 6,402 53,049 9,3s8 s 67,s18 76,402 43,691 s 77 .6% $ 22,394 16,961 78,462 30r.5% 450.50/o 236.7% Employees hired after November 7,2OlL, are enrolled in a retiree health savings plan (RHS Plan) after five years of service. Upon enrollment, the City contributes 2.0% of annual base bay into the RHS Plan. After nineteen years of service, the City contributes 2.5% of an nual base pay into the RHS Plan. 126 CITY OF BURTINGAME, CATIFORNIA REQUIRED SUPPTEMENTARY INFORMATION (Continued) FOR THE FISCAT YEAR ENDED JUNE 30, 2015 A formal budget is employed as a management control device during the year for the City, and is adopted annually for all City funds, except for the fiduciary funds and certain special revenue funds where appropriate. Consistent with most governmental entities, the City's budget is based on a modified accrual basis of accounting under which revenues are recognized in the period they become available and measurable, and expenditures are recognized in the period the related liability is incurred. Budgets for the General Fund and Special Revenue Funds are adopted on a basis consistent with accounting principles generally accepted in the United States (GAAP). The City budget includes information regarding estimated costs (or outlays) and revenue (or cash inflows) for identified programs, projects, and levels of service to meet the needs of the City. All annual appropriations lapse at the end of the fiscal year except in the Capital Projects Fund because capital improvement projects typically span more than one fiscal year. Appropriations for capital projects lapse when projects are completed, placed into service, accounted for as capital assets, or abandoned at the discretion of the City and/or City Council. Budget amendments that increase a fund's appropriations require majority approval by the City Council. Certain budgetary re-allocations within departments require approval by the Finance Director and department heads. Budget amendments between departments are approved by the Finance Director and City Manager. A mid-year budget status report and long-term financial forecast for the next five years is presented to the City Council as part of an ongoing assessment and evaluation of budgetary performance, with special attention to the General Fund and certain other major funds. The City Council encourages all Burlingame residents and business community members to participate in the development ofthe City budget. The Council holds three public meetings to provide guidance on the budget: a goal-settin8 session in January, and budget study sessions in March and May. The City Council solicits input at each of the meetings. Community members may also submit their ideas directly to City staff. Under these policy directives and guidance, departments prepare their budget requests in support of their programs in January for submission in early April. Expenditure assumptions are based on known factors such as collective bargaining agreements, current pay and benefit policies, consumer price indices, and other information available from expert third-parties or governing authorities. Budget requests are reviewed by the Finance Department for technical compliance to City budget instructions. The Proposed Budget is prepared and delivered to the City Council in May. The City Council reviews the Proposed Budget before the final budget is formally adopted in June at a public hearing, which gives residents an additional opportunity to comment on the spending plan. A separate publication presenting this information is available from the City of Burlingame, Finance Department, 501 Primrose Road, Burlingame, CA 94010. General Fund and Storm Drainage Fund Budgetary Comparison Schedules are also included in the Required Supplementary lnformation, which has information regarding budget to actual performance for the General Fund and Storm Drainage Fund. 721 NOTE 4 - BUDGET AND BUDGETARY ACCOUNTING CITY OF BURLINGAME, CALIFORNIA REQUIRED SUPPLEMENTARY INFORMATION (Continued) FOR THE FISCAI YEAR ENDED JUNE 30, 2015 NOTE 5 - MODIFIED APPROACH FOR THE CITY,S INFRASTRUCTURE ln accordance with GASB Statement No.34, the City accounts for and reports infrastructure capital assets. The City defines infrastructure as the basic physical assets including the street system; park and recreation lands and improvement system; storm water collection system; and site amenities associated with buildings, such as parking and landscaped areas, used by the City in the conduct of its business. Each major infrastructure system is divided into subsystems. For example, the street system is divided into concrete and asphalt pavements, concrete curb and gutters, sidewalks, medians, streetlights, traffic control devices (signs, signals, and pavement markings), landscaping, and land. Subsystem detail is not presented in these basic financial statements; however, the City maintains detailed information on these su bsystems. The City has elected to use the modified approach, as defined by GASB Statement No. 34, for the Roads and Streets networks. Under 645B Statement No. 34, eligible infrastructure capital assets are not required to be depreciated. ln December 2013, the City's consultant completed a study to update the physical condition assessment of the streets. The next assessment will be complete by April 201.6. The streets, primarily asphalt pavements, were defined as all physical features associated with the operation of motorized vehicles that exist within the limits of right of way. City-owned streets are classified based on land use, access and traffic utilization into the following four classifications: (1) arterial/major, (2) collector, (3) residential, and (4) other (such as alleys and parking lots). 724 This condition assessment will be performed approximately every two years. For this inspection update, all the paved streets in the City's system were re-inspected. A visual survey of approximately 83.87 centerline miles was evaluated in accordance with Metropolitan Transportation Commission (MTC) standards. Upon completion of this survey, a Pavement Condition lndex (PCl) was calculated for each segment to reflect the overall pavement condition. Ranging between 0 - 100, a PCI of 0 would correspond to a badly deteriorated pavement with virtually no remaining life. A PCI of 100 would correspond to a new pavement with proper engineering design and construction at the beginning of its life cycle. CITY OF BURLINGAME, CALIFORNIA REqUIRED SUPPLEMENTARY INFORMATION (Continued) FOR THE FISCAL YEAR ENDED JUNE 30, 2015 NOTE 5 - MODIFIED APPROACH FOR E CITY'S INFRASTRUCTURE (Continued) The following conditions were defined: DescriptionCondition Rating Very Good 70-89 Good 50-69 Poo r 25-49 Little or no distress, with the exception of utility patches in good condition, or minor to moderate hairline cracks; typically lightly weathered. Light to moderate weathering, light load-related base failure, moderate linear cracking. Moderate to severe weathering, moderate levels of base failure, moderate to heavy linear cracking. Extensive weathering, moderate to heavy base failure, failed patches, very Poor o'24 extensive network of moderate to heavy linear crackinB. The City's policy is to achieve an average rating of 65 for all streets. This rating allows minor cracking and ravelinB of the pavement along with minor roughness that could be noticeable to drivers traveling at the posted speeds. As of June 30, 2015, the city's street system was rated at a PCI index of 76 on a 100-point scale. The overall condition of the street pavement is in the lower range of MTC'S designation 'Very Good'. The following table details the network statistics and pavement condition by functional class. Table 1 - Street Network Statistics and Average PCI by Functional Class Functional class Centerline Miles Lane Miles 6 of Sections % ot Network Averase Pcl Arterial 25.06 53.84 94 29.9%79 Residential 33.'11 60.32 209 40.2v. collector 20.48 720 24.4v.75 Other 4.62 8.10 69 Totals 83.87 L62.21 492 76 Table 2 details the percentage of the street network area by each PCI range or condition category. 729 Excellent 90-100 Little or no distress. 78 39.9s 5.5%66 CITY OF BURLINGAME, CALIFORNIA REQUIRED SUPPLEMENTARY INFORMATION (Continued) FOR THE FISCAL YEAR ENDED JUNE 30, 2015 NOTE 5 - MODIFIED APPROACH FOR THE CIW,S I NFRASTRUCTURE (Continued) Table 2 - Percent Network Area by Functional Class and Condition Class Condition Class PCI Range Arterial Collector Residential Total Excellent/Very Good (l)70-100 Good/Fair (llllll) 26.OOvo 20.30% 27.30% 76.90% 4.70% 4.40% a.AOY" 77.7OY" 25-49 2.30%5.toy 0-24 0.30./" Totals 30.60v.34.o0%100.00% The City's street network replacement value is estimated at SL55 million. Replacement value is calculated as the current cost to reconstruct each street in the network. The optimal network PCI is somewhere between low and mid 80's, which is in the middle of the 'excellent/very good'condition category. This is recommended because streets with a PCI in the 80's as opposed to 70's will likely remain in the 'excellent/very good' condition category for a longer period of time if relatively inexpensive preventive maintenance treatments are used. Once PCI falls below 70, more expensive rehabilitation treatments will be needed. The cost to repair and maintain a pavement depends on its current PCl. ln the 'excellent/very good' category, it costs very little to apply preventative maintenance treatments. More than half (76.9%l of the City's street network would benefit from these lower cost preventative maintenance treatments. Approximately L7.7% of the City's street network is considered in 'good' condition. Pavements in this range require more than a life-extending treatment. At this point, a well designed pavement will have served at least 75 percent of its life with the quality ofthe pavement dropping approximately 40%. The remaining 5.4% ol lhe City's street network falls into the 'poor' or 'very poor' PCI ranges. These pavements are near the end of their service lives and often exhibit major forms of distress. Atthis stage a street usually requires either a thick overlay or reconstruction. One of the key elements of a pavement repair strategy is to keep streets that are in the 'good' or 'fair' category from deteriorating. This is particularly true for streets in the 'fair' range, because they are at the point where pavement deterioration accelerates if left untreated. Poor (lV)0.50% 7.80% 0.00% 0.30% 30.60v. 26.80% s0-69 Very Poor (V) The projected pavement budget for fiscal year 2011-12 through fiscal year 2015-16 is approximately 51,200,000 per year or 56.0 million. This investment maintains the current PCI of 76. Furthermore, under this investment level, the projected deferred maintenance backlog decreased from S2.9 million in 2014 to S680,000 in 2018. 130 ctw oF BURUN6AME, CALIFORNIA REQUIRED SUPPLEMENTARY INFORMATION (Continued} FOR THE FISCAT YEAR ENDED JUNE 30, 2015 NOTE 5 - MODIFIED APPROACH FOR T HE CITY,S INFRASTRUCTURE (Continued) 20L4 2015 2016 2077 2074 Total Budget S1,2oo,ooo 51,200,000 S1.2oo,ooo 51,200,000 51,200,000 S 6,000,000 Rehabilitation 487,474 1,367,a76 2,259,922 3,326,858 7,442,070 Preventative Maintenance 526,182 105,883 9,186 585 641,836 2,876,007 2,65a,243 2,053,360 2,207,335 681,351 70,476,296 PCt 76 76 76 76 The study determined that there was approximately a 52.9 million deferred maintenance backlog in 2014. To maintain an appropriate overall PCI level and address critical areas of deferred maintenance, a cost-effective funding and maintenance and rehabilitation strategy was implemented. A schedule of estimated annual amounts calculated to maintain and preserve its streets at the current level compared to actual expenditures for street maintenance for the last three years is presented below. 76 Fiscal Year 20L2-20L3 Maintenance Estimate Actual Expenditures PCt Rating s1,200,000 s 703,887 76 20Ll-2014 20L4-2015 s1,200,000 s 9s0,218 76 s1,200,000 5 r,479,349 16 131 Deferred Maintenance The City has an ongoing street rehabilitation program funded in the Capital lmprovement Program that is intended to maintain the condition rating of City streets. For example, a major street re-surfacing project was completed in fiscal year 2014-15 which resulted in over 360,000 square feet of street repair. CITY OF BURLINGAME, CALIFORNIA REQUIRED SUPPLEMENTARY INFORMATION (Continued) FOR THE FISCAT YEAR ENDED JUNE 30, 2015 NOTE 6 - BUDGETARY COMPARISON SCHEDULE - GENERAL FUND Budgeted Amounts Original Fina I Actual Variance with Final Budget Revenues Property taxes Sales and use taxes Transient occupancy taxes Other taxes Licenses and permits Fines, forfeitures, and penalties Charges for services Other revenue Grant revenue lnvestment income Total revenues Expenditures Current: General government: City attorney City clerk City council City manager Human resources Finance Total general government Public safety: Fire Fire - Disaster Preparedness Police Communications Dispatch Police Total public safety Public works Community development Parks, recreation, and library: Library Parks Recreation Total parks, recreation, and library Capital outlay Total expenditures Excess of revenues over expenditures Other financing sources (uses) Transfers in Transfers out Total other financing sources (uses) Net change in fund balance FUND BATANCE Beginning of year End of year 55,276,420 s9,9L7,L20 61,909,081 1,991,961 s 1s,2so,0oo 10,460,000 21,100,000 2,992,400 86,000 780,000 4,087,020 227,000 100,000 200,000 16,510,000 10,950,000 22,500,000 2,987,400 81,000 794,000 4,332,720 L,246,000 186,000 230,000 s 16,677,381 11,100,900 23,698,396 3,O48,3L4 83,840 837,704 4,481,6t8 t,254,463 465,725 260,740 67,38L 150,900 1,198,396 60,9L4 2,840 43,704 148,898 8,463 279,725 30,740 5 S 6ss,368 318,258 321,095 667,903 833,466 L,985,232 645,368 318,2s8 321,095 684,903 808,455 L,940,232 525,684 272,L78 287,788 554,L26 693,s68 1,788,551 LL9,684 46,080 33,307 L30,777 LL4,898 151,681 4,78t,322 4,7t8,322 4,t27,895 596,427 10,140,511 625,638 1,353,906 tt,437,445 LO,222,7tt 625,638 1,362,906 LL,458,447 9,848,829 621,547 1,185,815 LL,t17,303 373,882 4,OgL L77,09L 341,L44 23,557,500 23,669,702 22,773,494 896,208 5,42L,767 5,42L,L67 4,769,873 651,294 L,742,497 L,682,497 L,244,L99 438,298 4,658,794 3,526,799 4,186,560 4,662,294 3,546,799 4,238,O34 4,392,438 3,247,927 3,855,238 269,856 298,872 382,796 L2,372,753 72,447,727 11,495,603 95t,524 47,874,639 47 ,938,8L5 44,405,064 3,533,751 7,40L,78L 11,978,305 17,504,017 (t,54L,79O1 3,386,759 (ro,824,4241 3,386,7s9 (14,314,633) 3,386,759 (14,314,633) 17,437,66s1 (LO,927,8741 (LO,927,8741 s (3s,884) s 1,0s0,431 6,576,743 22,885,423 t32 5 29,46L,s66 5 s,s2s,7L2 CITY OF BURLINGAME, CATIFORNIA REQUIRED SUPPLEMENTARY INFORMATION (Continued) FOR THE FISCAL YEAR ENDED JUNE 30, 2015 NOTE 7 - BUDGETARY COMPARISON SCHEDUTE - STORM DRAINAGE FUND Budget Storm Drainage Fund Actual Variance with Final Budget REVENUES: Fines, forfeitures, and penalties Charges for services lnvestment income lntergovernmental Grants and subventions Total revenues EXPENDITURES: Current: Generalgovernment Public safety Public works Parks, recreation, and library Shuttle bus operations Capital outlay Total expenditures s s s 2,690,393 90,000 2,720,716 67,824 oTHER FtNANCTNG SOURCES (USES): Transfers in Transfers out Total other financing sources (uses) Net change in fund balance FUND BALANCE: Eeginning of year End of year 2,780,393 2,787 ,940 7 ,547 2,780,393 2,787,940 7 ,547 1L,42s,3041 (1,780,080)(354,776) |t,425,304) (1,780,080)13s4,776r. s 1,355,089 1,007,860 j_--_-(34, ,r2s)_ 1,,57 7,860 EXCESS OF REVENUES OVER EXPENDITURES 133 _S 2,s?9,?n 29,72; 122,L76_l This Page Intentionaly Left Blank 734 COMBINING FINANCIAT STATEMENTS AND OTHER SUPPLEMENTARY INFORMATION 135 This Page Intentionally Left Blank 736 NONMNOR GOVERNMENTAL FUNDS Special Revenue Funds Meosure A Fund - This fund accounts for the City's share of the special half-cent sales tax for transportation approved on the November 1988 ballot, effective January L, 1989. Expenditures from this fund can only be incurred on transportation-related programs. Gds Tox Fund -fhis fund is to account for revenue received from the State of California derived from gasoline taxes. These funds may only be used for street purposes as specified in the State Streets and Highway Code. Special Assessment District Fund -fhis fund accounts for revenue from special assessments received from a special benefit district formed during fiscal year 2011-12 on Burlingame Avenue. The special benefit district revenues fund the lighting, landscape, and utility-related upgrades completed in 20L4, and a portion of the related maintenance costs. Traffic Solety Fund - This fund is to account for revenues received from traffic fines and used for traffic safety programs. Troin Shuttle Fund - This fund is to account for grant revenues received from the San Mateo County Transportation Authority and the Bay Area Air Quality Management District for a commuter shuttle bus program. Stote/Federul Grdrts Funds - These funds are to account for grants from the State of California and the federal government, used or expended for a specific purpose, activity, or facility. Locdl Grdnts Fund - fhis fund is to account for grants or donations from local sources other than the State or Federal government used or expended for a specific purpose, activity, or facility. Development Fees Fund - This fund is to account for developers' fees that may be used for improvements on the bay front area and streetscape improvements in the North Burlingame area of the City, as well as Bayfront facilities impact fees and parking in lieu fees. Public TV Access Fund - This fund is to account for the PEG Access funding through Cable TV Franchise agreement beginning January 1, 1999. The City uses these funds to finance capital improvements associated with the broadcast of municipal events. L31 clrY oF BURLTNGAME, CALIFORNIA COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS JUNE 30,2015 Special Revenue Funds Measure A Fund Special Assessment District Fund Traffic Safety Fund ASSETS Cash and investments Receivables (net of uncollectible amount of S0): Accounts receivable Due from other governments Total assets LIABITITIES AND FUND BALANCES Liabilities: Accounts payable Due to other funds Total liabilities Fund balances: Restricted Assigned Total fund balances Total liabilities and fund balances 5 \t*,tgt 4,238 127,378 S r,oos,soz S 7,321 376,594 s 3,91s 37,682 5,519 5 \arc,qot s 1,670,888 s SAO,SOS s 43,201 5sss s 1,870,407 1,670,888 380,509 43,201 t,870,407 1,670,888 380,509 43,201 s 1,670,888 s 38o,so9 5 43,201 138 Gas Tax Fund CITY OF BURTINGAME, CALIFORNIA coMBlNlNG BALANCE SHEET (Continued) NONMAJOR GOVERNMENTAL FUNDS JUNE 30, 2015 Special Revenue Funds Train Shuttle Fund Local Grants Fund Public W Access Fund state/Federal Grants Funds Development Fees Fund 5 99,776 S 4,005 S - 70,060 536,505 s 446,073 7 t8,798 2,042 5 328,419 28,965 S s,s04,137 568,173 127,378 s 99,776 s 74,065 $ 982,s78 s 720,880 s 3s7,384 s 6,199,688 s 20,7s7 s 26,346- 42,588 4gR 76q s 40,231 s 5 4,s25 S 91,853 531,453 4,525 623,306 s,031 79,025 453,582 352,859 5,031 453,582 720,aAO 352,859 5,516,342 5 74,06s S 982,s78 S 720,880 5 3s7,384 S 6,199,688 20,75L 69,034 528,996 720,84O 79,025 4,690,916 885,466 5 99,776 139 Tota I Nonmajor Governmental Funds CITY OF BURTINGAME, CALIFORNIA COMBINING STATEMENT OF REVENUES, EXPENDITURES, ANO CHAN6ES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS FOR THE FISCAT YEAR ENDED JUNE 30, 2015 special Revenue Funds Measure A Fund Gas Tax Fund Special Assessment District Fu nd Traffic Safety Fund REVENUES Fines, forfeitures, and penalties lnvestment income lntergovernmental taxes Char8es for services Grant revenue FUND BATANCES: Beginning of year End of year s s s s 83,4s4 3,67 6 310,097 Totalrevenue5 800,320 876,466 313 773 83,454 EXPENDITURES: Current: Generalgovernment Public safety Public works Parks, recreation, and librarv Shuttle bus operations Total expenditures 50,673 50,573 REVENUES OVER (UNDER) EXPENDTTURES 800,320 a76,466 263,100 83,4s4 OTHER FINANCING SOURCES (USES)r Transfers in Transfer out Total othe. financing sources (uses) 265,848 (600,0oql (746,000)\278,044) (600,000)(480,152)Q7a,O44)87,000) Net change in fund balances 200,320 396,314 174,944J (3,s45) 77,211 789,049 77,268 859,198 7,670,087 7,274,574 395,453 5 7,870,407 l-_Ezq.qgg_ _9_____lg9E99_ 46,741 :_____4320!_ 740 (87,000) CITY OF BURLINGAME, CALIFORNIA coMBlNt NG STATEMENT OF REVEN UES, EXPENDITURES, AND CHANGES !N FUND BALANCES (Continued) NONMAJOR GOVERNMENTAL FUNDS FOR THE FTSCAL YEAR ENDED JUNE 30, 2015 Special Revenue Funds Fund Train State/Federal Shuttle Grants Fu nds s Loca I G ra nts Fu nd Development Fees Fu nd Public TV Access Fund Total Nonmajor Governmental Funds s s s s 5,100 7,370 39,936 170,097 s 83,454 38,430 7,648,247 450,130 (1es) 62,000 373,536 637 770 ,246 62,000 373,536 637,515 45,036 777,407 3,303,s07 377,493 705 38,739 38,739 372,t98 50,673 152,356 734,578 t52,356 134,578 734,578 3 71.493 153,061 38,739 748,544 2,043 484,454 45,036 72,668 85,500 s,000 (488,76s)(34,311) 504,360 (2,234,720]. .7,729,760l. 148,012 85,500 (48!105)(34,311)748,072 12,922 2,043 689 10,725 220,680 825,203 56,103 2,988 452.893 7to,t55 132,779 4,757,179 _S ,e,ox s s,031 s 4s3,s82 s 720,880 s 3s2,8s9 s s,s76,382 741 (72,s781 CITY OF BURLINGAME, CALIFORNIA COMBINING SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BATANCES - BUDGET AND ACTUAL NONMAJOR GOVERNMENTAL FUNDS FOR THE FISCAT YEAR ENDED JUNE 30, 2015 Speaial Revenue tunds Measure A Fund Gas Tax Fund Budget Actual Budget Actual Variance with Final Budget Variance with Final Budget REVENUTS: Fines, forfeitures, and penalties lnvestment income lntergovernmental Charges for services Grants revenue Total revenues EXPENDITURES: Curr€nt: Generalgovernment Public safety Public works Parks, recreation, and library Shuttle bus operations Total expenditures REVENUES OVER (uNoER) EXPENOTTURES OTHER FINANCING SOURCES (USES): Transfers in Tra nsfers out Total other fi nancing souraes (uses) Net change in Iund balanaes FUND BALANCES: BeBinning of year End of year 1 The City does not budget forthis fund L7,27t 789,049 77,27t 24,000 448,402 17,268 859,198 s s s s 5 760,000 760,000 800,320 40,320 472,402 816,466 4,064 (600,000) (6oo,ooo) _9_199!99- (600 000 (746,000) (746,000) j_126,40r_ 760,000 800,32q ____40,3n_ 8'12,402 (600,ooo) 476,466 4,064 265,848 265,U4 (480,1s2)_wL 396,374 s 26,972 7,27 4,57 4 200,320 s 40,320 I,670,087 5 r,870,407 742 rc,rr)1 10,796- (746,000) l_$29.9!!_ CITY OF BURTINGAME, CALIFORNIA COM BINI NG SCH EDULE OF REVENU ES, EXPENDITURES, AND CHANGES lN FUND BALANCES - BUDGET AND ACTUAL (Continued) NONMA'OR GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2015 Special Revenue Funds Special Assessment District Fund Traffic Safety Fund Train Shuttle Fund gcdcet Actual Variance with Final Budget Variance Variance with Final with Final Budget Actual Budget Budget Actual Budget s s 4,000 370,157 -s 3,676_ 310,097 (zzi1 (60) s 96,000 s 83,4s4 $ (12,s46) s s s 314,157 3L3,773 (384)96,000 83,4s4 (L2,s46l 52,000 62,000 _ 64,340 50,673 13,667 - - J 747,500 734,578 72,922 64,340 50,673 13,667 _ _ t47,5oo 134,578 12,922 249,817 263,100 L3,283 96,000 83,4s4 (12,s46) (8s,s00) (72,s78], 12,922 85,500 85,500 (278,0441 (278,044\(87,000) (87,000) ___ @1,944L Q78,0441 (87,000) (87,000) - 8s,s00 8s,s00 - _5 Q8,22r)_(14,944) s L3,283 _s s,009_ (3,s45) I (12,510_ _S -_ 72,e22 _$ 12,s22_ 395,453 S sso,sog t The City does not budget for this fund. 46,741 s 43,20L 66,103 j_8,02s_ 743 CIW OF BURLINGAME, CALIFORNIA COMBINING SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES lN FUND BATANCES - BUDGET AND ACTUA[ (Continued] NONMAJOR GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2015 Special Revenue Funds State/Federal Gr!!ts Funds Local Grants Fund Actual Variance with Final Budget Variance with Final Budget Actual Budget REVENUES: Fines, forfeitures, and penalties lnvestment income lntergovernmental Charges for services Grants and subventions Total revenues EXPENDITURES: Current: General government Public safety Public works Parks, recreation, and library Shuttle bus operations Budget 5-s s s s s 505,696 373,s36 506,696 373,536 (1ss)(19s) (133,160)637,7L0 637,710 (133,160)631,575 637,515 Total expenditures REVENUES OVER (UNDER) EXPENDITURES oTHER FTNANCTNG SOURCES (USES): Transfers in Transfers out Net change in fund balances S FUND BAI.ANCES: Beginning ofyear End ofyear I The City does not budgetforthis fund. 506,696 3't7,493 135,203 705 152,356 s05,696 _W_135,203 153,061 (1s3,061) 2,O43 12,043\484,454 484,454 5,000 5,000 (488,76s) (488,765) 765 {70s) (1s2,3s6) Total other financing sources (uses) 5,000 (483,765) 2,043 S (2,043)s s,ooo 589 4,311.)S( 2,988 s s,031 452,893 l_l!3rgl 744 Development Fees Fund CIW OF BURLINGAME, CALIFORNIA COMBINING SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL (Continued) NONMAJOR GOVERNMENTAT FU NDS FOR THE FISCAL YEAR ENDED JUNE 30, 2015 Special Revenue Funds Public W Access Fund Totals Variance Variance with Final with Final Budget 1 Actual Budget Budget Actual Budget ssssss- 5,100 5,100 - 1,310 1,310 - 39,935 39,936 110,000 710,097 97 Budget Actual Variance with Final set s s s96,000 28,000 7,608,402 420,t57 sq&Ee6 83,454 38,430 L,648,247 460,130 L,073,246 (r2,s461 10,430 39,845 39,973 504,550 - 45,036 45,036 110,000 Ltt,407 L,407 2,72t,2ss 3,303,s07 80,000 38,739 4L,26t s82,252 80,000 505,595 64,340 L47,500 38,739 372,L98 50,673 152,356 t34,578 4L,26t 134,498 t3,667 (152,3s6) L2,922 798,536 748,544 49,992 4s,036 4sp!q 30,000 72,668 (39,8s4)t,922,779 2,554,963 632,244 (34,31;) (34,31;) - 148'ot2- L48'0r2- - (1,s05,843) (t,72e,76o1 (222,917], 82s,203 s 409,327 4,75L,179 S s,s76,382 238,s72 (1,74s,3ss) 504,350 (2,234,t2O1 265,848 (488,75s) s (34,311) 10,72s s 45,036 5 fie,OtZ 220,680 S (39,8s4): :: :5 q$,se 710,155 _s ?20,880_ t The City does not budget for this fund. L32,t79 _s 3s2,8s9_ 745 INfERNAL SERVICE FUNDS Generol Liability Fund - Ihis fund accounts for the servicing of the general liability self-insurance program of the City. lncluded are costs associated with self-insurance and the purchase of excess insurance to adequately protect the City. User departments are charged for this program at rates based on loss experience (frequency and severity of claims). Wo*ers' Compensdtion Fund -This fund accounts for the funding of the City's Workers' Compensation costs. User departments are charged for workers' compensation at rates based on loss experience and on departmental personnel budgets. OPEB (Other Post-Employment Benefrts) Fund - This fund accounts for the costs of the City's retiree medical program and related liabilities. A percentage "surcharge" on actual payroll provides the fund's revenues; benefits are paid out of the fund and the remaining funds are swept to the irrevocable trust fund established to reduce the oPEB liability incurred in prior years. Focilities Services Fund -This fund accounts for the costs of operation of the City's maintenance and repair of buildings and custodial services on a cost reimbursement basis. Equipment Seruices Fund - This fund accounts for the costs of operation, maintenance, and replacement of automotive equipment used by the various departments. Such costs are billed to the consuming departments at a rate that includes operation and maintenance, and an amount necessary to provide replacement ofthe equipment at a future date. lnlormation Technology Services Fund - This fund accounts for the costs of operation of the City's telephone and computer maintenance and acquisitions. Such costs are billed to the consuming departments at a rate that includes operation and maintenance, and an amount necessary to provide for replacement of computers. r46 CITY OF BURLINGAME, CALIFORNIA COMB!NING STATEMENT OF NET POSITION INTERNAL SERVICE FUNDS JUNE 30, 2015 General Liability Fund workers' Compensation Fund OPEB Fund Facilities Services Fu nd Equipment Services Fund lnformation Technology Seryices Fund Total A5SETs Current assets: Cash and investments Receivables (net of uncollectible amounts of S0): Due from consumers Due from other governments other receivables Advances from other funds lnventory Total current assets Noncurrent assets: Cash and investments, restricted Capital assets: Facilities, infrastructure, and equipment, net of depreciation Total noncurrent assets Total assets DEFERRED OUTFTOWS OT RESOURCES Deferred outflows related to pension Total deferred outflows ot resources LIABILITIES Current liabilities: Accounts payable compensated absences due in one year Claims and litigation due in one year Total current liabilities Noncurrent liabilities: compensated absences Claims and litigation Net pension liability s 3,056,174 s 2,500 6,67r 6,258,398 s 98 77,629 3L2,248 s 3'79,230 s 5,817,180 s 714,050 s 16,s37,280 69,297 - 69,297 3,055,345 6,276,725 3t2,24A 380,377 6,10apM 735,197 !6,878,776 31,028 31,028 87,976 7,543,528 24,7A3 7,656,227 31,028 _ a7,976 7,543,528 24,7a3 7,64i,255 3,055,345 5,307,153 372,248 468,233 7,652,472 759,980 18,555,431 72,338 46,924 3,318 722,540 ______________: __lZE_ 46,e24 3,318 722,sa0 7,087 35,497 89 t6,467 201,990 69,665 2,462 19,004 2,743 187 25,425 201,990 448 1,180,000 524,O45 ) AA7 1,539,000459,000 509,812 50,812 51,355 743,705 (4,020) (545,521) 5,455,523 644,858 7,457,078 143,705 s (4,020) s (4s7,605) S 6,999,0s1 s 659,641 s 9,s13,30s 376,264 3s3,oo; 4,s83,00; - 40's0s 30'02s - t,.ll,i3l 1,780,448 316,268 35,497 72,727 51,355 2,765,507 902,472 6,L63,448 376,26A 805,119 575,762 84,847 A,a49,256 792,057 724,583 8,810 325,450 - 792,057 724j83 8,810 325,450 87,976 7,543,524 24,143 r,656,227 Total noncurrent liabilities Total liabilities DEFERRED INFI.OWS OF RESOURCES Deferred inflows of resources Total deferred lnflows of resources NET POSITION Net investment in capital assets Unrestricted (defi.it) Total net posltion 2,162,533 s 2,162,533 5 147 CIW OF BURL!NGAME, CALIFORNIA COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION INTERNAL SERVICE FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2015 lnformation General Workers' Facilities Equipment Technology Liability Compensation OPEB Services Services Services Fund Fund Fund Fund Fund Fund Total 5 L,877,206 S 931,07s S 4,781,861 S 1,366,s07 S 1,138,91s S 1,0s0,399 S 11,14s,963 9,54L 655 345 2,927 L3,468 r,886,747 931,730 4,78L,86r 1,365,852 7,L41,U2 1,050,399 u,!59,43L OPERATING REVENUES: charges for services Other revenue Total operating revenues OPERATING EXPENSES: Salaries and benefits Supplies and services Depreciation lnsurance claims and expenses Total operating expenses operatinB income (loss) NONOPERATING REVENUES: lnvestment income Net nonoperating revenues Net change in net position NET POSITION: Total net position, beginning, as restated Total net position, ending 226,612 LL3,920 _s r,16r,s33_ l_143,?0s_ t___14,0rq- 5,966,457 t,620,046 600,273 918,839 L,778,738 972,s62 9,105,615 6,935,75L s86,s15 7,352,283 s 6,999,0s1 5 569,641 s 9,s13,30s 64; ^'X?:,2i1 i\Z:Zii, - t6,173 l3L,76sl 942,9s6 - 3,s68 -rra r-rF* ,r**, tStrr* 407,434 t44,572 562,652 4,080 62,L88 888,926 2t,448 t,9r8,sL2 (11,871) (4,020) s0,2s4 23,!u 77,837 2,0s3,816 77,409 4t,656 2,656 40,196 s,289 707,206 40,196 5,289 107,206 L,93s,92L 29,785 (4,020)52,9L0 63,300 83,126 2,16r,022 (s10,515) s (4s7,60s) 748 CASH FLOWS FROM NONCAPITAL FINAI{CING ACTIVITIES: Advances from other funds CASH FTOWS FROM OPERATING ACTIVITIES: Receipts from consumers Payments to suppliers Payments to employees for services Net cash provlded by (usd in) operatint adivities Net cash provided by noncapital tinancing activitiet CASH FLOWS FROM CAPITAL AITD REI.ATED FINANCING ACTIVITIES: Capital expenditures Gain on disposal of asset Net cash used ln capltal and related linanclng activities CIW OF BURLINGAME, CAL!FORNIA COMBINING STATEMENTOF CASH FLOWS INTERNAL SERVICE FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2015 lnformation General Workers' Facilities Equipment Technology tiability Compensation OPEB Seruices SeNices seruices Fund Fund Fund Fund Fund Fund Total s 1,888,s21 s 923,108 s 4,7s1,861 s 1,366,170 5 7,134,729 s 1,0s1,413 s 11,14s,802 50,610 (943,1s3) 300,315 (s85,854) (1s4,ss4) (941,203) 12,264,8481(75s,000) (12s,000) 14,759,929) 1747,2291 (41s,20s) 162,942\1 (6,869.30s) 1,194,131 (145,045) 372,248 38,017 554,970 47,268 2,O77,U9 sq 4s8 99,498 99,498 - 99,498 (446,990) - (446,990) - -EE- 75'337 - (430,5s3) (430,6s3) !7,409 41,656 2 656 40.196 5.289 r07,206 17,409 41,655 2,656 40,196 5,289 707,206 7,277,540 {103,389)372,248 40,133 274,0L7 52,557 1,787,700 _Llfj@_ _glry_ 338,4s7 _lry_ 661,4s3 _11]gq99!_ _s 3,Os6,rl_ : 6,2er,426_ _s 3n248_ _s tr,r?o_ _s s,81?,180_ _s ?14,0s9_ l_16,s68,39!- CASH FLOWS FROM INVESTING ACIIVITIES: lnvestment and rental income received Net cash provlded by lnvesting activities Net lncrease (decrease) in cash and cash equivalents CASH AND CASH EQUIVALENTS: Beginnint ofyear End ofyear RECONC|LIAT|ON OF OPERAnNG INCOME (tOSSl TO NEr CASH PROVIDED BY (USED II{I OPERATII{G ACTIVITIES: Ope6tinS income (loss) Adjustments to Reconcile OpeEting lncome (Loss) to net cash provided by (u*d in) operating activities Depreciation and Amonization Chang€s in Assets and Liabilities (lncrease) Decrea* in Receivables (lncrease) in lnventory {lncr6ase) in Deferred Outflows (Decrease) in Claims in Litigation lncrease (Decrease) in Accounts Payable lncrease in D€ferred lnflows (oecrease) in net pensioh liability lncrease in Compensated Absences L5,t73 562,652 2!,444 600,273 7,774. te,622t : (.t1, ll:llil 1,01s ,ii;3311 - 172,338) (46,s24) (3,318) {122,s80)(7ss,ooo) (12s,ooo) (880,000)28'84s 44s. 316'268 l3i;3li) .1:,i21 ''3;3i3' 3!1;i33 - (135,170) (88,330) 15,246l, 1230,7451 2,72s _&999_ s,028 Netcarhprovidedby(usedinl operatingactivities S 1,194,131 S (145,04s) 5 312,248 -$ n,ol--S 564,r?0- 3-17,268-l----?,011,il9- s 1,918,s12 s (11,871) s (4,020) 5 50,2s4 S 23,104 5 77,837 S 2,0s3,816 s 3,0s5,174 s 6,2s8,398 s 372,248 s 379,230 s s,817,180 s 714,0s0 s 16,s37,280 RECONCILIATION OF CASH AND CASH EqUIVALENTS TO THE STATEMENT OF NET POgTION: Cash and investments - current Cash and investments- restricted 31,028 37,O28 Cashandcashequivalentsonthe statementolcashflows _S 3,056,1?t_ : 6,28r,426- -$ 3n248- -S 3?r,r30- -S 5,81?,180- -5 ?14,059- l-19558,399- 149 FIDUCIARY FUNDS Seismic Educotion Fees - This fund accounts for fees collected from building permits and disbursed to the State of California in accordance with program regulations. Hotel Business lmryovement District (BID) Fees - This fund accounts for fee collections received as an Agent for the San Mateo County Visitors and Convention Bureau. Elementdry School Development Fees - This fund accounts for fee collections received as an Agent for the Burlingame Elementary School District. High School Development Fees -fhis fund accounts for fee collections received as an Agent for the San Mateo Union High School District. lJncloimed Property - Police Department (PD) -Th's fund accounts for unclaimed property received by the Bu rlinga me Police Department. Emergency Medicol Services (EMS) Troining Fund - fhis fund accounts for collections received as an Agent for county-wide EMS training. Business lmprovement District (BID) Fund - Eroadwoy - This fund accounts for collections received as an Agent for the Broadway Business lmprovement District. Librory Founddtion Account Fund - This fund accounts for collections and disbursements by the Library Foundation. Building Standards Administrdtion - This fund accounts for fees collected from building permits and disbursed to the State of California in accordance with program regulations. Quality ol Work Life (QWL) Committee -This fund accounts for collections received as an ABent for the Quality of Work Life Committee. alncloimed - General Accoun$ -fhis fund accounts for unclaimed property and collections received by the city. Downtown Business lmprovement District Fund - This fund accounts for collections received for the Downtown Business lm provement District. 150 Aaencv Funds CIW OF BURLINGAME, CALIFORNIA COMBINING STATEMENT OF CHANGES IN ASSETS AND TIABILITIES ALT AGENCY FUNDS JUNE 30, 2015 Balance June 30,2014 Additions Deductions Seismic Education Fees Assets: Cash and investments Total assets s 33,607 s 1,183 S s 34,790 5 33,607 5 1,183 S 5 34,790 Liabilities: Accounts payable Due to other governmental units Total liabilities Hotel BID Fees s 53,377 30,236 2,888 1,666 33,724 s 1,70s s 5 33,607 5 2,888 5 1,70s 5 34,790 Assets: Cash and investments Accounts receivable Total assets 5 L22,877 855,s13 45,535 76,608 s 77,236 778,905 s S Liabilities: Accounts payable Due to other governmental units Total liabilities 5 978,384 5 5 722,243 S 856,141 s 978,384 5 s 732,787 845,597 s 29,367 92,882 5 122,243 5 856,141 s 5 to3,426 752,775 Elementary school Development Fees Assets: Cash and investments Total assets Liabilities: Accounts payable Total liabilities High School Development Fe€s s 43,732 s 34,840 s 34,840 5 43,132 5 34,840 58,292S543,132 5 8,292 5 8,292 s s s 8,292 S s 43,732 Assets: Cash and investments Total assets Liabilities: Accounts payable Total liabilities Unclaimed Property - PD s 2s,s28 s 6.716 s S 32,244 s 25,528 5 6,176 5 5 32,244 s 2s,s28 5 2s,s28 s 6,776 j_____9tls_ s 32,2445 5 5 32,244 s s 22,24L Assets: Cash and investments Total assets Liabillties: Due to other governmental units Total liabilities s 12,891 5 12,891 5 9,3s0 5 9,350 5 5 22,241 s 12,891 5 9,3s0 5 5 22,247 I 12,891 5 9,350 5 151 5 22,241 Balance lune 30,2015 s 34,840 CITY OF BURLINGAME, CALIFORNIA COMBINtNG STATEMENT OF CHANGES lN ASSETS AND LIABILIT!ES (Continued) ALL AGENCY FUNDS JUNE 30,2015 Balance June 30, 2014 Additions Deductions EMS Training Fund Balance June 30, 2015 s (3,871) Assets: Cash and investments Accounts receivable Total assets Liabilities: Due to other governmental units Total liabilities BID - Broadway 5 (3,871)5 s (3,871) s s (3,871) 5 S S s (3,871) s (3,871)s (3,871) S 5 (3,871) Assets: Cash and investments Total assets Liabilities: Accounts payable Total liabilities Library Foundation Account Fund s g,asg s 1,613 s s,asg s 1,613 s 8,8s9 S a,asg 5 1,613 5 8,8s9 5 1,613 s 1,613 s a,ess s 1,613 5 8,8s9 5 1,613 S 8,8s9 5 1,613 s r,sEa s Lqaz 5 S 3,316 s 1,834 S 1,482 5 5 3,316 1,097 737 s 7,482 1,,8341,097 5 1,834 S 1,482 S s 3,316 Assets: Cash and investments Total assets Liabilities: Accounts payable Due to other governmental units Total liabilities Building Standards Administration S 385S Assets: Cash and investments Total assets Liabilities: Accounts payable Due to other governmental units Total liabilities QWL Committee s 4,309 sss0s s 4,86s s 4,309 5 3,407 556 S s 4,865 556s908s 908 3s2 ss 4,309 s 4,309 5 908 5 3s2 S 4,865 Assets: Cash and investments Total assets Liabilities: Due to other governmental units Total liabilities 5 (15s) S S s (16s) 5 (16s) 5 5 5 (16s) s (16s) s S 5 (16s) S S 152 5 (16s) s (16s) CITY OF BURLINGAME, CALIFORNIA COMBINING STATEMENT OF CHANGES lN ASSETS AND tlABlLlTlES (Continued) AtL AGENCY FUNDS JUNE 30, ZO15 Additions Deductions Unclaimed - General Accounts Balance .June 30,2015 Assets: Cash and investments Total assets s 2,477 s 5 2,411 5 1s0 s 5 2,s67 Liabilities: Due to other governmental units Deposit Total liabilities ss5 s 2,477 1s0 5 _1_____f;97 s 2,367 5 2,417 5 150 5 2,567 Assets: Cash and investments Accounts receivable Total assets Liabilities: Accounts payable Due to other governmental units Total liabilities TOTALS s 5 15,449 s 1,810 1,181 5 2,997 3,899 11,550 5 s 5,709 72,737 5 5 18,440 4,254 74,786 sS3,500 11,849 5 6s4 2,331 s 5 15,449 5 2,991 5 s 18,440 Assets: Cash and investments Accounts receivable Total assets Liabilities: Accounts Payable Deposit Due to other governmental units Total liabilaties 5 1,114,082 5 32,333 5 247,079 857,063 s 210,990 2,417 900,675 j_]1)!-082_ S s4,494 76,608 5 131,102 s 40,277_ 92,882 s 223,677 797,636 s 37,752 7,747 s 77,660 150 16,580 s 1,015,313 s 188,373 2,557 824,373 5 34,390 5 133,159 5 1,015,313 153 Balance June 30,2014 Downtown Business lmprovement District 150 This Page Intentiona$ Left Blank 1,54 STATISTICAL SECTION 155 This Page Intentionally Left Blank 156 STATISTICAL SECIION Financiol Trends These schedules contain trend information to help the reader understand how the City's financial performance and well-being have changed overtime. Revenue Copacity These schedules contain information to help the reader assess the factors affecting the City's ability to generate its property and other taxes. Debt Copocitv 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. De moqro ph ic o nd Econo mic I nfor matio n These schedules offer demographic and economic indicators to help the reader understand the environment within which the City's financial activities take place and to help make comparisons over time and with other governments. These schedules contain information about the City's operations and resources to help the reader understand how the City's financial information relates to the services the City provides and the activities it performs. Paqes 158-165 L66-173 L74-778 L79-t&L r.83-186 757 Contents Operotino lnformotion CIW OF BURLINGAME, CALIFORNIA NET POSITION BY COMPONENT LAST TEN FTSCAL YEARS (ACCRUAL BASrS OF ACCOUNTING) (AMOUNTS EXPRESSED rN THOUSANDS) 2006 2007 (1) 2008 2009 Governmental activities: Net investment in capital assets Restricted U nrestricted Total governmental activities net position Business-type activities: Net investment in capital assets Restricted U nrestricted Total business-type activities net position Primary government: Net investment in capital assets Restricted U n restricted Total primary government net position s 109,44s s 108,209 s 112,3s9 s 7os,s47 S 95,584 1,655 12,206 93,700 1,800 L2,709 92,79s 3,299 t6,265 60,967 3,575 41,005 )s S 5 27,6sL 5 27,63L S 30,824 S 32,014 8,610 13,540 14,385 18,119 5 36,26t 5 47,771 S 45,209 S so,r:: S 123,235 1,655 20,876 127,337 s 1,800 26,249 723,619 3,299 30,650 )s 92,987 3,575 59,724 s 14s,706 s 149,380 s 1s7,s68 s 1ss,680 158 lt)(1) 2070 (1) 20tL CITY OF BURLINGAME, CALIFORNIA NET POSITION BY COMPONENT (Continued) LAST TEN FTSCAL YEARS (ACCRUAL BASIS OF ACCOUNTTNG) (AMOUNTS EXPRESSED rN THOUSANDS) 2072 2074 20152073 s 59,936 3,515 42,298 5L,521 8,674 49,259 78,903 t2,LO2 27,234 64,020 26,400 34,84L 72,956 45,863 L4,732 74,345 36,446 (26,763l s s s s S S 10s,749 S 109,4s4 $ 118,239 5 72s,26t S 133,ss1 S Aa,OZa s 30,7s9 s 38,405 s 79,260 77,736 5 s6,L42S so,o19 S oo,rss S a+,eP 40,381 5,014 74,788 43,469 5,050 16,093 s s 46,34r 451 27,O92 s 73,884 s s0,48s 22,O38 45L S 90,69s 3,515 61,558 s 89,927 s 8,674 66,99s Ltg,284 L7,LL6 42,022 707,489 31,450 50,934 779,297 46,374 4t,824 s s S 124,830 36,897 (4,7zsl. s 1s7,003s 1ss,768 s 16s,s96 s L78,422 s 189,873 5 207,436 (1) Reclassifications in the categories were made to stay consistent and comparable with the presentation in the current year. (2) 2012 reflects net position as originally stated and does not include the effect of implementation of GASB Statement No. 65 in 2013 which restated beginning net position. 159 5 72,974 CITY OF BURLINGAME, CATIFORNIA CHANGE IN NET POSITION LAST TEN FTSCAL YEARS (ACCRUAL BASIS OF ACCOUNTING) (AMOUNTS EXPRESSED rN THOUSANDS) -?999- -?44,- -?99C- -?999- -ry-Expenrei GeneEl Sovernment Public satuty Public work5 Community development Parks, recrcation, and library Shuttle bus opeEtions Financing and other activities Total governmental activities expenses Business-type activities: Sewer Waste manatement Landfill Parking Euilding Total busine$-type activities expenses Total primary govemmental expenses Program Revenues cha.ges for seryices: General Bovernment Public safety Public works Cgmmunity development Parks, recEation, and library OpeEtinS SEnts and cont.ibutions Capit.l Bcn$ and contributions Total governmental adivities program aevenues Buiiness-types activities: Charges forsedices: Water Sewer Waste management Landfill Parkint Building Capital Brants and contributions Total business-type activities program revenues Total primary govemmental program revehues Net (expenses)/rcvenue Governmental activities Businesgtype activities Total primary govemment net revenues {expenses) GeneEl Revenuei and Othet Changet ln Net PGItlon Governmental activities: Taxes Property taxes Sales tax Translent occupancy tax Other taxes OthergeneEl revenue Special item - oPEB prefunding lnvestment eamings (expense) T6nsfers Total toverhmental activities Business-type activities: Other tares lnvestment eamings (expense) Tran5fers Total business-type activities Total primary government Change ln Net Positlon Govern mental activities Business-type activities Total primary governm€nt s 4,488 s 4,ss7 s s,1ss 19,758 fi,AU 18,981 7,526 7,6A5 4,307 a37 835 4,168 Lt,373 11,304 9,465 246 305 304 _:19- -28!- -3.!- 44,787 45,535 43,42s S s,493 S s,3s4 2L,154 21,050 8,071 4,453 3,263 2,3L8 10,868 9,191 318 130 2.0e3 _!EL 51,251 48,372 9,370 LO,1?0 587 L2,798 s 8,251. 10,155 2,095 13,355 6,276 roi42 2,267 r.r27 \ts4 1,31s 1,3s3 1,294 1,185 1,075 15,865 La,478 20,295 23,5L2 _14600_ l--!1,9!?- j-----Jilt3- 1----J9EL S 275 S s74 S 269 S 240 S 3so !,892 2,355 7,737 2,104 1.,!79 1,393 3,032 1,43A 555 3L4 377 144 263 3@ 335 2,5L4 2,8L0 2,7!9 2,565 2,543 2,080 165 2,730 2,590 2,040 1,086 J ...J -39- _s,5s?_ _W!_ _r,26!_ 9,273 Lo,26e 6,934 8,486 318 7,629 9,323 372 8,662 10,011 307 9,315 1o,442 1,217 4,726 9,584 70,484 10,425 11,119 lL,592 11,516 12,534 294 11,800 r,644. 1,638 1,6e1 i?rZ i:,x13 1,105 535 23 22,947 25.507 28,805 27,49r -$ ,r41- :-32i29- I 34199- -S-3ry9- :---31@- s (3s,230) s (36,2s4) s (34,s64) s (41,s88) s (38,103) 3,08s _!@_ _J2f3_ s,2s3 4,asL lj11L- l-ilusll -s-l3e,r:3l l-]3!er l-131313I ,2,467 7 10,390 8,806 2,498 t2,t98 9,458 11,255 2,to3 11,469 9,231 10,356 2,090 s 716 1,408 1,610 897 618 42,722 35,018 3a,714 35,176 38,305 747 905 906 610 442 299 (11,039) (464) (2,080) (980) l'5,4471 {e,se3) 44L lL,!741 (370) (s,oos) 32,729 35,459 3?,540 34.806 _:1199_ 7,492 (1,236) 4,149 (6,811) 202 (6.s04) -1919- -&93!- -lj4l- S s88 S 3,674 S 8.187 S (1,887) S 88 150 CITY OF BURLINGAME, CALIFORNIA CHANGE lN NET POSITION (Continued) LAST TEN FTSCAL YEARS (ACCRUAL BASIS OF ACCOUNTTNG) (AMOUNTS EXPRESSED rN THOUSANDS) 20LL 2012 20L3 2OL4 _?!1E_ s 6,803 s 6,3s8 s 6,188 s 7,2ss 5 4,Br21,741 20,265 2r,L6X L9,L4t 23,005 9,514 a,24A 9,268 1.2,961 8,267 7,752 r,245 941 !,OO7 L,745 L0,475 9,a2a 11,065 L7,162 !5,432 324 249 779 188 135 __2&S_ _24._ _tl!:- -28J2- -2/32- 51,56s 48,408 52,355 _s4,s91_ ss,037 to,745 71,47! r,454 1,435 1,350 1,183 1,296 _Jy_ !,222 1,3\7 _t3!!_ 22,60A 24,107 24,9a0 23,L5a 24,827 :____J!E_ _s 7r,s16_ j_____ll;35_ :__JJE_ _s ?r,853_ 616 2,202 7,713 744 2,744 2,210 $ 13,310 8,041 L3,404 5,O37- 805 L2A2 41,879 (1,14s) 1r,282) (2,427], 39,452 11.082 9,686 681 1,053 2,760 5 L3,672 8,495 16,183 4,474- 472 4,5L3 47,413 224 11,427) (4,s13) ls,712) 42,707 !17 212 3,230 3&t 2,880 9a7 S 14,394 9,199 18,244 5,311 144 3,916 5!,272 314 (3,3s3) (3,916) (6,9ss) 44,257 302 r,097 4,075 734 738 t6,023 16,931 !,694 350 2,477 2,O57 S 15,497 10,196 27,357 4,595 344 (6,600) 576 _vJ!_ 51,739 (1,329) (s,774) (7,103) 44,636 1,056 3,870 651 3,372 1,727 !5,425 15,679 943 445 2,573 1,980 5 16,577 11,101 23,698 4,697 7,254- 481 _LB_ (1,4s1) 13,1271 (4,s78) 56,458 9,559 9,509 936 72,727 9,553 634 9,332 467 L77 t0,L44 481 67 s 5 560 319 3,189 3,s20 - r,249 4 13,418 9,379 A,L67 11,118 10,948 !2,734 14,556 653 L3,704 16,L57 465 L4,475 16,791 564 1,802 1,404 1,950 1,580 2,428 !,701 31,159 33,860 36,355 39,532 37,045 _s 44ilL I 432:9_ l__1193?_ l_gj,!gl_ I 4?,993_ s (38,247) s (3e,02e) s (44,18s) s (43,44s) s (44,08s) 8,ss1 s.7s3 _L14_ 16374 12,2).8 _t____G9.q99I :____Jrr, r7ll _1____133891t :____r pr:L _g____lUEZtI 3,704 A,7a4 7,023 8,290 76,947 6.124 _19!J_ 4.430 _4_ _l_W_ l--lE?s- -g----l?E- t--tll!r- -t-----12r9?- -9-----?3Es!- 76L This Page Intentionally Left Blank 162 CITY OF BURLINGAME, CALIFORNIA FUND BALANCE OF GOVERNMENTAL FUNDS LAST TEN FTSCAL YEARS (MODTFTED ACCRUAL BASrS OF ACCOUNTTNG) (AMOUNTS EXPRESSED rN THOUSANDS) 2006 2007 2008 2009 S s s 669 s 20L0 General Fund: Reserved Unreserved Subtotal General Fund All other governmental funds Reserved Unreserved, reported in: Debt service funds Special revenue funds Capital projects funds Subtotal General Fund All other governmental funds: Nonspendable Restricted Committed Assigned 40 8,707 9,802 58088670 6,676 s 8,881 6,276 5 e,tqt S 9.890 s e,sso s 7,346 s 5,8s6 s 1,666 s 4,s09 5 7,724 s 6,111 $ 9,024 739 2,643 Subtotal all other governmental funds 5 q,tgo S s,026 s 8,32e s 6,858 s e,763 2011 (1)20L2 2013 20t4 2015 General Fund: Nonspendable Assigned Unassigned 481 577 60s 757 s 3 10,200 1,655 1 LL,927 3,591 2t7 12,300 7,430 22t 9,413 13,25L 224 t8,773 10,465 s S s s 11,858 15,519 L9,947 22,885 29,462 s S 375 10,851 25,220 8,76216,140 t3,246 25,348 46,978 46,5L4 45,208 s 34,238 s 40,867 s 66,92s s 69,400 s 74,670 (1) Beginning in fiscal year 2011, the City implemented GASB Statement No. 54, which provided updated guidance on fund balance desiBnation and reporting. 475 5,756 s 204 11,898 396 26,004 79,4L2 1,155 383 s L3,617 31,863 651 5 163 Subtotal all other governmental funds 22,370 Total governmental fund balance CITY OF BURLINGAME, CALIFORNIA CHANGES !N FUND BALANCE OF GOVERNMENTAL FUNDS LAST TEN FTSCAL YEARS (MODTFIED ACCRUAL BASIS OF ACCOUNTING) (AMOUNTS EXPRESSED rN THOUSANDS) 2006 2007 2008 2009 REVENUES: Property taxes Sales and use taxes Transient occupancy taxes Other taxes Licenses and permits Fines, forfeitures, and penalties lnvestment income Motor vehicle in lieu tax Charges for services Grant and governmental revenue Other revenue Total revenues EXPENDITURES: General government Public safety Public works Community development Parkt recreation, and library shuttle bus operations Other Capital outlay Debt service: Principal lnterest Total expenditures EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Transfers in Transfers out Pension obligation bonds issued Payment to CaIPERS retirement Proceeds from issuance of debt Payments to refunded bond escrow agent Total other financing sources (uses) Net change in fund balances 4t,797 43,801 45,869 43,440 s 10,390 8,806 9,273 L,843 927 984 773 6s5 4,237 2,003 1,306 s Lt,469 9,231 10,355 1,900 967 L,784 L,497 190 4,t45 2,091 777 72,798 9,459 77,265 1,981 r,227 7,778 t,677 t22 3,797 2,748 823 72,798 8,257 10,155 2,072 298 t,298 9s9 83 3,986 2,722 877 2,050 7,456 6,680 11,001 4,306 L8,949 6,881 841 9,028 286 803 540 15,455 (13,268) 4,686 16,550 6,204 780 8,184 306 2,405 2,297 16,93s (76,471], 32,975 (32,393) 4,987 18,846 4,723 7,697 9,505 304 2,547 7,543 15,532 (7,50s) 5,ttL t9,o97 6,839 890 10,319 318 2,738 2,704 L7,398 (6,686) ** *,^* rar" "* (2,4871 333 (4,e63) (74,3771 2,187 L,046 7,927 10,7L2 s (300) s 1,37e 5 2,s64 s (3,66s) Debt service as a percentage of noncapital expenditures 3%17% Certain reclassifications have been made to facilitate comparability between prior year CAFRS. 764 9%9% S S 2010 CITY OF BURLINGAME, CALIFORNIA CHANGES lN FUND BALANCE OF GOVERNMENTAL FUNDS (Continued) LAST TEN FTSCAL YEARS (MODTFTED ACCRUAL BAS|S OF ACCOUNTING) (AMOUNTS EXPRESSED rN THOUSANDS) 20t7 2072 20L3 2014 s L2,209 s 6,276 LO,342 2,t59 92 467 695 108 6,392 2,652 552 13,310 s 8,041 73,404 2,4t6 97 1,025 803 L48 6,127 2,162 845 13,672 s 8,49s 16,183 2,582 100 889 472 6,270 3,172 904 15,539 s 9,199 t8,244 2,970 702 933 148 6,72r 2,383 370 5 t6,677 11,101 23,698 4,697 84 921 374 8,O76 L,867 L,25s 68,750 75,497 70,796 27,357 4,595 t72 874 391 7,704 L,987 345 47,945 48,372 s2,679 56,608 63,058 4,842 18,830 7,231 780 8,s00 130 5,028 5,458 L7,378 5,773 73L 8,620 139 T7 4,O23 6,669 t8,392 9,790 L,L72 9,463 t45 s,699 18,89s 7,834 854 9,328 t79 6,447 3,527 2,337 s,989 20,o82 Lt,280 t,04t 10,485 188 4,63t 2,752 3,206 6,594 4,434 23,230 8,311 1,2M 15,145 135 4,964 2,548 66,605 2,212 1,922 7,526 2,425 3,034 2,3U 50,96949,475 52,030 (7,s30)(3,6s8)t,7t0 55,100 59,655 1.508 3,404 2,L45 26,3r2 (2s,029) 29,276 (24,7631 33,209 (29,2931 37,320 (38,248) 9,936 20,300 (30s) 21,278 405 20,637 4,978 24,553 (928) 3,L27 s 6,629 s 26,0s9 5 2,474 S s,zto tO% lZYo t3% t3% s 2,40s s t7,620 9%2t% 165 20L5 16,797 (6,861) 33,694 (30,s67) Category CITY OF BURTINGAME, CALIFORNIA ASSESSED VALUES OF TAXABLE PROPERW LAST TEN FISCAT YEARS 2005-05 2006-07 2007-08 2008-09 Residential Commercial lndustrial Government lnstitutional Miscellaneous Recreational Vacant Land SBE Nonunitary Unsecured Unknown TOTALs Total Direct Rate 3,770,638,803 s L,0s0,922,639 340,313,166 L,6L9,429 30,906,932 2,249,33L tI,499,783 8,433,634 1,569,728 272,4r4,954 4,097,648,898 s 1,111,631,900 367,t37,642 1,651,816 3t,826,O7t 2,294,3L2 12,299,9L3 10,666,591 t,290,599 324,LOO,493 4,425,787,7t4 s L,218,274,542 386,s32,903 1,684,851 32,449,526 2,340,t92 12,527,505 10,038,189 3,837,42s 29L,377,sL6 4,752,698,976 t,205,209,O20 403,343,837 L,7L8,546 27,466,494 2,386,992 20,570,L00 43,89L,543 3,837,425 300,758,515 L45,525 s s s,490,568,395 s s,960,s48,240 s 6,384,8s0,362 5 6,762,026,973 0.14536 0.14531 0.14525 o.L4522 Sou rce: San Mateo Cou nty Assessor 2004/05 - 2ol3 / L4 combined tax rolls Notes: Exempt values are not included in the total. tn L978, the voters of the State of California passed Proposition 13 which limited taxes to a total maximum rate of 1%, based upon the assessed value of the property being taxed. Each year, the assessed value of property may be increased by an "inflation factor" (limited to a maximum of 2%). With few exceptions, property is only reassessed as a result of new construction activity or at the time it is sold to a new owner. At that point, the property is reassessed based upon the added value of the construction or at the purchase price (market value) or economic value of the property sold. The assessed valuation data shown above represents the only data currently available with respect to the actual market value of taxable property and is subject to the limitations described above. 165 2009-10 CITY OF BURL!NGAME, CALIFORNIA ASSESSED VATUES OF TAXABLE PROPERTY (Continued) IAST TEN FISCAT YEARS 2010-11 20LL-12 20t2-13 20t3-14 20t4-15 s 4,919,813,993 s L,229,890,648 4t7,397,O8L t,752,9t4 23,302,586 6,tt6,t46 L7,974,577 46,6LO,28L 3,837,425 299,902,769 4,964,900,673 t,r97,204,s46 445,945,589 477,622 5,108,197 47,603,69s 2t,392,6s6 50,379,786 3,680,597 274,429,627 s s,067,435,558 s t,203,204,597 449,409,L92 481,2t7 5,r79,683 46,L49,474 21,s65,053 44,684,470 2,s60,4s2 270,906,684 5,292,630,080 s t,264,338,49L 469,569,724 490,84r 5,313,527 47,73L,445 2L,330,221 s3,260,644 2,560,452 275,840,943 5,657,587,039 1,304,028,690 487,6t2,O64 t,L3t,74t 5,686,994 s2,2L6,889 21,756,820 6t,242,20r 2,560,4s2 302,7t2,78s 45,233,L93 5 6,to6,922,682 L,406,432,28r 49L,904,9L7 L,t36,878 6,739,774 52,541,265 27,696,88L 42,238,634 2,s60,452 307,284,506 _S 6,966,sr8,4r0_S 7,ott,tzz,g8s S 7,111,576,380 S 7,433,066,368 $ 7,941,768,868 5 8,44s,4s8,27o o.L452t 0.14520 0.14519 o.t4209 0.14205 o.L4235 t67 CITY OF BURLINGAME, CALIFORNIA NET TAXABLE ASSESSED VALUE HISTORY TAST TEN FISCAL YEARS LIEN YEAR SECURED UNSECURED ssE NONUNITARY NET TOTAL ASSESSED VALUE % CHANGE 2OOs/06 2006/07 2007 /08 2008/09 2OO9/70 2010/\t 20t1/t2 20t2/13 20L3/L4 2OL4/1,s s 5,216,583,71't s 5,535,157,143 6,Oa9 ,635,422 6,457 ,43L,033 6,562,Asa,226 6,7 33,012,764 6,a3a,109,244 7,t54,664,973 1,636,495,63\ 8,135,513,312 272,4L4,954 s 324,tO0,493 29t,377,5t6 300,758,515 299,902,759 274,429,627 270,905,684 275,840,943 302,7!2,785 307,284,506 1,569,728 s 1,290,599 3,837,42s 3,a37,425 3,837,425 3,580,597 2,560,452 2,s60,4s2 2,560,452 2,560,452 5,490,568,399 5,960,548,235 5,384,850,363 6,7 62,026,973 5,966,s98,420 7,Ot7,L22,944 7,tt7,576,380 1,433,056,368 7,947,768,864 8,445,454,270 73.97v. 8.56v. 1.!2% 5.91% 3.03% 0.64% !.43% 4.52% 6.a4% 6.34/o Sourcer San Mateo County Assessor 168 TAXABLE PROPERW VATUES Year General County, City, and Schools (1X2) CITY OF BURLINGAME, CALIFORNIA PROPERTY TAX RATES - DIRECT AND OVERTAPPING GOVERNMENTS IAST TEN FISCAT YEARS (PER s100 OF ASSESSED VALUE) DEBT AND/OR SPECIAL ASSESSMENTS Community Elementary High Peninsula College School School Total City County Hospital -Egig!- District District TaxRate sssssss 0.0000 0.0000 0.0000 0.0065 0.08s1 0.0174 1.1090 0.0000 0.0000 0.0000 0.0184 0.081s 0.01s6 1.1155 0.0000 0.0000 0.0000 0.0171 0.0830 0.0150 1.1151 0.0000 0.0000 0.0000 0.0165 0.1083 0.0298 1.1546 0.0000 0.0000 0.0000 0.0182 0.1274 0.0319 7.7775 0.0000 0.0000 0.0000 0.0193 0.1323 0.0322 1.1838 0.0000 0.0000 0.0000 0.0199 0.1388 0.0383 7.7970 0.0000 0.0000 0.0000 0.0194 0.1448 0.0381 7.2023 0.0000 0.0000 0.0000 0.0194 0.L772 0.03ss 7.2321 0.0000 0.0000 0.0000 0.0190 0.101s 0.047s 1.1680 Fiscal 2006 2007 2008 2009 2010 20LL 20L2 2013 20L4 2015 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 City's Share of 1% Levy Per Proposition 13 (3) General Obligation Debt Rate Redevelopment Rate (4) Total Direct Rate (5) Note: (1) lnlgT8,CaliforniavoterspassedProposition13whichsetthepropertytaxrateatal.00%fixedamount.Thisl.00%is sharedbyalltaxingagenciesinwhichthesubjectpropertyresides. lnadditiontothel.00%fixedamount,property owners are charged taxes as a percentage of assessed property values for the payment of any voter approved bonds. (2) Overlapping rates are those of local and county governments that apply to property owners within the City. Not all overlapping rates apply to all city property owners. (3) City's share of 1% levy is based on the City's share of the General Fund tax rate area with the largest net taxable value within the City. Educational Revenue Augmentation Fund (ERAF) General Fund tax shifts are not included in tax ratio figures. (4) Redevelopment Agency (RDA) rate is based on the largest RDA tax rate area (TRA) and includes only rate(s) from indebtedness adopted prior to 1989 per California State statute. RDA direct and overlapping rates are applied only to the incremental property values. The approval of ABX1 26 eliminated Redevelopment from the State of California for the fiscal year 2072/13 and years thereafter. (5) Total Direct Rate is the weighted average of all individual direct rates applied to by the government preparing the statistical section information and excludes revenues derived from aircraft. Beginning in 2013-14 the Total Direct Rate no longer includes revenue generated from the former redevelopment tax rate areas. Challenges to recognized enforceable obligations are assumed to have been resolved during 2072-13. For the purposes ofthis report, residual revenue is assumed to be distributed to the City in the same proportlons as general fund revenue. 0.7707 0.0000 0.0000 0.7424 169 CITY OF BURLINGAME, CALIFORNIA TOP TEN PROPERTY TAXPAYERS JUNE 30,2015 (AMOUNTS EXPRESSED rN THOUSANDS) 2014 Taxpayer Taxable Assessed Value Total Taxable Assessed Value (1) 1.41% 1.38% 1.26% 1.24% 0.65% 0.53% 0.43% 0.35% 0.34% 0.34% Taxable Assessed s 115,209,000 105,182,000 92,E18,651 66,200,000 49,367,791 44,305,434 43,000,000 35,853,000 29,603,244 Percentage of Total Taxable Assessed Rank -............}L R"nk -..sJ]l- Huden Bay Park Pla2a LLC EQR-Northpark LP lnland Ameri6n LodSinB Burlin HMC Burlingame Hotel LLC Felcor CCS Holdin8s LP 9520 EQR Skyline Terrace LP DCI Rollins Road LLC Upsky lnternational Holdings Limited 100-198 california Drive tLC Harbour View Hotels, lnc 719344,746 116,405,575 106,664,055 104,523,505 54,817.896 44,506,579 36,ors,172 29,141,520 2E,480,858 2A,474,O38 5 668,478,594 1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10 s EQR-Northpark LP inland American Lodging Burlin 8ay Park Plaza Alsociate! Felcor CCS Holdings LP 9520 EqR skyline Terrace LP One Bay Plaza Associates LLC DcT Rollins Road LLc Harbour View Hotels, lnc Upsky lnternational Holdin8s timited t.45.4 t.34% 1.L7% 0.83% 0.620,4 0,56% 0.54% 0.450/" o.37.4 7.92% 29,004,443 s 611,s47,s63 0.3704 7.70% (1) 2014-15 Local Secured Arses*d Valuation Source: San Mateo County Assessr, HDL coren & Cone 5 a,445,4s8,270 L70 ctTY oF BURLINGAME, CALIFORNIA PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN FISCAL YEARS Fisca I Year Total Tax Levy Cu rrent Collections Percent of Current Tax Collections to Total Tax Levy Delinquent Tax Collections Total Tax Collections Percent of Total Tax Collections to Total Tax Levy Tax 2006 2007 2008 2009 2010 20Ll 20L2 20L3 20t4 2015 s 9,141,6s1 9,939,398 r.0,551,563 11,304,881 11,653,813 1L,729,355 lL,900,220 12,445,10L 13,312,310 L4,L67,758 5 9,278,777 8,799,467 9,371,585 9,730,358 8,840,920 10,050,908 10,976,456 LL,162,421 72,745,227 73,744,01,4 10t50% 88.53% 87.90% 86.07% 75.86% 8s.69% 92.24% 94.51% 95.74% 97.lt/o 5 9,278,777 8,799,467 9,371,585 9,730,3s8 8,840,920 10,050,908 L0,976,456 tL,762,421 L2,745,227 13,744,074 L0L.50% 88.53% 87.90o/o 86.07o/o 7s.86% 85.69% 92.24o/o 94.5t% 95.74% 97.0L% s Notes: (1) lnfiscalyear200g-l0aspartoftheStateofCalifornia'sbudgetbalancingactions,theStateborrowed S1,145,268 of the City's property tax revenue, with the promise to repay the Proposition 1A loan in three years with 2% interest. These amounts were fully reimbursed by the State of California as of June 30,2073. (2) Current tax collections are less than the levy due to roll corrections, county administrative charges, and other adjustments which may occur after the date of levy. (3) The City participates in the Teeter Plan under California State law. Under the Teeter Plan, the County remits the entire tax levy and manages delinquent tax collections with the associated interest and penalties. Source: San Mateo County Controller's Office; Audited City financial records - General Fund 1,7r This Page Intentionally Left Blank t72 Fiscal Property CIW OF BURLINGAME, CALIFORNIA GENERAL GOVERNMENT TAX REVENUES BY SOURCE (MODTFIED ACCRUAL BASIS OF ACCOUNTTNG) (AMOUNTS EXPRESSED !N THOUSANDS) Sales Tra nsient Occupancy Tax Other Taxes lnter- governmental RevenuesTaxTaxYear Total 2006 2007 2008 2009 20to 20tt 2012 20t3 2014 2015 8,806 9,23t 9,4s9 8,25r 6,276 8,041 8,495 9,199 10,195 11,101 9,273 10,356 rt,265 10,155 to,342 L3,404 16,183 L8,244 2t,357 23,698 2,204 t,523 1,981 t,782 L,857 2,4t6 2,582 4,2L7 2,970 3,048 1,041 567 505 313 403 1,500 1,896 1,408 1,62s 1,648 3L,7L4 33,146 35,408 33,299 3L,087 38,67L 42,828 48,607 51,645 56,t72 (10,390 s rt,469 L2,L98 t2,798 t2,209 13,310 t3,672 15,539 L5,497 t6,677 s s s s Source: Audited City financial records - Governmental Funds 173 CITY OF BURLINGAME, CALIFORNIA RATIOS OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS Business-Type Activities Pension Fiscal Lease Revenue storm obligation sewer Year Bond Drainage Bond Bonds state L@ns Lease Purchase Bonds Water Bonds and Loans Total Prima ry Government Percentage of Personal 3.2gyo 4.aoyo 5.a1yo 5.7Ayo 7.25% 7.7A% 6.97vo 7.74% 7.74% 6.47% Per lncome (1) capita (1) 2006 2007 2008 2009 2010 2011 2072 2073 2074 2015 6,18o,ooo 5,645,000 5,095,000 4,530,000 3,950,000 11,555,000 10,935,000 19,985,000 18,889,859 15,999,489 9,805,000 9,550,000 19,530,000 79,596,924 79,O83,477 s 31,395,000 30,280,000 29,020,000 27,505,000 26,010,000 24,235,000 22,275,000 20,095,000 17,595,000 s 10,s21,7s0 11,055,020 10,596,649 70,249,390 9,797,549 77,776,097 13,465,890 364,204 320,209 274,884 1,500,000 1,305,907 7,L04,952 897,598 583,639 5 18,02s,000 15,435,000 26,025,000 24,250,00O 22,400,0@ 20,470,00O 1&225,000 17,525,000 30,260,4O7 24,129,87 S 18,o8o,ooo 17,540,000 30,475,000 29,550,000 28,600,000 27,625,000 25.925,000 24,895,000 24,550,763 23,372,756 52,806,750 42,07r,o20 702,57r,649 97,599,390 92,346,549 704,74t,o97 103,552,797 105,779,156 114,511,150 105,838,382 s s 7,467 2,844 3,566 3,360 3,747 3,735 3,522 3,563 3,861 3,597 Note: Details regarding the City's outstanding debt can be found in the notes to the basic financial statements. present a useful estimate, personal income data for calendar year 2014 has been used. 774 CITY OF BURLINGAME, CALIFORNIA RATIOS OF GENERAL BONDED DEBT OUTSTANDING LAST TEN FISCAL YEARS Fiscal Year General Obligation Bonds Net Totaltusessed Value Percentage of Estimated ActualTaxable value of Property Burlingame Population Per Capita 2006 2007 2008 2009 2010 20lt 2012 2013 2074 2015 s 31,395,000 30,280,000 29,020,000 27,605,000 26,010,@0 24,235,O00 22,275,000 20,095,000 !7,695,000 S 5,490,s68,399 5,960,548,235 6,384,850,363 6,7 62,026,97 3 6,966,598,420 7,0t1,722,9a8 7.111.576,380 7,433,066,368 7,941,768,868 8,44s,458,210 o.00/. o.53% 0.47% o.43v. o.40% o.37% 0.34% 0.30% 0.2s/. 0.2!% 28,180 24,277 28,453 28,762 29,050 29,342 29,106 29,426 29,685 29,700 1,110 1,064 1,009 950 886 833 757 677 596 Note: The City has had no general obligation bonds outstanding over the last ten years. However, because the 2006 Pension ObliSation Bonds are to be repaid with general government resources, they are shown as general obligation bonds included in this table. 775 CITY OF BURLINGAME, CALIFORNIA COMPUTATION OF DIRECT AND OVERTAPPING DEBT* JUNE 30, 2015 s 8,445,459,270 Total Debt June 30,2015 2014-15 Assessed Valuation*r OVERIAPPING TAx AND ASSESSMENT DEBTr San Nrateo Community College District Burlintame Elementary School District Hillsborough School 0istrict TOTAI. OVERLAPPING TAX ANO ASSESSMENT DEBT OIRECT ANO OVERI.APPING LEAsE OBTIGATION DEBT: San Mateo County GeneEl Fund ObliSations San Mateo County Board of Education Certificates of Participation City of Burlingame General Fund ObliSations (Net) City of Burlingame Pension ObliSation Bond City of BurlinSame - Storm Drainage Revenue Bonds, Series 2010 (Net) City of Burlingame - Sto.m Drainage Revenue Bonds, Series 2012 {Net) City of gurlintame - Master Equipment Lease Purchase Agreement, 2011 City of Burlingame - California Ener8y Commission, 2012 TOTAL GROSS DIRECI AND OVERTAPPING LEASE OBLIGATION DEBT Lessr City of Burlingame General Fund ObliFtions Supported from Enterprlse Revenues Less: City of Burlintame Penslon Obligations Supported by Enterprise Revenues TOTAL NET DIRECT AND OVERI.APPING GENERAL FUND OBI.IGATION DEBT 664,859,994 557,523,058 82,462,486 55,001,434 460,054,816 10,430,000 16,999,489 17,595,000 8,888,030 L0,r95,447 583,639 274,8U $ s2s,231,30s s.09s% 5 L4.553% 94.5890/o 0.7270/0 Percent Applicable {1) City's Share of Debt June 30,2015 33,874,677 81,136,331 78,000,447 59,852 s 193,081,240 23,440,302 531,409 15,999,489 17,695,000 8,888,030 70,195,447 583,639 274,884 s 78,708,200 s 3,112,500 4,423,75O s 71,171,950 54,736,489 47,2OO,239 277,O52,95L s.09s% s 5.O95% 100.000% 100.000% 100.000% 100.000% 100.000% 100.000% TOTAL GROSS DIRECT DEBT TOTAT NET DIRECT DEBT TOTAL OVERLAPPING DEBT GROSS COMBINED TOTAI. DEBT NET COMBINED TOTAL DEBT s I 5 $ s 277,7a9,4& 254,253,790 Ratlor to 201+15 Asselsed Valuatlon: Total Overlapping Tax and Assessment Debt.....................-.. Gross Combined Direct 0ebt (S54,736,489)........................ Net Combined Direct oebt (S47,200,239)............................. Gross Combined Total Debt ................. * Sourcer California Municipal Statistics, lnc. *1 Total assessed valuation less other exemptions 2.29% 0.65% 0s6% 3.22% 3.730/0Net Combined Total Debt Source: California Municipal Statistics, lnc. Note: Overla pping governments arc those that coincide, at least in paG with the teograph ic boundaries of the City. This *hedule estimates the portion of the outstanding debt of those overlapping Sovernments that is borne by the residents and busines3es of the city of Burlingame. This process recognizes that, when conside.in8 the city's ability to issue and repay lont-term debt, the entire debt burden borne by the residents and busine$es should be taken into account. However, this does not imply that every taxpayer is a resident and, therefore, responsible for repaying the debt of each overlappint government. (1) PercentaSe of overlappinS agency's assessd valuation located within boundaries of the City. (2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue, and tax allocation bonds and non-bonded capital leae obligations. 176 I 1,359,845,972 CIW OF BURLINGAME, CALIFORNIA LEGAI DEBT MARGIN INFORMATION LASTTEN FISCALYEARS (AMOUNTS EXPRESSED lN THOUSANDSI 2005 2001 2009 2010 2077 20L2 20r4 20L52013 Oebt limlt Pension Obligation Bond Total net debt applicable to the limit as a percentage of debt limit 5 780,344 S 888,627 S 239,432 S - 31,395 30,280 2s3,s76 s 257,247 s 266,684 s 29,020 27,605 26,010 295,550 s 295,s50 s 297,815 s 299,010 24,235 22,275 20,095 77,695 o.e/o 3.s%12.6%77.4% Legal Debt Margin Calculation for Fiscal Year 2015 Gross Assessed Valuation Multiplied by: (1.) 10.6%9.8% a,445,458,270 3.75% 8.2%7.5%6.7%5.9/o 5 )Less: Outstanding Debt Legal Debt Margin 376,704,685 (17,69s,000) 299,009,685 (1)CaliforniaGovernment,CodeSection43505setsthedebtlimitatl5%. TheCodesectionwasenactedwhenassessedvaluationswerebasedon25%of fullmarketvalue.Thishassincechangedtol00%offullmarketvalue, Thus,thelimitshownis3.T5%(on+fourththelimitofl5%). 777 2008 CITY OF BURLINGAME, CALIFORNIA PLEDGED REVENUE COVERAGE IAST TEN FISCAT YEARS Water Revenue Bonds Fiscal Year Water Charges Less: Operating Expenses Net Available Revenue Principal Debt Service Coverage 2005 2007 2008 2009 20to 20tl 20L2 20t3 20t4 2015 Fiscal Year 2.7t 3.19 2.L3 2.27 2.LL 2.27 L.87 2.tL 3.42 2.87 s 8,726,049 10,131,904 LL,1L9,428 11,800,380 11,515,884 t2,734,554 t3,708,448 L4,874,705 L6,O23,092 ts,425,234 s s,348,313 6,t32,96L 6,426,sL3 6,801,139 6,874,L20 7,747 ,436 9,tt2,553 9,577,242 8,955,437 9,507,833 3,377,736 3,998,943 4,692,9t5 4,999,24L 4,64L,764 4,987,LtB 4,595,895 5,297,463 7,067,655 5,977,40t 520,000 540,000 940,000 92s,000 950,000 975,000 1,225,000 t,220,oo0 1,125,000 1,09s,000 727,618 774,6t8 t,264,786 L,279,L73 r,249,998 1,218,998 L,232,332 1,295,085 942,966 964,149 s s s Wastewater Revenue Bonds Wastewater Less: Operating Expenses Net Available Revenue Debt Service charges Pri ncipa I lnterest CoveraSe 2006 2007 2008 2009 2010 20tt 2012 20L3 20t4 2015 s.80 7.3r 2.99 2.99 3.11 3.99 4.49 3.88 4.t4 3.40 s s s s9,584,286 LO,663,634 Lr,59t,922 t2,466,935 L2,534,507 t4,566,587 t6,t57,287 16,79t,449 t6,93r,432 t5,679,343 5,852,880 5,972,96L 5,997,898 6,763,470 6,578,950 6,927,346 6,932,146 6,297,799 6,448,667 7,O7L,969 3,73t,406 4,690,673 5,594,024 5,703,46s 5,955,557 7,639,24r 9,225,t41 10,493,650 L0,482,765 8,607,374 270,@O 275,OOO 778,684 797,258 822,UL 844,287 981,019 1,483,648 L,470,L49 L,489,OLz 373,090 366,340 1,094,019 L,LL2,6L5 L,09t,957 1,069,436 r,072,772 L,22L,156 1,060,938 t,043,726 s Source:City fina ncial statements Notes: Details regarding the City's outstanding debt can be found in Note 5 in the Notes to the Basic Financial Statements. Operating expenses, for purposes of calculating debt service coverage, do not include depreciation and amortization. The above reference debt service only includes parity debt. L78 lnterest CIW OF BURLINGAME, CALIFORNIA DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN FISCAL YEARS Calendar Population (1) Personal lncome (amounts expressed in thousands) (2) Per Capita Personal lncome (2) % Population 25+ with High School Enrollment (3) % Population 25+ with Bachelor's Degree (3)Year 2005 2006 2007 2008 2009 2010 2OLL 2012 20L3 20L4 28,t80 28,277 28,453 28,762 29,0s0 29,342 29,L06 29,426 29,68s 29,700 L,475,38t 1,610,910 t,708,L73 1,747,tO7 1,700,088 L,274,382 t,396,972 1,500,785 r,480,747 1,667,596 52,356 56,969 60,03s 60,744 58,523 43,432 47,996 sL,oo2 49,882 55,148 N/A N/A N/A N/A 95.3% 94.4% 94.L% 95.2% 95.2% 955% N/A N/A N/A N/A 53.6% 5L.8% 53.4% 54.L% 54.6% s8.3% s s Sources: (1) California State Department of Finance (2) lncome Data: ESRI provided by HDL, coren & Cone (3) For 200G2008, education level attained for population 25 years of age and over was not available. (4) State of California Employment Development Department for San Mateo County 179 CIW OF BURLINGAME, CALIFORNIA PRINCIPAL EMPLOYERS FtscAL YEAR 2014-15 AND 2009-10 Employer 2074-15 Employee Percentage of Total city Emplqyrnq!! Mills Pennisula Health Services San Francisco Airport Marriott Flying Food Group Lufthansa Service Holdings Group Sky Chefs lnc Hyatt Regency San Francisco Airport* Burlingame School District Guittard Chocolate Co.* American Medical Responser Putnam Auto Lohlouh lnc Burlingame Millbrae Yellow Cab COIT Services Classic Party Rental PR O Unlimited Total Top 10 Employers Total City Labor Force (2) 1,594 600 515 447 420 302 242 223 222 220 8.96% 3.37% 2.89% 2.48% 236% 7.70% l.36Yo L.25Yo L.25% t.24% o.o0% 0.00% o.oo% 0.00% 4,779 17,800 26.8s% Source : MuniServices, LLC Results based on direct correspondence with city's local businesses. (1) Prior year data provided by previous CAFR. (2) Total city Labor Force provided by EDD Labor Force Data. * lncludes full and part-time employees. 180 (1) CIW OF BURLINGAME, CALIFORNIA PRI NCI PAL EM PLOYERS (Continued) FIScAtYEAR 201,4-t5 AND 2009-10 Employee Percentage of Total city Employment 2,000 600 ,ro 270 300 ,ro 800 400 zso 250 o.o0% 0.o0% o.o0% o.o0% o.o0% 0.00% o.o0% 0.00% 0.oo% 0.00% 0.00% 0.00% 0.00% 0.00% 5,670 15,700 0.00% 181 This Page Intentionally Left Blank 182 ctTY oF BURLTNGAME, CALIFORNIA FULL.T!ME EqUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION LAST TEN FISCAL YEARS 2006 2007 2008 2009 2010 2077 2072 2073 2074 2015 18.13 19.13 19.13 19.13 19.00 18.00 18.00 18.00 18.00 19.00 Function General government Pubic safety Police: Officers Civilians Fire: Firefighters and officers Civllians Public works Community development Leisure and culture 42.O0 20.00 44.00 1.00 55.30 72.O0 54.O2 42.O0 20.00 44.@ 1.00 s6.55 12.00 55.14 42.00 20.00 44.00 L.75 56.30 12.00 55.42 42.00 20.00 44.00 7.75 56.30 72.00 55.42 39.00 19.00 43.00 7.75 59.55 12.00 52.29 37.00 18.25 61.15 10.00 49.77 37.00 18.25 61.15 10.00 49.77 37.00 77.25 67.14 10.00 49.52 37.00 79.25 62.74 11.00 52.78 Source: Clty of Burlingame Note: The Central County Fire Department (CCFD) is a Joint Powers Authority shared by the Town of Hillsborough and City of Burlingame. Please refer to the Notes to the Basic Financial Statements which define the reporting entity. CCFD is a non-disclosed organization, independently governed, and therefore, no longer a reporting unit of the City. 183 37.00 79.25 67.75 11.00 57.67 ctw oF BURUNGAME, CAUFORNTA OPERATING INDICATORS BY FUNCTION LAST TEN FISCAL YEARS 2006 2007 2008 2009 Function Police Calls for service Physicalarrests Crimes reponed Traffic violations Fire Number of calls answered lnspections Public works Street repair (sq. ft.) Sidewalk and curb repair {sq, ft.) City planning Plans checked Planning applications reviewed Permit applications received lnspections conducted Parks, recreation, and library Recreation cla5s participants Library circulation Tree plantings Tree trimmings Water New connection5 Main and valve repairs Millions of gallons purchased (millions ofgallons) Wastewater Average daily sewage treatment (million5 of gallons) Preventive maintenance, main cleaning (feet) 22,82s 602 2,476 2,434 26,275 537 2,755 2,893 30,337 54L 2,053 4,728 28,481 343 2,296 6,354 4,305 t,725 4,233 2,259 4,37 4 2,089 4,205 1,299 12,000 4,800 77,204 5,618 15,529 a,27A 547 727 560 144 548 140 N/A 500 tal 8 20 L,700 L7 61 1,551 4.50 4.50 4.10 3.82 17,927 624,OO0 266 t,532 75,323 599,833 334 1,350 16,303 600,000 229 t,57 4 14,318 698,558 466 L,576 273 1-4 1,63s 4 20 1,652 389,490 314,497 385,293 450,937 184 15,000 6,000 Source: Various City department records. Aquatic Center registrations are not included in fiscal year 2013, due to the transition of programming responsibility from the City of Burlingame to the Burlingame Aquatics Club. Police statistical data has been presented on a calendar year basis. Central County Fire Department data is now reported with the Central County Fire Department CAFR. t 2010 20LL CITY OF BURTINGAME, CALIFORNIA OPERATING INDICATORS BY FUNCTION (Continued) IAST TEN FISCAT YEARS 20t2 20L3 2014 29,124 438 1,797 5,255 4,267 1,4L4 10,000 4,000 L3,607 713,394 222 1,831 3.30 4s0,000 30,865 348 1,516 3,583 4,L52 4,L95 5,270 5,468 t3,82L 695,096 205 1,093 39,724 410 1,681 3,836 5,700 4,270 4,898 4r,65L 581 t,926 4,656 6,586 2,630 40,773 64t 7,738 7,073 5,095 2,465 73,428 753,694 230 1,806 2015 45,659 598 L,354 6,632 6,915 5,529 13,424 647,L28 198 3,018 2.80 383,233 362 75 N/A N/A 13,657 72L,L32 193 766 20 19 t,494 3.L4 408,437 355 58 N/A N/A 37 19 L,474 3.59 404,488 364 131 N/A N/A 50 15 1,600 N/A N/A 573 77 1,193 6,Lt7 N/A N/A5,662 537 110 N/A N/A N/A 443 7T N/A N/A N/A 1,3401,500 2.75 3t7,464 L,520 3.05 338,333 11,982 76t,795 270 948 10 20 22 42 2t 25 185 ctTY oF BURLTNGAME, CALTFORNIA CAPITAL ASSET STATISTICS BY FUNCT!ON FOR FISCAL YEAR 2014.15 (CoMPARED TO s YEARS AGO) Function Public works Streets (miles) Streetli ghts (City-owned ) Traffic signals Water Water mains (miles) Fire hydrants Maximum daily capacity (thousands of gallons) Sewer Sanitary sewers (miles) Storm sewers (miles) Maximum daily treatment capacity (thousands of gallons) Storm drain pump station Source: Various City department records Note: Historical data is not available. lncludes Hillside Fire Station which is currently closed. 2010 2015 4,100 88 42.0 4,100 L52 1,800 t4 LO7 826 2,8s0 752 t,700 16 94 822 2,850 84 38.5 55 186 BRO\rN ARAASTRONC C e r tif e d Pu b lit ll u o un ta n ts INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the Honorable Mayor and Members of City Council of the City of Burlingame Bu rlingame, California We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standords issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Burlingame, California (City), 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 and have issued our report thereon dated Janua ry 7 ,2016. lnternal Control Over Financial Reporting ln planning and performing our audit of the financial statements, we considered the City's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City's internalcontrol. Accordingly, we do not express an opinion on the effectiveness of the City's internal control. A deficiency in internol controlexists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A materiol weokness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the City's financial statements will not be prevented, or detected and corrected on a timely basis. A significont deficiency is a deficiency, ot a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. t87 't','wlN #SXry(ANC :'.:,"?,1'l'1i 1'tl't .7.4=.:t:,-.*t-.ii :1{7,*1.)'t1 ",l,ia \ =''.'.': :. : f*tsHo oFFrcE r 1 i ; .J irrr-r' i;: ,,: *:-::'l- ir:- t x w Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. As part of obtaining reasonable assurance about whether the City's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and materialeffect on the determination offinancial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under 6overnment Auditing Standords. We noted certain matters that we reported to management of the City in a separate letter dated January 7 ,2OL6. Purpose of this Report This report is intended solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control and compliance. Accordingly, this report is not suitable for any other purpose. BROWN ARMSTRONG ACCOU NTANCY CORPORATION Bakersfield, California January 7 ,2016 188 Compliance and Other Matters 6r*,r, 4,*,o+r"1. {*',- +-"7 [*ft"J;*- STAFF REPORT AGENDA NO: 10a From: MEETING DATE: January'19, 2016 To:Honorable Mayor and City Council January 19,2016 Syed Murtuza, Director of Public Works - (650) 558-7230 Update on Proposed Flood lnsurance Rate Map Date: Subject: RECOMMENDATION Staff recommends that the City Council receive an update regarding the Federal Emergency Management Agency's (FEMA) proposed flood insurance rate map. This is an information only item, and no City Council action is requested at this time. BACKGROUND ln early 2013, FEMA authorized the California Coastal Analysis and Mapping Program to study various types of potential for coastal flood events along the California coast such as king tide, extreme high tide, wind wave event, Pacific winter storm (Pineapple express) and remote swells. The study was prompted by coastal flood events, including Hurricane Katrina along the Gulf Coast and Superstorm Sandy along the East Coast. The results of the study identified potential flooding hazards in Burlingame; as a result, FEMA proposes to add the affected commercial and residential properties to the Special Flood Hazard Areas (SFHAs). There are currently 334 residential and commercial property owners that are in the SFHAs, and they are required to obtain a flood insurance policy if they have a federally backed mortgage' ln November 2014, staff presented to the City Council the proposed Flood lnsurance Rate Map (FIRM) and explained the basis of the new flood insurance study as provided by FEMA. This report is to further apprise the City Council regarding the revised preliminary FIRM and the public outreach efforts that staff will be undertaking to inform the affected property owners about the revised FIRM. FEtvlA released the revised preliminary FIRM in September 2015. The revised preliminary FIRM indicates that there are approximately 300 commercial properties and 50 residential properties in Burlingame that will be added to the SFHAs. The majority of the commercial properties affected are located in the north east part of Burlingame between the northern City limits, Rollins Road, and the Bayfront Area. The affected residential properties are located adjacent to Victoria Park, bordering Rollins Road, Victoria Road, and the southern City limits. The revised preliminary FIRI\4 is currently in the midst of a 90-day appeal period. Staff submitted comments to FEMA expressing concerns and questioning the probability and the likelihood of potential flooding in the affected areas and consequences for the property owners as a result of 1 . Proposed Flood lnsurance Rate Map Update January 19, 2016 the proposed FIRM. Additionally, staff participated in multiple phone conferences with FEMA to discuss the City's concerns with the study and requests for more information. FEMA provided the additional information as requested by staff. After review of the proposed FIRM by an outside engineering expert consultant, staff determined that the FEMA study is reasonable based on FEMA's scientific modeling methods and model results. FEMA is tentatively scheduled to adopt the final FIRM in March 2017, after which the new flood insurance rates will apply to the affected properties in the flood zone areas. DISGUSS!ON ln order to inform and educate the affected property owners of the new maps in a timely manner, staff will be conducting public outreach efforts beginning in March 2016. The outreach efforts will consist of mailing information to affected property owners regarding the revised maps, flood risk hazards, available resources, and staff contacts. Additionally, staff is planning to conduct two separate neighborhood meetings for the affected commercial and residential property owners. Furthermore, two months before the new maps are adopted, staff will send another mailing, informing property owners that are new to the SFHAs that they can purchase flood insurance under the lower-cost Preferred Risk Policy (PRP) option. This PRP offers an introductory flood insurance rate for new policy holders. FISCAL IMPACT There will be staff time involved in conducting the public outreach to the affected property owners regarding the new maps and to provide assistance as appropriate, which is anticipated to be covered by the department's current operating budget' Exhibits: . Staff Report - December 1,2014 . Current and proposed FIRMs 2 STAFF REPORT AGENDA NO: To: Date: From: Subject: MEETING DATE: December 1,2014 Honorable Mayor and CitY Council December 1,2014 Syed Murtuza, Director of Public Works - (650) 558'7230 Update on Proposed Flood lnsurance Rate Map and New Flood lnsurance Study by FEMA RECOMMENDATION Staff recommends that City Council review the proposed flood insurance rate map and new flood insurance study by FETVIA as part of the California Coastal Analysis and Mapping Program (CCAMP) and provide feedback to staff. BACKGROUND The National Flood lnsurance program (NFIP) is a Federal program created to mitigate future flood losses nationwide through community-enforced development ordinances and to provide access to affordable, federally backed flood insurance program. Burlingame participates in the NFlp by enforcing floodplain management requirements for new construction to reduce future ftood risks in special Flood Hazard Areas (SFHA). The sFHA is a high-risk area defined as any land that would be inundated by a flood having a 1-percent chance of occurring in a given year, more commonly referred to as a 100-year flood. Areas of flood hazard are established by engineering studies and are identified on Flood lnsurance Rate Maps (FlRMs)' Federal Emergency lr/lanagement Agency (FEMA) issued the first FIRM maps for Burlingame on September 16, 19g1 which indicated boundaries for two SFHA flood zones within the City. The two areas are referred to as the Laguna Flood Zone Area and the Easton Creek Flood Zone Area and encompass approximately 371 residential properties. Property owners within the flood zones are required to purchase flood insurance by mortgage companies if the elevation of their structure is lower than the base flood elevation (BFE) and face additional building permit requirements to either raise their finish floor or protect against flooding when initiating substantial remodeling or new construction projects. The FIRM maps also indicate that the major creeks of the city contain the 100-year flood within the creek channel. The major creeks are indicated as Burlingame Creek, Sanchez Creek, Easton Creek, Mills Creek, El Portal Creek, Trousdale Channel and Gilbreth Channel. FEMA issued revised FIRM maps effective October 12,2012 which indicated the identical flood zone boundary information as the 198l maps. 1 l|pdate on fuoposed Flood lnsurance Rate Map and New Flood lnsurance Study by FEMA December 1,2014 ln early 2013, FEMA authorized the ccAMP to study various types of potential for coastal flood processes along the California coast such as king tide, extreme high tide, wind wave event, Pacific winter storm (Pineapple express), El Nino winter storm, and remote swells. This study was prompted by coastal flood events, including Hurricane Katarina in 2005 and sandy in 2012, which has increased the public's awareness of coastal flood vulnerability. The coastal flood processes were used to generate wave models of the San Francisco Bay. The models include an analysis of wave run-up, wave overtopping, and overland wave propagation. The results of the study identified coastal areas in Burlingame and the preliminary map indicates that there are approximately 210 commercial properties and 22 residential properties that will be added to the SFHA. The majority of the commercial properties affected are located on the north side of Burlingame between the City Limits, Rollins Road, and the Bay. The affected residential properties are located ad.iacent to Victoria Park, bordering Rollins Road, Victoria Road, and the City Limits. The coastal study mapping timeline is as follows . February 2013 - FEIVIA initiated the Coastal Study . April - September 20'14 - Revised floodplain mapping was generated o October 1"t,2014 - Flood Risk Review Meeting by FEIvIA to discuss the proposed new maps . october 17rh to December 17\h,2014 - lnitial commenting period for study and map . June 2015 - Preliminary FIRM will be released . October to January 20'16 - 90-day appeal period . Ir/larch 2016 - Final map determination . September 2016 - New FIRM effective DIS CUSSION staff has reviewed the coastal study conducted by FEMA under the ccAMP and have concerns with the program used to generate the wave models. The original program was designed for conditions on the Atlantic and Gulf coasts. Revisions to the program were made to remove hurricane condition scenarios as it is not appropriate for the California Pacific coast. However, it is unclear how the program corrects, if any, the difference between waves within the Bay versus coastal waves. Staff is requesting more information from FEMA The result of the revised FIRM will mean that approximately 210 commercial and 22 residential propertyownerswouldberequiredtoobtainfloodinsuranceprotectionthroughtheprogram.ln addition, when the property owner wishes to construct a new building or complete major improvements to their property, they would have to comply with additional building permit requirements to raise the finish floor elevation above the BFE and/or flood proof the Structure' These additional requirements can Substantially increase the construction cost to a property owner. 2 Update on Proposed Flood lnsurance Rate Map and New Flood lnsurance Study by FEMA December 1, 2014 Following the current timeline for initial commenting, staff will be submitting comments to FElt/A before the December 17th deadline. Staff will send out a public notice of the revised FIRM to all affected property owners once the preliminary map is released in June 2015. Contents of the letter will include information on FEMA, flood risk hazards, available resources, and staff contacts. Based on the results of the study and response from FEMA to City comments, staff will determine if additional resources will be prudent to submit an appeal during the appeal period of October 2015 to January 2016. FISCAL IMPACT There will be staff time involved in reviewing FEMA documents and providing information to the public which will be absorbed within the department's current fiscal year operating budget. EXHIBITS: . FEMA 2012 Map . Coastal Beat - Coastal Flood Hazard Modeling . Proposed Burlingame Coastal Hazard Map 3 Epccaal Flood Har5rd Areo AE FLOOO\A.AY AREA NOT IITCLU OEO o O:' PCI ANNUAT CHAHCE FLOOO HAZARO Spcctal Flood Hazard Area ! PC' ANNUAL CHATTCE FLO,oO H ZARD FLOODINAY o 3 PCt ANNUAL CHAFTCS FLOOO HAZAEO o CURRENT FLOOD INSURANCE RATE MAP City of San Francisco City of MrlltrraeI City of Burlingame TOnC AE {Er- 1Ol Zono VE {EL 1O) { Zonc AH {EL 1.ll Zone A€ (EL 10l Zone AH {EL-t6) Crty ol Burlrnganre ,f. Town of Htllshorouqh I.EEfiE}i 'Crty of Milltrrae PROPOSED FLOOD INSURANCE RATE MAP Crty of San Fr.encisco Zone AE tEL 1O) City of Burling;ameZone AE (EL r0l Zone AL (El. 111 70rr.1 V[: trl 1?) .: .l t.i ,g la Zono A[: {Er, 10} /orra AE (EL l otffit +l {oirc AH (Er 161 Crty ot Burlirrgarne _* i'' :I Towrr of Hillsborouglr ffitu - 2o1s E E STAFF REPORT AGENDA NO:14a MEETINGDATE: Januayl9,2016 To:Honorable Mayor and CitY Council January 19, 2016 Carot Augustine, Finance Director - (650) 558'7222 Resolution Authorizing the lssuance of Storm Drainage Revenue Bonds to Finance Capital lmprovements to the Storm Drainage System of the Ci!y; Authorizing Execution and Delivery of a Trust Agreement, lnstallment Sale Agreement, a Bond Purchase Agreement and an Official Statement; and Authorizing Execution of Documents and the Taking of All Necessary Date From: Subject: Actions Relating to the lssuance of the Bonds RECOMMENDATION Staff recommends that the Financing Authority Board of Directors adopt the resolution approving all actions relating to the issuance of the Storm Drainage Revenue Bonds, Series 2016' BACKGROUND ln 200g, the property owners of Burlingame voted to approve a storm drainage fee that is based on the impervious nature of real estate lots. An engineering study was conducted to determine the various categories of fees. The fees are collected annually by San Mateo County as part of the property tax bill. The county then remits the funds to the city. The storm drainage fee revenue is used to make improvements to the city's storm drainage system' on April 19,2010, the city council approved a resolution authorizing the first issuance of storm drainage revenue bonds and authorizing staff to seek legal validation from the Superior Court of the County of San Mateo regarding the validity of this Council resolution. On June 29,2010, the Superior Court of the County of San Mateo entered a default judgment in favor of the City, which validates the issuance of storm drainage bonds. on August 1g,2010, the Burlingame Financing Authority issued its first series of storm drainage revenue bonds in the amount of $9,805,000. A second series of bonds was issued in December 2012inthe amount of $10,615,000. The series 2016 bonds will be the third component of the storm drainage system's financing program. one final issuance may be necessary before the City can anticipate funding future capital improvements on a pay-as-you-go basis' The blanks in the preliminary official statement and Bond Purchase Agreement are intentional and will be filled in once the issuance moves fonruard and the pricing and sale are completed. 1 Storm Druin Revenue Bonds, Series 2016 - Financing Authority January 19,2016 The storm drainage system requires additional capital improvement to modernize the City's aged storm drain infrastructure. The first series of bonds of about $9.8 million were sold in 2010 with a mixture of traditional tax-exempt bonds ($2.6 million) and taxable Build America Bonds (BABs) ($7.2 million). As the City drew down the proceeds of those bonds, the 2012 bonds issuance ($10.2 million) replenished the City's ability to fund further capital improvements; the remainder of this second issuance was encumbered in early November for construction and inspection services for the Neighborhood Storm Drain Project No. 8. The 2016 bonds will provide funding for storm drainage capital improvements that will be needed in the coming years. According to the capital improvement plan adopted as part of the City's budget on June 18' 2015' the City is contemplating $18.4 million of additional projects for this system beyond the current fiscal year. lncluded in these projects are capacity improvements to the Burlingame' Ralston, El portal and Gilbreth creeks as well as the Trousdale channel. The plan also calls for general improvements and maintenance of catchment basins and pump stations citywide. The 2016 bonds will finance approximately $10 million in new storm drainage improvements The final amount of improvements to be financed from the 2016 bonds will be determined closer to the bond sale based on actual funding needs. Stifel Nicolaus will serve as undeMriter for the bonds, which will be sold on a negotiated basis. Orrick will serve as Bond & Disclosure Counsel. PFM will serve as the Financial Advisor to review the transaction's interest rates and the underwriting fees at the time of the bond sale The expected date of sale of the bonds is February 10, 2016, and the transaction is expected to close on February 24,2016. The proceeds will be deposited in the Bank of New York Mellon Trust Company, the City's trustee bank. copies of the Resolutions, Preliminary official statement and Bond Purchase Agreement are available for public inspection at the Office of the City Clerk. Electronic copies are also available for e-mail to Councilmembers as well as interested members of the public by contacting the City Clerk. FIS CAL IMPACT The proposed bond issuance is currently projected to be rated "A+" by the Standard & Poor',s rating agency. lf a bond insurance policy is made available, the decision to purchase it will depend on the potential economic benefit it provides (if any). On April 19' 2010' the Council approved storm drainage fund policies to ensure the repayment of the storm drainage debt to the bondholders and aid in buffering investors against potential contingencies that the City may face, which may pose a financial risk. The not-to-exceed interest rate is set at 6.50%, but the actual interest rate is expected to be between 2.Ook and 5.Oo/o. The average debt payment for the 2016 bonds is estimated at $725,000, assuming financing $10 million in storm drainage improvements. The combined 2 DISCUSSION Storm Drain Revenue Bonds, Series 2016- Financing Authority January 19,2016 annual debt payment for the 201 6, 2012 and 2010 bonds is projected to be $2,000,000. The final maturity will be 2038 to coincide with the final collection date of the storm drainage revenue fee. Exhibits: Resolution Authorizing the lssuance of Storm Drainage Revenue Bonds to Finance Capital lmprovements to the Storm Drainage System of the City; Authorizing Execution and Delivery of a Trust Agreement, lnstallment Sale Agreement, a Bond Purchase Agreement and an Official Statement; and Authorizing Execution of Documents and the Taking of All Necessary Actions Relating to the lssuance of the Bonds lnstallment Sale Agreement between the City of Burlingame and the Burlingame Financing Authority, Dated as of February 1,2016 Trust Agreement between the Burlingame Financing Authority and The Bank of New York Mellon Trust Company, N.A., Dated as of February 1,2016 Preliminary Official Statement Bond Purchase Agreement a a a a a 3 I BURLINGAME FINANCING AUTHORITY RESOLUTION NO. RESOLUTION AUTHORIZING THE ISSUANCE OF STORM DRAINAGE REVENUE BONDS TO FINANCE CAPITAL IMPROVEMENTS TO THE STORM DRAINAGE SYSTEM OF THE CITY; AUTHORIZING EXECUTION AND DELIVERY OF A TRUST AGREEMENT, INSTALLMENT SALE AGREEMENT, A BOND PURCHASE AGREEMENT AND AN OFFICIAL STATEMENT; AND AUTHORIZING EXECUTION OF DOCUMENTS AND THE TAKING OF ALL NECESSARY ACTIONS RELATING TO THE ISSUANCE OF THE BONDS WHEREAS, the City of Burlingame (the "City") and the Redevelopment Agency of the City of Burlingame (the "Agency") have heretofore executed a Joint Exercise of Powers Agreement, dated urif Muy 15, l0g5 (the "Joint Powers Agreement"), by and between the City a.ri tf,e Agency, which Joint Powers Agreement creates and establishes the Burlingame Financing Authority (the "Authority"); and WHEREAS, pursuant to Article 4 of Chapter 5 of Division 7 of Title 1 of the Government Code of the Siate of Califomia (the "Marks-Roos Local Bond Pooling Act of lgg5,,) and the Joint powers Agreement, the Authority is authorized to issue bonds for financing public capital improvements whenever there are significant public benefits; and WHEREAS, the Authority desires to issue not to exceed $11,000,000 aggregate principal amount of Burlingame Financing Authority Storm Drainage Revenue Bonds, 'Seri"s ZO\O (the .,Bonds") foi the purpose of financing improvements to the storm drainage system of the City (the "Projects"); and WHEREAS, this Board of the Authority hereby determines that there are significant public benefits, including through demonstrable savings in the effective interest rates and bond issuance costs expected to be paid for the Bonds, and that it furthers the public purpose to assist in such financing; and WHEREAS, the Authority and City will enter into a Bond Purchase Agreement (the ,,Bond purchase Agreement") for the Bonds with Stifel, Nicolaus & Company, Incorporated (the "Underwriter"); and WHEREAS, this Authority now desires to approve the form and authorize the distribution of a preliminary form of the Official Statement describing the Bonds and a final Official Statement for the Bonds; and WHEREAS, the Authority desires to enter into a trust agreement (the "Trust Agreements,,) with The Bank of New Yoik Meilon Trust Company, N.A. (the "Trustee"), for the purpose of securing the Bonds; and OHSUSA:763796259.3 WHEREAS, in order to finance the Projects, the Authority desires to execute and deliver an installment sale agreement (the "Installment Sale Agreement") with the City; and WHEREAS, there is on file with the Secretary of the Authority a proposed form of the Trust Agreement, Installment Sale Agreement, Bond Purchase Agreement and Official Statement; NOW THEREFORE, the Governing Board of the Burlingame Financing Authority hereby finds, determines, declares and resolves, as follows: Section 1. The foregoing recitals are true and correct and the Authority hereby so finds and determines. Section 2. The issuance of Bonds, titled "Burlingame Financing Authority Storm Drainage Revenue Bonds, Series 2016" (the "Bonds"), in an aggregate principal amount not to exceed $1 1,000,000, is hereby approved. Section 3. (a) The proposed form of the Trust Agreement relating to the Bonds (the "Trust Agreement") by and between the Authority and Trustee, on file with the Secretary of ihe Authority, is hereby approved. The Executive Director of the Authority (or other officer designated by the Executive Director) is hereby authorized and directed for and in the name and on behalf of the Authority, to execute and deliver a trust agreement in substantially said form, with such changes therein as such officer may require or approve, such approval to be conclusively eviJenced by the execution and delivery thereof. The date, maturity date or dates (not to exceed July 1,20i8), interest rate or rates (not to exceed a true interest cost of six and one-half percent (6.5%) per annum), interest payment dates, series, denominations, forms, registration privileges, -unn.. of execution, place or places of payment, terms of redemption and other terms of the Bonds shall be as provided in the Trust Agreement, as finally executed. (b) The Bank of New York Mellon Trust Company, N.A. is hereby approved and appointed as Trustee of the Authority with respect to the Bonds, and shall be authorized to act as Trustee in accordance with the terms of the Trust Agreements. (c) The Treasurer and Controller of the Authority is hereby authorized and directed to hold the funds and accounts created under the Trust Agreements and specif,red therein to be held by the Treasurer and Controller of the Authority, in trust as a fiduciary for the owners of the Bonds as set forth in said documents. Section 4. The proposed form of Installment Sale Agreement relating to the Bonds (the .,ln-tattrnent sale Agreement"), by and between the City and the Authority, on file with the Secretary of the Authority, is hereby approved. The Executive Director (or other officer designated by the Executive Director) is hereby authorized and directed, for and in the name and on behalf of the Authority, to execute and deliver an installment sale agreement in substantially said form, with such changes therein as such offtcer may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof; provided, however, the principal amount of ifre purchase piice shall not exceed $11,000,000 and the term of the Installment Sale Agreement shall end no later than July 1, 2038. OHSUSA:763796259.3 1 Section 5. The proposed form of Bond Purchase Agreement among the Authority, the Underwriter and the City, on file with the Secretary of the Authority, is hereby approved. The Executive Director (or other officer designated by the Executive Director) is hereby authorized and directed, for and in the name and on behalf of the Authority, to execute and deliver a bond purchase agreement in substantially said form, with such changes therein as such officer may iequire or approve, such approval to be conclusively evidenced by the execution and delivery thereof; provided, however, the underwriting discount (not including original issue discount) shall not exceed one percent (l%) of the aggregate principal amount of the Bonds. Section 6. The proposed form of Official Statement relating to the Bonds (the ,.Official Statementi), on file with the Secretary of the Authority, is hereby approved. The Executive Director (or other officer designated by the Executive Director) is each hereby authorized and directed, to execute and deliver an Official Statement in substantially said form, with such changes therein as such officer may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof. The Underwriter is hereby directed to distribute copies of the Official Statement to all actual purchasers of the Bonds. Distribution by the Underwriter of a preliminary Official Statement relating to the Bonds is hereby approved and the Executive Director (or other officer designated by the Executive Direcior) is hereby authorized and directed, to execute a certificate confirming that the preliminary Official Statement has been "deemed final" by the Authority for purposes of Securities and Exchange Commission Rule l5c2-12. Section 7. The Executive Director (or other officer designated by the Executive Director) is hereby auth ortzed on behalf of the Authority to execute a Continuing Disclosure Certificate containing such covenants of the Authority as shall be necessary to comply with the requirements of Sec.-urities and Exchange Commission Rule l5c2-12. The Authority hereby covenants and agrees that it will comply with and carry out all of the provisions of such Continuing Disclosure Certifi cate. Section 8. The officers and directors of the Authority are hereby authorized and directed, jointly und ,.*.ully, to do any and all things and to execute and deliver any and all documents and certificates which they deem necessary or advisable in order to consummate the issuance, sale and delivery of the 'Bonds and otherwise to effectuate the purposes of this Resolution and the transactions contemplated hereby, including, but not limited to, making appropriate changes to the year referenced in the series designation for the Bonds and changes to dates in the documents. Section 9. The officers and board members of the Authority are hereby authorized and directed jointly and severally, to execute and deliver any Certificate of the Authority or Written Request of the Authority required to be delivered pursuant to the Trust Agreement. Section 10. This Resolution shall take effect from and after its adoption. OHSUSA:763796259.3 -J- I hereby certify that the foregoing is a full, true and correct copy of a resolution duly passed and adopted by the Burlingame Financing Authority at a regular meeting thereof held on the _ day of January,2076, by the following vote of the members thereof: AYES: BOARDMEMBERS: NOES: BOARDMEMBERS: ABSENT: BOARDMEMBERS: Secretary OHSUSA:763796259.3 -4- SECRETARY'S CERTIFICATE I, Meaghan Hassel-Shearer, Secretary of the Burlingame Financing Authority, do hereby certify as follows: The foregoing resolution is a full, true and correct copy of a resolution duly adopted by a vote of a majority of the members of the Goveming Board of said Authority at a r.grlur meeting of the Governing Board of said Authority duly and legally held at City Hall, Burlingame, Califomia, on January _, 2016, of which meeting all of such members had due notice, as follows: AYES: NOES: ABSTAIN ABSENT: An agenda of said meeting was posted at least 72 hours before said meeting at 501 Primrose Road, Burlingame, California, a location freely accessible to members of the public, and a brief description of said resolution appeared on said agenda. I have carefully compared the foregoing with the original minutes of said meeting on file and of record in my ofhce, and the foregoing is a full, true and correct copy of the original resolution adopted at said meeting and entered in said minutes. Said resolution has not been amended, modified or rescinded since the date of its adoption and the same is now in full force and effect. Dated:20r6 Secretary of the Burlingame Financing Authoriq' oHSUSA:763796259.3 2016 INSTALLMENT SALE AGREEMENT This 2016 INSTALLMENT SALE AGREEMENT (the "2016lnstallment Sale Agreement"), dated as of Febru ary 1,2016, by and between the CITY OF BURLINGAME, a municipal corporation duly organized and existing under and by virtue of the laws of the State of California (the "City"), and the BURLINGAME FINANCING AUTHORITY, a joint powers agency duly organized and existing under and by virtue of the laws of the State of California (the "Authority"); WITNE SSETH: WHEREAS, the City has determined that the acquisition of certain betterments and improvements as hereinafter described (the "2016 Project") to its storm drainage system is n....ru.y and proper for City purposes and uses under the terms of applicable law and is for the common benefit of the City as a whole; and WHEREAS, the Authority has determined to acquire and sell the 2016 Project to the City; and WHEREAS, the City has determined to make installment sale payments as hereinafter described to the Authority for the purchase of the 2016 Project and the costs of the design, acquisition and construction thereof and the incidental costs and expenses related thereto paid by the Authority; and WHEREAS, all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in connection with the execution and deiirery of the 2016 Instaliment Sale Agreement do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the parties hereto u.. no* duly authorized to execute and enter into the 2016 Installment Sale Agreement; NOW, THEREFORE, IN CONSIDERATION OF THE PREMISES AND OF THE MUTUAL AGREEMENTS AND COVENANTS CONTAINED HEREIN AND FOR OTHER VALUABLE CONSIDERATION, THE PARTIES HERETO DO HEREBY AGREE AS FOLLOWS: ARTICLE I DEFINITIONS Section 1.01. Definitions. Unless the context otherwise requires, the terms defined in this section shall for all purposes hereof and of any amendment hereof or supplement hereto and of any opinion or report or other document mentioned herein or therein have the meanings defined herein, the following definitions to be equally applicable to both the singular and plural forms of any of the terms defined herein: OFISUSA:763796299. I Accountant's Reoort "Accountant's Report" means a report signed by an Independent Certified Public Accountant. Authority "Authority" means the Burlingame Financing Authority, a joint powers authority duly organized and existing under and by virtue of the laws of the State of California and a Joint Exercisi of Powers Agreement, dated May 15,1995, between the Redevelopment Agency of the City of Burlingame and the CitY. Authorit), Bonds "Authority Bonds" means the Storm Drainage Revenue Bonds, Series 2016, issued by the Authority under and pursuant to the Trust Agreement. Bonds "Bonds" means all revenue bonds of the City authorized, executed, issued and delivered by the City under and pursuant to applicable law, the interest and principal and redemption premium, if any, payments under and pursuant to which are payable from System Revenues on a parity with the payment of the 2016 Installment Payments. Business Day "Business Day" means a day that is not a Saturday, Sunday or legal holiday on which banking institutions in the State of New York or California are authorized to remain closed, or a day on which the Federal Reserve system is closed' Capital Aopreciation Bonds "Capital Appreciation Bonds" means any Bonds described as such when issued. 2 OHSUSA:763796299.1 Accreted Value "Accreted Value" means, with respect to any Capital Appreciation Bonds, as of the date of calculation, the initial amount thereof plus the interest accrued thereon to such date of calculation, compounded from the date of initial delivery at the approximate interest rate thereof on each January 1 and July 1, as determined in accordance with the table of accreted values for any Capital Appreciation Bonds prepared by the City at the time of sale thereof, assuming in any year that such Accreted Value increases in equal daily amounts on the basis of a year of three hundred sixty (360) days composed of twelve (12) months of thirty (30) days each. Acquisition Fund "Acquisition Fund" means the acquisition and construction fund held pursuant to Section 3.02 of the Trust Agreement. eily "City" means the City of Burlingame, a municipal corporation duly organized and existing under and by virtue of the laws of the State of California. Code o'Code" means the Internal Revenue Code of 1986, as amended, and the regulations issued thereunder. Contracts "Contracts" means all installment sale contracts, loan agreements, capital leases or similar obligations of the City authorized and executed by the City under and pursuant to applicable law, the interest and principal and prepayment premium, if any, payments under and puisuant to which are payable from System Revenues on a parity with the payment of the 2016 installment payments, including, but not limited to, the 2010 Contract and the2012 Contract. Debt Service "Debt Service" means, for any Fiscal Year, the sum of: (l) the interest accruing during such Fiscal Year on all outstanding Bonds, assuming that all outstanding serial Bonds are retired as scheduled and that all outstanding term Bonds are redeemed or paid from sinking fund payments as scheduled (except to the extent that such interest is to be paid from the proceeds of sale of any Bonds), (2) that portion of the principal amount of all outstanding serial Bonds maturing on the next succeeding principal payment date that would have accrued during such Fiscal year if such principal amount were deemed to accrue daily in equal amounts from the next preceding principai payment date or during the year preceding the first principal payment date, as the case may be, (3) that portion of the principal amount of all outstanding term Bonds required to be redeemed or paid on the next succeeding redemption date (together with the redemption premiums, if any, thereon; that would have accrued during such Fiscal Year if such principal amount (and redLmption premiums) were deemed to accrue daily in equal amounts from the next preceding redempti,on date or during the year preceding the first redemption date, as the case may be, and (4) that portion of the Installment Payments required to be made at the times provided in the Contracts ihat would have accrued during such Fiscal Year if such Installment 'payments were deemed to accrue daily in equal amounts from, in each case, the next preceding Installment payment Date of interest or principal or the date of the pertinent Contract, as the case may be; but less the Refundable Credits to be received by the City during such Fiscal Year; provided, that J oHSUSA:763796299. I (a) if any of such Bonds are Capital Appreciation Bonds or if the Installment Payments due under any of such Contracts secure Capital Appreciation Bonds, then the Accreted Value payment shall be deemed a principal payment and interest that is compounded and paid as Accreted Value shall be deemed due on the scheduled redemption or payment date of such Capital Appreciation Bond; (b) if any of such Bonds or if the Installment Payments due under any such Contracts bear interest payable pursuant to a variable interest rate formula, the interest rate on such Bonds or such Contracts for periods when the actual interest rate cannot yet be determined, shall be assumed to be equal to the greater of (i) the actual rate on the date of calculation, or if such Bonds or Contracts are not yet outstanding, the initial rate (if then established and binding), (ii) if the Bonds or Contracts have been outstanding for at least twelve months, the average rate over the twelve months immediately preceding the date of calculation, and (iii)(1) if interest on such Bonds or Contracts is excludable from gross income under the applicable provisions of the Internal Revenue Code, the most recently published "Bond Buyer 25 Bond Revenue Index" (or comparable index if no longer published) or (2) if interest is not so excludable, the interest rate on direct U.S. Treasury obligations with comparable maturities plus fifty (50) basis points; (c) if any of such Bonds or Contracts is secured by an irrevocable letter of credit issued by a bank having a combined capital and surplus of at least one hundred million dollars (5100,000,000), the principal payments or deposits with respect to such Bonds or Contracts nominally due in the last Fiscal Year in which such Bonds or Contracts mature may, at the option of the dity, b. treated as if they were due as specified in any loan agreement or reimbursement agreement issued in connection with such letter of credit or pursuant to the repayment provisions of such letter of credit and interest on such Bonds or Contracts after such Fiscal year shall be assumed to be payable pursuant to the terms of such loan agreement or reimbursement agreement or repayment provisions and (d) if any of such Bonds or Contracts is not secured by a letter of credit as described in clause (c) of this definition and 20o/o or more of the original principal of such Bonds or the Installment payments due under such Contracts is not due until the final stated maturity of such Bonds or the Installment Payments due under such Contracts, such principal may, at the option of the City, be treated as ilit were due based upon a level amortization of such principal over the term of such Bonds or Installment Payments or twenty-five (25) years, whichever is greater. Director of Finance ,.Director of Finance" means the Director of Finance of the City or its successor designated by the CitY Council' Engineer's Report ,'Engineer's Report" means a report signed by an Independent Engineer. Event of Default ,.Event of Default" means an event described in section 6.01. 4 OHSUSA:763796299. I Fiscal Year "Fiscal Year" means the period beginning on July 1 of each year and ending on the next succeeding June 30, or any other annual accounting period hereafter selected and designated by the City Council of the City as the Fiscal Year of the City. Generally Accepted Accounting Principles "Generally Accepted Accounting Principles" means the uniform accounting and reporting procedures set forth in publications of the American Institute of Certified Public Accountants or its successor and the Govemmental Accounting Standards Board or its successor, or by any other generally accepted authority on such procedures, and includes, as applicable, the standards set forth by the Financial Accounting Standards Board or its successor. Independent Certifi ed Public Accountant "Independent Certified Public Accountant" means any certified public accountant or firm ofsuch accountants duly licensed and entitled to practice and practicing as such under the laws of the State, appointed and paid by the city, and who, or each of whom: (A) is in fact independent according to the Statement of Auditing Standards No. I and not under the domination of the City; (B) does not have a substantial financial interest, direct or indirect, in the operations of the City; and (C) is not connected with the City as a councilmember, officer or employee of the City, but who may be regularly retained to audit the accounting records of and make reports thereon to the City. Independent Engineer .,lndependent Engineer" means any registered engineer or firm of registered engineers of nationai reputation generally recognized to be well qualified in engineering matters r.l-uting to Systems, appointed and paid by the City, and who or each of whom -- (l) is in fact independent and not under the domination of the City; (2) does not have a substantial financial interest, direct or indirect, in the operations of the City; and (3) is not connected with the City as a councilmember, officer or employee of the City, but may be regularly retained to make reports to the City. Installment Paymentsl 201 6 Installment Payments .'lnstallment Payments" means the installment sale, rental or other periodic payments scheduled to be paid by the City under and pursuant to the Contracts, including the 5 OHSUSA:763796299. I 2016 Installment Payments. *2016 Installment Payments" means the Installment Payments scheduled to be paid by the City under and pursuant hereto. Installment Pavment Date: 2016 Installment Payment Date "lnstallment Payment Date" means any date on which Installment Payments are scheduled to be paid by the City under and pursuant to any Contract. *2016Installment Payment Date" means any date on which 2016 Installment Payments are scheduled to be paid by the City under and pursuant hereto. Insurance Consultant "lnsurance Consultant" means (a) the Risk Manager for the City or (b) any insurance consultant or firm of insurance consultants generally recognized to be well qualified in insurance consulting matters relating to storm drainage and other municipal systems, appointed and paid by the City, and who or each of whom -- (l) is in fact independent and not under the domination of the City; (2) does not have a substantial financial interest, direct or indirect, in the operations of the City; and (3) is not connected with the City as a councilmember, officer, or employee of the City, but may be regularly retained td make reports to the City. Interest P Date ,.lnterest Payment Date" means a date on which an interest installment of the 2016 Installment Payment is due and payable, being January 1 and July I of each year to which reference is made, commencing on July 1,2016. Maximum Annual Debt Service o,Maximum Annual Debt Service" means the greatest total Debt Service due in any Fiscal year during the period commencing with the next ensuing Fiscal Year and terminating with the Fiscal Yeai in which payments are due under the last outstanding Bonds or the last outstanding Contract, whichever is later. Ooinion of Counsel ,,Opinion of Counsel" means a written opinion of counsel of national representation generally recognized to be well qualified in the field of law relating to municipal bonds, retained by the CitY. 6 OHSUSA:763796299. I Ordinance "Ordinance" means Ordinance No. 1836 of the City entitled "Ordinance of the City of Burlingame Adding Chapter 4.30 to the Burlingame Municipal Code to Administer A Storm Drainage Fee." Paritlz Obligations "Parity Obligations" means, collectively, Bonds and Contracts Principal Office "Principal Office" means the corporate trust off,rce of the Trustee located in San Francisco, Califomia or such other office or offices as the Trustee shall designate from time to time. Project. 2016 Project "Project" means any betterments or improvements to the System designated by the City Council of the City as a Project, the design, acquisition or construction of which (togethir with the incidental costs and expenses related thereto) is to be financed by the proceeds of lny parity Obligations. "2016 Project" means the capital improvements described in Exhibit A hereto and such additions, substitutions and deletions as shall be specified in a Certificate of the City stating that such additions, substitutions or deletions constitute part of the 2016 Project. Price "Purchase Price" means the principal amount plus the interest thereon owed by the City to the Authority under the conditions and terms hereof for the repayment of the costs of the design, acquisition and construction of the 2016 Project and the incidental costs and expenses related thereto paid by the Authority. Refundable Credits .'Refundable Credits" means the amounts which are payable by the Federal government under Section 6431 of the Tax Code, which the City elected to receive under Section saAA(gXl) of the Tax Code, and which relate to the 2016 Installment Sale Agreement and Parity Obligations. Reserve Account "Reserve Account" means the fund by that name established pursuant to Section 5.03 of the Trust Agreement. 7 OHSUSA:763796299. I Reserve Account Requ "Reserve Account Requirement" has the same meaning as set forth in the Trust Agreement. Storm Fee "Storm Drainage Fee" means the storm drainage fee imposed pursuant to the Ordinance. Subordinate Oblieations "subordinate Obligations" mean obligations of the City authorized and executed by the City under applicable law, the payments under and pursuant to which are payable from System Revenues, subject and subordinate to the payment of the 20l6Installment Payments and to the payment of Parity Obligations. Such obligations may be payable from any fund established for the purpose of paying debt service on such Subordinate Obligations. System "System" means properties and assets, real and personal, tangible and intangible, of the City, now or hereafter existing, used or pertaining to storm drainage, including all additions, ixtensions, expansions, improvements and betterments thereto and equippings thereof, together with any other properties or assets hereafter determined by the City Council of the City to be part of the System. Svstem Revenues .'system Revenues" means all proceeds of the Storm Drainage Fee, the proceeds of the Refundable Credits and all gross income and revenue received by the City from the ownership and operation of the System, determined in accordance with Generally Accepted Accounting Principles, including, without limiting the generality of the foregoing, (a) all other income, rents, rates, fees, connection fees, charges or other moneys derived from the System, (b) the earnings on and income derived from the investment of such income, rents, rates, fees, .t urg.. o. oth., moneys (including all investment earnings credited by the Trustee to the Revenue Fund), and (cjthe proceeds derived by the City directly or indirectly from the sale, lease or other disposition of a part of the System as permitted in this 2016 Installment Sale Agreement; proviied, however, that the term "system Revenues" shall not include customers' de-posits o. uny other deposits subject to refund until such deposits have become the property of the City. System Revenue Fund .'system Revenue Fund" means the fund by that name established pursuant to Section 3.02. 8 OHSUSA:763796299. I Treasurer of the Authoritv "Treasurer of the Authority" means the Treasurer of the Authority or its successor designated by the Authority. Trust Agreement "Trust Agreement" means that certain Trust Agreement dated as of February 7, 2016, by and between The Bank of New York Mellon Trust Company, N.A., as Trustee, and the Authority, as originally executed and as it may from time to time be amended or supplemented in accordance with its terms. Trustee "Trustee" means The Bank of New York Mellon Trust Company, N.A. at its Principal Office, acting in its capacity as trustee under and pursuant to the Trust Agreement, and its successors and assigns as provided in the Trust Agreement. 2010 Contract 2010 Contract means the Installment Sale Agreement by and between the City and the Authority, dated as of August 1,2010, as originally executed and as it may from time to time be amended or supplemented in accordance with its terms. 2012 Contracl 2012 Contract means the Installment Sale Agreement by and between the City and the Authority, dated as of December I ,2012, as originally executed and as it may from time to time be amended or supplemented in accordance with its terms. 2016 Installment Sale Agreement "2016lnstallment Sale Agreement" means this installment sale agreement by and between the City and the Authority, dated as of February 1,2016, as originally executed and as it may from time to time be amended or supplemented in accordance herewith and with the terms of the Trust Agreement. ARTICLE II THE 2016 PROJECT Section 2.01.I)esi on A ricifinn Cnnctflrcf i onrl Sqle nf the ?O l6 Prnicnf The Authority hereby agrees to design, acquire and construct the 2016 Project for, and to sell the 2016 Projectio, the City. In order to implement this provision, the Authority hereby appoints the City as its agent for the purpose of such design, acquisition and construction, and the City hereby ugrl.t to enter into such engineering, design and construction contracts and purchase orders as rnay be necessary, as agent for the Authority, to provide for the complete design, acquisition and construction of the 2016 Project. The City hereby agrees that as such agent it will cause the 9 OHSUSA:763796299. I acquisition and construction of the 2016 Project to be diligently completed after the deposit of funds in the Acquisition Fund for such purpose pursuant to Section 3.01 of the Trust Agreement, and that it will use its best efforts to cause the design, acquisition and construction of the 2016 Project to be completed as soon as reasonably practicable. The Authority hereby agrees to sell, and hereby sells, the 2016 Project to the City. The City hereby agrees to purchase, and hereby purchases, the 2016 Project from the Authority on the terms and conditions specified herein' i.Jotwithstanding the foregoing, it is hereby expressly understood and agreed that the Authority shall be under no liability of any kind or character whatsoever for the payment of any costs or expenses incurred by the City (whether as agent for the Authority or otherwise) for the acquisition and construction ofthe 2016 Project and that all such costs and expenses shall be puiA Uy the City, regardless of whether the funds deposited in the Acquisition Fund are sufficient to cover all such costs. ARTICLE III 2016 INSTALLMENT PAYMENTS Section 3.01. Purchase Price' (a) The Purchase Price to be paid by the City to the Authority hereunder is the sum of the principal amount of the City's obligation hereunder plus the interest to accrue on the unpaid balance oi such principal amount from the date hereof over the term hereof, subject to prepayment as provided in Section 3.03. (b) The principal amount of the Purchase Price to be paid by the City to the Authority hereunder is dollars (S (c) The interest to accrue on the unpaid balance of such principal amount shall be paid by the iity as and shall constitute interest paid on the principal amount of the City's Purchase Price obligation hereunder. (d) Interest on the unpaid balance of the principal amount of the Purchase Price shall accrue, from Februdt! -,2016,on the principal component of each 2016Installment Payment at the following rates: Payment Date Installment PaYments Principal Interest Rate Installment (Per annum) $% Interest Amount $ OHSUSA:763796299. I 10 Installment Payments Principal Installment Interest Rate (per annum)Payment Date Interest Amount Section 3.02. Payment of 2016 Installment Payments. The City shall, subject to prepayment as provided in Section 3.03, pay the Authority the Purchase Price, without offset or OHSUSA:763796299. I l1 deduction of any kind, by paying the principal installments of the 2016 Installment Payments due annually on July 1, together with interest installments of the 2016 Installment Payments, which interest installments shall be paid semiannually on each January I and July 1, commencing July I ,2016. The City shall also pay all expenses, compensation and indemnification payable by the Authority to the Trustee under the Trust Agreement' The obligation of the City to pay the Purchase Price by paying the 2016 Installment Payments is, subject to Section 8.01, absolute and unconditional, and until such time as the 2016 Installment Payments shall have been paid in full (or provision for the payment thereof shall have been made pursuant to Section 7.01), the City will not discontinue or suspend any 2016lnstallment Payments required to be paid by it under this section when due, whether or noi the System or any part thereof is operating or operable, or its use is suspended, interfered with, reduced, curtailed or terminated in whole or in part, and such payments shall not be subject to reduction whether by offset or otherwise and shall not be conditional upon the performance or nonperformance by any party to any agreement for any cause whatsoever. In order to carry out and effectuate the obligation of the City contained herein to pay the Purchase Price by paying the 2016 Installment Payments, the City agrees and covenants itrat att System Revenues ieceived by it shall be deposited when and as received in trust in the City of -Burlingame Storm Drainage System Revenue Fund (also known as the City of Builingame Speciat Storm Drainage Fund) which fund is established pursuant to the Ordinance and is-hereby pledged and a security interest is granted therein and which fund the City agrees and covenants to maintain so long as any 2016Installment Payments remain unpaid, and all money on deposit in the System Revenue Fund shall be applied and used only as provided herein. All amounts on deposit in the System Revenue Fund shall be set aside and deposited by the City at the following times in the following order of priority: Transfers to Trustee. (l) Revenue Fund Deposits. on or before the fourth Business Day before each date'on which a2016lnstallment Payment becomes due and payable under this 2016 Installment Sale Agreement, the City shall, from the money in the System Revenue Fund, transfer to the Trustee for deposit in the Revenue Fund established pursuant to the Trust Agreement a sum equal to the 2016 Installment Payments becoming due and payable under this 2016Installment Sale Agreement on such due date, except that no such deposit need be made to the extent the Trustee then holds money for such purpose in the ft..r.nr. Fund available to pay the 2016 Installment Payment becoming ar. arra payable under this 2016 Installment Sale Agreement on such date. The City shall also, from such remaining moneys in the System Revenue Fund, pay to the party entitled thereto or transfer or cause to be transferred to any applicable debt service or other payment fund or account for any Parity Obligations, without preference or priority between transfers made pursuant to this sentence and the preceding sentence, and in the event of any insufficiency of such moneys ratably without any discrimination or preference, on the dates specified in the proceedings relating to such Parity Obligations, the sum or sums required to be paid or deposited in such debt service or other payment OHSUSA:763796299. I t2 fund or account with respect to principal, premium, if any, and interest on Parity Obligations in accordance with the terms of such Parity Obligations. (2) Reserve Account Deposits. On or before the fourth Business Day before each 2016 Installment Payment Date, the City shall, from the remaining money on deposit in the System Revenue Fund after deposits and transfers pursuant to paragraph (l) above, transfer to the Trustee for deposit in the Reserve Account that sum, if any, necessary to restore the Reserve Account to an amount equal to the Reserve Account Requirement. The City shall also, from such remaining moneys in the System Revenue Fund, transfer or cause to be transferred to any applicable reserve fund or account for any Parity Obligations for which a separate reserve has been funded pursuant to Section 4.01(d) hereof, without preference or priority between transfers made pursuant to this sentence and the preceding sentence, and in the event of any insufficiency of such moneys ratably without any discrimination or preference, the sum or sums, if any, equal to the amount required to be deposited therein in accordance with the terms of such Parity Obligations. After making the foregoing deposits and transfers hereinabove required to be made, or, if sooner, at such time as amounts remaining on deposit in the System Revenue Fund shall be sufficient to make the remaining transfers hereinabove required to be made in the next l2 months with respect to 2016 Installment Payments and Parity Obligations, the City may apply any remaining money in the System Revenue Fund for any purpose permitted pursuant to the Ordinance. The City shall distribute System Revenues available for Outstanding 2016 Installment payments and debt service on all Outstanding Parity Obligations on a pro rata basis without regard to whether each such Parity Obligations has a funded debt service reserve or a surety bond or other similar funding instrument. Section 3.03. Prepa of 20 l6 Installment (a) Installment payments. The City may prepay from any source of available funds as a whole or in part on any aut., o, o. after July l, _,all or any part of the principal amount of the unpaid Installment payments becoming due and payable on or after July 1, -, in such order of prepayment as the Ciiy may determine upon written direction to the Authority and the Trustee (and by lot within an Insiallment Payment Date), at the following prepayment prices (expressed as a percentage of the principal amount of the Bonds called for prepayment) plus accrued interest to the date of prepayment: Prepayment Period PrePaYment (Dates Inclusive) Price (b) Before making any prepayment pursuant to this section, the City shall give written notice to the Authority and the Trustee describing such event and specifying the date on which the prepayment will be paid and the order thereof, which date shall be not less than forty- OHSUSA:763796299. I 13 five (45) days nor more than sixty (60) days from the date such notice is given; provided, that notwithstanding any such prepayment, the City shall not be relieved of its obligations hereunder, including specifically its obligations under this article, until the Purchase Price shall have been fully paid (or provision for payment thereof shall have been made pursuant to Article VII). Section 3.04. Pledge of System Revenues. All System Revenues are hereby inevocably pledged to the payment of the 2016 Installment Payments; provided, that out of the System Revenues there may be apportioned such sums for such purposes as are permitted by this 2016 Installment Sale Agreement. This pledge shall constitute a lien on the System Revenues for the payment of the 2016 Installment Payments and Parity Obligations' ARTICLE IV PARITY OBLIGATIONS Section 4.01.tions The City shall not incur any obligation, the payment of which is payable from and secured by a lien and charge on the System Revenues prior to the lien and charge on System Revenues securing the 2016 Installment Payments under this 2016 Instal lment Sale Agreement. The City may at any time execute and deliver anY a lien and charge on the Revenues securing the 2 Agreement, provided: Parity Obligation, the payment of which is payable from and secured by System Revenues on a parity with the lien and charge on System 016 Instal lment Payments due under this 2016 Installment Sale (a) Either - (1) as evidenced by a Certificate of the City, during any twelve (12) consecutive calendar months out of the immediately preceding eighteen (18) calendar month period, the System Revenues were at least equal to one hundred ten percent (ll0%) of the Maximum Annual Debt Service for all Outstanding 2016 Installment payments and all Outstanding Parity Obligations plus the Parity Obligation proposed to be executed; or (2) as evidenced by a Certificate of the City, the projected System Revenues during the first Fiscal Year in which Debt Service on the Parity Obligation is payable (other than from Bond or Contract proceeds), is at least equal to one hundred ten peicent (110%) of the Maximum Annual Debt Service for all Outstanding 2016 installment Payments and all Outstanding Parity Obligations plus the Parity Obligation proposed to be executed; (b) The proceeds of such Parity Obligation proposed to be executed shall be used solely to finance or. ,.finun.e (including reimbursement to the City of amounts advanced for such costs) one or more betterments or improvements to the System as designated by the City and to pay any incidental costs and expenses related thereto including the costs of issuance, execution or delivery of such proposed Parity Obligation; (c) There shall have been delivered to the City an Opinion of Counsel substantially to the effect that (l)the City has the right and power under applicable law to OHSUSA:763796299 1 14 execute and deliver the Parity Obligation, and the Parity Obligation is a valid and binding obligation of the City, and (2) such Parity Obligation has been duly and validly authorized and issued in accordance herewith; and (d) The City is not in default under this 2016 Installment Sale Agreement. For purposes of calculating the coverage test described in clauses (a) and (b) above, the proceeds of the Refundable Credits received by the City will not be included in System Revenues and will be subtracted from the amount of interest payable in calculating Maximum Annual Debt Service. Notwithstanding the foregoing provisions, neither clause (a) nor clause (b) above shall limit the ability of the City to execute any Parity Obligations at any time to refund any Outstandin g 2016 Installment Payments or Outstanding Parity Obligations if the annual Debt Service foi each Fiscal Year during which such Parity Obligation is Outstanding will not be increased by reason of the issuance of such Parity Obligation. Section 4.02. Subordinate Oblisations. The City may incur Subordinate Obligations without meeting any of the tests set forth in Section 4.01. ARTICLE V COVENANTS OF THE CITY Section 5.n1. Compliance with 2016 Installment Sale Agreement and Trust Asreement. The City will punctually pay the 2016 Installment Payments in strict conformity *ittr tt. terms hereof, and will faithfully observe and perform all the agreements, conditions, covenants and terms contained herein required to be observed and performed by it, and will not terminate the 2016Installment Sale Agreement for any cause including, without limiting the generality of the foregoing, any acts or circumstances that may constitute failure of consideration, destruCtion of or damage to the 2016 Project or the System, commercial frustration of purpose, any change in the tax or other laws of the United States of America or of the State of California or any political subdivision of either or any failure of the Authority to observe or perform any agreement, condition, covenant or term contained herein required to be observed and perform.a Uy it, whether express or implied, or any duty, liability or obligation arising out of tr connected herewith or the insolvency, or deemed insolvency, or bankruptcy or liquidation of the Authority or any force majeure, including Acts of God, tempest, storm, earthquake, war, rebellion, riot, civil disorder, acts of public enemies, blockade or embargo, strikes, industrial disputes, lockouts, lack of transportation facilities, fire, explosion, or acts or regulations of governmental authorities. The City will faithfully observe and perform all the agreements, conditions, covenants and terms contained in the Trust Agreement required to be observed and performed by it, and it is expressly understood and agreed by and among the parties to the 2016 Installment Sale Agreement and the Trust Agreement that each of the agreements, conditions, covenants and terms contained in each such agriement is an essential and material term of the obligation of the City to repay the costs of the aiquisition and construction of the 2016 Project and the costs and OHSUSA:763796299. I 15 expenses incidental thereto paid by the Authority pursuant to, and in accordance with, and as authorized under law and the 20l6Installment Sale Agreement. Section 5.02. Use of Proceeds of Authority Bonds. The Authority and the City agree that the proceeds of the Authority Bonds will be used by the Authority to design, acquire, construct and install the 2016 Project and to pay the incidental costs and expenses related thereto as provided herein and in the Trust Agreement. Section 5.03. Against Encumbrances. The City will pay or cause to be paid when due all sums of money that may become due or purporting to be due for any labor, services, materials, supplies or equipment furnished, or alleged to have been fumished, to or for the City in, upon, aboui or relating to the System and will keep the System free of any and all liens against any portion of the System. In the event any such lien attaches to or is filed against u.ry pJrtio, of tire System, the City will cause each such lien to be fully discharged and released at ih; time the performance of any obligation secured by any such lien matures or becomes due, except that if the City desires to contest any such lien it may do so. If any such lien shall be reduced to final judgment and such judgment or any process as may be issued for the enforcement thereof is not promptly stayed, or if so stayed and such stay thereafter expires, the City will forthwith pay or .um. io be paid and discharged such judgment. The City will, to the maximum extent permitted by law, indemnify and hold the Authority and the Trustee harmless from, and defend Lach of them against, any claim, demand, loss, damage, liability or expense (including attomeys' fees) as a result of any such lien or claim of lien against any portion of the System. Section 5.04. Aeainst Sale or Other Disposition of Property. The City will sell, transfer or otherwise dispose of any of the facilities of the System or any real or personal property comprising u pu.t of the System only if such a sale, transfer or other disposition of the iu.iliti", or propen! oithe System are not material to the operation of the System, or shall have become unr..ri..*tle, inadequate, obsolete or unfit to be used in the operation of the System, or are no longer necessary, material or useful to the operation of the System and if such transfer will not reduce the System Revenues below the requirements to be maintained under Section 5'14. Section 5.05. Tax Covenants. (a) The City will not directly or indirectly use or permit the use of any proceeds of the obligation provided herein or any other funds of the City or take or omit to take any action that would cause such obligation to be an "arbitrage bond" within the meaning of Section 148(a) of the Code or a "federal-guaranteed obligation" within the meaning of-Section 149(b) of the Code or a "private activity bond" as described in Section 141 of the Code. To that end, as long as any 2016Installment Payments are unpaid, the City will comply with all requirements of such sections of the Code to the extent applicable to the obligaiions provided herein. In the event that at any time the City is of the opinion that for pr.p,-or., ofinis Section it is necessary to restrict or to limit the yield on the investment of any -on.y, held by the City under this 2016 Installment Sale Agreement or by the Trustee under the Trust Agreement, the iity shall so instruct the Trustee in writing and the trustee, as appropriate, shall act in accordance with such instructions. OHSUSA:763796299. I 16 The City and the Authority covenant that they will at all times do and perform all acts necessary or desirable in order to assure that the interest on the tax-exempt Authority Bonds will not be included in gross income of the registered owners thereof for federal income tax purposes and will take no action that would result in such interest being so included. (b) Notwithstanding any provision of this section or of Article VIII, if the City receives an opinion of Bond Counsel that any specified action required under this section is no longer required or that some further or different action is required to maintain the exclusion from gross income for federal income tax purposes on the tax-exempt Authority Bonds, the City may conclusively rely on such opinion in complying with the requirements of this section, and the covenants hereunder shall be deemed to be modified to that extent. Section 5.06.of the The City will take all necessary and appropriate steps to acquire and construct the 2016 Project, as agent ofthe Authority. Section 5.07. Maintenance and Operation of the System. The City will maintain and preserve the System in good repair and working order at all times and will operate the Systlm in an efficient and economical manner and will pay all maintenance and operation costs as they become due and payable. Section 5.08. Compliance with Contracts. The City will comply with, keep, observe and perform all agreements, conditions, covenants and terms, express or implied, required to be performed by it contained in all contracts for the use of the System and all other contracts affecling or involving the System to the extent that the City is a party thereto. Section 5.09. Payment of Claims. The City will pay and discharge any and all lalr{ul claims for labor, materials or supplies which, if unpaid, might become a lien on the System Revenues or any part thereof prior or superior to the obligation to make the 2016 Installment Payments as provided herein or which might impair the security of the 2016 Installment Payments. Section 5.10. Insurance. The City will procure and maintain such insurance relating to the System which it shall deem advisable or necessary to protect its interests and the interesis of the Authority and the Trustee, which insurance shall afford protection in such amounts and against such risks as are usually covered in connection with municipal storm drainage systems similar to the System; provided, that any such insurance may be maintained under a self-insurance program so long as such self-insurance is maintained in the amounts and manner usually maintained in connection with municipal storm drainage systems similar to the System and is, in the opinion of an Insurance Consultant, financially sound. All policies of insurance required to be maintained herein shall provide that the Authority and the Trustee shall be given thirty (30) days' written notice of any intended cancellation thereof or reduction of coverage provided therebY. Section 5.11. Accountins Records and Financial Statements. (a) The City will keep appropriate accounting records in which complete and comect entries shall be made of all transactions relating to the System, which records shall be OHSUSA:763796299. I 17 available for inspection by the Authority and the Trustee at reasonable hours and under reasonable conditions. (b) The City will prepare and file with the Authority and the Trustee annually within two hundred ten (210) days after the close of each Fiscal Year (commencing with the Fiscal Year ending June 30,2016) financial statements of the City for the preceding Fiscal Year prepared in accordance with generally accepted accounting principles, together with an Accountant's Report thereon. Section 5.12.Protection of Security and Riehts of the Authority and the Trustee. The City will preserve and protect the security hereof and the rights of the Authority and the Trustee to the 20l6Installment Payments hereunder and will warrant and defend such rights against all claims and demands of all persons. Section 5.13.of Taxes with Regulations.The City will pay and discharge all taxes, assessments and other governmental charges which may hereafter be lawfullY imPosed upon the System or any part thereof when the same shall become due. The City will duly observe and conform with all valid regulations and requirements of any governmental authority relative to the operation of the System or any part thereof, but the City InAt not be required to comply with any regulations or requirements so long as the validity or application thereof shall be contested in good faith. Section 5.14. Collection of Storm Drainage Fees. The City shall collect the Storm Drainage Fee pursuant to th. prorisions of Section 4.30.060 of the Ordinance. The City shall take all actions authorized by the Ordinance (including, if necessary, increasing the Storm Drainage Fee pursuant to the provisions of Section 4.30.030 of the ordinance) to collect System Revenues during each Fiscal year through the 2037-2038 Fiscal Year in an amount at least equal to one hundred ten percent (l l0%) of Debt Service for such Fiscal Year' For purposes ofcalculating the fee covenant described in the preceding paragraph, the proceeds of the Refundable Credits received by the City will not be included in System Revenues and will be subtracted from the amount of interest payable in calculating Debt Service for each Fiscal Year' Section 5.15. Further Assurances. The City will adopt, deliver, execute and make any and all fuither assurances, instruments and resolutions as may be reasonably necessary or proper to carry out the intention or to facilitate the performance hereof and for the better ussu.ing and confirming unto the Authority of the rights and benefits provided to it herein. Section 5.16. Continuing Disclosure. The City hereby covenants and agrees that it will comply with and carry out all of its obligations under the Continuing Disclosure Certificateio be delivered by the City in connection with the execution and delivery of the Authority Bonds. Notwithsianding any other provision hereof, failure of the City to comply with the Continuing Disclosure Certificate shall not be considered an Event of Default hereunder; provided, however, that any beneficial owner of Authority Bonds may take such actions as may t. n...r.ury and appropriate, including seeking mandate or specific performance by court order, OHSUSA:763796299. I 18 to cause the City or the Trustee, as the case may be, to comply with its obligations in this section and the Continuing Disclosure Certificate. ARTICLE VI EVENTS OF DEFAULT AND REMEDIES Section 6.01. Events of Default. If one or more of the following Events of Default shall happen, that is to say -- (1) if default shall be made in the due and punctual payment of any 2016 Installment Payment or of any Parity Obligation when and as the same shall become due and payable; or (2) if default shall be made by the City in the performance of any of the other agreements or covenants contained herein required to be performed by it, and such default shall have continued for a period of sixty (60) days after the City shall have been given notice in writing of such default by the Authority or the Trustee; or (3) if default shall be made by the City in the performance of any of the agreements or covenants contained in any Parity obligation required to be performed by it, other than as set forth in (a) above, and such default shall have continued after any notice and grace period provided by such Parity Obligation; or (4) if the City shall file a petition or answer seeking arrangement or reorganization under the federal bankruptcy laws or any other applicable law of the United States of America or any state therein, or if a court of competent jurisdiction shall approve a petition filed with or without the consent of the City seeking arrangement or reorganization under the federal bankruptcy laws or any other applicable law of the United States of America or any state therein, or if under the provisions of any other law for the relief or aid of debtors any court of competent jurisdiction ihull arrr-e custody or control of the City or of the whole or any substantial part of its ProPertY; then the Trustee shall have the right -- (a) by mandamus or other action or proceeding or suit at law or in equity to enforce its rights against the City or any councilmember, officer or employee thereof, and to compel the City or uny such councilmember, officer or employee to perform and carry out its or his duties under law and the agreements and covenants required to be performed by it or him contained herein; (b) by suit in equity to enjoin any acts or things which are unlawful or violate the rights of the Authority or the Trustee; or (c) by suit in equity upon the happening of an Event of Default to require the City and its councilmembers, officers and employees to account as the trustee of an express trust. OHSUSA:763796299. I 19 Section 6.02. Non-Waiver. Nothing in this article or in any other provision hereof shall affect or impair the obligation of the City, which is absolute and unconditional, to pay the 20l6Installment Payments from the System Revenues to the Trustee at the respective due dates or upon prepayment, or shall affect or impair the right of the Trustee, which is also absolute and unconditional, to institute suit to enforce such payment by virtue of the contract embodied herein. A waiver of any default or breach of duty or contract by the Trustee shall not affect any subsequent default or breach of duty or contract or impair any rights or remedies on any such subsequent default or breach of duty or contract. No delay or omission by the Trustee to exercise any right or remedy accruing upon any default or breach of duty or contract shall impair any such right or remedy or shall be construed to be a waiver of any such default or breach ofduty or contract or an acquiescence therein, and every right or remedy conferred upon the Trustee by law or by this article may be enforced and exercised from time to time and as often as shall be deemed expedient by the Trustee. If any action, proceeding or suit to enforce any right or exercise any remedy is abandoned or determined adversely to the Trustee, the Authority and the City and the Trustee shall be restored to their former positions, rights and remedies as if such action, proceeding or suit had not been brought or taken. Section 6.03. Remedies Not Exclusive. No remedy herein conferred upon or reserved to the Trustee is intended to be exclusive of any other remedy, and each such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing in law or in equity or by statute or otherwise and may be exercised without exhausting and without regard to any other remedy conferred by law' ARTICLE VII DISCHARGE OF OBLIGATIONS Section 7.01. Discharee of Obligations. (a) If the City shall pay or cause to be paid all the 2016lnstallment Payments at the times and in the manner provided herein, the right, title and interest of the Authority herein and the obligations of the City hereunder shall thereupon cease, terminate, become void and be completely discharged and satisfied. (b) Any unpaid principal installment of the 2016 Installment Payments shall on its payment date or date of prepayment be deemed to have been paid within the meaning of and with the effect expressed in subsection (a) of this section if the City makes payment of such 2016 Installment Payments and the prepayment premium, if applicable, in the manner provided herein. (c) All or any portion of unpaid principal installments of the 2016 Installment Payments shall, prior to their payment dates or dates of prepayment, be deemed to have been paid within the meaning of and with the effect expressed in subsection (a) of this section if (i) notice is provided by the City to the Trustee as required by the Trust Agreement, (ii) there shall OHSUSA:763796299.1 20 have been deposited with the Trustee either money in an amount which shall be sufficient, or Govemment Securities (as that term is defined in the Trust Agreement), the interest on and principal of which when paid will provide money which, together with money, if any, deposited with the Trustee, shall be sufficient in the opinion of an Independent Certified Public Accountant to pay when due the principal installments of such 2016 Installment Payments or such portions thereof on and prior to their payment dates or their dates of prepayment, as the case may be, and the prepayment premiums, if any, applicable thereto, and (iii) an opinion of nationally recognized bond counsel is filed with the Trustee to the effect that the action taken pursuant to this iubsection will not cause the interest on the tax-exempt Authority Bonds to be includable in gross income under the Code for federal income tax purposes. (d) After the payment of all 2016 Installment Payments and prepayment premiums, if any, as provided in this section, and payment of all fees and expenses of the Trustee, the Trustee, upon request of the City, shall cause an accounting for such period or periods as may be requested by the City to be prepared and filed with the City and the Authority and shall execute and deliver to the City and the Authority all such instruments as may be necessary or desirable to evidence such total discharge and satisfaction of the 2016 Installment Sale Agreement, and the Trustee shall pay over and deliver to the City, as an overpayment of 2016 Installment payments, all such money or investments held by it pursuant hereto other than such money and such investments as are required for the payment or prepayment of the 2016 Installment payments, which money and investments shall continue to be held by the Trustee in trust for the payment of the 2016 Installment Payments and shall be applied by the Trustee pursuant to the Trust Agreement. ARTICLE VIII MISCELLANEOUS Section 8.01. Liability of City Limited to System Revenues. Notwithstanding anything contained herein, the City shall not be required to advance any moneys derived from uny ,oui". of income other than the System Revenues for the payment of the 2016 Installment payments or fbr the performance of any agreements or covenants required to be performed by it contained herein. The City may, however, advance moneys for any such purpose so long as such moneys are derived from a source legally available for such purpose and may be legally used by the City for such purpose. The obligation of the City to make the 2016 Installment Payments is a special obligation of the City payable solely from the System Revenues as provided herein, and does not .or,r-titrt. a debt or inl bity or of the State of California or of any political subdivision thereof within the meaning of any constitutional or statutory debt limitation or restriction. Section 8.02.of ment Nothing contained herein, expressed or impl ied, is intended to give to any person other than the Authority or the City or the Trustee anY right,remedy or claim under or pursuant hereto, and any agreement or covenant required herein to be performed by or on behalf of the Authority or the City or the Trustee shall be for the sole and exclusive benefit of the other party. To the extent that this 20 l6 Installment Sale Agreement confers upon or gives or grants the Trustee any right, OHSUSA:763796299. I 2l remedy or claim under or by reason of this 2016 Installment Sale Agreement, the Trustee is hereby explicitly recognized as being a third-party beneficiary hereunder and may enforce any such right, remedy or claim conferred, given or granted hereunder' Section 8.03.Sr rcceqqnt"Is T-)eerned Inelrrded in all Pcferenneq tn Predece a anr Whenever either the Authority or the City or the Trustee is named or referred to herein, such reference shall be deemed to include the successor to the powers, duties and functions that are presently vested in the Authority or the City or the Trustee, and all agreements and covenants ieqrirea hereby to be performed by or on behalf of the Authority or the City or the Trustee shall bind and inure to the benefit of the respective successors thereof whether so expressed or not. Section 8.04. Waiver of Personal Liability. No councilmember, officer or employee of the City shall be individually or personally liable for the payment of the 2016 Installment paymeni, but nothing contained herein shall relieve any councilmember, officer or employee of the City from the performance of any official duty provided by any applicable provisions of law or herebY. Section 3.65. Article and Section Headings. Gender and References. The headings or titles of the severaGrticles and sections hereof and the table of contents appended hereto shall be solely for convenience of reference and shall not affect the meaning, construction or effect hereof, and words of any gender shall be deemed and construed to include all genders. All references herein to "Articles," 'oSections," "Exhibits" and other subdivisions or clauses are to the corresponding articles, sections, exhibits, subdivisions or clauses hereof; and the words ,.hereby," "herein,":'hereof," "hereto," "herewith" and other words of similar import refer to the 2016 Installment Sale Agreement as a whole and not to any particular article, section, exhibit, subdivision or clause hereof. Section 8.06. Partial Invalidity. If any one or more of the agreements or covenants or portions ther.of .equir.d hereby to be performed by or on the part of the Authority or the City shall be contrary to law, then such agreement or agreements, such covenant or covenants or such portions thereof shall be null and void and shall be deemed separable from the remaining agreements and covenants or portions thereof and shall in no way affect the validity hereof. The Authority and the City hereby declare that they would have executed the 2016 Installment Sale Agreemento and each and every other article, section, paragraph, subdivision, sentence, clause an"d phrase hereof irrespective of the fact that any one or more articles, sections, purugruphr, subdivisions, sentences, clauses or phrases hereofor the application thereofto any p.rrJn or circumstance may be held to be unconstitutional, unenforceable or invalid. Section 8.07. Assignment. The 2016 Installment Sale Agreement and any rights hereunder shall be assigned by the Authority to the Trustee as provided in the Trust Agreement; to which assignment the City hereby expressly acknowledges and consents. Section 8.08. Net Contract. The 2016 Installment Sale Agreement shall be deemed and construed to be a net contract, and the City shall pay absolutely net during the term hereof the 201 6 Installment Payments and all other payments required hereunder, free of any deductions and without abatement, diminution or set-off whatsoever' OHSUSA:763796299. I 22 Section 8.09. California Law. The 2016 Installment Sale Agreement shall be construed and governed in accordance with the laws of the State of California. Section 8.10. Indemnification. The City shall, to the full extent then permitted by law, indemnify, protect, hold harmless, save and keep harmless the Authority and its directors, officers and employees and the Trustee and its directors, officers and employees from and against any and all liability, obligations, losses, claims and damages whatsoever, regardless of the cause thereof, and expenses in connection therewith, including, without limitation, counsel fees and expenses, penalties and interest arising out of or as the result of the entering into of the 2016 Instaliment Sale Agreement, the acquisition, construction, installation and use of the 2016 Project and each portion thereof or any accident in connection with the operation, use, condition or iossession of the 2016 Project or any portion thereof resulting in damage to property or injury to or death to any person including, without limitation, any claim alleging latent and other defects, whetheror not discoverable by the City or the Authority; any claim for patent, trademark or copyright infringement; and any claim arising out of strict liability in tort; the acceptance or administration of the trusts of the Trust Agreement or the exercise or performance of any of its powers or duties thereunder or under any of the documents relating to the Authority Bonds' The indemnification arising under this section shall continue in full force and effect notwithstanding the full payment of all oUligations hereunder or the termination hereof for any reason or with regard to t-he Trustee the reiignation or removal of the Trustee. The City agrees not to withhold oiubut. any portion of the payments required pursuant hereto by reason of any defects, malfunctions, breakdowns or infirmities of the 2016 Project. The City and the Authority mutually agree to promptly give notice to each other of any claim or liability hereby indemnified against following either's learning thereof. Section 8.11. Funds. Any fund required to be established and maintained herein by the Director of Finance may be established and maintained in the accounting records of the Director of Finance either as an account or a fund, and may, for the purpose of such accounting records, any audits thereof and any reports or statements with respect thereto, be treated either as an account or a fund; but all such records with respect to any such fund shall at all times be maintained in accordance with sound accounting practice and with due regard for the protection of the security of the Authority Bonds and the rights of the owners of the Authority Bonds. Section 8.12. Notices. All written notices to be given hereunder shall be given by mail to the party entitled thereto at its address set forth below, or at such other address as such pu.ty ,nuy prouide to the other party in writing from time to time, namely: If to the City City of Burlingame 501 Primrose Road Burlingame, CA 94010-3997 Attention: Finance Director OHSUSA:763796299. I 23 If to the Authority Burlingame Financing Authority c/o City of Burlingame-Dept. of Finance 501 Primrose Road Burlingame, CA 94010-3997 Attention: Executive Director Section 8.13. Trust Asreement Provi sions. The execution of this 2016 Installment Sale Agreement shall constitute conclusive evidence of approval of the Trust Agreement by the City. Whenever the Trust Agreement by its terms imposes a duty or obligation upon the City, such duty or obligation shall be binding upon the City to the same extent as if the City were an express party to the Trust Agreement, and the City shall carry out and perform all of its obligations under the Trust Agreement as fully as if the City were a party to the Trust Agreement. Section 8.14. Effective Date. The 2016 Installment Sale Agreement shall become effective upon its execution and delivery, and shall terminate when the Purchase Price shall have been fuliy paid (or provision for the payment thereof shall have been made pursuant to Article VII). Section 8.15. Execution in Counterparts. The 2016 Installment Sale Agreement may be executed in several counterparts, each of which shall be deemed an original, and all of which shall constitute but one and the same instrument. OHSUSA:763796299. I 24 IN WITNESS WHEREOF, the parties hereto have executed the 2016 Installment Sale Agreement by their officers thereunto duly authorized as of the day and year first written above. CITY OF BURLINGAME City Manager BURLINGAME FINANCING AUTHORITY Executive Director By By OHSUSA:763796299. I s-1 EXHIBIT A THE 20T6 PROJECT The 2016 Project shall include all capital improvements to the System financed with the proceeds of the Burlingame Financing Authority Storm Drainage Revenue Bonds, Series 20[6, including, but not limited to, any of the following (to the extent not financed with proceeds of the 2010 Contract or 2012 Contract): Easton Creek-Marsten Pump Station and Outfall Improvements; Mills Creek Improvements; Burlingame Creek Bypass and Improvements; Ralston Creek ImProvements; New Rollins Road PumP Station; Terrace Creek/Laguna Area Storm Drainage Improvements; El Portal, Trousdale and Gilbreth Creek repairs; Bridge and Culvert Facility Improvements; and Upgrades to existing storm water pump stations' OHSUSA:763796299. I A-i DRAFT ty23t20ts 2016 INSTALLMENT SALE AGREEMENT by and between the CITY OF BURLINGAME, as Purchaser AND THE BURLINGAME FINANCING AUTHORITY, as Seller for the CITY OF BURLINGAME STORM DRAINAGE PROJECTS Dated as of February 1,2016 OHSUSA:763796299. I TABLE OF CONTENTS ARTICLE I DEFINITIONS Section 1.01. Definitions ARTICLE II THE 2016 PROJECT Section 2.01. Design, Acquisition, Construction and Sale of the 2016 Project.. ARTICLE III 2016 INSTALLMENT PAYMENTS Purchase Price......... Payment of 2016 Installment Payments.. Prepayment of 201 6 Installment Payments...'.... Pledge of System Revenues ARTICLE IV PARITY OBLIGATIONS........ Section 4.01. Conditions for the Execution of Parity Obligations Section 4.02. Subordinate Obligations...'.......... ARTICLE V COVENANTS OF THE CITY Agreement Page I 1 9 9 Section 3.01. Section 3.02. Section 3.03. Section 3.04. Section 5.02. Section 5.03. Section 5.04. Section 5.05. Section 5.06. Section 5.07. Section 5.08. Section 5.09. Section 5.10. Section 5.1 1 . Section 5.12. Section 5.13. 10 10 11 ... 13 ... t4 ...14 ...14 ... 15 ... 15 Use of Proceeds of Authority Bonds .... Against Encumbrances............. Against Sale or Other Disposition of Property...... Tax Covenants .......... Acquisition and Construction of the 2016 Project.'.... Maintenance and Operation of the System Compliance with Contracts.. Payment of Claims.... Insurance Accounting Records and Financial Statements..........." Protection of Security and Rights of the Authority and the Trustee Payment of Taxes and Compliance with Governmental Regulations ............... l5 16 t6 16 16 17 t7 t7 t7 17 .... t7 ....18 18 18Section 5.14. Collection of Storm Drainage Fees....'...'. Section 5.15. Further Assurances Section 5.16. Continuing Disclosure ARTICLE VI EVENTS OF DEFAULT AND REMEDIES.................."... ......18 ......18 ...... 19 ..,,,. L9Section 6.01 Events of Default . -1- Section 5.01. Compliance with 2016 Installment Sale Agreement and Trust TABLE OF CONTENTS Page Section 6.02. Non-Waiver............... Section 6.03. Remedies Not Exclusive............ ARTICLE VII DISCHARGE OF OBLIGATIONS Section 7.01. Discharge of Obligations ......"....... ARTICLE VIII MISCELLANEOUS....... Section 8.01. Liability of City Limited to System Revenues Section 8.02. Benefits of 20l6Installment Sale Agreement Limited to Parties............ Section 8.03. Successor Is Deemed Included in all References to Predecessor Section 8.04. Waiver of Personal Liability..... Section 8.05. Article and Section Headings, Gender and References......"... Section 8.06. Partial Invalidity...... Section 8.07. Assignment ... Section 8.08. Net Contract.............. Section 8.09. California Law... Section 8. 1 0. Indemnification ..........'..... Section 8.I l. Funds........ Section 8.12. Notices Section 8.13. Trust Agreement Provisions Section 8.14. Effective Date ..... Section 8.15. Execution in Counterparts'. EXHIBIT A THE 2OI6 PROJECT........ 20 20 20 20 21 2l 2l 22 22 22 22 22 22 /.) z) 23 ZJ 24 ,24 .24 OHSUSA:763796299. I -ll- TABLE OF CONTENTS Page ARTICLEI DEFINITIONS... Section 1.01. Definitions ARTICLE II THE 2OI6 PROJECT........ ... I ......9 ......9 10 10 11 l3 t4 1 16 16 l6 16 Section 2.01. Design, Acquisition, Construction and Sale of the 2016 Project.. ARTICLE III 2016 INSTALLMENT PAYMENTS Section 3.01 . Purchase Price...... Section 3.02. Payment of 2016lnstallment Payments.. Section 3.03. Prepayment of 2016 Installment Payments....... Section 3.04. Pledge of System Revenues ARTICLE IV PARITY OBLIGATIONS Section 4.01. Conditions for the Execution of Parity Obligations............ Section 4.02. Subordinate Obligations. ARTICLE V COVENANTS OF THE CITY Section 5.01. Compliance with 2016 Installment Sale Agreement and Trust Agreement ,,,.14 .....14 .....15 .....15 ...15 Section 5.02. Section 5.03. Section 5.04. Section 5.05. Section 5.06. Section 5.07. Section 5.08. Section 5.09. Section 5.10. Section 5.1 I . Section 5.12. Section 5.13. Section 5.14. Section 5.15. Section 5.16. Use of Proceeds of AuthoritY Bonds Against Encumbrances.. Against Sale or Other Disposition of Property Tax Covenants Acquisition and Construction of the 20 1 6 Proj ect'.'......'..'...... Maintenance and Operation of the System Compliance with Contracts Payment of Claims Insurance Accounting Records and Financial Statements'...'..".'.. Protection of Security and Rights of the Authority and the Trustee Payment of Taxes and Compliance with Govemmental Collection of Storm Drainage Fees Further Assurances...... t7 17 t7 t7 l7 .... l8 Continuing Disclosure ........ 18 l8 18 l8 TABLE OF CONTENTS (continued) ARTICLE VI EVENTS OF DEFAULT AND REMEDIES.......... Section 6.01. Events of Default.. Section 6.02. Non-Waiver... Section 6.03. Remedies Not Exclusive..,... ARTICLE VII DISCHARGE OF OBLIGATIONS Section 7.01. Discharge of Obligations .'..'.'........... ARTICLE VIII MISCELLANEOUS .................. Section 8.01. Liability of City Limited to System Revenues Section 8.02. Benefits of 2016Installment Sale Agreement Limited to Parties......... Section 8.03. Successor Is Deemed Included in all References to Predecessor.......'. Section 8.04. Waiver of Personal Liability Section 8.05. Article and Section Headings, Gender and References Section 8.06. Partial Invalidity.. Section 8.07. Assignment .... Section 8.08. Net Contract...'..'... Section 8.09. Califomia Law Section 8. I 0. Indemnification......... Section 8.1 l. Funds................ Section 8.12. Notices Section 8.13. Trust Agreement Provisions Section 8. 14. Effective Date ...".... Section 8. I 5. Execution in Counterparts...'.'..'..'..... Page .... l9 t9 20 20 20 20 ....21 ....2t 2T 22 22 22 22 22 22 23 .23 23 Z) 24 24 ..24 -ll - TRUST AGREEMENT THIS TRUST AGREEMENT dated as of February 1, 2016 (the "Trust Agreement"), by and between the BURLINGAME FINANCING AUTHORITY (the "Authority"), a public entity and agency (duly organized and existing pursuant to an Agreement entitled "Joint Exercise of Powers Agreement" by and between the City of Burlingame and the Redevelopment Agency of the City of Burlingame), and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., a national banking association duly organized and existing under the laws of the United States, as trustee (the "Trustee"); WITNESSETH: WHEREAS, the Authority is a joint exercise of powers authority duly organized and operating pursuant to Article 1 of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of Califomia (hereinafter, the "Act"); WHEREAS, Article 4 of the Act authorizes and empowers the Authority to issue bonds to assist local agencies in financing projects and programs consisting of certain public improvements or working capital or liability and other insurance needs whenever a local agency determines that there are significant public benefits from so doing; WHEREAS, the City of Burlingame has determined that the consummation of the transactions contemplated in the Installment Sale Agreement (as hereinafter defined) and this Trust Agreement will result in significant public benefits; WHEREAS, the Authority is empowered pursuant to the Installment Sale Agreement and the aforementioned Article 4 of the Act to cause the financing of the Projects (as hereinafter defined) through the issuance ofits bonds; WHEREAS, the Authority has authorized the issuance of its Storm Drainage Revenue Bonds, Series 2016 (the "Bonds"), in an aggregate principal amount of Dollars (S -) to assist in financing the Projects; WHEREAS, to provide for the authentication and delivery of the Bonds (as hereinafter defined), to establish and declare the terms and conditions upon which the Bonds are to be issued and secured and to secure the full and timely payment of the principal thereof and premium, if any, and interest thereon, the Authority has authorized the execution and delivery of this Trust Agreement; WHEREAS, the Authority has determined that all acts and proceedings required by law necessary to make the Bonds, when executed by the Authority, authenticated and dllivered by the irustee and duly issued, the valid, binding and legal obligations of the Authority payable in accordance with their terms, and to constitute this Trust Agreement a valid and tinding agreement of the parties hereto for the uses and purposes herein set forth, have been done and taken, and have been in all respects duly authorized; Now, THEREFORE, THIS TRUST AGREEMENT WITNESSETH, thAt iN order to secure the full and timely payment of the principal of, premium, if any, and the interest OHSUSA:763796391 .2 on all Bonds at any time issued and outstanding under this Trust Agreement, according to their tenor, and to secure the performance and observance of all the covenants and conditions therein and herein set forth, and to declare the terms and conditions upon and subject to which the Bonds are to be issued and received, and in consideration of the premises and of the mutual covenants herein contained and of the purchase and acceptance of the Bonds by the holders thereof, and for other valuable consideration, the receipt whereof is hereby acknowledged, the Authority does hereby covenant and agree with the Trustee, for the benefit of the respective holders from time to time of the Bonds, as follows: ARTICLE I DEFINITIONS; EQUAL SECURITY SECTION 1.01. Definitions. Unless the context otherwise requires, the terms defined in this Section shall for all purposes hereof and of any Supplemental Trust Agreement and of any certificate, opinion, request or other document herein or therein mentioned have the meanings herein specified, unless otherwise defined in such other document. Capitalized terms not othirwise defined herein shall have the meaning assigned to such terms in the Installment Sale Agreement. on and on Fund The term "Acquisition and Construction Fund" means the fund by that name established pursuant to Section 3.01. Act The term "Act" means the Joint Exercise of Powers Act (being Chapter 5 of Division 7 of Title I of the Government Code of the State, as amended) and all laws amendatory thereof or supplemental thereto. Authority The term "Authority" means the Burlingame Financing Authority created pursuant to the Act and its successors and assigns in accordance herewith' Authorized Denominations The term o'Authorized Denominations" means $5,000 or any integral multiple thereof. Bond Counsel The term "Bond Counsel" means counsel of recognized national standing in the field of law relating to municipal bonds, appointed by the Authority. 2 OHSUSA:763796391.2 Bonds. Serial Bonds. Term Bonds The term "Bonds" means all bonds of the Authority authorized by and at any time Outstanding pursuant hereto and executed, issued and delivered in accordance with Article II. The term "serial Bonds" means Bonds for which no sinking fund payments are provided. The term "Term Bonds" means Bonds which are payable on or before their specified maturity dates from sinking fund payments established for that purpose and calculated to retire such Bonds on or before their specified maturity dates. Bond Year The term ooBond Year" means the twelve (l2)-month period ending on July 1 of each year to which reference is made. Bondholder: Holder: Owner The term "Bondholder," "Holder" or "Owner" means any person who shall be the registered owner of any Outstanding Bond. Business Day The term "Business Day" means a day that is not a Saturday, Sunday or legal holiday on which banking institutions in the State of New York or California are authorized to remain closed, or a day on which the Federal Reserve system is closed. Certifi cate of Completion The term "Certificate of Completion" means a Certificate of the City certifying that the Projects have been completed, meeting the requirements specified for such a Certificate in Section 3.02 hereof. Certificate of the Authority The term "Certificate of the Authority" means an instrument in writing signed by the Chair, Vice-Chair, Executive Director, Secretary or Treasurer of the Authority, or by any other person (whether or not an offrcer of the Authority) who is specifically authorized by resolution of the Authority for that purpose. Certificate of the Citv The term "Certificate of the City" means an instrument in writing signed by the Mayor, Vice-Mayor, City Manager or Finance Director/Treasurer of the City, or by any such offrcials' duly appointed designee, or by any other officer or employee of the City duly authorized by the City Council of the City for that purpose. J OHSUSA:763796391 .2 eiu The term "City" means the City of Burlingame, a city organized and validly existing under the laws of the State. Code The term o'Code" means the Internal Revenue Code of 1986, as amended. Continuing Disclosure Certifi cate The term Continuing Disclosure Certificate shall mean that certain Continuing Disclosure Certificate executed by the City dated the date of issuance and delivery of the Bonds, as originally executed and as it may be amended from time to time in accordance with the terms thereof. Costs of Issuance The term "Costs of Issuance" means all items of expense directly or indirectly payable by or reimbursable to the City or the Authority and related to the authorization, execution and delivery of the Installment Sale Agreement, this Trust Agreement and the issuance and sale of the Bonds, including, but not limited to, costs of preparation and reproduction of documents, costs of rating agencies and costs to provide information required by rating agencies, filing and recording fees, fees and charges of the Trustee, legal fees and charges, fees and disbursements of consultants and professionals, fees and charges for preparation, execution and safekeeping of the Bonds, fees of the Authority and any other authorized cost, charge or fee in connection with the issuance of the Bonds. Costs of Fund The term "Costs of Issuance Fund" means the fund by that name established pursuant to Section 3.01. Depository The term "Depository" shall mean DTC or another recognized securities depository selected by the Authority which maintains a book-entry system for the Bonds. DTC The term "DTC" means The Depository Trust Company, New York, New York. Event of Default The termooEvent of Default" shall have the meaning specified in Section 7.01. 4 OHSUSA:763796391 .2 Financial Newspaper The term "Financial Newspaper" means The Wall Street Journal or The Bond Buyer, or any other newspaper or journal printed in the English language, publishing financial news, and selected by the Authority. Fiscal Year The term "Fiscal Year" means the twelve (12) month period terminating on June 30 ofeach year, or any other annual accounting period hereafter selected and designated by the Authority as its Fiscal Year in accordance with applicable law. Government Securities The term'oGovernment Securities" means: l. U.S. Treasury Certificates, Notes and Bonds (including State and Local Govemment Series - (SLGs)). 2. Direct obligations of the U.S. Treasury which have been stripped by the U.S. Treasury itself. 3. Resolution Funding Corp. ("REFCORP"). Only the interest component of REFCORP strips which have been stripped by request to the Federal Reserve Bank of New York in book entry form are acceptable. 4. Pre-refunded municipal bonds rated "Aaa" by Moody's and "AAA" by S&P. If, however, the issue is only rated by S&P (i.e., there is no Moody's rating) then the pre- refunded bonds must have been pre-funded with cash, direct U.S. or U.S. guaranteed obligations, or AAA rated pre-refunded municipals to satisfy this condition. 5. Obligations issued by the following agencies which are backed by the full faith and credit of the U.S.: U. S. Export - Import B ank (Exrmbank) Direct obligations or fully guaranteed certificates of beneficial ownership Farmers Home Administralion (FmHA) Federal Financing Book G ener al Servi c e s Admini str at ion Participation Certifi cates U. S. Maritime Administration Guaranteed Title XI financing U.S, Department of Housing and Urban Developme,?/ (HUD) Project Notes 5 a. b. c. d. e. f. OHSUSA:763796391 .2 Local Authority Bonds New Communities Debentures - U.S. govemment guaranteed debentures U.S. Public Housing Notes and Bonds - U.S. govemment guaranteed public housing notes and bonds. Independent Certifi ed Public Accountant The term "Independent Certified Public Accountant" means any certified public accountant or firm of such accountants duly licensed and entitled to practice and practicing as such under the laws of the State, appointed and paid by the Authority or City, and who, or each of whom -- (l) is in fact independent according to the Statement of Auditing Standards No. I and not under the domination of the Authority or the City; (2) does not have a substantial financial interest, direct or indirect, in the operations of the Authority or the City; and (3) is not connected with the Authority or the City as a member, officer or employee of the Authority or the City, but who may be regularly retained to audit the accounting records of and make reports thereon to the Authority or the City. Information Services The term "Information Services" means the Electronic Municipal Market Access System of the Municipal Rulemaking Board; and in accordance with then current guidelines of the Securities and Exchange Commission, such other addresses and/or such other services providing information with respect to called bonds, or such services as the Authority may designate in a Certificate of the Authority delivered to the Trustee. Installment Sale Agreement The term "Installment Sale Agreement" means the 2016 Installment Sale Agreement, dated as of February 1,2016, by and between the Authority and the City, as such may be amended or supplemented from time to time. Instal Pavments The term "Installment Payments" means the Installment Payments due under the Installment Sale Agreement. Interest Date The term o'lnterest Payment Date" means January I and July I in each year, commencing July 1, 2016. 6 OHSUSA:763796391 .2 Joint Powers Asreement The term "Joint Powers Agreement" means the Joint Exercise of Powers Agreement by and between the City and the Redevelopment Agency of the City of Burlingame, dated May 1 5, lgg5, as originally executed and as it may from time to time be amended or supplemented pursuant to the provisions hereof and thereof. Moody's The term o'Moody's" means Moody's Investors Service, Inc. a corporation duly organized and existing under and by virtue of the laws of the State of Delaware, and its ,,ri..rro6 and assigns, except that if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, then the term "Moody's" shall be deemed to refer to any other nationally recognized securities rating agency selected by the City' Opinion of Counsel The term "Opinion of Counsel" means a written opinion of Bond Counsel. Outstanding The term "Outstanding," when used as of any particular time with reference to Bonds, means (subject to the provisions of Section 9.02) all Bonds except (1) Bonds theretofore cancelled by the Trustee or surrendered to the Trustee for cancellation; (2) Bonds paid or deemed to have been paid within the meaning of Section 10.01; and (3) Bonds in lieu of or in substitution for which other Bonds shall have been executed, issued and delivered by the Authority pursuant hereto. Permitted Investments The term "Permitted Investments" means any of the following, if and to the extent each is permissible for investment of funds of the Authority, as stated in its current investment policy and pursuant to applicable laws (provided that the Trustee shall be entitled to rely upon any Written Request of the City as conclusive certification to the Trustee that the investments described therein are included in its current investment policy and authorized under the laws of the State): A. Direct obligations of the United States of America (including obligations issued or held in book-entry form on the books of the Department of the Treasury, and CATS and TIGRS) or obligations ihe principal of and interest on which are unconditionally guaranteed by the United States of America. 7 OHSUSA:763796391 .2 B. Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following federal agencies and provided such obligations are backed by it . fUt faith and credit of the United States of America (stripped securities are only permitted if they have been stripped by the agency itself): l. U.S. Export-Import Bank (Eximbank) Direct obligations or fully guaranteed certificates of benehcial ownership 2. Farmers Home Administration (FmHA) Certifi cates of Beneficial Ownership Federal Financing Bank Federal Administration (FHA) General Services Administration Participation Certifi cates Governmental National Mortgage Association (GNMA or Ginnie Mae) GNMA - guaranteed mortgage-backed bonds GNMA - guaranteed pass-through obligations (these obligations are not acceptable for certain cash-Jlow sensitive issues) U.S. Maritime Administration Guaranteed Title XI financing 8. U.S f (HUD) Project Notes Local Authority Bonds New Communities Debentures - U.S. govemment guaranteed debentures U.S. Public Housing Notes and Bonds U.S. government guaranteed public housing notes and bonds C. Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following federal agencies which are not backed by the full faith and credit of the United States of America (stripped securities are only permitted if they have been stripped by the agency itself): 1. Federal Home Loan Bank System Senior debt obligations 2. Federal Home Loan Mortgage Corporation (FHLMAC or Freddie Mac) Participation Certificate aJ 4 5 6 7 OHSUSA:763796391 .2 8 Senior debt obligations Federal National Mortgage Association (FNMA or Fannie Mae) Mortgage-backed securities and senior debt obligations Student Loan Marketing Association (SLMA or Sallie Mae) Senior debt obligations Resolution Fundine Corp. (REFCORP) obligations Farm Credit S)rstem C"rr"lid"t.d iysemwide bonds and notes D. Money market funds registered under the Federal Investment Company Act of 1940, whose shares are registered under the Federal Securities Act of 1933, and having a rating by S&P of AAAm-G; AAA-m; or AA-m and if rated by Moody's rated Aaa, Aal or Aa2 including funds for which the Trustee or its affiliates provide investment advisory or other management services. E. Certificates of deposit secured at all times by collateral described in (A) and/or (B) above. Such certificates must be issued by commercial banks, savings and loan associations or mutual savings banks which may include the Trustee and its affiliates' The collateral must be held by a third party and the bondholders must have a perfected first security interest in the collateral. F. Certificates of deposit, savings accounts, deposit accounts or money market deposits which are fully insured by FDIC, including BIF and SAIF including those of Trustee and its affiliates. G. Investment Agreements, including GIC's, Forward Purchase Agreements and Reserve Fund Put agreements. H. Commercial paper rated, at the time of purchase, "Prime -1" by Moody's and "A-l" or better by S&P. L Bonds or notes issued by any state or municipality which are rated by Moody's and S&P in one of the two highest rating categories assigned by such rating agencies. J. Federal funds or bankers acceptances with a maximum term of one year of any bank which has an unsecured, uninsured and unguaranteed obligation rating of o'Prime - 1'o or ooA3" or better by Moody's and "A-1" or "A" or better by S&P. K. following criteria. Repurchase Agreements ("Repos") for 30 days or less must follow the Repos provide for the transfer of securities from a dealer bank or securities firm (seller/borrower) io a municipal entity (buyer/lender), and the transfer of cash from a municipal entity to the dealer bank or securities firm with an agreement that the dealer bank or securities 9 OHSUSA:763796391.2 aJ 4 5 6 firm will repay the cash plus a yield to the municipal entity in exchange for the securities at a specified date. 1. Repos must be between the municipal entity and a dealer bank or securities firm. a. Primary dealers on the Federal Reserve reporting dealer list which are rate "A" or better by S&P and"A2" or better by Moody's, or b. Banks rated "A" or better by S&P and "A2" or better by Moody's. 2. The written repurchase agreement must include the following: a. Securities which are acceptable for transfer are: (l) Direct obligations of the United States of America referred to in clause A above, or (2) Obligations of federal agencies referred to in clause B above (3) Obligations of FNMA and FHLMC The term of the Repos may be up to 30 days. c. The collateral must be delivered to the municipal entity, trustee (if trustee is not supplying the collateral) or third party acting as agent for the trustee is (if the trustee is supplying the collateral) before/simultaneous with payment (perfection by possession of certifi cated securities). d. Valuation of Collateral. (1) the securities must be valued weekly, marked-to- market at current market price plus accrued interest. (2) The value of collateral must be equal to l04o/o of the amount of cash transferred by the municipal entity to the dealer bank or security firm under the repo plus accrued interest. If the value of securities held as collateral slips below 104% of the value of the cash transferred by the municipal entity, then additional cash and/or acceptable securities must be transferred. If, however, the securities used as collateral are FNMA or FHLMC, then the value of the collateral must equal 105%. 3. A legal opinion which must be delivered to the municipal entity that states that the Repo meets guidelines under state law for legal investment of public funds. b OHSUSA:763796391 .2 l0 L. The Local Agency Investment Fund of the State of California. M. Any other investment selected by the City which does not adversely affect the then-current rating on the Bonds. Person The term "Person" means a corporation, firm, association, partnership, trust, or other legal entity or group of entities, including a govemmental entity or any agency or political subdivision thereof. Principal Office The term "Principal Offrce" refers to the office of the Trustee noted in Section I I .l I and such other offices as the Trustee may designate from time to time except that with respect to presentation of Bonds for payment or for registration of transfer and exchange such term shall mean the office or agency of the Trustee at which, at any particular time, its corporate trust agency business shall be conducted. Principal Payment Date The term "Principal Payment Date" means any date on which principal of the Bonds is required to be paid (whether by reason of maturity, redemption or acceleration). Proiects The term "Projects" means the construction and improvement of the capital improvements to the storm drainage system of the City financed pursuant to the Installment Sale Agreement. Project Costs The term "Project Costs" means all costs of acquisition, construction and improvement of the Projects and of expenses incident thereto (or for making reimbursements to the Authority or the City or any other person, firm or corporation for such costs theretofore paid by him or it), including, but not limited to, construction costs, architectural and engineering fees and expenses, interest during construction, tests and inspection, surveys, land acquisition, insuranie premiums, losses during construction not insured against because of deductible amounts, costs related to the Trustee during construction, costs of accounting, feasibility, environmental and other reports, inspection costs, permit fees, filing and recording costs, printing costs, reproduction and binding costs. Ratine Aeencies The term "Rating Agencies" means, as of any date, (a) Moody's, if Moody's then maintains a rating on the Bonds, and (b) S&P, if S&P then maintains a rating on the Bonds. OHSUSA:763796391 .2 1l Rating Catesory The term "Rating Category" means one of the general long-term (or short-term, if so specifically provided) rating categories of either Moody's and S&P, without regard to any refinement or gradation of such rating category by a numerical modifier or otherwise. Record Date The term 'oRecord Date" means the close of business on the fifteenth (15th) calendar day (whether or not a Business Day) of the month preceding any Interest Payment Date. Redemption Date The term "Redemption Date" shall mean the date fixed for redemption of any Bonds. Redemption Price The term "Redemption Price" means, with respect to any Bond (or portion thereof), the principal amount of such Bond (or portion) plus the applicable premium, if any, payable upon redemption thereof pursuant to the provisions of such Bond and this Trust Agreement. Representation Letter The term "Representation Letter" means the blanket letter of representation of the Authority to DTC or any similar letter to a substitute depository. LReserve Account [Discuss Need for Reservel The term'oReserve Account" means the account of that name established pursuant to Section 5.03(d).1 lReserve Account Requirement The term "Reserve Account Requirement" means the least of (i) the maximum annual Installment Payments, (ii) 125% of average annual Installment Payments, and (iii) 10% of the original principal amount of the Installment Payments; provided, however, such amount shall not exieed the amount permitted by the arbitrage bond regulations issued by the United States Department of the Treasury, as such regulations are, at the time, applicable and in effect, without the imposition of yield restrictions.] Responsible Officer The term "Responsible Officer" means any officer of the Trustee assigned to administer its duties under this Trust Agreement. OHSUSA:763796391 .2 1,2 Revenues The term 'oRevenues" means (i) all Installment Payments and other payments paid by the City and received by the Authority pursuant to the Installment Sale Agreement, and (ii) all interest or other income from any investment, pursuant to Section 5.05, of any money in any fund or account (other than the Rebate Fund) established pursuant to this Trust Agreement or the Installment Sale Agreement. Securities Depositories The term "securities Depositories" means: The Depository Trust Company or such other securities depositories as the Authority may designate to the Trustee. S&P The term 'oS&P" means Standard & Poor's Ratings Group, a corporation duly organized and existing under and by virtue of the laws of the State of New York, and its successors and assigns, except that ifsuch corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, then the term S&P shall be deemed to refer to any other nationally recognized securities rating agency selected by the City. State The term "state" means the State of California. Supplemental Trust Agreement The term "supplemental Trust Agreement" means any trust agreement then in full force and effect which has been duly executed and delivered by the Authority and the Trustee amendatory hereof or supplemental hereto; but only if and to the extent that such Supplemental Trust Agreement is executed and delivered pursuant to the provisions hereof. Tax Certificate The term "Tax Certificate" means the Tax Certificate dated February -,2016. Treasurer The term "Treasurer" means the Treasurer and Controller of the Authority designated pursuant to the Joint Powers Agreement. Trust Agreement The term "Trust Agreement" means this Trust Agreement, dated as of February l, 2016 between the Authority and the Trustee, as originally executed and as it may from time to time be amended or supplemented by all Supplemental Trust Agreements executed pursuant to the provisions hereof. OHSUSA:763796391 .2 l3 Trustee The term "Trustee" means The Bank of New York Mellon Trust Company, N.A., or any other association or corporation which may at any time be substituted in its place as provided in Section 8.01. Written Request of the Authorit), The term "Written Request of the Authority" means an instrument in writing signed by or on behalf of the Authority by its Chair, Vice-Chair, Executive Director or Treasurer oiby u.ty other person (whether or not an officer of the Authority) who is specifically authorized by resolution of the Authority for that purpose. Written st of the Citv The term "Written Request of the City" means an instrument in writing to the Trustee signed by the Mayor, Vice-Mayor, City Manager, or the Finance Director/Treasurer of the City, oi by uny such officer's duly appointed designee, or by any other officer or employee of the City duly authorizedby the City for that purpose. SECTION 1.02. Equal Security. In consideration of the acceptance of the Bonds by the Bondholders thereof, this Trust Agreement shall be deemed to be and shall constitute a contract among the Authority, the Trustee and the Bondholders from time to time of all Bonds authorized, executed, issued and delivered hereunder and then Outstanding to secure the full, timely and final payment of the interest on and principal of and redemption premiums, if any, on all Bonds which may from time to time be authorized, executed, issued and delivered heieunder, subject to the agreements, conditions, covenants and provisions contained herein; and all agreements and covenants set forth herein to be performed by or on behalf of the Authority shalibe for the equal and proportionate benefit, protection and security of all Bondholders of the Bonds without distinction, preference or priority as to security or otherwise of any Bonds over any other Bonds by reason of the number or date thereof or the time of authorization, sale, exlcution, issuance or delivery thereofor for any cause whatsoever, except as expressly provided herein or therein. SECTION 1.03. Interpretation. (a) Unless the context otherwise indicates, words expressed in the singular shall include the plural and vice versa and the use of the neuter, masculine, or feminine gender is for convenience only and shall be deemed to mean or include the neuter, masculine or feminine gender, as appropriate. (b) Headings of articles and sections herein and the table of contents hereof are solely for convenience of reference, do not constitute a part hereof and shall not affect the meaning, construction or effect hereof. OHSUSA:763796391 .2 t4 ARTICLE II THE BONDS SECTION 2.01. Auth of Bonds.(a) The Bonds in an aggregate principal amount of $[PAR] are hereby authorized to be issued by the Authority. The Bonds shall be designated "Burlingame Financing Authority Storm Drainage Revenue Bonds, Series 20r6;' (b) The Authority has reviewed all proceedings heretofore taken relative to the authorization of the Bonds and has found, as a result of such review, and hereby finds and determines that all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in the issuance of the Bonds do exist, have happened and have been performed in due time, form and manner as required by law, and that the Authority is now duly iuthorized, pursuant to each and every requirement of the Act, to issue the Bonds in the form and manner provided herein for the purpose of providing funds to pay for and construct the Projects, and that the Bonds shall be entitled to the benefit, protection and security of the provisions hereof. (c) The validity of the issuance of the Bonds shall not be dependent on or affected in any way by the proceedings taken by the Authority for the financing of the Projects or by any contracts made by the Authority or its agents in connection therewith, and shall not be dlpendent upon the completion of the Projects or upon the performance by any person, firm or corporation 6f ni. or its obligation with respect thereto. The recital contained in the Bonds that the same are issued pursuant to the Act and pursuant hereto shall be conclusive evidence of their validity and of the regularity of their issuance, and all Bonds shall be incontestable from and after their issuance. The Bonds shall be deemed to be issued, within the meaning hereof, whenever the definitive Bonds (or any temporary Bonds exchangeable therefor) shall have been delivered to the purchaser thereofand the proceeds ofsale thereofreceived. SECTION 2.02. Terms of the Bonds. (a) The Bonds shall be dated as of the date of issuance, shall be issued only in fully registered form in Authorized Denominations (not exceeding the principal amount of Bonds maturing at any one time), and shall mature in the y.u6 und in the principal amounts and bear interest at the rates as set forth in the following schedule, subject to prior redemption as described in Article IV hereof: Maturity Date (Julv D_ Principal Amount $ Interest Rate % OHSUSA:763796391 .2 15 Maturity Date (Jul v1) Principal Amount Interest Rate *Term Bond The Bonds shall bear interest at the rates set forth above, payable on July 1,2016, and semiannually thereafter on January I and July 1 in each year. The Bonds shall bear interest from the Interest payment Date next preceding the date of registration thereof, unless such date of registration is an Interest Payment Date, in which event they shall bear interest from such date, o, unles such date of registration is prior to the first Interest Payment Date, in which event they shall bear interest from their dated date. The amount of interest so payable on any Interest payment Date shall be computed on the basis of a 360-day year consisting of twelve 30-day months. (b) Payment of interest on the Bonds due on or before the maturity or prior redemption thereof shall be paid by check mailed by first class mail on each Interest Payment Date tb the person in whose name the Bond is registered as of the applicable Record Date for such Interesi payment Date at the address shown on the registration books maintained by the Trustee pursuant to Section 2.09; provided, however, that interest on any Bonds shall be paid by wire transfer or other means to provide immediately available funds to any Holder of at least $1,000,000 in aggregate principal amount of such Bonds, at its option, according to wire instructions givenlo ihe Trustee in writing for such putpose and on file prior to the applicable Record Date preceding the Interest Payment Date. (c) Interest on any Bond shall cease to accrue (i) on the maturity date thereof, provided that there has been irrevocably deposited with the Trustee an amount sufficient to pay the principal amount thereof, plus interest accrued thereon to such date; or (ii) on the redemption date the."tf, provided there has been irrevocably deposited with the Trustee an amount sufficient to pay the Redemption Price thereof, plus interest accrued thereon to such date. The Holder of such -Bond shall not be entitled to any other payment, and such Bond shall no longer be Outstanding and entitled to the benefits of this Trust Agreement, except for the payment of the principal amount or Redemption Price, of such Bond, as appropriate, from moneys held by the Trustee for such Payment. OHSUSA:763796391 .2 t6 (d) The principal of the Bonds shall be payable by check in lawful money of the United States of America at the Principal Office of the Trustee. No payment of principal shall be made on any Bond unless and until such Bond is surrendered to the Trustee for cancellation. (e) The Trustee shall identify all payments (whether made by check or by wire transfer) of interest, principal, and premium by CUSIP number of the related Bonds. SECTION 2.03. F orm Bonds. The Bonds and the authentication and registration endorsement and assignment to appear thereon shall be substantially in the forms set forth in Exhibit A hereto attached and by this reference herein incorporated. SECTION 2.04. [Intentionallv Left Bankl. SECTION 2.05. flntentionallv Left Bankl' SECTION 2.06. Execution of Bonds. The Executive Director of the Authority is hereby authorized and directed to execute each of the Bonds on behalf of the Authority and the Secretary of the Authority is hereby authorized and directed to countersign each of the Bonds on behalf of the Authority. The signatures of such Executive Director and Secretary may be by printed, lithographed or engraved by facsimile reproduction. In case any officer whose signature upp"urr on the -Bonds shall cease to be such officer before the delivery of the Bonds to the puichas.r thereof, such signature shall nevertheless be valid and sufficient for all purposes as if such officer had remained in office until such delivery of the Bonds. Only those Bonds bearing thereon a certificate of authentication in the form hereinbefore recited, executed manually and dated by the Trustee, shall be entitled to any benefit, protection or security hereunder or be valid or obligatory for any purpose, and such certificate of the Trustee shall be conclusive evidence that the Bonds so authenticated have been duly authorized, executed, issued and delivered hereunder and are entitled to the benefit, protection and security hereof. SECTION 2.07.Transfer and Payment Bonds Any Bond may, in accordance with its terms, be transferred in the books required to be kept pursuant to the provisions of Section 2.09 by the person in whose name it is registered, in person or by his duly authorized attorney, upon surrender of such Bond for cancellation accompanied by delivery of a duly executed written instrument of transfer in a form acceptable to the Trustee' Whenever any gona or Bonds shall be surrendered for transfer, the Authority shall execute and the Trustee shall authenticate and deliver to the transferee a new Bond or Bonds of the same maturity for a like aggregate principal amount of Authorized Denominations. The Trustee shall require the puy-.nt by the Bondholder requesting such transfer of any tax or other governmental charge iequired to be paid with respect to such transfer as a condition precedent to the exercise of such privilege. The Authority and the Trustee may, except as otherwise provided herein, deem and treat the registered owner of any Bond as the absolute owner of such Bond for the purpose of receiving payment thereof and for all other purposes, whether such Bond shall be overdue or not, and neither the Authority nor the Trustee shall be affected by any notice or knowledge to the OHSUSA:763796391.2 17 contrary; and payment of the interest on and principal of and redemption premium, if any, on such Bond shall be made only to such registered owner, which payments shall be valid and effectual to satisfy and discharge liability on such Bond to the extent of the sum or sums so paid. The Trustee shall not be required to register the transfer of or exchange any Bonds which has been selected for redemption in whole or in part, from and after the day of mailing of a notice of redemption of such Bond selected for redemption in whole or in part as provided in Section 4.03 or during the period established by the Trustee for selection of Bonds for redemption. SECTION 2.08.Exchange ofBonds. Bonds may be exchanged at the Principal Office of the Trustee for a like aggregate principal amount of Bonds of the same maturity of other authorized denominations. The Trustee shall require the payment by the Bondholder requesting such exchange of any tax or other govemmental charge required to be paid with respect to such exchange as a condition precedent to the exercise of such privilege. The Trustee shall not be required to exchange any Bond which has been selected for redemption in whole or in part, from and after the day of mailing of a notice of redemption of such Bond selected for redimption in whole or in part as provided in Section 4.03 or during the period established by the Trustee for selection of Bonds for redemption. SECTION 2.09. Bond Registration Books. The Trustee will keep at its office sufficient books for the registration and transfer of the Bonds, which during normal business hours shall be open to inspection by the Authority, and upon presentation for such purpose the Trustee shall, under such reasonable regulations as it may prescribe, register or transfer the Bonds in such books as hereinabove provided. SECTION 2.10. Mutilated. Destroyed. Stolen or Lost Bondsl Temporarv Bonds. If any Bond shall become mutilated, the Trustee, at the expense of the Bondholder, shall th..*pon auihenticate and deliver a new Bond of like tenor and amount in exchange and substitution for the Bond so mutilated, but only upon surrender to the Trustee of the Bond so mutilated. Every mutilated Bond so surrendered to the Trustee shall be cancelled. If any Bond shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Trustee and, if such evidence be satisfactory to the Trustee and indemnity satisfactory to the Trustee shall be given, the Trustee, at the expense of the Bondholder, shall thereupon authenticate and deliver a new Bond of like tenor in lieu of and in substitution fbr the Bond so lost, destroyed or stolen. The Trustee may require payment of a reasonable sum for each new Bond issued under this Section and of the expenses which may be incurred by the Authority and the Trustee in the premises. Any Bond issued under the provisions of this Section in lieu of any Bond allegedto be lost, destroyed or stolen shall be equally and proportionately entitled to the benefits of this Trust Agreement with all other Bonds secured by this Trust Agreement. Neither the Authority nor the Trustee shall be required to treat both the original Bond and any replacement Bond as being Outstanding for the purpose of determining the principal amount of Bonds which may be issued hereunder or for the purpose of determining any percentage of Bonds Outstanding hereunder, but both the original and replacement Bond shall be treated as one and the same. OHSUSA:763796391 .2 18 The Bonds issued under this Trust Agreement may be initially issued in temporary form exchangeable for definitive Bonds when ready for delivery. The temporary Bonds may be printed, lithographed or typewritten, shall be of such denominations as may be determined by the Authority, shall be in fully registered form and may contain such reference to any of the provisions of this Trust Agreement as may be appropriate. Every temporary Bond shall be executed and authenticated as authorized by the Authority, in accordance with the terms of the Act. If the Authority issues temporary Bonds it will execute and furnish definitive Bonds without delay and thereupon the temporary Bonds may be surrendered, for cancellation, in exchange therefor at the Principal Office of the Trustee, and the Trustee shall deliver in exchange for such temporary Bonds an equal aggregate principal amount of definitive Bonds of authorized denominations. Until so exchanged, the temporary Bonds shall be entitled to the same benefits under this Trust Agreement as definitive Bonds delivered hereunder. SECTION 2.11.Special C ts as to Book-Entry Svstem for Bonds. (a) Except as otherwise provided in subsections (b) and (c) of this Section, all of the Bonds initially issued shall be registered in the name of Cede & Co., as nominee for DTC, or such other nominee as DTC shall request pursuant to the Representation Letter. Payment of the interest on any Bond registered in the name of Cede & Co. shall be made on each Interest Payment Date for such Bonds to the account, in the manner and at the address indicated in or pursuant to the Representation Letter. (b) The Bonds initially shall be issued in the form of a single authenticated fully registered bond for each stated maturity of such Bonds, representing the aggregate principal amount of the Bonds of such maturity. Upon initial issuance, the ownership of all such Bonds shall be registered in the registration records maintained by the Trustee pursuant to Section 2.09 in the name of Cede & Co., as nominee of DTC, or such other nominee as DTC shall request pursuant to the Representation Letter. The Trustee, the Authority and any paying agent may treat DTC (or its nominee) as the sole and exclusive owner of the Bonds registered in its name for the purposes of payment of the principal or redemption price of and interest on such Bonds, selecting the Bonds or portions thereof to be redeemed, giving any notice permitted or required to be given to Bondholders hereunder, registering the transfer of Bonds, obtaining any consent or other action to be taken by Bondholders of the Bonds and for all other purposes whatsoever; and neither the Trustee nor the Authority or any paying agent shall be affected by any notice to the contrary. Neither the Trustee nor the Authority or any paying agent shall have any responsibility or obligation to any "Participant" (which shall mean, for purposes of this Section, securities brokers and dealers, banks, trust companies, clearing corporations and other entities, some of whom directly or indirectly own DTC), any person claiming a beneficial ownership interest in the Bonds under or through DTC or any Participant, or any other person which is not shown on the registration records as being a Bondholder, with respect to (i) the accuracy of any records maintained by DTC or any Participant, (ii) the payment by DTC or any Participant of any amount in respect of the principal or redemption price of or interest on the Bonds, (iii) any notice which is permitted or required to be given to Bondholders of Bonds hereunder, (iv) the selection by DTC or any Participant of any person to receive payment in the event of a partial redemption of the Bonds, or (v) any consent given or other action taken by DTC as Bondholder of Bonds. The Trustee shall pay all principal of and premium, if any, and interest on the Bonds only at the times, to the accounts, at the addresses and otherwise in accordance with the Representation Letter, and all such payments shall be valid and effective to satisfy fully and discharge the OHSUSA:763796391 .2 19 Authority's obligations with respect to the payment of the principal of and premium, if any, and interest on the Bonds to the extent of the sum or sums so paid. Upon delivery by DTC to the Trustee of written notice to the effect that DTC has determined to substitute a new nominee in place of its then existing nominee, the Bonds will be transferable to such new nominee in accordance with subsection (e) of this Section. (c) In the event that the Authority determines that the Bonds should not be maintained in book-entry form, the Trustee shall, upon the written instruction of the Authority, so notify DTC, whereupon DTC shall notify the Participants of the availability through DTC of bond certificates. In such event, the Bonds will be transferable in accordance with subsection (e) of this Section. DTC may determine to discontinue providing its services with respect to the Bonds or a portion thereof, at any time by giving written notice of such discontinuance to the Authority oithe Trustee and discharging its responsibilities with respect thereto under applicable law. In such event, the Bonds will be transferable in accordance with subsection (e) of this Section. If at any time DTC shall no longer be registered or in good standing under the Securities Exchange Act or other applicable statute or regulation and a successor securities depository is not appointed by the Authority within 90 days after the Authority receives notice or becomes aware of such condition, as the case may be, then this Section shall no longer be applicable and the Authority shall execute and the Trustee shall authenticate and deliver certificates representing the Bonds as provided below. Whenever DTC requests the Authority and the Trustee to do so, the Trustee and the Authority will cooperate with DTC in taking appropriate action after reasonable notice to arrange for another securities depository to maintain .uttoiy of all certificates evidencing the Bonds then Outstanding. In such event, the Bonds will be transferable to such securities depository in accordance with subsection (e) of this Section, and thereafter, all references in this Trust Agreement to DTC or its nominee shall be deemed to refer to such successor securities depository and its nominee, as appropriate' (d) Notwithstanding any other provision of this Trust Agreement to the contrary, so long as all Bonds Outstanding are registered in the name of any nominee of DTC, all puy,n.rrt, with iespect to the principal of and premium, if any, and interest on each such Bond and all notices with respect to each such Bond shall be made and given, respectively, to DTC as provided in or pursuant to the Representation Letter' (e) In the event that any transfer or exchange of Bonds is authorized under subsection (b) or (c) of this Section, such transfer or exchange shall be accomplished upon receipt by the Trusiee from the registered owner thereof of the Bonds to be transferred or exchanged and appropriate instruments of transfer to the permitted transferee, all in accordance with th-e applicabie provisions of Sections 2.07 and 2.08. In the event Bond certificates are issued to Bondholdeis other than Cede & Co., its successor as nominee for DTC as holder of all the Bonds, another securities depository as holder of all the Bonds, or the nominee of such successor securities depository, the provisions of Sections 2.07 and 2.08 shall also apply to, among other things, the registration, exchange and transfer of the Bonds and the method of payment of principal of, premium, if any, and interest on the Bonds. OHSUSA:763 796391 .2 20 ARTICLE III ISSUANCE OF BONDS SECTION 3.01. Procedure for the Issuance of Bonds. At any time after the sale of the Bonds in accordance with the Act, the Authority shall execute the Bonds for issuance hereunder and shall deliver them to the Trustee, and thereupon the Bonds shall be authenticated and delivered by the Trustee to the purchaser thereof upon the Written Request of the Authority and upon receipt of payment therefor from the purchaser thereof. Upon receipt of payment for the Bonds from the purchaser thereof, the Trustee shall, unless otherwise instructed by the Authority, transfer or deposit the proceeds received from such sale to the following respective accounts or funds, in the following order of priority: (i) deposit the sum of $-- in the Costs of Issuance Fund, which fund is hereby created and which fund the Trustee hereby agrees to maintain. All money in the Costs of Issuance Fund shall be used and withdrawn by the Trustee to pay the Costs of Issuance of the Bonds upon receipt of a Written Request of the Authority filed with the Trustee, each of which shall be sequentially numbered and shall state the person(s) to whom payment is to be made, the amount(s) to be paid, the purpose(s) for which the obligation(s) was incurred and that such payment is a proper charge against said fund. On June l,2Ol3, or upon the earlier Written Request of the Authority, any remaining balance in the Costs of Issuance Fund shall be transferred to the Acquisition and Construction Fund which fund is hereby created and which fund the Trustee hereby agrees to maintain; (ii) Fund; and deposit the sum of $in the Acquisition and Construction (iiD $shall be deposited in the Reserve Account. The Trustee may, in its discretion, establish a temporary fund or account in its books and records to facilitate such transfers. SECTION 3.02. Use of Monevs in the Acquisition and Construction Fund. All moneys in the Acquisition and Construction Fund shall be held by the Trustee and applied by the Trustee to the payment of Project Costs and of expenses incident thereto (or for making reimbursements to ine Auttrority or the City or any other person, firm or corporation for such costs theretofore or thereafter paid by him or it), or for the payment of interest on the Bonds. Before any payment is made from the Acquisition and Construction Fund by the Trustee, the City shall .urr. to be filed with the Trustee a Written Request of the City showing with respect to each payment to be made: (i) the particular subaccount from which such payment shall be made; (ii) the item number of the PaYment; (iii) the name and address of the person to whom payment is due; OHSUSA:763796391 .2 2l (iv) the amount to be paid; and (v) the purpose for which the obligation to be paid was incurred. Funds shall not be requisitioned by the City from the Acquisition and Construction Fund for a particular Project until the City has taken all actions, if any, for such Project required pursuant to the California Environmental Quality Act. The Trustee is not responsible for determining whether any cost of construction is pursuant to a contract. The Trustee shall not be responsible for the representations made in such requisitions and may conclusively rely thereon and shall be under no duty to investigate or verify any statements made therein. When the Projects shall have been completed, (1) the City shall deliver to the Trustee a Certificate of Completion stating that all such costs of construction and incidental expenses for the Projects have been determined and paid (or that all of such costs and expenses have been paid less specified claims which are subject to dispute and for which a retention in the Acquisition and Construction Fund is to be maintained in the full amount of such claims until ,r.h dirpute is resolved); (2) the Trustee shall transfer from the Acquisition and Construction Fund for deposit in the Reserve Account such amount as is necessary to make the amount on deposit therein equal the Reserve Account Requirement; and (3) subject to the covenants contained in Section 6.03, the Trustee shall deposit any moneys remaining in the Acquisition and Construction Fund (but less the amount of any such retention described above) in the Revenue Fund to be applied as a credit against the Installment Payments. SECTION 3.03.on the Issuance of Oblisations ble from Revenues. The Authority will not, so long as any of the Bonds are oUtlgAtio.rr or securities, however denominated, payable in whole or Outstanding, issue any in part from Revenues except the following: (a) Obligations owing with respect to a reserve facility, including principal, interest and fees relating thereto; provided such obligations shall be payable on a subordinate basis to principal and interest on the Bonds; and (b) Obligations which are junior and subordinate to the payment of the principal, premium, interest and Reserve Account Requirements for the Bonds and which iubordinated obligations are payable as to principal, premium, interest and reserve account requirements, if any, only out of Revenues after the prior payment of all amounts then required to be paid hereunder from Revenues for principal, premium, interest and Reserve Account Requirements for the Bonds, as the same become due and payable and at the times and in the manner as required in this Trust Agreement. ARTICLE IV REDEMPTION OF BONDS SECTION 4.01. Optional Redemption. The Bonds maturing on or before July I , _are not subject to redemption prior to their respective stated maturities. The Bonds 22 OHSUSA:763796391 2 maturing on or after July 1, _ are subject to redemption prior to their respective stated maturities, at the option of the Authority from lawfully available funds, in whole or in part on any date on or after July 7, _ (in such order of maturity as shall be selected by the Trustee upon direction by the Authority and by lot within a maturity), at the following redemption prices (expressed as a percentage of the principal amount of the Bonds called for redemption) together with interest accrued thereon to the date fixed for redemption: Redemption Period (Dates Inclusive) Redemption Price SECTION 4.02. Mandatorv Sinkins Fund RedemDtion' Bonds maturing on July l, _, shall be subject to redemption prior to their stated maturity, by lot, from mandatory sinllng frnd payments in the following amounts and on the following dates, at the principal amount thereof on the date fixed for redemption, without premium: Mandatory Sinking Fund Payment Date Principal Amount *Maturity Bonds maturing on July l, _, shall be subject to redemption prior to their stated maturity, by lot, from mandatory sinking fund payments in the following amounts and on the following dates, at the principal amount thereof on the date fixed for redemption, without premium: Mandatory Sinking Fund Payment Date Principal Amount *Maturity oHSUSA:763796391 .2 23 In the event of an optional redemption pursuant to Section 4.01, the City shall provide the Trustee with a revised sinking fund schedule giving effect to the optional redemption so completed. SECTION 4.03. Selection of Bonds for Redemption. If less than all Outstanding Bonds maturing by their terms on any one date are to be redeemed at any one time, the Trustee shall select the Bonds of such maturity date to be redeemed by lot and shall promptly notify the Authority in writing of the numbers of the Bonds so selected for redemption' For pr.por., of such sllection, Bonds shall be deemed to be composed of multiples of minimum Auihorized Denominations and any such multiple may be separately redeemed. In the event Term Bonds are designated for redemption, the Authority may designate which sinking account payments are allocated to such redemption. SECTION 4.04. Notice of Redemption: Cancellationl Effect of Redemption. Notice of redemption shall be mailed by first-class mail by the Trustee, not less than thirty (30) nor more than sixty (60) days prior to the redemption date to (i) the respective Bondholders of the Bonds designated foi rede-ption at their addresses appearing on the registration books of the Trustee, (ii) th; Securities Depositories and (iii) one or more Information Services. Notice of redemption to the Securities Depositories and the Information Services shall be given by registered mail or overnight deivery or facsimile transmission or by such other method acleptable to such institutions. Each notice of redemption shall state the date of such notice, the date of issue of the Bonds, the redemption date, the Redemption Price, the place or places of redemption (including the name and appropriate address of the Trustee), the CUSIP number (if any) oi the maturity or maturities, and, ii less than all of any such maturity is to be redeemed, the distinctive cerlificate numbers of the Bonds of such maturity, to be redeemed and, in the case of Bonds to be redeemed in part only, the respective portions of the principal amount thereof to be redeemed. Each such notice shali also state that on said date there will become due and payable on each of said Bonds the redemption price thereof, together with interest accrued thereon to the redemption date, and that from and after such redemption date interest thereon shall cease to u..rr., and shall require that such Bonds be then surrendered at the address of the Trustee specified in the redemption notice. Failure to receive such notice or any defect in such notice shall not invalidate any of the proceedings taken in connection with such redemption. The Authority may, at its option, prior to the date fixed for redemption in any notice of redemption rescind and cancel such notice of redemption by Written Request to the Trustee and the Trustee shall mail notice of such cancellation to the recipients of the notice of redemption being cancelled. If notice of redemption has been duly given as aforesaid and money for the payment of the redemption price oi the Bonds called for redemption is held by the Trustee, then fnthe redemption date designated in such notice Bonds so called for redemption shall become due and puyuLl., and from und uft., the date so designated interest on such Bonds shall cease to accrue, and the Bondholders of such Bonds shall have no rights in respect thereof except to receive payment of the redemption price thereof' OHSUSA:763796391 .2 24 All Bonds redeemed pursuant to the provisions of this Article shall be cancelled by the Trustee and shall be destroyed with a certificate of destruction furnished to the Authority upon its request and shall not be reissued. ARTICLE V REVENUES SECTION 5.01. Pledge of Revenues. All Revenues and any other amounts (including proceeds of the sale of the Bonds) held by the Trustee in any fund or account established hereunder (other than amounts on deposit in the Rebate Fund created pursuant to Section 6.03) are hereby irrevocably pledged to the payment of the interest and premium, if any, on and principal of the Bonds as provided herein, and the Revenues and other amounts pledged hereundir shall not be used for any other purpose while any of the Bonds remain Outstanding; plovidgd, however, that out of the Revenues and other moneys there may be applied such sums ior such pu{poses as are permitted hereunder. This pledge shall constitute a pledge of and charge and first lien upon the Revenues, all other amounts pledged hereunder and all other moneys on deposit in the funds and accounts established hereunder (excluding amounts on deposit in the Rebate Fund created pursuant to Section 6.03) for the payment of the interest on and principal of the Bonds in accordance with the terms hereof and thereof. The Authority hereby assigns to the Trustee all of the Authority's right, title and interest in the Installment Sale Agreement as security for payment of the Bonds. SECTION 5.02.Receint and osit of Revenues in the ue Fund. In order to carry out and effectuate the pledge, charge and lien contained herein, the Authority agrees and covenants that all Revenues and all other amounts pledged hereunder when and as received shall be received by the Authority in trust hereunder for the benefit of the Bondholders and shall be transferred when and as received by the Authority to the Trustee for deposit in the Revenue Fund (the "Revenue Fund"), which fund is hereby created and which fund the Authority hereby agrees and covenants to maintain in trust for Bondholders so long as any Bonds shall be Outstanding hereunder. Subject to Section 5.05, all Revenues and all other amounts pledged hereunder shall be accounted for through and held in trust in the Revenue Fund, and the Autliority shall have no beneficial right or interest in any of the Revenues except only as herein provided. All Revenues and all other amounts pledged hereunder, whether received by the Authority in trust or deposited with the Trustee as herein provided, shall nevertheless be allocated, applied and disbursed solely to the purposes and uses hereinafter in this Article set forth, and shall be accounted for separately and apart from all other accounts, funds, money or other resources of the AuthoritY. Moneys on deposit in the Revenue Fund prior to an Installment Payment Date may be credited to the Installment Payments due on such Installment Payment Date. SECTION 5.03. Establishment and Maintenance of Accounts for Use of Money in the Revenue Fund: Reserve Account. (a) Subject to Section 6.03, all money in the R.*r* F6d shall be set aside by the Trustee in the following respective special accounts or funds within the Revenue Fund (each of which is hereby created and each of which the Authority hereby covenants and agrees to cause to be maintained) in the following order of priority: OHSUSA:763796391 .2 25 (1) Interest Account, (2) Principal Account, and (3) Reserve Account. All money in each of such accounts shall be held in trust by the Trustee and shall be applied, used and withdrawn only for the purposes hereinafter authorized in this Section. Subject to Section 5.05, on each Interest Payment Date, following payment of principal of and interest on the Bonds, any excess amount on deposit in the Revenue Fund shall be transferred to the Reserve Account to the extent necessary to increase the amount therein to the Reserve Account Requirement and any excess shall be returned to the City as an excess of Installment Payments. (b) Interest Account. On or before each Interest Payment Date, the Trustee shall set aside from the Revenue Fund and deposit in the Interest Account that amount of money which is equal to the amount of interest becoming due and payable on all Outstanding Bonds on the next succeeding Interest Payment Date. On or before the final two Interest Payment Dates, the Trustee shall set aside from the Reserve Account and deposit in the Interest Account the amount of money which is equal to the amount of interest becoming due and payable on all Outstanding Bonds on such Interest Payment Dates. No deposit need be made in the Interest Account if the amount contained therein and available to pay interest on the Bonds is at least equal to the aggregate amount of interest becoming due and payable on all Outstanding Bonds on such Interest Payment Date. All money in the Interest Account shall be used and withdrawn by the Trustee solely for the purpose of paying the interest on the Bonds as it shall become due and payable (including accrued interest on any Bonds purchased or redeemed prior to maturity)' (c) Principal Account. On or before each July 1, commencing July 7, -,the Trustee shall set aside from the Revenue Fund and deposit in the Principal Account an amount of money equal to the principal amount of all Outstanding Serial Bonds maturing on such July 1 and itre principal amount of all Outstanding Term Bonds being redeemed on such July L On or befoie the final principal payment date, the Trustee shall set aside from the Reserve Account and deposit in the Principal Account an amount of money equal to the principal amount of Bonds maturing on such date' No deposit need be made in the Principal Account if the amount contained therein and available to pay principal of the Bonds is at least equal to the aggregate amount of the principal of all Outstanding Serial Bonds maturing by their terms on such July 1 and the principal amount of all Outstanding Term Bonds being redeemed on such July I . All money in the Principal Account shall be used and withdrawn by the Trustee solely for the purpose of paying the principal of the Bonds as it shall become due and payable. (d) Reserve Account. All money in the Reserve Account shall be used and withdrawn by the Trustee solely for the purpose of replenishing the Interest Account or the OHSUSA:763796391 2 26 Principal Account (in such order) in the event of any deficiency at any time in any of the Installment Payments. Earnings on amounts in the Reserve Account in excess of the Reserve Account Requirement shall be transferred to the Revenue Fund on January I and July I of each year. In the event of a withdrawal of amounts from the Reserve Account to make payments to the Interest Account or Principal Account, the Trustee shall deposit in the Reserve Account moneys from the Revenue Fund necessary to restore the amount in the Reserve Account to the Reserve Account Requirement. SECTION 5.04. flntentionallv Left Bankl. SECTION 5.05. Deposit and Investments of Monev in Accounts and Funds. Subject to Section 6.03, all money held by the Trustee and the Treasurer in any of the accounts or funds established pursuant hereto shall be invested in Permitted Investments at the Written Request of the City or, if no instructions are received, in money market funds described in paragraph (D) of the definition of Permitted Investments; provided, however, that any such investment shall be made by the Trustee only if, prior to the date on which such investment is to be made, the Trustee shall have received a Written Request of the City specifying a specific money market fund and, if no such Written Request of the City is so received, the Trustee shall hold such moneys uninvested. Such investments shall, as-nearly as practicable, mature on or before the dates on which such money is anticipated to be needed for disbursement hereunder. Subject to Section 6.03, all interest or profits received prior to the completion of the Projects on any money invested in the funds held hereunder (excluding the Rebate Fund and the Reserve Account) shall be deposited in the Acquisition and Construction Fund, and all interest or profits received subsequent thereto on any money so invested shall be deposited first in the Reserve Account, to the extent necessary to make amounts on deposit in the Reserve Account equal to the Reserve Account Requirement, and then in the Revenue Fund. The Trustee and its affrliates may act as principal, agent, sponsor or advisor with respect to any investments. The Trustee shall not be liable for any losses on investments made in accordance with the terms and provisions of this Trust Agreement. Investments (except investment agreements or repurchase agreements) in Trust Agreement funds and accounts shall be valued at the market value thereof, exclusive of accrued interest. Investments purchased with funds on deposit in the Revenue Fund shall mature not later than the payment date or redemption date, as appropriate, immediately succeeding the investment. Subject to Section 6.03, investments in any and all funds and accounts may be commingled for purposes of making, holding and disposing of investments, notwithstanding provisions herein for transfer to or holding in particular funds and accounts amounts received or held by the Trustee hereunder, provided that the Trustee shall at all times account for such investments strictly in accordance with the funds and accounts to which they are credited and otherwise as provided in this Trust Agreement. OHSUSA:763796391 .2 27 The Authority (and the City by its execution of the Installment Sale Agreement) acknowledges that to the extent regulations of the Comptroller of the Currency or other applicable regulatory entity grant the Authority, the right to receive brokerage confirmations of security transactions as they occur, the Authority specifically waives receipt of such confirmations to the extent permitted by law. The Trustee will furnish the City periodic cash transaction statements which include detail for all investment transactions made by the Trustee hereunder. ARTICLE VI COVENANTS OF THE AUTHORITY SECTION 6.01.Punctual Pavment and Performance.The Authority will punctually pay out of the Revenues the interest on and principal of and redemption premiums, if any, to become due on every Bond issued hereunder in strict conformity with the terms hereof and of the Bonds, and will faithfully observe and perform all the agreements and covenants to be observed or performed by the Authority contained herein and in the Bonds. SECTION 6.02.Aeainst brances. The Authori ty will not make any pledge or assignment of or place any charge or lien upon the Revenues except as provided in Section 3.03, and will not issue any bonds, notes or obligations payable from the Revenues or secured by a pledge of or charge or lien upon the Revenues except as provided in Section 3.03. SECTION 6.03. Tax Covenants: Rebate Fund' (a) In addition to the accounts created pursuant to Section 5.03, the Trustee shall establish and maintain a fund separate from any other fund or account established and maintained hereunder designated as the Rebate Fund. There shall be deposited in the Rebate Fund such amounts as are required to be deposited therein pursuant to the Tax Certificate. The Trustee may rely conclusively upon the City's determinations, calculations and certifications required by this Section. The Trustee shall have no responsibility to independently make any calculation or determination or to review the City's calculations hereunder. A11 money at any time deposited in the Rebate Fund shall be held by the Trustee in trust, to the extent required to satisfy ih. R.bute Requirement (as defined in the Tax Certificate), for payment to the United States of America. Notwithstanding the provisions of Sections 5.01 , 5.02, 5'05 and 10'01 relating to the pledge of Revenues, the allocation of money in the Revenue Fund, the investments of money in any fund or account and the defeasance of Outstanding Bonds, all amounts required to be deposited into or on deposit in the Rebate Fund shall be govemed exclusively by this Section and by the Tax Certificate (which is incorporated herein by reference). The Trustee shall be deemed conclusively to have complied with such provisions if it follows the written directions of the Authority, and shall have no liability or responsibility to enforce compliance by the Authority with the terms of the Tax Certificate. (b) Any funds remaining in the Rebate Fund after redemption and payment of all Bonds and all other amounts due hereunder or under the Installment Sale Agreement, or provision made therefor satisfactory to the Trustee, including accrued interest and payment of any applicable fees and expenses of the Trustee and satisfaction of the Rebate Requirement (as OHSUSA:763796391 .2 28 defined in the Tax Certificate), shall be withdrawn by the Trustee and remitted to or upon the direction of the Authority. (c) The Authority shall not use or permit the use of any proceeds of the Bonds or any funds of the Authority, directly or indirectly, to acquire any securities or obligations, and shall not take or permit to be taken any other action or actions, which would cause any of the Bonds to be an "arbitrage bond" within the meaning of Section 148 of the Code, "private activity bond" within the meaning of Section 141(a) of the Code, or "federally guaranteed" within the meaning of Section 149(b) of the Code and any such applicable requirements promulgated from time to time thereunder and under Section 103(c) of the Code. The Authority shall observe and not violate the requirements of Section 148 of the Code and any such applicable regulations. The Authority shai comply with all requirements of Sections 148 and 149(b) of the Code to the extent applicable to the Bonds. In the event that at any time the Authority is of the opinion that for purposes of this Section it is necessary to restrict or to limit the yield on the investment of urry^*on.ys held by the Trustee under this Trust Agreement, the Authority shall so instruct the Trustee under this Trust Agreement in writing, and the Trustee shall take such action as may be necessary in accordance with such instructions. (d) The Authority and the Trustee (as directed by the Authority) specifically covenant to comply with the provisions and procedures of the Tax Certificate; provided that the Trustee shall not be bound by this covenant if an Event of Default has occurred and is continuing. (e) The Authority shall not use or permit the use of any proceeds of the Bonds or any funds olthe Authority, directly or indirectly, in any manner, and shall not take or omit to take any action that would cause any of the Bonds to be treated as an obligation not described in Section 103(a) of the Code. (f) Notwithstanding any provisions of this Section, if the Authority shall provide to the Trustee an Opinion of Counsel that any specified action required under this Section or the Tax Certificate is no longer required or that some further or different action is required to maintain the exclusion from federal income tax of interest on the Bonds, the Trustee and the Authority may conclusively rely on such opinion in complying with the requirements of this Section, and, notwithstanding Article IX hereof, the covenants hereunder shall be deemed to be modified to that extent. SECTION 6.04. Accountins Records and Reports. The Authority will keep or cause to be kept proper books of record and accounts in which complete and correct entries shall be made of all transactions relating to the receipts, disbursements, allocation and application of the Revenues, and such books shall be available for inspection by the Trustee at reasonable hours and under reasonable conditions. The Authority shall also keep or cause to be kept such other information as required under the Tax Certificate. SECTION 6.05.Pros and Defense of Suits. The Authority will defend against every suit, action or proceeding at any time brought against the Trustee upon any claim to the extent arising out of the receipt, application or disbursement of any of the Revenues or to the extent involving the failure of the Authority to fulfill its obligations OHSUSA:763796391 .2 29 hereunder; provided, that the Trustee or any affected Bondholder at its election may appear in and defend any such suit, action or proceeding. The Authority will indemnify and hold harmless the Trustee against any and all liability claimed or asserted by any person to the extent arising out of such failure by the Authority, and will indemnify and hold harmless the Trustee against any reasonable attorney's fees or other reasonable expenses which it may incur in connection with any litigation to which it may become a party by reason of its actions hereunder, except for any loss, cost, damage or expense resulting from the negligence or willful misconduct by the Trustee. Notwithstanding any contrary provision hereof, this covenant shall remain in full force and effect even though all Bonds secured hereby may have been fully paid and satisfied. SECTION 6.06. Further Assurances. Whenever and so often as reasonably requested to do so by the Trustee or any Bondholder, the Authority will promptly execute and deliver or cause to be executed and delivered all such other and further'assurances, documents or instruments, and promptly do or cause to be done all such other and further things as may be necessary or reasonably required in order to further and more fully vest in the Bondholders all rights, interests, powers, benefits, privileges and advantages conferred or intended to be conferred upon them hereby. SECTION 6.07. flntentionallv Left Bankl. SECTION 6.08. Amendments to Installment Sale Asreement. The Authority shall not supplement, amend, modify or terminate any of the terms of the Installment Sale Agreement, or consent to any such supplement, amendment, modification or termination, without the prior written consent of the Trustee. The Trustee shall give such written consent if such supplement, amendment, modification or termination (a) will not materially adversely affect the interests of the Bondholders or result in any material impairment of the security hereby given for the payment of the Bonds, (b) is to add to the agreements, conditions, covenants and terms required to be observed or performed thereunder by any party thereto, or to surrender any right or power therein reserved to the Authority or the City, (c) is to cure, correct or supplement any ambiguous or defective provision contained therein, or (d) if the Trustee first obtains the written consent of the Bondholders of a majority in principal amount of the Bonds then Outstanding to such supplement, amendment, modification or termination; provided, that no such supplement, amendment, modification or termination shall reduce the amount of Installment Payments to be made to the Authority or the Trustee by the City pursuant to the Installment Sale Agreement, or extend the time for making such payments, or permit the creation of any lien prior to or on a parity with the lien created by this Trust Agreement on the Installment Payments (except as expressly provided in the Installment Sale Agreement), in each case without the written consent of all of the Bondholders of the Bonds then Outstanding. OHSUSA:763796391 .2 30 ARTICLE VII EVENTS OF DEFAULT AND REMEDIES OF BONDHOLDERS SECTION 7.01. Events of Default. If one or more of the following events (herein called "Events of Default") shall happen, that is to say: (a) if default shall be made by the Authority in the due and punctual payment of the interest on any Bond when and as the same shall become due and payable; (b) if default shall be made by the Authority in the due and punctual payment of the principal of or redemption premium, if any, on any Bond when and as the same shall become due and payable, whether at maturity as therein expressed or by proceedings for redemption; (c) if default shall be made by the Authority in the performance of any of the other agreements or covenants required herein to be performed by the Authority, and such default shall have continued for a period of thirty (30) days after the Authority shall have been given notice in writing of such default by the Trustee; (d) if the Authority shall file a petition or answer seeking arrangement or reorganization under the federal bankruptcy laws or any other applicable law of the United States of America or any state therein, or if a court of competent jurisdiction shall approve a petition filed with or without the consent of the Authority seeking arrangement or reorganizatton under the federal bankruptcy laws or any other applicable law of the United States of America or any state therein, or if under the provisions of any other law for the relief or aid of debtors any court of competent jurisdiction shall assume custody or control of the Authority or of the whole or any substantial part of its property; or (e) if an Event of Default has occurred under Section 6.01 of the Installment Sale Agreement; then the Trustee may, and upon the written request of the Bondholders of a majority in principal amount of the Bonds then Outstanding, and in each case upon being indemnified to its reasonable satisfaction therefor, shall, proceed to protect or enforce its rights or the rights ofthe Bondholders of Bonds under this Trust Agreement and under Article VI of the Installment Sale Agreement by a suit in equity or action at law, either for the specific performance of any covenant or agreement contained herein, or in aid of the execution of any power herein granted, or by mandamus or other appropriate proceeding for the enforcement of any other legal or equitable remedy as the Trustee shall deem most effectual in support of any of its rights and duties hereunder; provided that the acceleration of principal of the Bonds shall not be an available remedy. SECTION 7.02. Application of Funds Upon Acceleration. A11 moneys in the accounts and funds provided in Sections 3.07,3.02,5.02, 5.03 and 5.05 upon the date of the declaration of acceleration by the Trustee as provided in Section 7.01 and all Revenues (other than Revenues on deposit in the Rebate Fund) thereafter received by the Authority hereunder shall be transmitted to the Trustee and shall be applied by the Trustee in the following order-- OHSUSA:763 796391 .2 31 First, to the payment of the reasonable fees, costs and expenses of the Trustee in providing for the declaration of such event of default and carrying out its duties under this Agreement, including reasonable compensation to their accountants and counsel together with interest on any amounts advanced as provided herein and thereafter to the payment of the reasonable costs and expenses of the Bondholders, if any, in carrying out the provisions of this Article, including reasonable compensation to their accountants and counsel; and Second, upon presentation of the several Bonds, and the stamping thereon of the amount of the payment if only partially paid or upon the surrender thereof if fully paid, to the payment of the whole amount then owing and unpaid upon the Bonds for interest and principal, with (to the extent permitted by law) interest on the overdue interest and principal at the rate borne by such Bonds, and in case such money shall be insufficient to pay in full the whole amount so owing and unpaid upon the Bonds, then to the payment of such interest, principal and (to the extent permitted by law) interest on overdue interest and principal without preference or priority among such interest, principal and interest on overdue interest and principal ratably to the aggregate of such interest, principal and interest on overdue interest and principal. SECTION 7.03. Non-Waiver. Nothing in this Article or in any other provision hereof or in the Bonds shall affect or impair the obligation of the Authority, which is absolute and unconditional, to pay the interest on and principal of and redemption premiums, if any, on the Bonds to the respective Bondholders of the Bonds at the respective dates of maturity or upon prior redemption as provided herein from the Revenues as provided herein pledged for such payment, or shall affect or impair the right of such Bondholders, which is also absolute and unconditional, to institute suit to enforce such payment by virtue of the contract embodied herein and in the Bonds. A waiver of any default or breach of duty or contract by the Trustee or any Bondholder shall not affect any subsequent default or breach of duty or contract or impair any rights or remedies on any such subsequent default or breach of duty or contract. No delay or omission by the Trustee or any Bondholder to exercise any right or remedy accruing upon any default or breach of duty or contract shall impair any such right or remedy or shall be construed to be a waiver of any such default or breach of duty or contract or an acquiescence therein, and every right or remedy conferred upon the Bondholders by the Act or by this Article may be enforced and exercised from time to time and as often as shall be deemed expedient by the Trustee or the Bondholders. If any action, proceeding or suit to enforce any right or exercise any remedy is abandoned, the Authority, the Trustee and any Bondholder shall be restored to their former positions, rights and remedies as if such action, proceeding or suit had not been brought or taken. SECTION 7.04. Actions by Trustee as Attornev-in-Fact. Any action, proceeding or suit which any Bondholder shall have the right to bring to enforce any right or iemedy hereunder may be brought by the Trustee for the equal benefit and protection of all Bondholders, whether or not the Trustee is a Bondholder, and the Trustee is hereby appointed (and the successive Bondholders, by taking and holding the Bonds issued hereunder, shall be conclusively deemed to have so appointed it) the true and lawful attomey-in-fact of the Bondholders for the purpose of bringing any such action, proceeding or suit and for the purpose OHSUSA:763796391 .2 )Z of doing and performing any and all acts and things for and on behalf of the Bondholders as a class or classes as may be advisable or necessary in the opinion of the Trustee as such attomey- in-fact. SECTION 7.05. Remedies Not Exclusive. No remedy herein conferred upon or reserved to the Bondholders is intended to be exclusive of any other remedy, and each such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute or otherwise and may be exercised without exhausting and without regard to any other remedy conferred by the Act or any other law. SECTION 7.06. Limitation on Bondholders' Rieht to Sue. No Bondholder of any Bond issued hereunder shall have the right to institute any suit, action or proceeding at law or equity, for any remedy under or upon this Trust Agreement, unless (a) such Bondholder shall have previously given to the Trustee written notice of the occuffence of an event of default as defined in Section 7.01; (b) the Bondholders of at least a majority in aggregate principal amount of all the Bonds then Outstanding shall have made written request upon the Trustee to exercise the powers hereinbefore granted or to institute such suit, action or proceeding in its own name; (c) said Bondholders shall have tendered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities to be incur:red in compliance with such request; and (d) the Trustee shall have refused or omitted to comply with such request for a period of sixty (60) days after such request shall have been received by, and said tender of indemnity shall have been made to, the Trustee. Such notification, request, tender of indemnity and refusal or omission are hereby declared, in every case, to be conditions precedent to the exercise by any Bondholder of Bonds of any remedy hereunder; it being understood and intended that no one or more Bondholders of Bonds shall have any right in any manner whatever by his or their action to enforce any right under this Trust Agreement, except in the manner herein provided, and that all proceedings at law or in equity to enforce any provision of this Trust Agreement shall be instituted, had and maintained in the manner herein provided and for the equal benefit of all Bondholders of the Outstanding Bonds. ARTICLE VIII THE TRUSTEE SECTION 8.01. The Trustee. The Bank of New York Mellon Trust ComPanY, N.A. shall serve as the Trustee for the Bonds for the purpose of receiving all money which the Authority is required to deposit with the Trustee hereunder and for the purpose of allocating, applying and using such money as provided herein and for the purpose of paying the interest on and principal of and redemption premiums, if any, on the Bonds presented for payment, with the rights and obligations provided herein. The Authority agrees that it will at all times maintain a Trustee having a principal office in California. The Authority, unless there exists any Event of Default as defined in Section 7.01, may at any time remove the Trustee initially appointed and any successor thereto and may OHSUSA:763796391 2 JJ appoint a successor or successors thereto by an instrument in writing; provided, that any such successor shall be a national banking association, bank, banking institution, or trust company, having (or whose parent holding company has) a combined capital (exclusive of borrowed capital) and surplus of at least fifty million dollars ($50,000,000) and subject to supervision or examination by federal or state authority. If such national banking association, bank, banking institution, or trust company publishes a report of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority above referred to, then for the purpose of this Section the combined capital and surplus of such national banking association, bank, banking institution, or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent reporl of condition so published. The Trustee may at any time resign by giving written notice of such resignation to the Authority, and by mailing by first class mail to the Bondholders notice of such resignation. Upon receiving such notice of resignation, the Authority shall promptly appoint a successor Trustee by an instrument in writing. Any removal or resignation of a Trustee and appointment of a successor Trustee shall become effective only upon the acceptance of appointment by the successor Trustee. The successor Trustee shall send notice of its acceptance by first class mail to the Bondholders. If, within thirty (30) days after notice of the removal or resignation of the Trustee no successor Trustee shall have been appointed and shall have accepted such appointment, the removed or resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee, which court may thereupon, after such notice, if any, as it may deem proper and prescribe and as may be required by law, appoint a successor Trustee having the qualifi cations required hereby. Any company into which the Trustee may be merged or converted or with which it may be consolidated or any company resulting from any merger, conversion or consolidation to which it shall be a party or any company to which the Trustee may sell or transfer all or substantially all of its corporate trust business shall succeed to the rights and obligations of the Trustee without the execution or filing of any paper or any further act, anlthing herein to the contrary notwithstanding. The Trustee is hereby authorized to pay or redeem the Bonds when duly presented for payment at maturity or on redemption prior to maturity. The Trustee shall cancel all Bonds upon payment thereof or upon the surrender thereof by the Authority and shall destroy such Bonds and a certificate of destruction shall be delivered to the Authority upon its request. The Trustee shall keep accurate records of all Bonds paid and discharged and cancelled by it. The Trustee shall, prior to an event of default, and after the curing of all Events of Default that may have occurred, perform such duties and only such duties as are specifically set forth in this Trust Agreement and no implied duties or obligations shall be read into this Trust Agreement. The Trustee shall, during the existence of any event of default (that has not been cured), exercise such of the rights and powers vested in it by this Trust Agreement, and use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. SECTION 8.02. Liability of Trustee. The recitals of facts, agreements and covenants herein and in the Bonds shall be taken as recitals of facts, agreements and covenants of the Authority, and the Trustee assumes no responsibility for the correctness of the same or OHSUSA:763796391 .2 34 makes any representation as to the sufficiency or validity hereof or of the Bonds, or shall incur any responsibility in respect thereof other than in connection with the rights or obligations assigned to or imposed upon it herein, in the Bonds or in law or equity. The Trustee shall not be liable in connection with the performance of its duties hereunder except for its own negligence or willful misconduct. The Trustee shall not be bound to recognize any person as the Bondholder of a Bond unless and until such Bond is submitted for inspection, if required, and such Bondholder's title thereto satisfactorily established, if disputed. The Trustee shall not be liable for any error of judgment made in good faith, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts. The Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Bondholders of not less than a majority (or any lesser amount that may direct the Trustee in accordance with this Agreement) in aggregate principal amount of the Bonds at the time Outstanding, relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee under this Trust Agreement. The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Trust Agreement at the request, order or direction of any of the Bondholders pursuant to the provisions of this Trust Agreement unless such Bondholders shall have offered to the Trustee reasonable security or indemnity against the reasonable costs, expenses and liabilities that may be incurred therein or thereby. The Trustee has no obligation or liability to the Bondholders for the payment of the interest on, principal of or redemption premium, if any, with respect to the Bonds from its own funds; but rather the Trustee's obligations shall be limited to the performance of its duties hereunder. The Trustee shall not be deemed to have knowledge of any event of default (except payment defaults) unless and until a Responsible Officer shall have actual knowledge thereof or a Responsible Officer of the Trustee shall have received written notice thereof at its Principal Office. The Trustee shall not be bound to ascertain or inquire as to the performance or observance of any of the terms, conditions, covenants or agreements herein or of any of the documents executed in connection with the Bonds, or as to the existence of a default or event of default thereunder. The Trustee shall not be responsible for the validity or effectiveness of any collateral given to or held by it. The Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through attorneys-in-fact, agents or receivers, but shall not be answerable for the negligence or misconduct of any such attorney-in-fact, agent or receiver if such attomeys-in-fact, agents or receivers was selected by the Trustee with due care. The Trustee shall be entitled to advice of counsel and other professionals concerning all matters of trust and its duty hereunder, but the Trustee shall not be answerable for the professional malpractice of any attorney-in-law or certified public accountant in connection with the rendering of his professional advice in accordance with the terms of this Trust Agreement, if such attomey-in-law or certified public accountant was selected by the Trustee with due care. OHSUSA:763796391 .2 35 The Trustee shall not be concemed with or accountable to anyone for the subsequent use or application of any moneys which shall be released or withdrawn in accordance with the provisions hereof. Whether or not therein expressly so provided, every provision of this Trust Agreement, the Installment Sale Agreement or related documents relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Article. The Trustee makes no representation or warranty, express or implied, as to the title, value, design, compliance with specifications or legal requirements, quality, durability, operation, condition, merchantability or fitness for any particular purpose for the use contemplated by the Authority or City of the Projects. In no event shall the Trustee be liable for incidental, indirect, special or consequential damages in connection with or arising from the Installment Sale Agreement or this Trust Agreement for the existence or use of the Projects. The Trustee shall be protected in acting upon any notice, resolution, requisition, request (including any Written Request of the Authority or Written Request of the City), consent, ord.r, certificate, report, opinion, bond, facsimile transmission, electronic mail or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties. The Trustee may consult with counsel, who may be counsel of or to the Authority, with regard to legal questions, and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good faith and in accordance therewith. The Trustee shall not be considered in breach of or in default in its obligations hereunder or progress in respect thereto in the event of enforced delay ("unavoidable delay") in the performun.. of such obligations due to unforeseeable causes beyond its control and without its iault or negligence, including, but not limited to, Acts of God or of the public enemy or terrorists, acts oi a govemment, acts of the other party, fires, floods, epidemics, quarantine restrictions, strikes, freight embargoes, earthquakes, explosion, mob violence, riot, inability to procure or general sabotage or rationing of labor, equipment, facilities, sources of energy, material or iupplies in the open market, litigation or arbitration involving a party or others relating to zoning or other govemmental action or inaction pertaining to the project, malicious mischill condemnation, and unusually severe weather or delays of suppliers or subcontractors due to such causes or any similar event and/or occulrences beyond the control of the Trustee' Whenever in the administration of its rights and obligations hereunder the Trustee shall deem it necessary or desirable that a matter be established or proved prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specificilly prescribed) may, in the absence of bad faith on the part of the Trustee, be deemed to bi concluiively proved and established by a Certificate of the Authority, which certificate shall be full warrant to the Trustee for any action taken or suffered under the provisions hereof upon the faith thereof, but in its discretion the Trustee may in lieu thereof accept other evidence of such matter or may require such additional evidence as it may deem reasonable. OHSUSA:763796391 .2 36 No provision of this Trust Agreement shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance or exercise of any of its duties hereunder, or in the exercise of its rights or powers. The Trustee shall not be required to review or inspect, and shall not be deemed to have notice of, the contents of any financial statement delivered to the Trustee including but not Iimited to Section 5.11 of the Installment Sale Agreement, it being expressly understood that the Trustee shall only receive and hold such documents as a repository for examination and copying by any Holder at such Holder's expense during business hours on Business Days with reasonable prior notice. The Trustee agrees to accept and act upon instructions or directions pursuant to this Trust Agreement sent by unsecured e-mail, facsimile transmission or other similar unsecured electronic methods, provided, however, that, the Trustee shall have received an incumbency certificate listing persons designated to give such instructions or directions and containing specimen signatures of such designated persons, which such incumbency certificate shall be amended and replaced whenever a person is to be added or deleted from the listing. If the City elects to give thl Trustee e-mail or facsimile instructions (or instructions by a similar electronic method) and the Trustee in its discretion elects to act upon such instructions, the Trustee's understanding of such instructions shall be deemed controlling. The Trustee shall not be liable for any lossei, costs or expenses arising directly or indirectly from the Trustee's reliance upon and compliance with such instructions notwithstanding such instructions conflict or are inconsistent with a subsequent written instruction. The City agrees to assume all risks arising out of the use of such electronic methods to submit instructions and directions to the Trustee, including without limitation the risk of the Trustee acting on unauthorized instructions, and the risk of interception and misuse by third parties. The Trustee shall not be concemed with or accountable to anyone for the subsequent use or application of any moneys which shall be released or withdrawn in accordance with the provisions hereof. The permissive right of the Trustee to do things enumerated in this Trust Agreement shall noi be construed as a duty and it shall not be answerable for other than its negligence or willful misconduct. The Trustee shall have no responsibility or liability with respect to any information, statements or recital in any offering memorandum or other disclosure material prepared or distributed with respect to the issuance of these Bonds. SECTION 8.03.Comnensa and Indemnification of Trustee. The Authority covenants to pay to the Trustee from time to time, and the Trustee shall be entitled to, ,"*.onubl. compensation for all services rendered by them in the exercise and performance of any of the powers and duties hereunder of the Trustee, and the Authority will pay or reimburse the Trustesupon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee, in accordance with any of the provisions of this Trust Agreement (including the reasonable compensation and the reasonable expenses and disbursements of their counsel (including the allocated reasonable fees and disbursements of in-house counsel) and of 37 OHSUSA:763796391 2 all persons not regularly in their employ) except any such expense, disbursement or advance as may arise from their negligence or willful misconduct. The Authority, to the extent permitted by law, shall indemnify, defend and hold harmless the Trustee against any loss, damage, liability or expense incurred without negligence or bad faith on the part of the Trustee arising out of or in connection with the acceptance or administration of the trusts created hereby, including reasonable costs and expenses (including reasonable attomeys' fees and disbursements) of defending itself against any claim or liability in connection with the exercise or performance of any of its powers hereunder. The rights of the Trustee and the obligations of the Authority under this Section 8.03 shall survive the discharge of the Bonds and this Trust Agreement and the resignation or removal of the Trustee. SECTION 8.04. Compliance with Continuins Disclosure Certificate. Pursuant to Section5.l6 of the Installment Sale Agreement, the City has undertaken all responsibility for compliance with continuing disclosure requirements. Notwithstanding any other provision of this Trust Agreement, failure of the City to comply with the Continuing Disclosure Certificate shall not be considered an Event of Default; however, the Trustee may (and, at the request of any Participating Underwriter (as defined in the Continuing Disclosure Certificate) or the Holders of at least 25Yo aggregate principal amount in Outstanding Bonds, and upon receipt of indemnification satisfactory to it, shall) or any Bondholder or Beneficial Owner may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the City to comply with its obligations under Section 5.16 of the Installment Sale Agreement or under this Section. For purposes of this Section, "Beneficial Owner" means any person which has or shares the power, directly or indirectly, to make investment decisions concerning ownership of any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries). ARTICLE IX AMENDMENT OF THE TRUST AGREEMENT SECTION 9.01. Amendment of the Trust Agreement. (a) This Trust Agreement and the rights and obligations of the Authority and of the Bondholders may be amended at any time by a Supplemental Trust Agreement which shall become binding when the written consents of the Bondholders of a majority in aggregate principal amount of the Bonds then Outstanding, exclusive of Bonds disqualified as provided in Section 9.02, are filed with the Trustee; provided that if such modification or amendment will, by its terms, not take effect so long as any Bonds of any particular maturity remain Outstanding, the consent of the Holders of such Bonds shall not be required and such Bonds shall not be deemed to be Outstanding for the purpose of any calculation of Bonds Outstanding under this Section. No such amendment shall ( I ) extend the maturity of or reduce the interest rate on or amount of interest on or principal of or redemption premium, if any, on any Bond without the express written consent of the Bondholder of such Bond, or (2) permit the creation by the Authority of any pledge of or charge or lien upon the Revenues as provided herein superior to or on a parity with the pledge, charge and lien created hereby for the benefit of the Bonds, or (3) reduce the percentage of Bonds required for the written consent to any such amendment, or (4) modify any rights or obligations of the Trustee, the Authority, or the City without their prior written assent thereto, respectively. It shall not be necessary for the consent of the Bondholders to approve the particular form of any OHSUSA:763796391 .2 38 Supplemental Trust Agreement, but it shall be sufficient if such consent shall approve the substance thereof. Promptly after the execution by the Authority and the Trustee of any Supplemental Trust Agreement pursuant to this subsection (a), the Trustee shall mail a notice on behalf of the Authority, setting forth in general terms the substance of such Supplemental Trust Agreement to the Bondholders at the addresses shown on the registration books maintained by the Trustee. Any failure to give such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such Supplemental Trust Agreement. (b) The Trust Agreement and the rights and obligations of the Authority and of the Bondholders may also be amended at any time by a Supplemental Trust Agreement which shall become binding upon adoption without the consent of any Bondholders for any one or more of the following purposes -- (i) to add to the agreements and covenants required herein to be performed by the Authority other agreements and covenants thereafter to be performed by the Authority, or to surrender any right or power Reserved herein to or conferred herein on the Authority; (ii) to make such provisions for the purpose of curing any ambiguity or of correcting, curing or supplementing any defective provision contained herein or in regard to questions arising hereunder which the Authority may deem desirable or necessary; or (iii) to add to the agreements and covenants required herein, such agreements and covenants as may be necessary to qualify the Trust Agreement under the Trust Indenture Act of 1939; or (iv) any other purpose that will not materially adversely affect the interests of the Bondholders. SECTION 9.02. Disqualified Bonds. Bonds owned or held by or for the account of the Authority shall not be deemed Outstanding for the purpose of any consent or other action or any calculation of Outstanding Bonds provided in this Article, and shall not be entitled to consent to or take any other action provided in this Article. SECTION 9.03. Endorsement or Replacement of Bonds After Amendment. After the effective date of any action taken as hereinabove provided, the Authority may determine that the Bonds may bear a notation by endorsement in form approved by the Authority as to such action, and in that case upon demand of the Bondholder of any Outstanding Bonds and presentation of his Bond for such purpose at the office of the Trustee a suitable notation as to such action shall be made on such Bond. If the Authority shall so determine, new Bonds so modified as, in the opinion of the Authority, shall be necessary to conform to such action shall be prepared and executed, and in that case upon demand of the Bondholder of any Outstanding Bond a new Bond or Bonds shall be exchanged at the office of the Trustee without cost to each Bondholder for its Bond or Bonds then Outstanding upon surrender of such Outstanding Bonds. SECTION 9.04. Amendment by Mutual Consent. The provisions of this Article shall not prevent any Bondholder from accepting any amendment as to the particular Bonds held by him, provided that due notation thereof is made on such Bonds. 39 OHSUSA:763796391 .2 ARTICLE X DEFEASANCE SECTION 10.01. Discharse of Bonds. (a) If the Authority shall pay or cause to be paid or there shall otherwise be paid to the Bondholders of all Outstanding Bonds the interest thereon and principal thereof and redemption premiums, if any, thereon at the times and in the manner stipulated herein and therein, and the Authority shall pay in full all other amounts due hereunder, then the Bondholders of such Bonds shall cease to be entitled to the pledge of and charge and lien upon the Revenues as provided herein, and all agreements, covenants and other obligations of the Authority to the Bondholders of such Bonds hereunder shall thereupon cease, terminate and become void and be discharged and satisfied. In such event, the Trustee shall execute and deliver to the Authority all such instruments as may be necessary or desirable to evidence such discharge and satisfaction, the Trustee shall pay over or deliver to the Authority all money or securities held by it pursuant hereto which are not required for the payment of the interest on and principal of and redemption premiums, if any, on such Bonds and for the payment of all other amounts due hereunder and under the Installment Sale Agreement. (b) Any Outstanding Bonds shall prior to the maturity date or redemption date thereof be deemed to have been paid within the meaning of and with the effect expressed in subsection (a) of this Section if (l) in case any of such Bonds are to be redeemed on any date prior to their maturity date, the Authority shall have given to the Trustee in form satisfactory to it irrevocable instructions to provide notice in accordance with Section 4.05, (2) there shall have been deposited with the Trustee (A) money in an amount which shall be sufficient and/or (B) Government Securities, the interest on and principal of which when paid will provide money which, together with the money, if any, deposited with the Trustee at the same time, shall be suffrcient, in the opinion of an Independent Certified Public Accountant, to pay when due the interest to become due on such Bonds on and prior to the maturity date or redemption date thereof, as the case may be, and the principal of and redemption premiums, if any, on such Bonds, and (3) in the event such Bonds are not by their terms subject to redemption within the next succeeding sixty (60) days, the Authority shall have given the Trustee in form satisfactory to it irrevocable instructions to mail as soon as practicable, a notice to the Bondholders of such Bonds that the deposit required by clause (2) above has been made with the Trustee and that such Bonds are deemed to have been paid in accordance with this Section and stating the maturity date or redemption date upon which money is to be available for the payment of the principal of and redemption premiums, if any, on such Bonds. SECTION 10.02. Unclaimed Monev. Anything contained herein to the contrary notwithstanding, any money held by the Trustee in trust for the payment and discharge of any of the Bonds or interest thereon which remains unclaimed for two (2) years after the date when such Bonds or interest thereon have become due and payable, either at their stated maturity dates or by call for redemption prior to maturity, if such money was held by the Trustee at such date, or for two (2) years after the date of deposit of such money if deposited with the Trustee after the date when such Bonds have become due and payable, shall be repaid by the Trustee to the Authority as its absolute property free from trust, and the Trustee shall thereupon be released and OHSUSA:763796391 .2 40 discharged with respect thereto and the Bondholders shall not look to the Trustee for the payment of such Bonds; provided, however, that before being required to make any such payment to the Authority, the Trustee may, and at the request of the Authority shall, at the expense of the Authority, cause to be published once a week for two (2) successive weeks in a Financial Newspaper of general circulation in Los Angeles and in San Francisco, California, and in the same or a similar Financial Newspaper of general circulation in New York, New York, a notice that such money remains unclaimed and that, after a date named in such notice, which date shall not be less than thirty (30) days after the date of the first publication of each such notice, the balance of such money then unclaimed will be retumed to the Authority. ARTICLE XI MISCELLANEOUS SECTION 11.01. Liabilitv of Authoritv Limited to Revenues; Benefits of this Trust Asreement Limited to Parties. Notwithstanding anything contained herein, the Authority shall not be required to advance any money derived from any source other than the Revenues as provided herein for the payment of the interest on or principal of or redemption premiums, if any, on the Bonds or for the performance of any agreements or covenants herein contained. The Authority may, however, advance funds for any such purpose so long as such funds are derived from a source legally available for such purpose. The Bonds are limited obligations of the Authority and are payable, as to interest thereon, principal thereof and any premiums upon the redemption of any thereof, solely from the Revenues as provided herein, and the Authority is not obligated to pay them except from the Revenues. All the Bonds are equally secured by a pledge of and charge and lien upon the Revenues, and the Revenues constitute a trust fund for the security and payment of the interest on and principal of and redemption premiums, if any, on the Bonds as provided herein. The Bonds are not a debt of the City, the State or any of its political subdivisions, and neither the City, the State nor any of its political subdivisions is liable thereon, nor in any event shall the Bonds be payable out of any funds or properties other than those of the Authority as provided herein. The Bonds do not constitute an indebtedness within the meaning of any constitutional or statutory limitation or restriction. Nothing contained herein, expressed or implied, is intended to give to any person other than the Authority, the Trustee, and the Bondholders any right, remedy or claim under or by reason hereof. Any agreement or covenant required herein to be performed by or on behalf of the Authority or any member, officer or employee thereof shall be for the sole and exclusive benefit of the Authority, the Trustee, and the Bondholders. SECTION II,O2.Successor Is Deemed Included In All ces To Predecessor. Whenever herein either the Authority or any member, officer or employee thereof or of the State is named or referred to, such reference shall be deemed to include the successor to the powers, duties and functions with respect to the Projects that are presently vested in the Authority or such member, officer or employee, and all agreements and covenants required OHSUSA:763796391 .2 4l hereby to be performed by or on behalf of the Authority or any member, officer or employee thereof shall bind and inure to the benefit of the respective successors thereof whether so expressed or not. SECTION 1f.03. Execution of Docu bv Bondholders Any declaration, request or other instrument which is permitted or required herein to be executed by Bondholders may be in one or more instruments of similar tenor and may be executed by Bondholders in person or by their attorneys appointed in writing. The fact and date of the execution by any Bondholder or his attorney of any declaration, request or other instrument or of any writing appointing such attorney may be proved by the certificate of any notary public or other officer authorized to make acknowledgments of deeds to be recorded in the state or territory in which he purports to act that the person signing such declaration, request or other instrument or writing acknowledged to him the execution thereof, or by an affidavit of a witness of such execution duly sworn to before such notary public or other officer. The ownership of any Bonds and the amount, maturity, number and date of holding the same may be proved by the registration books relating to the Bonds at the Principal Office of the Trustee. Any declaration, request, consent or other instrument or writing of the Bondholder of any Bond shall bind all future Bondholders of such Bond with respect to anything done or suffered to be done by the Trustee or the Authority in good faith and in accordance therewith. SECTION 11.04. W aiver of Liabilifv . No member, officer or employee of the Authority or the City shall be individually or personally liable for the payment of the interest on or principal of or redemption premiums, if any, on the Bonds by reason of their issuance, but nothing herein contained shall relieve any such member, officer or employee from the performance of any official duty provided by the Act or any other applicable provisions of law or hereby. SECTION 11.05. Acquisition of Bonds by Authoritv. All Bonds acquired by the Authority, whether by purchase or gift or otherwise, shall be surrendered to the Trustee for cancellation. SECTION 11.06. Destruction of Cancelled Bonds. Whenever provision is made for the return to the Authority of any Bonds which have been cancelled pursuant to the provisions hereof, the Authority may, by a Written Request of the Authority, direct the Trustee to destroy such Bonds and furnish to the Authority a certificate of such destruction, at its request. SECTION 11.07. Content of Certificates. Every Certificate of the Authority with respect to compliance with any agreement, condition, covenant or provision provided herein shall include (a) a statement that the person or persons making or giving such certificate have read such agreement, condition, covenant or provision and the definitions herein relating thereto; (b) a brief statement as to the nature and scope of the examination or investigation upon which the statements contained in such certificate are based; (c) a statement that, in the opinion of the signers, they have made or caused to be made such examination or investigation as is necessary to enable them to express an informed opinion as to whether or not such agreement, condition, OHSUSA:763796391 .2 42 covenant or provision has been complied with; and (d) a statement as to whether, in the opinion of the signers, such agreement, condition, covenant or provision has been complied with. Any Certificate of the Authority may be based, insofar as it relates to legal matters, upon an Opinion of Counsel unless the person making or giving such certificate knows that the Opinion of Counsel with respect to the matters upon which his certificate may be based, as aforesaid, is erroneous, or in the exercise of reasonable care should have known that the same was erroneous. Any Opinion of Counsel may be based, insofar as it relates to factual matters information with respect to which is in the possession of the Authority, upon a representation by an officer or officers of the Authority unless the counsel executing such Opinion of Counsel knows that the representation with respect to the matters upon which his opinion may be based, as aforesaid, is erroneous, or in the exercise of reasonable care should have known that the same was erroneous. SECTION 11.08. Publication for Successive Weeks. Any publication required to be made hereunder for successive weeks in a Financial Newspaper may be made in each instance upon any Business Day of the first week and need not be made on the same Business Day of any succeeding week or in the same Financial Newspaper for any subsequent publication, but may be made on different Business Days or in different Financial Newspapers, as the case may be. SECTION 11.09. Accounts and Funds.Any account or fund required herein to be established and maintained by the Trustee may be established and maintained in the accounting records of the Trustee either as an account or a fund, and may, for the purposes of such accounting records, any audits thereof and any reports or statements with respect thereto, be treated either as an account or a fund; but all such records with respect to all such accounts and funds shall at all times be maintained in accordance with corporate trust industry standards and with due regard for the protection of the security of the Bonds and the rights of the Bondholders. SECTION 11.10. Business Dav. When any action is provided for herein to be done on a day named or within a specified time period, and the day or the last day of the period falls on a day which is not a Business Day, such action may be performed on the next ensuing Business Day with the same effect as though performed on the appointed day or within the specified period. SECTION 11.11. Notices. All written notices to be given hereunder shall be given by mail to the party entitled thereto at its address set forth below, or at such other address as such party may provide to the other party in writing from time to time, namely: If to the Authority: Burlingame Financing Authority c/o City of Burlingame-Dept. of Finance 501 Primrose Road Burlingame, CA 94010-3997 Attention: Executive Director OHSUSA:763796391 .2 43 If to the Trustee:The Bank of New York Mellon Trust Company, N.A. 100 Pine Street, Suite 3100 San Francisco, CA 94lll Attention: Corporate Trust Department If to the City City of Burlingame 501 Primrose Road Burlingame, CA 94010-3997 Attention: Finance Director SECTION ll.l2. Article and Section Headings and References. The headings or titles ofthe several articles and sections hereofand the table ofcontents appended hereto shall be solely for convenience of reference and shall not affect the meaning, construction or effect hereof. AII references herein to "Articles," "sections" and other subdivisions or clauses are to the corresponding articles, sections, subdivisions or clauses hereof; and the words "herebyooo "herein," ':hereof," "hereto," "herewith," "hereunder" and other words of similar import refer to this Trust Agreement as a whole and not to any particular article, section, subdivision or clause hereof. SECTION 11.13. Partial Invalidity. If any one or more of the agreements or covenants or portions thereof required hereby to be performed by or on the part of the Authority or the Trustee shall be contrary to law, then such agreement or agreements, such covenant or covenants or such portions thereof shall be null and void and shall be deemed separable from the remaining agreements and covenants or portions thereof and shall in no way affect the validity hereof or of the Bonds, and the Bondholders shall retain all the benefit, protection and security afforded to them under the Act or any other applicable provisions of law. The Authority and the Trustee hereby declare that they would have executed and delivered this Trust Agreement and each and every other article, section, paragraph, subdivision, sentence, clause and phrase hereof and would have authorized the issuance of the Bonds pursuant hereto irrespective of the fact that any one or more articles, sections, paragraphs, subdivisions, sentences, clauses or phrases hereof or the application thereof to any person or circumstance may be held to be unconstitutional, unenforceable or invalid. SECTION ll.l4.Governins Law. This Trust Agreement shall be governed exclusively by the provisions hereof and by the laws of the State as the same from time to time exist. SECTION 11.15. Execution in Several Countenrarts. This Trust Agreement may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original; and all such counterparts, or as many of them as the Authority and the Trustee shall preserve undestroyed, shall together constitute but one and the same instrument. OHSUSA:763796391 .2 44 IN WITNESS WHEREOF, the BURLINGAME FINANCING AUTHORITY has caused this Trust Agreement to be signed in its name by its Executive Director, and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., in token of its acceptance of the trusts created hereunder, has caused this Trust Agreement to be signed by one of the officers thereunder duly authortzed, all as of the day and year first above written. BURLINGAME FINANCING AUTHORITY By: Executive Director THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee By: Authorized Officer OHSUSA:763796391 .2 s-1 No. R- EXHIBIT A FORM OF BOND BURLINGAME FINANCING AUTHORITY STORM DRAINAGE REVENUE BOND SERIES 20I6 NEITHER THE FULL FAITH AND CREDIT OF THE AUTHORITY NOR THE CITY OF BURLINGAME IS PLEDGED FOR THE PAYMENT OF THE INTEREST ON OR PRINCIPAL OF THE BONDS AND NO TAX OR OTHER SOURCE OF FI-]NDS OTHER THAN THE REVENUES HERETNAFTER REFERRED TO IS PLEDGED TO PAY THE INTEREST ON OR PRINCIPAL OF THE BONDS. NEITHER THE PAYMENT OF THE PRINCIPAL OF NOR INTEREST ON THE BONDS CONSTITUTES A DEBT, LIABILITY OR OBLIGATION OF THE CITY OF BURLINGAME. $ Rate Interest % Maturity Date Dated Date CUSIP REGISTERED OWNER: CEDE & CO PRINCIPAL SUM The BURLINGAME FINANCING AUTHORITY, a joint exercise of powers authority, duly organized and validly existing under and pursuant to the laws of the State of California (the "Authority"), for value received, hereby promises to pay (but only out of the Revenues hereinafter referred to) to the registered owner identified above or registered assigns, on the maturity date specified above (subject to any right of prior redemption hereinafter provided for) the principal sum specified above, together with interest on such principal sum from the interest payment date next preceding the date of authentication of this Bond (unless this Bond is registered as of an interest payment date or during the period from the 15th day of the month preceding an interest payment date to such interest payment date, in which event it shall bear interest from such interest payment date, or unless this Bond is authenticated prior to July 1, 2016, in which event it shall bear interest from the original issue date specified above) until the OHSUSA:763796391 .2 A-l l, DOLLARS principal hereof shall have been paid at the interest rate per annum specified above, payable on July I ,2016, and semiannually thereafter on each July I and January l. Interest due on or before the maturity or prior redemption of this Bond shall be payable only by check mailed on the interest payment date by first-class mail to the registered owner hereof as of the applicable record date; provided that upon the written request of a Bondholder of $1,000,000 or more in aggregate principal amount of Bonds received by the Trustee prior to the applicable record date, interest shall be paid by wire transfer in immediately available funds. The principal hereof is payable in lawful money of the United States of America upon presentation of this Bond at the principal office of The Bank of New York Mellon Trust Company, N.A., in San Francisco or Los Angeles, California. This Bond is one of a duly authorized issue of bonds of the Authority designated as its "Burlingame Financing Authority Storm Drainage Revenue Bonds, Series 2016" (the "Bonds") issued in an aggregate principal amount of dollars ($[PAR]), consisting of Storm Drainage Revenue Bonds, Series 2016. The Bonds are all of like tenor and date (except for such variations, if any, as may be required to designate varying series, subseries, numbers, maturities and interest rates), and are issued under and pursuant to the provisions of the Joint Exercise of Powers Act (being Chapter 5 of Division 7 of Title 1 of the Califomia Government Code, as amended) and all laws amendatory thereof or supplemental thereto (the o'Act") and under and pursuant to the provisions of a trust agreement, dated as of February 1, 2016 (as amended from time to time, the "Trust Agreement"), between the Authority and The Bank of New York Mellon Trust Company, N.A., as trustee (together with any successor as trustee under the Trust Agreement, the "Trustee") (copies of the Trust Agreement are on file at the principal office of the Trustee in San Francisco, California). The Bonds are issued to provide funds to finance the cost of the acquisition, construction and improvement of certain capital improvements to the storm drainage system of the City. The Bonds are limited obligations of the Authority and are payable, as to interest thereon and principal thereof, solely from certain proceeds of the Bonds held in certain funds and accounts pursuant to the Trust Agreement and the revenues (as more fully defined in the Trust Agreement, the "Revenues") derived from Installment Payments and other payments made by the City of Burlingame (the oocity"), and all interest or other investment income thereon, pursuant to the Installment Sale Agreement, dated as of February 1,2016 (as amended from time to time, the "Installment Sale Agreement"), by and between the Authority and the City, and the Authority is not obligated to pay the interest or premium, if any, on and principal of the Bonds except from the Revenues. All Bonds are equally and ratably secured in accordance with the terms and conditions of the Trust Agreement by a pledge of and charge and lien upon the Revenues, and the Revenues constitute a trust fund for the security and payment of the interest or premium, if any, on and principal of the Bonds as provided in the Trust Agreement. The full faith and credit of the Authority and the City are not pledged for the payment of the interest or premium, if any, on or principal of the Bonds. No tax shall ever be levied to pay the interest on or principal of the Bonds. The Bonds are not secured by a legal or equitable pledge of or charge or lien upon any property of the Authority or any of its income or receipts except the Revenues, and neither the payment of the interest on nor principal of the Bonds is a debt, liability or general obligation of the Authority, the City or any member of the Authority for which such entity is obligated to levy or pledge any form of taxation. Reference is hereby made to the Act and to the Trust Agreement and any and all amendments thereof and supplements thereto for a description OHSUSA:763796391.2 A-2 of the terms on which the Bonds are issued, the provisions with regard to the nature and extent of the Revenues, the rights of the registered owners of the Bonds, security for payment of the Bonds, remedies upon default and limitations thereon, and amendment of the Trust Agreement (with or without consent of the registered owners of the Bonds); and all the terms of the Trust Agreement are hereby incorporated herein and constitute a contract between the Authority and the registered owner of this Bond, to all the provisions of which the registered owner of this Bond, by acceptance hereof, agrees and consents. The Bonds are subject to redemption by the Authority on the dates, and at the redemption prices, set forth in the Trust Agreement. Notice of redemption of this Bond shall be given by first-class mail not less than thirty (30) days nor more than sixty (60) days before the redemption date to the registered owner of any Bond selected for redemption, subject to and in accordance with provisions of the Trust Agreement with respect thereto. If notice of redemption has been duly given as aforesaid and money for the payment of the above-described redemption price is held by the Trustee, then this Bond shall, on the redemption date designated in such notice, become due and payable at the above-described redemption price; and from and after the date so designated, interest on this Bond shall cease to accrue and the registered owner of this Bond shall have no rights with respect hereto except to receive payment of the redemption price hereof. This Bond is transferable only on a register to be kept for that purpose at the above-mentioned corporate trust office of the Trustee by the registered owner hereof in person or by the duly authorized attorney of such owner upon payment of the charges provided in the Trust Agreemeni and upon surrender of this Bond together with a written instrument of transfer ruiirf..tory to the Trustee duly executed by the registered owner or the duly authorized attorney of such owner, and thereupon a new fully registered Bond or Bonds in the same aggregate principal amount in authorized denominations will be issued to the transferee in exchange it,erefor. The Authority and the Trustee may deem and treat the registered owner hereof as the absolute owner hereof for the purpose of receiving payment of the interest hereon and principal hereof and for all other purposes, whether or not this Bond shall be overdue, and neither the Authority nor the Trustei shall be affected by any notice or knowledge to the contrary; and puy..ni of the interest on and principal of this Bond shall be made only to such registered t*n.r, which payments shall be valid and effectual to satisfy and discharge liability on this Bond to the extent of the sum or sums so paid. This Bond shall not be entitled to any benefit, protection or security under the Trust Agreement or become valid or obligatory for any purpose until the certificate of authentication hereon endorsed shall have been executed and dated by the Trustee. It is hereby certified and recited that all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in the issuance of this Bond do exist, have happened and have been performed in due time, form and manner as required by the Act, and by the Constitution and laws of the State of California, that the amount of inis Bond, together with all other indebtedness of the Authority, does not exceed any limit prescribed by thi Constitution or laws of the State of Califomia and is not in excess of the amount of Bonds permitted to be issued under the Trust Agreement. OHSUSA:763796391 .2 A-3 IN WITNESS WHEREOF, the Burlingame Financing Authority has caused this Bond to be executed in its name and on its behalf by the manual or facsimile signature of the Executive Director of the Authority and countersigned by the manual or facsimile signature of the Secretary of said Authority, and has caused this Bond to be dated as of the original issue date specified above. BURLINGAME FINANCING AUTHORITY By: Executive Director Countersigned: Secretary OHSUSA:763796391 .2 A-4 IFORM OF CERTIFICATE OF AUTHENTICATION] This is one of the Bonds described in the within-mentioned Trust Agreement THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee By: Authorized Signatory IDTC LEGEND] Unless this Bond is presented by an authorized representative of The Depository Trust Company to the issuer or its agent for registration of transfer, exchange or payment, and any Bond issued is registered in the name of Cede & Co. or such other name as requested by an authorized representative of The Depository Trust Company and any payment is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an interest herein. IFORM OF ASSIGNMENT] For value received the undersigned hereby sells, assigns and transfers unto (Taxpayer Identifi cation Number ) the within Bond and all rights thereunder, and attomey to transfer the within bondhereby irrevocably constitutes and appoints on the books kept for registration thereof, with full power of substitution in the premises NOTE: The signature to this Assignment must correspond with the name as written on the face of the Bond in every particular, without alteration or enlargement or any change whatever. Dated PLEASE INSERT SOCIAL SECURITY NUMBER, TAXPAYER IDENTIFICATION NUMBER OR OTHER IDENTIFYING NUMBER OF ASSIGNEE: Signature Guaranteed: NOTE: Signature must be guaranteed by an eligible guarantor institution. OHSUSA:763796391 .2 A-5 which has been registered and authenticated on DRAFT 11t23t2015 TRUST AGREEMENT between the BURLINGAME FINANCING AUTHORITY and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., Trustee Dated as of February 1,2016 $[PAR] Burlingame Financing AuthoritY Storm Drainage Revenue Bonds Series 2016 OHSUSA:763796391 .2 TABLE OF CONTENTS ARTICLE I DEFINITIONS; EQUAL SECURITY .......... SECTION 1.01. Definitions SECTION 1.02. Equal Security.... SECTION 1.03. Interpretation...... ARTICLE II THE BONDS,..... SECTION 2.OI Authorization of Bonds..... SECTION 2.02. Terms of the Bonds Page ....,.,,,.,.,2 ......,,....,2 ............14 ..14 15 ......15 15 Form ofBonds flntentionally Left Bank] [Intentionally Left Bank] ...... Execution of Bonds...... Bonds ARTICLE III ISSUANCE OF BONDS. SECTION 3.OI SECTION 3.02 SECTION 3.03 SECTION 2.03. SECTION 2.04. SECTION 2.05. SECTION 2.06. SECTION 2.07. SECTION 2.08. SECTION 2.09. SECTION 2.10. SECTION 5.0I. SECTION 5.02. SECTION 5.03. ........ t7 17 .t7 .......... t7 .,..............,.,., 17 Bonds....... SECTION 2.1 1 . Special Covenants as to Book-Entry Only System for Transfer and Payment of Bonds......... Exchange ofBonds ............18 Bond Registration Books .'..... 18 Mutilated, Destroyed, Stolen or Lost Bonds; Temporary 18 .......... l9 Procedure for the Issuance of Bonds Use of Moneys in the Acquisition and Construction Fund Limitations on the Issuance of Obligations Payable from Pledge of Revenues...... Receipt and Deposit of Revenues in the Revenue Fund ' Establishment and Maintenance of Accounts for Use of Money in the Revenue Fund; Reserve Account ...,,2| .....21 ,..,.21 Revenues...,.,..22 ARTICLE IV REDEMPTION OF BONDS ....,,.,...22 SECTION4.01. OptionalRedemption....'........22 SECTION 4.02. Mandatory Sinking Fund Redemption'Z) SECTION 4.03.Selection of Bonds for Redemption.............24 SECTION 4.04. Notice of Redemption; Cancellation; Effect of Redemption.......24 ARTICLE V REVENUES...,.,,.25 ...,,.,25 )\ ..,,,.'25 OHSUSA:763796391 .2 -l- TABLE OF CONTENTS (continued) SECTION 5.04. [Intentionally Left Bank] SECTION 5.05. Deposit and Investments of Money in Accounts and Funds .. ARTICLE VI COVENANTS OF THE AUTHORITY SECTION 6.01 Punctual Payment and Performance .......... SECTION 6.02. Against Encumbrances............. SECTION 6.03. Tax Covenants; Rebate Fund SECTION6.04. AccountingRecordsandReports............. SECTION 6.05. Prosecution and Defense of Suits SECTION 6.06. Further Assurances. Page SECTION 6.07 SECTION 6.08 [Intentionally Left Bank] Amendments to Installment Sale Agreement ....30 .... 3 1 27 27 28 28 28 28 29 29 30 30 30 30 JJ 34 37 38 39 39 39 40 4l ARTICLE VII EVENTS OF DEFAULT AND REMEDIES OF BONDHOLDERS SECTION 7.01 Events of Default SECTION SECTION SECTION SECTION SECTION ........32 ,.,.,...32 ,....,..32 ........33 ........33 7.02. 7.03. 7.04. 7.05. 7.06. Application of Funds Upon Acceleration ......... Non-Waiver................ Actions by Trustee as Attomey-in-Fact Remedies Not Exclusive............ Limitation on Bondholders' Right to Sue......... ARTICLE VIII THE TRUSTEE SECTION8.01. TheTrustee............. SECTION 8.02. Liability of Trustee. SECTION 8.03. Compensation and Indemnification of Trustee.... SECTION 8.04. CompliancewithContinuingDisclosure Certificate..... ARTICLE IX AMENDMENT OF THE TRUST AGREEMENT......... SECTION 9.01. Amendment of the Trust Agreement SECTION 9.02. Disqualified Bonds SECTION 9.03. Endorsement or Replacement of Bonds After Amendment SECTION 9.04 Amendment by Mutual Consent ....... ARTICLE X DEFEASANCE. SECTION 10.01. Discharge of Bonds SECTION IO.02 Unclaimed Money..... ARTICLE XI ....39 ..,,39 OHSUSA:763796391 .2 MISCELLANEOUS -ll- TABLE OF CONTENTS (continued) Page SECTION I 1.01. Liability of Authority Limited to Revenues; Benefits of this Trust Agreement Limited to Parties...........41 SECTION 11.02. Successor Is Deemed Included In All References To Predecessor 4t SECTION I1.03.Execution of Documents by Bondholders ....'......."'.'...........'......41 SECTION 11.04. Waiver of Personal Liability.42 SECTION 11.05. Acquisition of Bonds by Authority.,.,...,.42 SECTION I 1.06. Destruction of Cancelled Bonds .,...,.,....,....42 SECTION I1.07.Content of Certificates ..............42 SECTION 11.08. Publication for Successive Weeks .,.'..,...' 43 SECTION 1 1.09. Accounts and Funds 43 SECTION 11.10. Business DaY .............. 43 SECTION 11.11. Notices 43 SECTION 11,.12. Article and Section Headings and References 43 SECTION I 1.13. Partial Invalidity....,.,....,44 SECTION 11.14. Governing Law ........"...44 SECTION I I .15. Execution in Several Counterparts.........44 EXHIBIT A FORM OF BOND ...........A-1 OHSUSA:763796391 .2 -lll- TABLE OF CONTENTS Page An extra section break has been inserted above this paragraph. Do not delete this section break if you plan to add text after the Table of Contents/Authorities. Deleting this break will cause Table of Contents/Authorities headers and footers to appear on any pages following the Table of Contents/Authorities. OHSUSA:763796391 .2 -1V- io 6.9 Y5.i3EoOo E€ od 9=FAo1 =eaa 6O FI il G =>:d 3qc& EO3, o6 '6 t,o E- -= =a o o- o.9e6 o3 o- -; IE EO Q6.:a 50 o= o: Eg EO 6G e4ca9- I-aE =^.9,ts-o VO ),c aE€= '=eoE sE':oa *.! -aoE OH&S DRAFT: r10812016 PRELIMINARY OFFICIAL STATEMENT DATED JANUARY NEW ISSUE - FULL BOOK-ENTRY ONLY RATING: S&P: "_" (See "RATING" herein). ln the opinion of Orrick, Herrington & Sutclffi LLP, Bond Counsel, based upon an analysis of existing laws, regulations, rulings and court decisions, and assuming, among other malters, lhe accuracy ofcertain representations and compliance v)ith certain coveiants, interest on the Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Inlernal Revenue Code of 1986 and is exempt from State of California personal income taxes. In the further opinion of Bond Counsel, interest on the Bonds is noi a specific preference itemfor purposes ofthefederal individual or corporate alternative minimum tares, although Bond Counsel obseryes ihat such interest is included in adjusted current earnings when calculaling corporate alternative minimum taxable income. Bond Counsel expresses no opinion regarding any other tax consequences related to the ovrnership or disposition of, or the amount, accrual or receipl ofinlerest on, the Bonds. See "TAX MATTERS" herein. $9,890,000' BURLINGAME FINANCING AUTHORITY STORM DRAINAGE REVENUE BONDS, SERIES 2016 Dated: Date of Delivery Due: July l, as shown on the inside cover The Burlingame Financing Authority Storm Drainage Revenue Bonds, Series 2016 (the "Bonds") will be issued in fully registered tbrm-only and, when issued, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company. New York, New York ("DTC-). Ownership interests in the Bonds will be in denominations of $5,000 or any integral multiple thereof. Beneficial owners of the Bonds will not receive physical certificates representing the Bonds purchased, but will recei;e a credit balance on the books of the nominees of such purchasers. Interest on the Bonds is payable semiannually on January I and July l, commencing July 1,2016 (the "lnterest Payment Dates"). Principal of, premium, if any, and interest on the Bonds will be paii by The Bank Jf N"* york Mellon Trust Company, N.A., San Francisco, Califomia, as trustee (the "Trustee") to DTC, which in tum will remit such principal, premium, if any, and interest to its participants for subsequent disbursement to beneficial owners of the Bonds as described herein. See 'APPENDIX F - Book-Entry Only System" herein. The Bonds are being issued to provide funds to the City of Burlingame (the "City") to (i) finance certain improvements to the City,s Storm Drainage System, (ii) fund a reserve account for the Bonds, and (iii) pay the costs ofissuance ofthe Bonds. The Bonds are limited obligations of the Authority payable solely from Revenues generally consisting of Installment payments to be made by the City und f.o. amounts on deposit in certain funds and accounts held under the Trust Agreement' Thi Installment paymenrs are sfecial obligations of the City under the 2016 lnstallment Sale Agreement and are secured by a pledge of the System Revenuei of the Storm Drainage System on a parity with the installment payments under the 2010 installment Sale Agreement currently outstanding in the aggregate principal amount of $8,715,000 and the 2012 Installment Sale Agreement currently outstanding in the aggregate principal amount of $9,945,000. The System Revenues consist primarily of Stlorm Drainage Fees approved u*y a majori[ olthe'parcel owners in the City voting at a special election in 2009. See "SToRM DRAINAGE FEES AND SYSTEM" herein. The Bonds do not constitute a debt or tiability of the State of California or of any political subdivision thereof (including any member of the Authority). The Authority shatl be obligated to pay the principal of the Bonds, and the interest ih.r.on, 6nly-from the revenues described above, and neither the faith and credit nor the taxing power ofthe State ofCalifornia or of any potiticat subdivision thereof (including any member of the Authority) is pledged to the payment of the principal of or the inteiest on the Bonds. The issuance ofthe Bonds shall not directly, indirectly or contingently obligate the State ofCalifornia or any political subdivision thereof (including any member of the Authority) to tevy or pledge any form of taxation. The Authority has no ta.xing Power. The Bonds are sub.iect to optional and mandatory redemption prior to maturity as described herein. See "THE BONDS - Redemption" herein.t Maturity Schedule- located on inside front cover THIS COVER PAGE CONTAINS INFORMATION FOR REFERENCE ONLY. IT IS NOT A SUMMARY OF THIS ISSUE. INVESTORS MUST READ THE ENTIRE OFFICIAL STATEMENT TO OBTATN INFORMATION ESSENTIAL TO THE MAKING OF AN INFORMED INVESTMENT DECISION. The Bonds will be offered when, as and ifissued, subject to the approval ofvalidity by orrick, Herrington & Sutcliffe LLP' Bond counsel. certain legal matters will be passed upon for the Authority and the city by the city Attomey of the city of Burlingame' orrick, Henington & Sutctiffe LLp will serve as Disclosure Counsel. Certain matters will be passed upon for the Underwriter by Stradling, yoc-ca Carlson & Rauth, A Professional Corporation, counsel to the Underwriter. It is expected that the Bonds will be deliverei through the facitities of DTC on or about February -,2016, in New York, New York, against payment therefor. Dated: February ,2016 ' Preliminary, subject to change. OHSUSA:763800162.4 ffi qiE,J MATURITY SCHEDULE' (Base CUSIPT ) InterestMaturity (July 1) Principal Amount Yield CUSIPTRate $- -ohrermBond due July 1,20- Yield: -o/o cuslPt - - Preliminary, subject to change. t Copyright i0 16,-American dankers Association. CUSIP@ is a registered trademark of the American Bankers Rssoiiation. CUSIp Global Services (CGS) is managed by S&P capital IQ. All rights reserved. This data is not intended to create a database and does not serve in any way as a substitute for the CUSIP Service. CUSIP numbers are provided for convenience ofreference only and have been assigned by an independent company not affiliated with the Authority. None of the City, the Authority or the Underwriter take any responsibility for the use or accuracy of such numbers. OHSUSA:763800162.4 No dealer, broker, salesman or other person has been authorized to give any information or to make any representation other than those contained in this Official Statement, and, if given or made, such other information or representation must not be relied upon as having been authorized by the City, the Authority or the Underwriter. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Bonds by any person' in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. This Official Statement is not to be construed as a contract with the purchasers of the Bonds. Statements contained in this Officiat Statement which involve estimates, forecasts or matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as representations offacts. The information contained in this Official Statement has been furnished by the City' the Authority and other sources which are deemed to be reliable but is not guaranteed as to accuracy or completeness by, and is not to be construed as a representation by the Underwriter. The information and expressions of opinion herein are subject to change without notice and neither the delivery of this Official Statement, nor any sale hereunder, shall under any circumstances create an implication that there has been no change in the affairs of the City, the Authority or any other matter described herein since the date hereof. The Underwriter has provided the following sentence for inclusion in this Official Statement: The Underwriter has reviewed the information in this Official Statement in accordance with, and as part of, its responsibility to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. Certain statements included or incorporated by reference in this Official Statement constitute "forward-looking statements." Such statements are generally identifiable by the terminology used, such as ttplanrt' ttexpectrtt ttestimatert' ttbudgetr" or other similar words. The achievement of certain results or other expectations contained in such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements described to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Neither the Authority nor the City plans to issue any updates or revisions to those forward-looking statements if or when their expectations, or events, conditions or circumstances on which such statements are based, occur. IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER- ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARJGT PRICE OF THE BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. The Bonds have not been registered under the Securities Act of 1933, as amended, in reliance upon an exemption contained in the Act. The Bonds have not been registered or qualified under the securities laws of any state. OHSUSA:763800162.4 Ricardo Ortiz Vice Mayor Donna Colson Lisa Goldman City Manager Syed Murtuza Director of Public l(orks BURLINGAME FINANCING AUTHORITY Governing Board and Mayor and City Council Ann Keighran Mayor Authority Staff/City Staff Carol Augustine Finance Director Bond and Disclosure Counsel orrick, Herrington & Sutcliffe LLP San Fr anc is co, C al iforni a Financial Advisor Public Financial Management, Inc. San Fr ancis co, C ol iforn i a Trustee The Bank of New York Mellon Trust Company, N.A. San Frqncisco, California Michael Brownrigg Emily Beach Kathleen Kane City Attorney OHSUSA:763800162.4 TABLB OF CONTENTS INTRODUCTION General The Authority ......... Purpose of the Bonds....................... Authoritv for Issuance Security for the Bonds............... Storm Drainage Fee.. Additional Parity Obligations Reserve Account The City..... Description of the Bonds...... Tax Matters Continuing Disclosure... Summaries Not Definitive....... Other Information............ THE BONDS General.... Redemption Book-Entry Only System ESTIMATED SOURCES AND USES OF FUNDS.. DEBT SERVICE...... SECURITY FOR THE BONDS Sources of Payment Pledge of System Revenues, Storm Drainage Fees' Additional Parity Obligations Reserve Account Collection of Storm Drainage Fees Flow of Funds Limited Obligations STORM DRAINAGE FEES AND SYSTEM... Ceneral Process for Establishing the Storm Drainage Fee Page J ......5 ......6 7 8 8 ..8 ..8 ..9 .,9 ....1 0 ............1 I ll 1 I I 1 I I .2 .2 .2 .J .3 .J .J .,4 ..4 ..4 ..4 -l- ...........1I ...........1 1 TABLE OF CONTENTS (continued) Engineer's Report........ Ordinance Lien Citizens Oversight Committee Fees Paid by Largest Payers....... Historical and Projected Debt Service Coverage STORM DRAINAGE SYSTEM IMPROVEMENT PROGRAM.... RISK FACTORS.... Limited Obligations Limited Recourse on Default Bankruptcy Tax Exemption of the Bonds............ Add itional Obligations Right to Vote on Taxes Act.............. Termination of Teeter Plan .............. THE AUTHORITY..... Organization and Membership .. Powers........ NO LITIGATION... RATTNG.... TAX MATTERS..... VALIDATION ........ LEGAL MATTERS UNDERWRITING............. CONTINUING DISCLOSURE ADDITIONAL INFORMATION ......... Page ............17 ............ l7 ............ I 7 ............ I 8 ............ I 8 ............1 8 ................ I 8 .........,......1 8 .20 .20 .20 ..20 ..20 ..20 ....21 ....23 ....23 .,.,23 ,,,............,.,.,,...23 ,..........,............24 t2 l2 14 t4 l4 t6 OHSUSA:763800162.4 -ll- OHSUSA:7638001 62.4 APPENDIX A - CITY OF BURLINGAME FINANCIAL AND DEMOGRAPHIC INFORMATION ................ APPENDIX B _ ENGINEER'S REPORT FOR THE CITY OF BURLINGAME'S STORM APPENDIX C _ SUMMARY OF PRINCIPAL LEGAL DOCUMENTS APPENDIX D _ FORM OF CONTINUING DISCLOSURE CERTIFICATE APPENDIX E - FORM OF LEGAL OPINION...... APPENDIX F - BOOK-ENTRY ONLY SYSTEM .... A-l ............B-l ............c-l D-1 ...........E-l ... F-1 OHSUSA:763800162.4 -llt- The purpose of this Official Statement, which includes the cover page, inside cover, table of contents and appendices hereto is to provide certain information concerning the issuance, sale and delivery by the Burlingame Financing Authority (the "Authority") of its Storm Drainage Revenue Bonds, Series )OiO (tt.,. "BonJs"), in the aggiegate principalamount of $9,890,000-. OFFICIAL STATEMENT $9,890,000. BURLINGAMB FINANCING AUTHORITY STORM DRAINAGE REVENUE BONDS, SERIES 2016 INTRODUCTION This Introduction is not a summary of this Official Statement. It is only a brief description of and guide to, and is qualified by, more complete and detailed information contained in the entire Official Statement, including the cover page and appendices hereto, and the documents summarized or described herein. A full review should be made of the entire Official Statement. The offering of the Bonds to potential investors is made only by means of the entire Official Statement. Capitalized terms used, but not otherwise defined, herein, shall have the meanings ascribed thereto in "APPENDIX C -SUMMARY OF PRINCIPAL LEGAL DOCUMENTS - Certain Definitions." General The Authority The Authority is a joint exercise of powers authority duly organized and existing under and pursuant to that certain Joint Exercise of Powers Agreement, by and between the City of Burlingame (the "City") and the Redevelopment Agency of the City of Burlingame (the "Agency"), and under the provisions of Articles I through 4 (commencing with Section 6500) of Chapter 5 of Division 7 of Title I of the California Government Code (the "Act"). Purpose of the Bonds The Bonds are being issued to provide funds to the City to (i) finance certain improvements to the City's Storm Drainage System, (ii) fund a reserve account for the Bonds, and (iii) pay the costs of issuance ofthe Bonds. Authority for Issuance The Bonds are being issued pursuant to the Act and a Trust Agreement dated as of February 1, 2016 (theooTrust Agreement"), by and between the Authority and The Bank of New York Mellon Trust Company, N.A., San Francisco, California, as trustee (the "Trustee"). Security for the Bonds The Bonds are limited obligations of the Authority payable solely from Revenues generally consisting of Installment Payments to be made by the City and from amounts on deposit in ceftain funds and accounts held under the Trust Agreement. The Installment Payments securing the Bonds are special obligations of the City under the 2016 Installment Sale Agreement dated as of February 1,2016 and - Preliminary, subject to change. OHSUSA:7638001 62.4 entered into by the City and the Authority (the "lnstallment Sale Agreement"). The Installment Payments under the Installment Sale Agreement are payable solely from, and secured by a pledge oi the System Revenues on a parity with the installment payments under the 2010 lnstallment Sale Agreement (the "2010 Installment Sale Agreement"), dated as of August 1,2010, and entered into by the City and the Authority, which installment payments are currently outstanding in the aggregate principal amount of $8,715,000 and the installment payments under the 2012 Installment Sale Agreement (the "2012 Installment Sale Agreement"), dated as of December I , 2012, and entered into by the City and the Authority, which installment payments are currently outstanding in the aggregate principal amount of $9,945,000. The Bonds are limited obligations of the Authority and are not secured by a legal or equitable pledge of, or charge or lien upon, any property of the Authority or any of its income or receipts, except the Revenues. Neither the full faith and credit nor the taxing power of the Authority, the City, the State of California or any subdivision thereof is pledged for the payment of the interest on, principal of or redemption price on the Bonds or for the payment of Installment Payments. Neither the payment of the principal of or interest on the Bonds nor the obligation to make Installment Payments constitutes a debt, liability or obligation of the Authority or the City for which any such entity is obligated to ler.y or pledge any form of taxation or for which any such entity has levied or pledged any form of taxation. The Authority has no taxing power. For more information regarding the security for the Bonds, see ..SECURITY FOR THE BONDS". Storm Drainage Fee The System Revenues consist primarily of Storm Drainage Fees approved by a majority of the parcel owners in the City voting at a special election on May 5, 2009. The Storm Drainage Fees are imposed on every parcel of property in the City other than vacant, unimproved parcels and streets, highways, channels and canals. The Storm Drainage Fees are currently imposed on 8,624 parcels of property in the City. See "STORM DRAINAGE FEES AND SYSTEM." Additional Parity Obligations The Installment Sale Agreement provides that under certain circumstances the City may at any time enter into obligations secured by a lien and charge upon the System Revenues equal to and on a parity lien and charge with the Installment Payments. There are currently $8,715,000 outstanding aggregate principal amount of installment payments under the 2010 Installment Sale Agreement and $9,945,000 outstanding aggregate principal amount of installment payments under the 2012 Installment Sale Agreement secured on a parity with the Installment Payments. See "SECURITY FOR THE BONDS - Additional Parity Obligations". Reserve Account To further secure the payment of the principal of and interest on the Bonds, the Trust Agreement establishes the Reserve Account to be held by the Trustee. The Reserve Account will be initially funded in the amount of $'. The Trust Agreement defines "Reserve Account Requirement" to be the least of (i) the maximum annual Installment Payments, (ii) 125% of average annual Installment Payments, and (iii) 10Yo of the original principal amount of the Installment Payments; provided, however, such amount shall not exceed the amount permified by the arbitrage bond regulations issued by the United States Deparlment of the Treasury, as such regulations are, at the time, applicable and in effect, without the imposition of yield restrictions. See "APPENDIX C - SUMMARY OF PRINCIPAL LEGAL - Preliminary, subject to change 2 OHSUSA:763800 162.4 DOCUMENTS - The Trust Agreement," and *SECURITY FOR THE BONDS - Reserve Account" herein. The City The City of Burlingame is located on the San Francisco Peninsula approximately l0 miles south of San Francisco and has a population of approximately 29,890. See "APPENDIX A - CITY OF BURLINGAME FINANCIAL AND DEMOGRAPHIC INFORMATION,, hETCiN. Description of the Bonds The Bonds will be issued as fully-registered current interest bonds without coupons in denominations of $5,000 principal amount each, or any integral multiple thereof, and will be registered initially in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ("DTC"). DTC will act as securities depository for the Bonds. See "APPENDIX F - BOOK- ENTRY ONLY SYSTEM" herein. Interest on the Bonds is payable semiannually each July I and January 1, commencing July 1,2016. Principal of the Bonds is payable on July 1 in each year due, as set forth on the cover page hereof. Tax Matters In tlie opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel, based upon an analysis of existing laws, regulations, rulings and courl decisions, and assuming, among other matters, the accuracy of certain representations and compliance with certain covenants, interest on the Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 (the "Code") and is exempt from State of California personal income taxes. ln the further opinion of Bond Counsel, interest on the Bonds is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes, although bond counsel observes that interest on the Bonds is included in adjusted current earnings when calculating corporate alternative minimum taxable income. Bond Counsel expresses no opinion regarding any other tax consequences related to the ownership or disposition of, or the amount, accrual or receipt of interest on, the Bonds. See "TAX MATTERS" herein. Continuing Disclosure The City has covenanted for the benefit of the holders and beneficial owners of the Bonds to annually provide certain financial information and operating data relating to the City (the 'oAnnual Report") and to provide notices of the occurrence of certain enumerated events, if material. See "CONTINUING DISCLOSURE" and *APPENDIX D FORM OF CONTINUING DISCLOSURE CERTIFICATE" herein. Summaries Not Definitive Brief descriptions of the Bonds, the security and sources of payment for the Bonds, the Authority, the City and the Storm Drainage System, are included in this Official Statement together with summaries of the Trust Agreement and the Installment Sale Agreement. Such descriptions do not purport to be comprehensive or definitive. Capitalized terms used herein and not otherwise defined shall have the meanings set forth in "APPENDIX C - SUMMARY OF PRINCIPAL LEGAL DOCUMENTS," and if not therein, then in the Trust Agreement. All references herein to the Trust Agreement and the Installment Sale Agreement are qualified in their entirety by reference to such documents, and references 3 OHSiJSA:763800162.4 herein to the Bonds are qualified in their entirety by reference to the forms thereof, copies of allof which are available for inspection at the principal corporate trust office ofthe Trustee. Other Information Copies of documents referred to herein and information concerningthe Bonds are available from the Finance Director, City of Burlingame, 501 Primrose Road, Burlingame, California 94010-3997 telephone (650) 558-7221. The City may impose a charge for copying, mailing and handling. THE BONDS General The Bonds will be dated the date of delivery thereof and will be issued in fully registered form, without coupons, in the denominations of $5,000 or any integralmultiple thereof. The Bonds will be initially registered in the name of "Cede & Co.," as nominee of The Depository Trust Company, New York, New York ("DTC"), which has been appointed depository for the Bonds, and registered ownership may not thereafter be transferred except as provided in the Trust Agreement. See "APPENDIX F - BOOK-ENTRY ONLY SYSTEM" herein. Principal of and premium, if any, on the Bonds will be paid by the Trustee at maturity or redemption to DTC, which in turn will remit such principal and premium, if any, to its participants for subsequent disbursement to beneficial owners of the Bonds as described herein. See "APPENDIX F -BOOK-ENTRY ONLY SYSTEM" herein. Interest on the Bonds will be payable semiannually on January I and July l, commencing July 1,2016, to DTC in the same manner as described in the preceding sentence. Interest on the Bonds shall be computed on the basis of a 360-day year of twelve 30-day months. Redemption' Optional Redemption. The Bonds maturing on or before July l, 20- are not subject to redemption prior to their respective stated maturities. The Bonds maturing on or after July l, 20-are subject to redemption prior to their respective stated maturities, at the option of the Authority from lawfully available funds, in whole or in part on any date on or after July l, 20_ (in such order of maturity as shall be selected by the Trustee upon direction by the Authority and by lot within a maturity), at the following redemption prices (expressed as a percentage of the principal amount of the Bonds called for redemption) together with interest accrued thereon to the date fixed for redemption: Redemption Period (Dates Inclusive) Redemption Price Sinking Account Redemption.. The Bonds maturing on July 7,20- are subject to redemption prior to maturity in part, by lot, at the principal amount thereof plus accrued interest to the date fixed for redemption, without premium, from mandatory sinking account payments in the following amounts, commencing on July 1,20_according to the following schedule: - Preliminary, subject to change. 4 OHSUSA:763800162.4 Schedule of Mandatory Sinking Account Payments Bonds Maturing July 1,20_ Redemption Date (July 1) Principal Amount *Maturity Notice of Redemption. Notice of any redemption shall be mailed not less than 30 days nor more than 60 days prior to the date fixed for redemption to the registered owner of each Bond to be redeemed, in whole or in paft, at the address shown on the registration books maintained by the Trustee. Failure to give such notice by mail or any defect in such notice to any Bondholder shall not affect the validity of any proceedings for the redemption of any other Bond. If DTC or its nominee is the registered owner of any Bond to be redeemed, notice of redemption will be given to DTC or its nominee as the registered owner of such Bond. Any failure on the part of DTC or failure on the part of a nominee of a Beneficial Owner (having received notice from a DTC Participant or otherwise) to notifo the Beneficial Owner of any Bond to be redeemed shall not affect the validity of the redemption of such Bond. Cancellation of Notice. The Authority may, at its option, prior to the date fixed for redemption in any notice of redemption rescind and cancel such notice of redemption by Written Request to the Trustee and the Trustee shall mailnotice of such cancellation to the recipients of the notice of redemption being canceled. Effect of Notice of Redemption. If notice of redemption has been duly given as aforesaid and money for the payment of the redemption price of the Bonds called for redemption is held by the Trustee, then on the redemption date designated in such notice Bonds so called for redemption shall become due and payable, and from and after the date so designated interest on such Bonds shall cease to accrue, and the Owners of such Bonds shall have no rights in respect thereof except to receive payment of the redemption price thereof. All Bonds redeemed pursuant to the provisions of the Trust Agreement shall be canceled by the Trustee and shall be destroyed with a certificate of destruction furnished to the Authority upon its request and shall not be reissued. Book-Entry Only System The Depository Trust Company ("DTC"), New York, New York, will act as securities depository for the Bonds. The ownership of one fully registered Bond for each maturity set forth on the cover page hereof, in the aggregate principal amount of the Bonds maturing on that date, will be registered in the name of Cede & Co., as nominee of DTC. See "APPENDIX F - BOOK-ENTRY ONLY SYSTEM" for a description of DTC and the Book-Entry Only System. 5 OHSUSA:763800162.4 ESTIMATED SOURCES AND USES OF FUNDS The estimated sources and uses of funds with respect to the Bonds are as follows: BURLINGAME FINANCING AUTHORITY Storm Drainage Revenue Bonds, Series 2016 Estimated Sources and Uses of Funds Sources ofFunds Principal Amount of Bonds Net Original Issue IPremium/Discount] Total Sources Uses ofFunds Acquisition and Construction Fund Reserve Account Costs of Issuance (') Total Uses $9,890,000' $ $ $ ( | ) Includes Underwriter's Discount . Preliminary, subject to change 6 OHSUSA:763800162.4 DEBT SERVICE Set forth below are the annual principal, interest and total debt service requirements for the Bonds, assuming no redemptions: CITY OF BURLINGAMB Annual Debt Service Year ending July I Principal Interest Total 2016 2017 201 8 2019 2020 2021 2022 2023 2024 2025 2026 2021 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 203 8 Total $ 490,000 265,000 270,000 285,000 295,000 305,000 315,000 340,000 350,000 370,000 385,000 410,000 430,000 450,000 470,000 495,000 520,000 545,000 575,000 600,000 630,000 665,000 700.000 $10,160,000 $ 239,7s0 469,700 461,7 50 450,950 439,550 427,750 412,500 396,750 379,750 362,250 343,750 324,500 304,000 282,500 260,000 236,500 211,7 50 185,750 I 58,500 129,750 99,7 50 68,250 35.000 $6,680,700 $ 729,750 734,700 731 ,7 50 735,950 734,ss0 732,750 727,500 736,750 729,750 732,250 '128,750 734,500 734,000 732,500 730,000 731,500 731,750 730,750 733,500 729,750 729,',z50 733,250 73 5.000 $t 6,840,700 7 OHSUSA:763800162.4 SECURITY FOR THE BONDS Sources of Payment The Bonds are limited obligations of the Authority payable solely from Revenues, generally consisting of Installment Payments to be made by the City, and from amounts on deposit in certain funds and accounts held under the Trust Agreement. The lnstallment Payments securing the Bonds are special obligations of the City under the Installment Sale Agreement. There are currently $8,715,000 outstanding aggregate principal amount of installment payments under the 2010 Installment Sale Agreement and $9,945,000 outstanding aggregate principal amount of installment payments under the 2012 Installment Sale Agreement secured by a lien on System Revenues on a parity with the Installment Payments. Pledge of System Revenuesl Storm Drainage Fees The Installment Payments under the Installment Sale Agreement are secured by a pledge of the System Revenues. "system Revenues" are defined as all proceeds of the Storm Drainage Fee, the proceeds of the Refundable Credits and all gross income and revenue received by the City from the ownership and operation of the Storm Drainage System, determined in accordance with Generally Accepted Accounting Principles, including, without limiting the generality of the foregoing, (a) all other income, rents, rates, fees, connection fees, charges or other moneys derived from the Storm Drainage System, (b) the earnings on and income derived from the investment of such income, rents, rates, fees, charges or other moneys (including all investment earnings credited by the Trustee to the Revenue Fund), and (c) the proceeds derived by the City directly or indirectly from the sale, lease or other disposition of a part of the Storm Drainage System as permitted in the Installment Sale Agreement; provided, however, that the term "system Revenues" does not include customers' deposits or any other deposits subject to refund until such deposits have become the property of the City. The System Revenues consist primarily of the Storm Drainage Fees approved by a majority of the parcel owners in the City voting at a special election held on May 5, 2009. The Storm Drainage Fees are imposed on every parcel of properly in the City other than vacant, unimproved parcels and streets, highways, channels and canals. See "STORM DRAINAGE FEES AND SYSTEM." Additional Parity Obligations The Installment Sale Agreement provides that the City may at any time enter into obligations secured by a lien and charge upon the System Revenues equal to and on a parity lien and charge with the Installment Payments, provided: (a) Either - (l) as evidenced by a Certificate of the City, during any twelve (12) consecutive calendar months out of the immediately preceding eighteen (18) calendar month period, the System Revenues were at least equalto one hundred ten percent (l l0%) of the Maximum Annual Debt Service for all Outstanding Installment Payments and all Outstanding Parity Obligations plus the Parity Obligation proposed to be executed; or (2) as evidenced by a Certificate of the City, the projected System Revenues during the first Fiscal Year in which Debt Service on the Parity Obligation is payable (other than from Bond or Contract proceeds), is at least equalto one hundred ten percent (l l0%) of the Maximum Annual Debt Service for all Outstanding Installment Payments and all Outstanding Parity Obligations plus the Parity Obligation proposed to be executed; 8 OHSUSA:763800162.4 (b)The proceeds of such Parity Obligation proposed to be executed shall be used solely to finance or refinance (including reimbursement to the City of amounts advanced for such costs) one or more betterments or improvements to the System as designated by the City and to pay any incidental costs and expenses related thereto including the costs of issuance, execution or delivery of such proposed Parity Obligation; (c)There shall have been delivered to the City an Opinion of Counsel substantially to the effect that (l) the City has the right and power under applicable law to execute and deliver the Parity Obligation, and the Parity Obligation is a valid and binding obligation of the City, and (2) such Parity Obligation has been duly and validly authorized and issued in accordance herewith; and (d) The City is not in default under the Installment Sale Agreement. Notwithstanding the foregoing provisions, neither clause (a) nor clause (b) above shall limit the ability of the City to execute any Parity Obligations at any time to refund any Outstanding Installment Payments or Outstanding Parity Obligations if the annual Debt Service for each Fiscal Year during which such Parity Obligation is Outstanding will not be increased by reason of the issuance of such Parity Obligation. For purposes of calculating the Additional Parity Obligations test described in clause (a) above, the proceeds of the Refundable Credits received by the City will not be included in System Revenues and will be subtracted from the amount of interest payable in calculating Maximum Annual Debt Service. Reserve Account Simultaneously with the delivery of the Bonds, the Authority will cause to be deposited into the Reserve Account established under the Trust Agreement, Bond proceeds in an amount equal to the least of (i) the maximum annual Installment Payments, (ii) 125% of average annual Installment Payments, and (iii) l0% of the original principal amount of the Installment Payments provided, however, that such amount shall not exceed the amount permitted by the arbitrage bond regulations issued by the U.S. Department of the Treasury as such regulations are, at the time applicable and, in effect, without the imposition of yield restrictions. lf the amount on deposit in the Reserve Account is less than the Reserve Fund Requirement, the first payment of Installment Payments thereafter received from the City under the Installment Sale Agreement and not needed to pay the interest or principal payable to the Owners on the next Interest Payment Date or Principal Payment Date will be used to increase the amount on deposit in the Reserve Account to an amount which will be equal to the Reserve Account Requirement. Any amounts on deposit in the Reserve Account in excess of the Reserve Account Requirement will be deposited in the Revenue Fund. Collection of Storm Drainage Fees Pursuant to the Installment Sale Agreement, the City agrees to take all actions permitted by the Ordinance to collect System Revenues during each Fiscal Year throughthe203T-2038 Fiscal Year in an amount at least equal to one hundred ten percent (110%) of Debt Service for such Fiscal Year. The Ordinance provides that the maximum per square foot rate for impervious area, commencing in Fiscal Year 2010-201l, may be increased by an amount equal to the change in the Consumer Price Index for all Urban Consumers for the area including San Mateo County (the "CPI"), including all items as published by the U.S. Bureau of Labor Statistics as of March I of each year, notto exceed a maximum increase of 9 OHSUSA:763800162.4 two percent (2%) per year. The Storm Drainage Fee will not be deemed to be increased in the event the actual fee upon a parcel in any given year is higher due to an increase in the amount of the impervious area of the subject parcel. In any year in which the City Council does not change the rate per square foot of impervious area, the previously adopted fee will continue in full force and effect for the next fiscal year. The City Council will not be required to enact an inflation increase in each year but may accumulate the inflationary increases and enact the cumulative amount. Any increase in the Storm Drainage Fees above the increase permitted by the Ordinance would require approval by a majority vote of the properfy owners subject to the fee. See "STORM DRAINAGE FEES AND SYSTEM - Ordinance - Setting the Fee." For purposes of calculating the coverage test described in the preceding paragraph, the proceeds of the Refundable Credits received by the City will not be included in System Revenues and will be subtracted from the amount of interest payable in calculating Debt Service for each Fiscal Year. The City Council increased the storm drainage rate per square foot of impervious area for Fiscal Year 2010-l I by two percent (2Yo),Fiscal Year 2011-12 by one and one-half percent (15%) and by two percent (2%)for each of FiscalYears 2012-13,2013-14 and 2014-15. Flow of Funds The City covenants in the Installment Sale Agreement that the System Revenues, when and as received, will be held by the City in trust and will be deposited in the City's Storm Drainage Fund and shall be accounted for separately and apart from all other money, funds, accounts or other resources ofthe City. System Revenues shall be applied and transferred, as follows: ( 1) Debt Service Fund. On or prior to the fourth Business Day prior to each Interest Payment Date, the City shall transfer the respective Installment Payments to the Trustee for deposit in the Revenue Fund in an amount equal to the aggregate amount of interest and principal (including any sinking fund installments) due and payable on all Outstanding Bonds on the next succeeding Interest Payment Date' The City shall also, from such remaining moneys in the System Revenue Fund, pay to the party entitled thereto or transfer or cause to be transferred to any applicable debt service or other payment fund or account for any Parity Obligations, without preference or priority between transfers made pursuant to this sentence and the preceding sentence, and in the event of any insufficiency of such moneys ratably without any discrimination or preference, on the dates specified in the proceedings relating to such Parity Obligations, the sum or sums required to be paid or deposited in such debt service or other payment fund or aCcount with respect to principal, premium, if any, and interest on Parity Obligations in accordance with the terms of such Parity Obligations. (2) Reserve Account. After making the payments, allocations and transfers provided for in (l) above, if the balance in the applicable Reserve Account is less than the applicable Reserve Account Requirement, the deficiency shall be restored by transfers from the first moneys which become available in the Storm Drainage Fund. The City shall also, from such remaining moneys in the System Revenue Fund, transfer or cause to be transferred to any applicable reserve fund or account for any Parity Obligations for which a separate reserye has been funded without preference or priority beFveen transfers made pursuant to this sentence and the preceding sentence, and in the event of any insufficiency of such moneys ratably without any discrimination or preference, the sum or sums, if any, equal to the amount required to be deposited therein in accordance with the terms of such Parity Obligations. (3) Surplus. After making the foregoing deposits and transfers hereinabove required to be made, or, if sooner, at such time as amounts remaining on deposit in the System Revenue Fund shall be sufficient to make the remaining transfers hereinabove required to be made in the next 12 months with OHSUSA:763800162.4 l0 respect to Installment Payments and Parity Obligations, the City may apply any remaining money in the System Revenue Fund for any purpose permitted pursuant to the Ordinance. The City shall distribute System Revenues available for Outstanding Installment Payments and debt service on all Outstanding Parity Obligations on a pro rata basis without regard to whether each such Parity Obligations has a funded debt service reserve or a surety bond or other similar funding instrument. Limited Obligations The Bonds shall not constitute a debt or liability of the City, State of California or of any political subdivision thereof. The Authority shall be obligated to pay the principal of the Bonds, and the interest thereon, only from the Revenues described above, and neither the faith and credit nor the taxing power of the State of California or of any political subdivision thereof is pledged to the payment of the principal of or the interest on the Bonds. The issuance of the Bonds shall not directly, indirectly or contingently obligate the State of California or any political subdivision thereof to levy or pledge any form of taxation. The Authority has no taxing power. STORM DRAINAGE FEES AND SYSTEM General The City's Storm Drainage System (the "System") was constructed more than 80 years ago and is deteriorating. The maintenance costs of the System are paid from the general fund of the City. The System's capacity is inadequate and the City is subject to flooding and sewer infiltration during seasonal storms. Pursuant to the authority set forth in Article XIIID of the California Constitution ("Proposition 218"), Government Code Sections 53750 and following, and Health and Safety Code Section 5471 and following, the City enacted the Storm Drainage Fee for the purpose of improving, upgrading, and maintaining the storm drainage system, reducing pollutants flowing into Burlingame's creeks and the San Francisco Bay, preventing street flooding that impedes residents and police/fire emergency access, improving local drainage, and better assuring that the System serves the needs of its residents. The Storm Drainage Fee is a property-related fee levied on each parcel of property in the City that drains into the Storm Drainage System (i.e., all parcels other than vacant, unimproved parcels and streets, highways, channels and canals), including parcels owned by public entities. The Storm Drainage Fee is levied on 8,624 parcels of property and is currently calculated at 4.698 cents per square foot of impervious area. See "STORM DRAINAGB FEES AND SYSTEM - Ordinance - Computing the Fee" for details regarding the calculation of the fee. The Storm Drainage Fee was approved by a majority of the property owners voting on the enactment of the fee at a special election held on May 5, 2009. The Storm Drainage Fee is collected on the San Mateo County tax roll in the same manner, by the same persons, and at the same time as, the general property taxes of the City. The Storm Drainage Fee is included in the Teeter Plan. See "APPENDIX A - CITY OF BURLINGAME FINANCIAL AND DEMOGRAPHIC INFORMATION - Property Taxes" for additional information regarding the process for collecting property taxes and the Teeter Plan. Additionally, the collection of Storm Drainage Fees pursuant to the Installment Sale Agreement was included in a court validation action. See ..VALIDATION." For a description of the improvements to the Storm Drainage System to be financed with the Storm Drainage Fee, see "STORM DRAINAGE SYSTEM IMPROVEMENT PROGRAM." OHSUSA:763800162.4 11 Process for Establishing the Storm Drainage Fee The Storm Drainage Fee is a property-related fee under Proposition 218, and the City imposed the fee pursuant to the requirements and procedures contained in Proposition 21 8. As part of the process for imposing the fee, the City adopted a resolution on February 1,2008, scheduling a protest hearing for January 20, 2OO9 and authorizing procedures for the protest hearing. A notice of public hearing was sent to each record owner of parcels in the City to which the fee would apply at least 45 days prior to the hearing. On January 20, 2009, the City Council held the protest hearing. The City did not receive a majority protest. Following the protest hearing, the City adopted a resolution establishing procedures for conducting an election. Among other things, the resolution called for the submittal of the Storm Drainage Fee to the record owners of each parcel to which the Storm Drainage Fee would apply pursuant to a mailed-ballot election to be held on May 5,2009. On January 20,2009, the City also enacted an ordinance administering the Storm Drainage Fee, entitled "Ordinance of the City of Burlingame Adding Chapter 4.30 to the Burlingame Municipal Code to Administer A Storm Drainage Fee" (the "Ordinance"). The Ordinance provided that the Storm Drainage Fee would not be imposed until approved by the majority of eligible properfy-owner voters as required by Proposition 218. For a description of the Ordinance, see "STORM DRAINAGE FEES AND SYSTEM - Ordinance." At the special election, the proposed Storm Drainage Fee was approved by 63.41% of the property-owners voting on the enactment of the Storm Drainage Fee, and the Ordinance was codified as Chapter 4.30 of the City of Burlingame Municipal Code. Engineer's Report In connection with establishing the Storm Drainage Fee, an "Engineer's Report for the City of Burlingame Storm Drainage Fee dated November 20,2008" (the "Engineer's Report") was prepared for the City. Among other things, the Engineer's Report established the fee rate structure using a "cost of service" approach. This "cost of service" approach to rate-setting was utilized so that each property owner would pay a rate proportional to its "fair share" of the cost of the System. Fee rates show a clear nexus between the amount of the rate charged and each parcel's contribution to the System, which is directly proportional to the impervious area of the property. The text of the Engineer's Report, without the accompanying exhibits, is attached hereto as ..APPENDIX B _ ENGINEER'S REPORT FOR THE CITY OF BURLINGAME'S STORM DRAINAGE FBE." Ordinance The following is a summary of the Ordinance imposing the Storm Drainage Fees. Computing the Fee. The Storm Drainage Fee is levied upon each parcel of properfy that drains into the System. The amount of the Storm Drainage Fee for each individual parcel is computed as follows: Parcel square footage is multiplied by the percentage of impervious area on the parcel. The resulting number is multiplied by the per square foot impervious area rate in order to calculate the dollar fee for the fiscal year. The rate will not exceed the maximum rate established by the voters, per square foot of impervious area (subject to increase as described below under " - Setting the Fee"). When the impervious area of a parcel is increased or decreased, the annual fee for the parcel will be adjusted for the OHSUSA:763800162.4 t2 fiscal year next succeeding the change in impervious area. The term impervious area means the non- natural state or surface of a parcel which acts as a barrier that prevents the majority of storm water from infiltrating into the ground below, including as examples but not limited to concrete, asphalt pavement or concrete paver walkways, patios or driveways; playing surfaces such as tennis courts or basketball courts; pools and pool decks; rooftops; tool sheds; carports; andlor patio covers. The fee for each condominium will be based on the individual condominium's percentage of ownership interest as shown on the assessor's roll; and if not shown are deemed to be equal ownership percentages, unless proof is submitted otherwise. Vacant, unimproved parcels are still in their natural states and do not contribute any additional runoff to burden the City's storm drain system. Therefore, the storm drain user fee is not applicable to these parcels. When a vacant parcel that is not subject to the Storm Drainage Fee adds impervious area, it will be required to pay a storm drainage fee based on its impervious area. Streets and highways, channels, and canals are exempt from the storm drainage fee as part of the storm system. Setting the Fee. The City Council, following a public hearing, determined the initial storm drainage fee. In no event will the square footage rate for impervious area be increased beyond the initial rate without further approval by a majority vote of the properly owners subject to the Storm Drainage Fee; provided, however, that, without approval by a majority vote of the property owners subject to the Storm Drainage Fee, the maximum per square foot rate for impervious area, commencing Fiscal Year 2010-2011, may be increased by an amount equal to the change in the Consumer Price Index for all Urban Consumers for the area including San Mateo County (the "CPI"), including all items as published by the U.S. Bureau of Labor Statistics as of March 1 of each year, not to exceed a maximum increase of two percent (2%) per year. The Storm Drainage Fee will not be deemed to be increased in the event the actual fee upon a parcel in any given year is higher due to an increase in the amount of the impervious area of the subject parcel, In any year in which the City Councildoes not change the rate per square foot of imperviou.-ur.u, the previously adopted fee will continue in full force and effect for the next fiscal year. The City Council will not be required to enact an inflation increase in each year but may accumulate the inflationary increases and enact the cumulative amount. Pursuant to the Ordinance, the City Council increased the rate per square foot of impervious area for Fiscal Year 2010-ll by two percent (2o/o),Fiscal Year 20ll-12 by one and one-half percent (15%) and by two percent (2%)for each of FiscalYears 2012-13,2013-14 and 2014-15. Appeals by Prope(y Owners. If a properfy owner disagrees with the calculation of his or her Storm Drainage Fee, the property owner may appeal the calculation within 20 calendar days after the properly o*n.. receives notice that the fee will be increased/decreased. The property owner must provide written documentation to the City's Public Works Department explaining the reason why the Storm Drain Fee is not correct. The property owner will be notified in writing within three weeks after sufficient documentation has been submitted whether or not the fee will be changed. The property owner can appeal the decision of Public Works to the City Council if the amount remaining in dispute after the pu'btic Works decision exceeds $100 annually. The appeal must be made in writing and filed with the City Clerk not later than ten calendar days from the date of mailing of the Public Works Department deCision. The City Clerk will fix a time and place for hearing the appeal and shall give notice in writing to the appellant. The City Council's determination on the appeal shall be final. As of the date hereof, no appeals of the Storm Drainage Fee have been filed. Collection of the Fee.The Storrn Drainage Fee will be collected on the San Mateo County tax roll in the same manner, by the same persons, and at the same time as, together with and not separately from, the general properfy taxes of the City; provided, however, in any year the City Council may, by resolution, provide for an alternative procedure for collection of the Storm Drainage Fee. For any fiscal OHSUSA:763800162.4 l3 year in which the Storm Drainage Fee is authorized but not collected on the tax roll, the City may collect all or a portion of the fee for such year on the tax roll in the following fiscalyear or years. Expiration of Fee. The Storm Drainage Fee established by the Ordinance will remain in effect until 2038. Lien The Storm Drainage Fee is collected in the same manner and at the same time as general taxes, and subject to the same delinquency penalties as general properfy taxes. The Storm Drainage Fee is secured by a lien against the parcel against which the fee has been imposed, and all laws applicable to the levy, collection and enforcement of general property taxes of the City, including but not limited to, those pertaining to matters of delinquency, correction, cancellation, refund or redemption, are applicable to the Storm Drainage Fees. See "APPENDIX A - CITY OF BURLINGAME FINANCIAL AND DEMOGRAPHIC INFORMATION - Property Taxes" for a description of the property tax collection procedures. Citizens Oversight Committee The Cify Council has appointed a citizens committee to assure that the Storm Drainage Fees are used for storm drainage purposes. The committee reviews and provides advisory input to the Public Works Director in the preparation of the budget expenditures, and any amendments thereto, from the storm drainage fund, including project priorities. Fees Paid by Largest Payers For Fiscal Year2015-16, the Storm Drainage Fees were levied on8,624 parcels of property, the fee totaled $2,715,811 and the average fee per parcel was $314.91, and for Fiscal Year 2014'15, the Storm Drainage Fees totaled 52,659,740 and the average fee per parcel was $308.52. The following table sets forth the fees paid by the largest fee payers for Fiscal Year 2014-15. OHSUSA:763800162.4 14 CITY OF BURLINGAME Fees Paid By Largest Fee Payers Fiscal Year Ending 2015 Entitv MILLS PENTNSULA PAULS ROLLINS ROAD LLC SAN MATEO UNION HIGH SCH DIST STATE OF CALIFORNIA EQR,NORTHPARK LP CITY OF BURLINGAME SISTERS OF MERCY MERCY HIGH SCHOOL BURLINGAME HMC BURLINGAME HOTEL LLC HMH SFO INC BAY PARK PLAZA ASSOCIATES VANGUARD REAL ESTATE HOLDINGS LLC STATE OF CALIFORNIA SEVEN SPRINGS L P PUBLIC STORAGE INC NEW TOWN HOTEL INC CALIF TEACHERS ASSOCIATION CRP BAHP SFO I633 BAYSHORE ASSOCIATES LLC GUITTARD CHOCOLATE CO ONE BAY PLAZA ASSOC LLC CITY OF BURLINGAME CITY PARK 350 BEACH ROAD LLC SANDRA & JEFFREY DAVIS LP HARBOR VIEW HOTELS INC Total Top l0 Fee Payers Total Top 25 Fee Payers Total Parcels (8,624) Storm Drain Fee 7o of Total $36,344.00 $25,108.00 $22,743.00 $ 19,745.00 $ 19,284.00 $ 18,044.00 $ 17,746.00 $ 16,848.00 $ 16,847.00 $ 16,83 I .00 $16,672.00 $ 1 5,621 .00 $ 13,537.00 $ 12,178.00 $ 10,710.00 $ 10,537.00 s 10,104.00 $ 9,282.00 $ 8,792.00 $ 8,725.00 $ 8,715.00 $ 8,456.00 $ 8,138.00 $ 7,431.00 $ 7.295.00 13% 0.9% 0.8% 0.7% 0.7% 0.7% 0.7% 0.6% 0.6% 0.6% 0.6% 0.6% 0.5% 0.4% 0A% 0.4% 0.4% 0.3% 03% 0.3% 0.3% 0.3% 03% 0.3% 0.3% $209,520 $365,713 7.71% 13.47% OHSUSA:763800162.4 l5 Historical and Projected Debt Service Coverage The following table sets forth the historical and projected debt service coverage for the Bonds CITY OF BURLINGAME Projected Debt Service Coverage Bond Year 2016 2017 201 8 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 Total Storm Drain Fees (l) $ 2,722,688 2.777,142 2,832,685 2,889,339 2,947,125 3.006.068 3,066, r 89 3,12'7,5t3 3, I 90,063 3,253,865 3,318.942 3,385,321 3,453,027 3,522,088 3,s92,529 3,664.380 3.73'7,668 3.812.421 3.888,669 3.966.443 4.045.'7',|2 4.126.687 4.209.221 $78,535,844 2010 Bond Debt Service (2) $ 606,734 605,234 605,634 608, r 34 604,884 603,884 603,909 607,29s 605,090 607,492 604,302 604,394 608,838 607,4t7 605,349 601,632 608,631 608,747 601,979 606,328 608,792 605,t52 2012 Bond Debt Service $ 626,344 625,144 623,544 62t,544 624,144 626,144 629,144 621,144 627,644 622,894 627,644 626,488 6t9,525 62t,325 627,675 623,425 623,875 623,875 622,t38 624,913 622,038 623,675 2016 Bond Debt Service $ 7?9,750 734,700 731,750 735,950 734,550 732,750 727,500 736,750 729,750 732,250 728,750 734,500 734,000 732,500 730,000 73 1,500 731,750 730,750 733,500 729,750 729,'750 133,250 Total Net Debt Service $ 1,962,828 1,965,078 1,960,928 1,965,628 1,963,578 1,962,778 1,960,553 I,965,189 1,962,484 1,962,636 t,960,696 1,96s,382 t,962,363 1,961,242 1,963,024 1,962,557 1,964,256 t,963,372 1,963,617 r ,960,991 r.960,580 1,962,017 Projected Debt Service Coverage 1.39o/o l.4l 1.44 t.47 r.50 1.53 1.56 1.59 r.63 r.66 1.69 1.72 1.76 1.80 1.83 1.87 1.90 1.94 1.98 2.02 2.06 2.10 $13,341,85t s13,734,282 $16,105,700 $43'l8l'833 rBused on Storm Drainage Fees collected through no change in impervious surface area' (2) Debt service net of Refundable Credits Fiscal Year 2014-15 and projected to increase at a rale of 2.0oh thereafter. Assumes OHSUSA:763800162.4 l6 STORM DRAINAGE SYSTEM IMPROVEMENT PROGRAM The Storm Drainage Fees will be applied to (i) improve, upgrade and maintain the City's deteriorated 80 year old storm drain system; (ii) protect water quality; (iii) reduce pollutants flowing into creeks and the San Francisco Bay; (iv) prevent street flooding that can impede residents and emergency access, and (v) improve local drainage. A comprehensive assessment of the Storm Drain System was performed to determine deficiencies and future requirements of the Storm Drainage System. The assessment identified five major watershed areas, with a list of recommended improvements. The City anticipates that the improvements will be funded both on a pay-as-you-go basis, with the proceeds of Series 2010 Bonds, the Series 2012 Bonds and with the proceeds of the Bonds. It is estimated that the costs of improvements financed with the proceeds of Bonds will be approximately $-. The following improvements to the Storm Drainage System are currently under consideration: o Burlingame Creek Bypass and Improvements; o Ralston Creek Improvements; o Rollins Road/US l0l - Crossing; o Rollins Road Pump Station Improvements; o Rollins Area Collection System Improvements; o Terrace Creek Improvements; o El Portal, Trousdale and Gilbreth Creek repairs; . Citywide Neighborhood Storm Drainage Improvements; o Bridge and Culvert Facilities Improvements; and . Upgrades to existing storm water pump stations' RISK FACTORS payment of principal of and interest on the Bonds depends almost entirely upon the collection of the Storm brainage Fee. -Some of the events which could affect the System Revenues, as well as issues that could affect the availability of moneys in any reserves, are set forth below. The following discussion of risks is not meant to be an eihaustive iirt of the risks associated with the purchase of the Bonds and the order in which the risks are discussed does not necessarily reflect the relative importance of the various risks. Limited Obligations The Bonds are limited obligations of the Authority payable solely from Revenues, generally consisting of the Installment Payments. The obligations of the City to make Installment Payments are not payable fiom, or secured by a legal or equitable pledge or charge or lien upon, any property of the City or any of its income o. ,"..iptr, "*."pt the System Revenues. The obligation of the City to pay the Initallment payments from System Revenues does not constitute an obligation of the City to levy or pledge any form of taxation or for which the City has levied or pledged any form of taxation. OHSUSA:763800162.4 17 The City is obligated under Installment Sale Agreement to make payments solely from the System Revenues. There is no assurance that the City can succeed in collecting the Storm Drainage Fee such that the System Revenues in the future will be sufficient for that purpose. See also "Right to Vote on Taxes Act" below. Limited Recourse on Default Failure by the City to pay Installment Payments constitutes an event of default under the Installment Sale Agreement and the Trustee is permitted to pursue remedies at law or in equity to enforce the City's obligation to make such payments. The Trustee has no right to accelerate the total unpaid principal amount of the Installment Payments. Bankruptcy The rights and remedies provided in the Trust Agreement and the Installment Sale Agreement may be limited by and are subject to the provisions of federal bankruptcy laws, to other laws or equitable principles that may affect the enforcement of creditors' rights, to the exercise of judicial discretion in appropriate cases and to limitations on legal remedies against public agencies in the State of California. The various opinions of counsel to be delivered with respect to the Bonds and the Trust Agreement, including the opinion of Bond Counsel, will be similarly qualified. If the City were to file a petition under Chapter 9 of the Bankruptcy Code, the Owners of the Bonds and the Trustee could be prohibited from taking any steps to enforce tieir rights under the Trust Agreement and/or Installment Sale Agreement. In the eient the City fails to comply with its covenants under the Installment Sale Agreement or fails to pay the Installment payments, there ian be no assurance of the availability of remedies adequate to protect the interest of the holders of the Bonds. See "APPENDIX E - FORM OF LEGAL OPINION". Tax Exemption of the Bonds The City and Authority have covenanted in the Installment Sale Agreement and Trust Agreement respectively thai they will take all actions necessary to assure the exclusion of interest on the Bonds from the gross income olthe Beneficial Owners of the Bonds for federal income tax purposes. If the City or Auti'ority fail to comply with the foregoing tax covenant, the interest on by the Bonds may be includable in the gross income of itre Beneficial Owners thereof for federal tax purposes. See "TAX MATTERS" herein. Additional Obligations The lnstallment Sale Agreement permits the issuance of Parity Obligations secured by System Revenues on a parity basis and/or a subordinate basis to the Installment Payments. See "STORM DRAINAGE SYSTEM IMPROVEMENT PROGRAM." Such additionallnstallment Payments would increase debt service payable from System Revenues and could adversely affect debt service coverage with respect to the Insiallment Payments. In such event, however, the covenant to collect System Revenues described herein will remain in effect. Right to Vote on Taxes Act General. On Novemb er 5, 1996, the voters of the State approved Proposition 218, the so-called ,,Right to Vote on Taxes Act." Proposition 2l 8 adds Articles XIIIC and XIIID to the State Constitution, wtrictr affect the ability of local governments to levy and collect both existing and future taxes, assessments, fees and.hurg"r. Proposition 218, which became effective on November 6,1996 (although OHSUSA:761800162.4 18 application of some of its provisions was deferred until July 1,1997) changes, among other things, the procedure for the imposition of new or increased fees or charges. Article XIII C. Article XIII C requires that all new local taxes be submitted to the electorate for approval before such taxes become effective. General taxes, imposed for general governmental purposes oiit . City, require a majority vote, and special taxes, imposed for specific purposes, require a two-thirds vote. Under Proposition 218, the City can only continue to collect taxes that were imposed after January l, 1995 if they were approved by the voters by November 6, 1998' Article XIII D. Under Article XIIID, revenues derived from a "fee" or "charge" (defined as "any levy other than an acl valorem tax, a special tax or an assessment, imposed by a local government upon a parcel or upon a person merely as an incident of property ownership, including user fees or charges for a properly reiated service") may not exceed the funds required to provide the "property-related seryice" and ,nuy noi be used for any purpose other than that for which the fee or charge was imposed. Further, (i) the amount of a ,ofee,' or ;'charge" may not exceed the proportional cost of the service attributable to the parcel, (ii) no "fee" or "charge" may be imposed for a service unless that service is actually used by, or is immediately available to, thi owner of the property in question and (iii) no "fee" or "charge" may be imposed for general governmental services where the service is "available to the public at large in substantially the same manner as it is to the property owners." All new and existing property-related fees and charges must conform to specific requirements and prohibitions set forth in the Article. Further' before any properry-related fee or charge may be imposed or increased, written notice must be given to the record owner of each parcel of land uffe"t"d by such fee or charge. The City must then hold a hearing upon the proposed imposition or increase, and if written protests against the proposal are presented by a majority of tire o*n"r, of the identified parcels, the City may not impose or increase the fee or charge. Moreouer, except for fees or charges foi water, wastewater and refuse collection services (or fees for electrical and gas service, which are exempt from Proposition 218), no property-related fee or charge may be imposed oiincreased without majority approval by the property owners subjecl to the fee or charge or, at the option ofthe local agency, twothirds approval by those residing in the affected area and voting at the election. The Storm Drainage Fees are property-related fees conforming to the requirements of the Article, and were approved by a irajority of the parcel owners in the City voting on the fee. See "STORM DRAINAGE FEES AND SYSTEM." Repeal or Reduction of Existing Rates. Under Article XIIIC, Section 3, the initiative power is expressly extended to matters of local taxes, assessments, fees and charges. This means that the voters of the City'could, by future initiative, repeal or reduce existing local taxes, assessments, fees and charges. This power is arguably limited in the iase of levies directly pledged to bonded indebtedness, such as the Storm Drainage Fees securing the Installment Payments' Legislation adopted by the State Legislature in 1997 provides that Article XIIIC shall not be construed to mean that any owner or beneficial owner of a municipal security assumes the risk of, or consents to, any initiative measure which would constitute an impairment of contractual rights under the Contracts Clause of the United States Constitution. However, there can be no assurance thatthe voters of the City will not, in the future, approve an initiative which attempts to reduce System Revenues. Termination of Teeter Plan The Storm Drainage Fees are included in the Teeter Plan. See "APPENDIX A - CITY OF BURLINGAME FINANtTAT, AND DEMOGRAPHIC INFORMATION - TECTET PIAN.,' ThE County of San Mateo Board of Supervisors is permitted, however, to discontinue the Teeter Plan with OHSUSA:763800162.4 19 respect to the Storm Drainage Fees and assessments and no assurance can be given that the Teeter Plan will continue with respect to the Storm Drainage Fees. THE AUTHORITY Organization and Mem bership The Authority was formed pursuant to the provisions of Articles l, 2 and 4 of Chapter 5 of Division 7 of Title 1 of the Govemment Code of the State of California (the "Act") and the Joint Exercise of Powers Agreement, dated as of May l, 1995 (the "JPA Agreement"), by and between the City and the Redevelopmint Agency of the City of Burlingame (the "Agency"). The Authority was formed by and between the City and the Agency to assist in the financing of public capital improvements. The Authority functions as a public entity, separate and apart from the City and the Agency, and is administered by a five-member governing board consisting of the members of the City Council. The City Aftorney ,.iuer as counsel to the Authority. The Authority has no employees and all staff work is performed by the City or consultants. Powers Under the JPA Agreement, the Authority is empowered to assist in the financing of public capital improvements through thi issuance of bonds in accordance with the Act. To exercise its powers, the auihority is authorized, in its own name, to do all necessary acts, including but not limited to making and entering into contracts; employing agents and employees; and to sue or be sued in its own name' NO LITIGATION At the time of delivery of and payment for the Bonds, officials of the City and Authority will certifu that to the best of such officials' knowledge there is no action, suit, litigation, inquiry or invesiigation before or by any court, governmental agency, public board or body served or threatened, against-the Authority or City, respectively, or the titles of their officers to their respective offices or sJeking to prohibit, iestrain or enjoin the sale, execution or delivery of the Bonds or the payments of the Installmeni payments or challenging the validity or enforceability of the Installment Sale Agreement or the Trust Agreement. RATING Standard & Poor's Ratings Services, a Standard & Poor's Financial Services LLC business (,,S&p") has assigned its municipal bond rating of "-" to the Bonds. Such rating reflects only the view of srch-organizaiion, and an explanation of the significance of such rating may be obtained from the rating agen-cy at Standard & Poor's Ratings Services, 55 Water Street, New York, New York 10041. The City-anJ the Authority furnished to the rating agency certain information and materials concerning the gonds and the City. Generally, the rating agencies base their ratings on such information and materials and on investigations, studies and assumptions made by the rating agencies. There is no assurance that such ratings will continue for any given period of time or that such ratings will not be revised downward or withdrawn entirely by the respective rating agency, if in its judgment circumstances so warrant' Any such downward revision or withdrawal may have an adverse effect on the market price of the Bonds. OHSUSA:763 800162.4 20 TAX MATTERS In the opinion of Orrick, Herringlon & Sutcliffe LLP ("Bond Counsel"), based upon an analysis of existing laws, regulations, rulings and court decisions, and assuming, among other matters, the accuracy of certain representations and compliance with certain covenants, interest on the Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 (the "Code") and is exempt from State of California personal income taxes. Bond Counsel is of the further opinion that interest on the Bonds is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes, although Bond Counsel observes that such interest is included in adjusted current earnings when calculating corporate alternative minimum taxable income. Bond Counsel expects to deliver an opinion at the time of issuance of the Bonds substantially in the form set forth in APPENDIX E hereto. To the extent the issue price of any maturity of the Bonds is less than the amount to be paid at maturity of such Bonds (excluding amounts stated to be interest and payable at least annually over the term oi such Bonds), the difference constitutes "original issue discount," the accrual of which, to the extent properly allocable to each Beneficial Owner thereof, is treated as interest on the Bonds which is excludid i.orn gross income for federal income tax purposes and State of California personal income taxes. For this purpose, the issue price of a particular maturity of the Bonds is the first price at which a substantialurount of such maturity of the Bonds is sold to the public (excluding bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers). The original issue discount with respect to any maturity of the Bonds accrues daily over the term to maturity of such Bonds on the basis of a constant interest rate compounded semiannually (with straight- line intlrpolations between compounding dates). The accruing original issue discount is added to the adjusted basis of such Bonds to determine taxable gain or loss upon disposition (including sale, reiemption, or payment on maturity) of such Bonds. Beneficial Owners of the Bonds should consult their own tax advisois with respect to the tax consequences of ownership of Bonds with original issue discount, including the treatment oi Beneficial Owners who do not purchase such Bonds in the original offering to the public at the first price at which a substantial amount of such Bonds is sold to the public. Bonds purchased, whether at original issuance or otherwise, for an amount higher than their principal amount payable at maturity (or, in some cases, at their earlier call date) ("Premium Bonds") will te treated as having amortizable bond premium. No deduction is allowable for the amortizable bond premium in the casi of bonds, like the Premium Bonds, the interest on which is excluded from gross in.o*" for federal income tax purposes. However, the amount of tax-exempt interest received, and a Beneficial Owner's basis in a Premium Bond, will be reduced by the amount of amortizable bond premium properly allocable to such Beneficial Owner. Beneficial Owners of Premium Bonds should tonsult their own tax advisors with respect to the proper treatment of amortizable bond premium in their particular circumstances. The Code imposes various restrictions, conditions and requirements relating to the exclusion from gross income for fediral income tax purposes of interest on obligations such as the Bonds' The City and Authority have made ceftain representations and covenanted to comply with certain restrictions, conditions and requirements designed to ensure that interest on the Bonds will not be included in federal gross income. Inaccuracy of these representations or failure to comply with these covenants may result in interest on the Bonds being included in gross income for federal income tax purposes, possibly from the date of original issuance of the Bonds. The opinion of Bond Counsel assumes the accuracy of these representations and compliance with these covenants. Bond Counsel has not undertaken to determine (or to inform any person) whether any actions taken (or not taken), or events occurring (or not occurring), or any other matters coming to Bond Counsel's attention after the date of issuance of the Bonds may adversely affect the value of, or the tax status of interest on, the Bonds. Accordingly, the opinion of Bond OHSUSA:763800162.4 2l Counsel is not intended to, and may not, be relied upon in connection with any such actions, events or matters Although Bond Counsel is of the opinion that interest on the Bonds is excluded from gross income for federal income tax purposes and is exempt from State of California personal income taxes, the ownership or disposition of, or the accrual or receipt of amounts treated as interest on, the Bonds may otherwise affect a Beneficial Owner's federal, state or local tax liability. The nature and extent of these other tax consequences depends upon the particular tax status of the Beneficial Owner or the Beneficial Owner's other items of income or deduction. Bond Counsel expresses no opinion regarding any such other tax consequences. Current and future legislative proposals, if enacted into law, clarification of the Code or court decisions may cause interest on the Bonds to be subject, directly or indirectly, in whole or in part, to federal income taxation or to be subject to or exempted from state income taxation, or otherwise prevent Beneficial Owners from realizing the full current benefit of the tax status of such interest. For example, the Obama Administration's budget proposals in recent years have proposed legislation that would limit the exclusion from gross income of interest on the Bonds to some extent for high income individuals. The introduction or enactment of any such legislative proposals or clarification of the Code or court decisions may also affect, perhaps significantly, the market price for, or marketability of, the Bonds. prospective purchasers of the Bonds should consult their own tax advisors regarding the potential impact of any pending or proposed federal or state tax legislation, regulations or litigation, as to which Bond Counsel is expected to express no opinion. The opinion of Bond Counsel is based on current legal authority, covers certain matters not directly addressed by such authorities, and represents Bond Counsel's judgment as to the proper treatment of the Bonds for federal income tax purposes. It is not binding on the Internal Revenue Service (*IRS") or the courts. Furthermore, Bond Counsel cannot give and has not given any opinion or assurance about the future activities of the City, or about the effect of future changes in the Code, the applicable regulations, the interpretation thereof or the enforcement thereof by the IRS. The City has covenanted, however, to comply with the requirements of the Code' Bond Counsel's engagement with respect to the Bonds ends with the issuance of the Bonds, and, unless separately engaged,- dond Counsel ii not obligated to defend the Authority, the City or the Beneficial Owners rJguiAing the tax-exempt status of the Bonds in the event of an audit examination by the IRS. Under currint pr6cedures, partiis other than the City and the Authority and their appointed counsel, including the Blneficial Owners, would have little, if any, right to participate in the audit examination pro."rr. Moreover, because achieving judicial review in connection with an audit examination of tax-exempt bonds is difficult, obtaining an independent review of IRS positions with which the Authority or the City legitimately disagrees, may not be practicable. Any action of the IRS, including but not limited to seiection of the Bonds for audit, or the course or result of such audit, or an audit of bonds presenting similar tax issues may affect the market price for, or the. marketability of, the Bonds, and may cause thi Authority, the City or the Beneficial Owners to incur significant expense' VALIDATION On April 20, 2OlO, the City, acting pursuant to the provisions of Sections 860 et seq' of the California Code of Civil procedure, filed a complaint in the Superior Court of the County of San Mateo (Case No. ClV4g4233). On June29,20l0, the court entered a default judgment to the effect, among other things, that (i) the Storm Drainage Fees constitute a fee that is validly established, calculated, levied OHSUSA:763800162.4 22 and collected, (ii) the use of Storm Drainage Fee revenues to make Installment Payments is a valid use of the Storm Drainage Fee revenues, and (iii) the Bonds, the Trust Agreement and the Installment Sale Agreement are valid, legal and binding obligations. The last day to file an appeal with respect to the judgment was July 29,2010. No appealwas filed with respect to the judgment. In issuing its opinion as to the validity of the Bonds, Trust Agreement and Installment Sale Agreement, Bond Counsel has relied upon the entry of the foregoing default judgment. LEGAL MATTERS The validity of the Bonds and certain other legal matters are subject to the approving opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel. Certain legal matters will be passed upon for the Authority and the City by the City Attorney. Certain matters will be passed upon for the Underwriter by Stradling, Yocca Carlson & Rauth, A Professional Corporation. The proposed form of opinion of Bond Counsel is set forth in APPENDIX E hereto, Bond Counsel undertakes no responsibility for the accuracy, completeness or fairness of this Official Statement' UNDERWRITING The underwriter of the Bonds is Stifel, Nicolaus & Company, [nc. (the "Underwriter"). Pursuant to a Purchase Agreement between the City and the Underwriter, the Bonds are being purchased by the Underwriter at a purchase price equal to the principal amount of Bonds being issued [plus/less] a net originalissue[premium/discount]of$-andlessanUnderwriter,sdiscountof$-'The Puichase Agreement provides that the Underwriter will purchase all of the Bonds if any are purchased, the obligation to make such purchase, if made, being subject to certain terms and conditions set fofth in the Purchase Agreement, the approval of certain legal matters by counsel, and ceftain other conditions. The Underwriter may offer and sell Bonds to certain dealers and others at a price other than the offering price. The offering price may be changed from time to time by the Underwriter. CONTINUING DISCLOSURE The City has covenanted for the benefit of Bond Owners and beneficial owners of the Bonds to provide certain financial information and operating data relating to the City by not later than seven months following the end of the City's fiscal year (currently ending June 30) (the "Annual Report"), commencing with the report for the fiscal year June 30, 2015, and to provide notices of the occurrence of certain enumerated events, if material. The Annual Report and the notices of material events will be filed by the City or by the Trustee on behalf of the City with the Municipal Securities Rulemaking Board through thi Electronic Municipal Access (EMMA) System. The specific nature of the information to be contained in the Annual Report or the notices of material events is summarized below under the caption ..APPBNDIX D - FORM OF CONTINUING DISCLOSURE CERTIFICATE.', ThESC COVENANTS have been made in order to assist the Underwriters in complying with S.E.C. Rule 15c2-12(b)(5). The City has not failed during the previous five years to comply in all material respects with any previous undertaking under such Rule. ADDITIONAL INFORMATION References made herein to certain documents and reports are brief summaries thereof which do not purport to be complete or definitive, and reference is made to such documents and reports for full and complete statements of the contents thereof. oHSUSA:763800162.4 23 Any statements in this Official Statement involving matters of opinion, whether or not expressly so stated, are intended as such and not as representations of fact. This Official Statement is not to be construed as a contract or agreement between the Authority and the purchasers or the Owners of any of the Bonds. The execution and delivery of this Official Statement has been duly authorizedby the Authority. At the time of delivery and payment forthe Bonds, an authorized representative of the Authority and the City will deliver a certificate stating that to the best of his or her knowledge this Official Statement does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements herein (excepting therefrom the information contained herein describing DTC, and its book entry system), in light of the circumstances under which they were made, not misleading. Such certificate will also certify that to the best of his or her knowledge from the date of this Official Statement to the date of such delivery and payment there was no material adverse change in the information set forth herein. BURLINGAME FINANCE AUTHORITY By: OHSUSA:763800162.4 24 APPENDIX A CITY OF BURLINGAME FINANCIAL AND DEMOGRAPHIC INFORMATION General The City of Burlingame is situated in San Mateo County, approximately 10 miles south of San Francisco and 35 miles north of San Jose. The City is approximately three miles south of the San Francisco International Airporl and served by two major freeways, north-south U.S. 101 (Bayshore Freeway) and highway lnterstate 280. The City was incorporated in 1908. It is a California general law city with a Council-Manager form of govemment, whereby the policies of the City Council (the "Council") are administered by a City Manager, who is appointed by the Council. The Council consists of five members who are elected at large on a non- paftisan basis for four-year staggered terms. The Mayor is selected annually by the Council. City Management Lisa K. Goldman is the City Manager for the City of Burlingame. Ms. Goldman has held this position since December 2012. She is the fourth City Manager in Burlingame's history and the first woman to hold the position. prior to joining the City of Burlingame, Ms. Goldman worked for the City of Alameda forjust under ii* y.u.r, serving as the Deputy City Manager, the Acting City Manager, and as the Assistant City Manager' Ms. Goldman is the former Intergovernmental Relations Manager for the City of Fremont and began her career in local government as an Administrative Intern for her hometown, the City of Palos Verdes Estates. Ms. Goldman also spent time on Capitol Hill in Washington, D.C., as a Legislative Assistant for Representative Henry A. Waxman. Ms. Goldman is a member of the International City/County Management Association, the California City Management Foundation, and Women Leading Government. She earned her Bachelor's degree from Haivard Co-llege and her Master of Public Policy from U.C. Berkeley's Graduate School of Public Policy. Carol Augustine is the Finance Director for the City of Burlingame and has held this position since March 2013. prior to her position with the City of Burlingame, Ms. Augustine worked as Finance Director for the City of Menlo park foi eight years. She also served as Finance Director for the City of Cupertino for over three years, and Administrative 'services Director for the Town of Los Altos Hills for over six years' She began her career in California municipal finance as Accounting Manager for the City of Palo Alto, a position she held for seven years, in 1988' Ms. Augustine received her Bachelor's degree in Accounting from the University of Texas, Austin in 19g0, and has bien a member of the American Institute of Certified Public Accountants since 1983' She is a member of the Governmental Finance Officers Association, the California Society of Municipal Finance Officers, and the California Municipal Treasurer's Association' Property Taxes Storm Drainage Fees. The Storm Drainage Fees will be collected on the San Mateo County tax roll in th. ,u*. ,*rr*r, by ihe same persons, and at the same time as the general property taxes of the City. The following is a general discussion of the general property taxes of the City, including levies, collections and delinquencies. OHSUSA:763 800162.4 A-l Assessed Valuation. The valuation of property in the City is established by the San Mateo County Assessor, except for public utility propeffy, which is assessed by the State Board of Equalization. Assessed valuations are reported atl00o/o of the full value of the property, as defined in Article XIIIA of the California Constitution. Prior to 1981-82, assessed valuations were repofted at25Yo of the full value of the property. See ..CONSTITUTIONAL AND STATUTORY LIMITATIONS AFFECTING CITY REVENUES AND APPROPRIATIONS" herein. Two types of State-reimbursed exemptions affect the valuation of properfy. The first currently exempts 100% of the full value of business inventories from taxation. The second exemption currently provides a credit of $7,000 of the full value of an owner-occupied dwelling for which application has been made to the County Assessor. Revenue estimated to be lost to local taxing agencies due to the above exemptions has in the past been reimbursed from State sources. Reimbursement is based upon total taxes due upon such exemption values and therefore is not reduced by any estimated amount of actual delinquencies. The following table sets forth assessed valuations for Fiscal Years 2007-08 through 2015-16. CITY OF'BURLINGAME Assessed Valuations 2007-08 2008-09 2009- I 0 2010-l I 2011-12 2012-13 2013-14 2014-15 2015-16 Local Secured $6,089,635,422 6,457,431,033 6,662,858,226 6,733,012,764 6,838,109,244 7,154,664,973 7,636,495,631 8,135,613,312 8,690,688,613 Utilitv $3,837,425 3,837,425 3,837 ,425 3,680,597 2,560,452 2,560,452 2,560,452 2,560,452 2,763,435 Unsecured $291,377 ,516 300,758,515 299,902,769 274,428,627 270,906,684 275,840,943 302,712,785 307,284,506 324,903,282 Total $6,384,850,363 6,762,026,973 6,966,598,420 7,011,121,988 '7,111,576,380 7,433,066,368 7,941,768,868 9,445,458,270 9,018,355,330 7o Change 5.91% 3.03% 0.64% t.43% 452% 6.84% 634% 6.78o/o Source: Califomia Municipal Statistics, Inc OHSUSA:7638001 62.4 A-2 The following table sets forth assessed valuation of single family homes for Fiscal Year 2015-16. CITY OF BURLINGAME Per Parcel 2015-16 Assessed Valuation of Single Family Homes Single Family Residential No. of Parcels 5,958 2015-16 Average Assessed Valuation AssessedValuation $4,998,956,958 s839,033 Median Assessed Valuation $730,468 2015-16 No. of Assessed Valuation Parcels (r) $0 - s99,999 277 $100,000 - $199,999 923 $200,000 - $299,999 340 $300,000 - $399,999 372 s400,000 - $499,999 343 $500,000 - s599,999 324 s600,000 - $699,999 300 $700,000 - $799,999 341 $800,000 - $899,999 307 $900,000 - $999,999 313 $1,000,000 - $1,099,999 294 $ 1, I 00,000 - $ 1, I 99,999 243 $ 1,200,000 - $1,299,999 230 $1,300,000 - $1,399,999 208 $r,400,000 -$1,499,999 198 $1,500,000 - $1,599,999 181 $1,600,000 - $1,699,999 142 $ I ,700,000 - $1 ,799,999 125 $1,800,000 - $1,899,999 97 $ 1,900,000 - $1,999,999 62 $2,000,000 and greater 338 Total 5,958 Yo of Cumulative Total Yo of Total 4.649% 4.649% 15.492 20.141 5.707 25.848 6.244 32.091 5.7 57 37 .848 5.438 43.286 5.03s 48,322 s.723 54.045 s.153 s9.198 s.253 64.451 4.935 69.386 4.079 73.464 3.860 77.325 3 .49r 80.8 I 6 3.323 84. 139 3.038 87.1',77 2.383 89.560 2.098 91.658 1.628 93.286 I .04 l 94.327 5.673 100.000 100.000% Total Valuation $ 23,936,327 130,649,628 85,840,408 130,506,453 154,968,593 178,710,416 194,628,962 255,634,463 260,828,461 29'.7,320,208 308,220,343 279,188,774 287,215,137 280,419,62t 285,787,332 280,486,307 233,7 61,738 217,792,230 178,81 1,778 120,694,868 813,554.91 1 Yo of Cumulative Total % of Total 0.479% 0.4',79% 2.614 3.092 1,717 4.810 2.611 7.420 3. 100 I 0.520 3.575 14.095 3.893 17.989 5. l 14 23 .102 s.218 28.320 s.948 34.268 6.166 40.433 5.585 46.018 5.746 51.764 5.610 57.373 5 .7 t7 63.090 5.611 68.701 4.676 73.377 4.357 77.734 3.s77 81.31 I 2.414 83.726 16.274 100.000 $4,998,956,958 100.000% C)1.pror.d single family residential parcels. Excludes condominiums and parcels with multiple family units. Source: California Municipal Statistics, Inc. OHSUSA:763 800162.4 A-3 The following table sets forth the assessed valuation and parcels by land use for Fiscal Year 2015-16 CITY OF BURLINGAME Assessed Valuation and Parcels bv Land Use Non-Residential: CommercialiOffice Industrial Recreational Govemment/Social/ln stitutional Miscellaneous Subtotal Non-Residential Residential: Single Family Residence Condominium/Townhouse Hotel/Motel 2-4 Residential Units 5+ Residential Units/Apartments Subtotal Residential 2015-16 Assessed Valuation (r) $1,143,014,486 500,290, I 83 5,314,228 7 5,347 ,047 2.604.576 $t,726,570,520 $4,998,956,958 482,458,579 373,715,806 344,575,023 12lj31l4E $6,921,243,414 5,958 897 13 525 371 7,764 57.52% 5.55 4.30 3.96 8.30 79.64% 68.73% 10.35 0.r5 6.06 4.28 89.s6% oh of Total 13.15% 5.76 0.06 0.87 0.03 19.87% No, of Parcels 507 194 6 97 44 848 Yo of Total 5.85% 2.24 0.07 l.l2 0.51 9.78% Vacant Parcels $42,874,679 0.49% s7 0.66% Total $8,690,688,613 100.00% 8,669 100.00% (r) Local Secured Assessed Valuation, excluding tax-exempt property Source: California Municipal Statistics, Inc. Ad Valorem Propertv Taxes/Storm Drainage Fees. Taxes are levied for each fiscal year on taxable real and personal property which is situated in the City as of the preceding January l. For assessment and collection purposes, property is classified either as "secured" or "unsecured," and is listed accordingly on separate parts of the assessment roll. The "secured roll" is that part of the assessment roll containing State- assessed property, the taxes on which are a lien on real properfy sufficient to secure payment of the taxes. Other property is assessed on the "unsecured roll." See "CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS" herein. OHSUSA:763800162.4 A-4 The following table sets forth the largest taxpayers located within the City in terms of their assessed value for Fiscal Year 2015-16. CITY OF BURLINGAME Largest Taxpayers Fiscal Year Endin92016 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. Pronerty Owner EQR-Nothpark LP HMC Burlingame Hotels LLC Inland Amer Lodging Burlingame LLC Hudson Bay Park PlazaLLC Hudson One Bay PlazaLLC EQR Skyline Terrace LP DCT Rollins Road LLC Harbor View Hotels Inc. Green Banker LLC Burlingame Point LLC Claire A Spencer, Trust Upsky SF Airport Hotel LLC Today's III Inc. Mehrdad Elie, Trust Cali fornia Teachers Association ARE-819/863 Mitten Road LLC Burlingame Towers Partners LP Raiser Resources LLC Safeway Inc., Lessee Hanqi Investment Inc. 2015-16 Primary Land Use Assessed Valuation Apartments $l18,730,058 Hotel 117,946,382 Hotel 108,795,212 Office Building 72,125,910 Office Building 49,607,463 Apartments 45,395,820 lndustrial 36,735,366 Hotel 29,090,229 Commercial 29,01 1,550 Undeveloped 28,426,749 Auto Sales/Service 25,619,495 Hotel 24,723,728 Hotel 23,719,457 Office Building 23,145,434 Office Building 22,990,816 Industrial 21,398,340 Apartments 19,982,330 Office Building 19,948,734 Supermarket 19,856,953 Olfice Buildine 19.235.598 s 856,485.624 o/o of Total (r) 1.37% 1.36 1.25 0.83 0.5'7 0.s2 0.42 0.33 0.33 0.33 0.29 0.28 0.27 0.27 0.26 0.2s 0.23 0.23 0.23 0.22 9.86% (') 2015-16 Local Secured Assessed Valuation: $8,690,688,613 Source: California Municipal Statistics, lnc. Tax Rates The basic tax rate for all taxing entities within a particular tax code area is $1 per $100 of assessed valuation in accordance with Article XIIIA of the State Constitution. To this may be added whatever tax rates are necessary to meet debt service on indebtedness approved by the voters. Tax Levies, Collections and Delinquencies Property taxes on the secured roll are due in two installments, on January lst and June lst of the fiscal year. If unpaid, such taxes become delinquent on December 10th and April l0th, respectively, and a l0 percent penalty attaches to any delinquent payment. On July 1, an additional TY, percent per month is levied bn delinquencies for five years. In addition, property on the secured roll with respect to which taxes are delinquent is sold to the State on or about June 30th five years after the delinquency occurs. Such property may tirereafter be redeemed by payment of the delinquent taxes and the delinquency penalty, plus a redemption penalty of one percent per month to the time of redemption. If taxes are unpaid for a period of five years or more, the property is deeded to the State and then is subject to sale by the County Tax Collector. OHSUSA:763800162.4 A-5 Property taxes on the unsecured roll are due as of the March 1st lien date and become delinquent, if unpaid, on August 3lst. A six percent penalty attaches to delinquent taxes on properfy on the unsecured roll, and an additional penalty of one percent per month begins to accrue beginning November 1 st of the fiscal year. Beginning in fiscal year 1978179, Proposition 13 and its implementing legislation shifted the function of property taxation primarily to the counties, except for levies to support prior voted debt, and prescribed how levies on countywide properry values are to be shared with local taxing entities within each county. The total tax levies and year-end delinquencies for fiscal years 2010-1 1 through 2014-15 are set forth in the following table. CITY OF BURLINGAME Secured Tax Charges and Delinquencies Fiscal Year 2010-1 1 20n-12 2012-13 2013-14 2014-15 Secured Tax ChaPgs (r) s77,457,524.00 79,460,514.48 84,117,724.34 90,5 14,698.80 97,692,692.34 Amt. Del. 30-Jun $821,427 .63 6s9,279.56 532,521.91 551,453.00 774,904.47 oh Del. 30-Jun 1.06% 0.83 0.63 0.61 0.79 (') All taxes collected by the County within the City. Includes Special Charges. Source: California Municipal Statistics, Inc. Teeter Plan The San Mateo County Board of Supervisors utilizes the Alternative Method of Distribution of Tax Levies and Collections and of Tax Sale Proceeds (the "Teeter Plan"), as provided for in Section 4701et seq. of the California Revenue and Taxation Code. The Storm Drainage Fees are included in the Teeter Plan. Generally, the Teeter Plan provides for a tax distribution procedure in which secured roll taxes and assessments are distributed to taxing agencies within the County on the basis of the tax and assessment lery, rather than on the basis of actual tax and assessment collections. The County then receives all future delinquent tax and assessment payments and penalties. Pursuant to the Teeter Plan, the County establishes a tax and assessment losses reserye fund and a tax resources accoun| and each entity levying or entitled to receipt of property taxes in the County may draw on the amount of uncollected taxes and assessments credited to its fund, in the same manner as if the amount credited had been collected. The County is responsible for determining the amount of tax and assessment levy on each parcel which is entered onto the secured real propeffy tax roll. Upon completion of the secured real property tax roll, the County's Auditor-Controller determines the total amount of taxes and assessments actually extended on the roll for each fund for which a tax levy has been included, and apportions 100 percent of the tax and assessment levies to that fund's credit. Such moneys may thereafter be drawn against by the taxing agency in the same manner as if the amount credited had been collected. The County determines which moneys in the county treasury (including those credited to the tax and assessment losses reserye fund) shall be available to be drawn OHSUSA:763800162.4 A-6 on to the extent of the amount of uncollected taxes and assessments credited to each fund for which a levy had been included. When amounts are received on the secured tax roll for the current year, or for redemption of tax-defaulted property, Teeter Plan moneys are distributed to the apportioned tax resources funds. California State law has authorized the Teeter Plan for over 40 years; however, until 1993, it had been implemented by only five counties. Legislation signed by the Governor on July 19, 1993 provided a financial inducement to utilize this simplified accounting method. So long as the Teeter Plan is in place, the City is expected to be credited with 100 percent of its property taxes, regardless of any delinquencies in payment of the taxes. However, the County Board of Supervisors may discontinue the Teeter Plan at any time. Direct and Overlapping Bonded Debt The statement of direct and overlapping debt (the "Debt Report") set forth below was prepared by California Municipal Statistics, Inc. as of January 1,2016. The Debt Report includes only such information as has been reported to California Municipal Statistics, Inc. by the issuers of the debt described therein and by others. The Debt Report is included for general information purposes only. The City takes no responsibility for its completeness or accuracy. OHSUSA:763800162.4 A-7 CITY OF BURLINGAME Statement of Direct and Overlapping Debt As ofJanuary 1,2016 201 5- l6 Assessed Valuation: $9,01 8,355,330 OVERLAPPING TAX AND ASSESSMENT DEBT: San Mateo Community College District San Mateo Union High School District Burlingame School District Hillsborough School District TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT (l) (2) DIRECT AND OVERLAPPINC GENERAL FUND DEBT: San Mateo County General Fund Obligations 5.056% San Mateo County Board of Education Certificates of Participation 5.056 City of Burlingame General Fund Obligations 100. City of Burlingame Pension Obligation Bonds 100. TOTAL GROSS DIRECT AND OVERLAPPING GENERAL FUND DEBT Less: City of Burlingame General Fund Obligations supported from enterprise revenues City of Burlingame Pension Obligation Bonds supported by enterprise revenues TOTAL NET DIRECT AND OVERLAPPING GENERAL FLTND DEBT GROSS COMBINED TOTAL DEBT NET COMBINED TOTAL DEBT % Applicable 5.056% 14.420 94.638 0.1l9 Debt 1/lll6 $ 32,580,056 78,563,s72 99,249,223 64.022 $210,456,873 $22,s27,251 527.341 15,720,000(r) 17.695,000 $56,469,592 3,112,500 4.423,750 $48,933,342 $266,926,465Q) $259,390,215 Excludes issue to be sold. Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded capital lease obligations. Ratios to 20 l5-16 Assessed Valuation: Total Overlapping Tax and Assessment Debt Total Gross Direct Debt (533,415,000)......... Total Net Direct Debt ($25,878,750)........... Cross Combined Total Debt Net Combined Total Debt ............. 233% 0.31'/, 0.290h 2.96% 2.88% Source: California Municipal Statistics, Inc OHSUSA:763800162.4 A-8 Population The following table presents population data for the City and County POPULATION Year City of Burlingame Countv of San Mateo 587,329 649,623 707,161 718,451 722,372 729,630 739,804 745,635 753,123 I 980 1 990 2000 2010 20ll 2012 2013 2014 2015 26,173 26,666 28, I 58 28,806 28,888 29,106 29,582 29,700 29,890 Source: The 1980, 1990,2000 and 2010 totals are U.S. Census figures. The figures for the years 201 I through 2015 are based upon adjusted January I estimates provided by the State Department of Finance. Per Capita Personal Income Per Capita Personal Income (PCPI) is defined as the total personal income of the residents of an area divided by the population. The County has historically enjoyed a higher PCPI than either the State or the nation. PCPI for the County, State, and the nation from 2009-2014 is shown below. PER CAPITA PERSONAL INCOME Year County of San Mateo State of California s41,588 42,411 44,852 47,614 48,t25 49,985 United States 2009 2010 201 I 2012 2013 2014 $70,31 I 71,204 76,897 85,798 85,653 89,659 s39,376 40,277 42,453 44,266 44,438 46,049 Source: U.S. Department of Commerce, Bureau of Economic Analysis. OHSUSA:763800162.4 A-9 Employment The following table summarizes the major employers in the City CITY OF BURLINGAME Principal Employers As ofJune 30,2015 Rank Percentage of Total City EmploymentEmployer Mills Pennisula Health Services San Francisco Airport Marriott Flying Food Group Lufthansa Service Holdings Group Sky Chefs Inc. Hyatt Regency San Francisco Airport* Burl ingame School District Guittard Chocolate* American Medical Response* Putnam Auto Lohlouh Inc. Burlingame Millbrae Yellow Cab COIT Services Classic Party Rental PR O Unlimited Total Top l0 Employers Total City Labor Force(r) Employees 1,594 600 515 441 420 302 242 223 222 220 I 2 3 4 5 6 7 8 9 l0 8.96Yo 3.37Yo 2.89o/o 2.48Yo 2.36% 1.70o/o t.36% 1.25% 1.25Yo t.24% 4,779 17,800 26.85% Source: MuniServices, LLC. Results based on direct correspondence with City's local businesses. (r)Total City labor force provided by EDD Labor Force Data. + Includes firll and paft time. OHSUSA:763 800162.4 A-10 The following table summarizes historical employment and unemployment in San Mateo County SAN MATEO COUNTY Civilian Labor Force, Employment and Unemployment Annual Averages Civilian Labor Force(o) Employment Unemployment Total(b) 3 59,700 32,800 369,400 30, l 00 398,200 22,000 412,700 1 8,1 00 201 0 20tl 2012 386,100 26,500 2013 2014 392,600 8.4% 399,600 7.5% 412,600 6.4% 420,200 5.2% 430,800 4.2%Unemployment Rate(') Based on place of residence and not seasonally adjusted; March 2014 Benchmark. Total may not compute due to rounding. The unemployment rate is calculated rounding up to the nearest hundredth. (a) (b) (c) Source: Califomia Employment Development Department, Labor Market Information Division. The following table summarizes historical employment and unemployment in the City CITY OF BURLINGAME Civilian Labor Force, Employment and Unemployment Annual Averages Civilian Labor Force(u) Employment Unemployment Total0) Unemployment Rate(') 14,700 I,000 1 5,1 00 I,000 16,200 700 16,800 600 2010 20ll 2012 15,700 800 20t3 2014 15,700 16,000 5.9%6.6% (a) Based on place of residence and not seasonally adjusted; March 2014 Benchmark. (b) Total may not compute due to rounding.(c) The unemployment rate is calculated rounding up to the nearest hundredth. 16,600 5.1% 16,900 4.1% 17,400 3.3% Source: California Employment Development Department, Labor Market Information Division. Community Facilities The City of Burlingame maintains a main library and a branch library. A daily newspaper and two weeklies serve the community. The City's Park and Recreation Department operates ten parks, four playgrounds and a recreation building with facilities and programs directed to all age groups in the community.'euilingu*. Country Club, a private facility located in neighboring Hillsborough, is reputed to be the oldest country club in the United States. There are several championship golf courses in the vicinity. OHSUSA:763800162.4 A-t I Hospitals A full medical services hospital, Peninsula Hospital (part of the Mills-Peninsula Hospital) serves the residents of the City and its surrounding communities. Peninsula Hospital offers additional special programs including: arthritis, injured worker services, cancer care, open heaft surgery, alcohol and drug treatment, mental health, diabetes education, nutrition and weight, parenting, seniors' self-care, and support groups. Education Public education services through high school in the City are provided by the Burlingame School District and the San Mateo Union High School District. Located within the City limits are four elementary schools, an intermediate school and Burlingame High School, which also houses the San Mateo Adult Evening High School. Post-secondary public education is available at three community colleges operated by the San Mateo County Community College District. The College of San Mateo is located in San Mateo, Canada College is located in Redwood City and Skyline College is located in San Bruno. Transportation North-south U.S. 101 serves the most densely populated areas along the Bayside of the San Francisco Peninsula. Interstate 280 runs near the western city limits of the City, providing an alternate major route to San Francisco and San Jose. California 82 (El Camino Real) parallels these two principal highways, serving the City's commercial corridor. CalTrain provides passenger rail service on the San Francisco Peninsula as well as connections to BART and San Francisco Airpor-t through an intermodel station in Millbrae. City of Burlingame is one of the principal commuter points on this main line. There are two commuter stations in Burlingame for the convenience of those traveling to San Francisco or south to San Jose and intermediate points. Commuter service is also offered by the San Mateo County Transit District (SamTrans), which connects with the Santa Clara County Transit in Menlo Park, San Francisco Municipal Railway in San Francisco and BART in Colma. San Francisco International Airport is three miles northeast of the City and the Mineta San Jose Airport is approximately 30 miles south of the City. The Port of San Francisco is less than twenty miles north. San Francisco and the porl are easily accessible from interstate highways. The Port of Oakland is approximately 25 miles northeast of the City. Utilities Natural gas, electric power and telephone service are provided by the Pacific Gas and Electric Company and AT&T. The City supplies water and sewer service. OHSUSA:763800162.4 A-12 APPENDIX B ENGINEER'S REPORT FOR THE CITY OF BURLINGAME'S STORM DRAINAGE FEE (EXCLUDING EXHTBITS) OHSUSA:763800162.4 B-l APPENDIX C SUMMARY OF PRINCIPAL LEGAL DOCUMENTS lro BE UPDATEDI The following summary discussion of selected features of the 2016 Installment Sale Agreement, dated as of February 1,2016 (the "lnstallment Sale Agreement") and the Trust Agreement, dated as of February 1,2016 (the "Trust Agreement"), are made subject to all of the provisions of such documents and to the discussions of such documents contained elsewhere in this Official Statement. This summary discussion does not purport to be a complete statement of said provisions and prospective purchasers of the Bonds are referred to the complete text of said documents, copies of which are available upon request from the Trustee or the City. CERTAIN DEFINITIONS The following are definitions of certain of the terms used in the Installment Sale Agreement or the Trust Agreement, to which reference is hereby made. The following definitions are equally applicable to both the singular and pluralforms of any of the terms defined herein: The term "Acquisition and Construction Fund" means the fund by that name held pursuant to the Trust Agreement. The term "Bonds" means all bonds of the Authority authorized by and at any time Outstanding pursuant to the Trust Agreement and executed, issued and delivered in accordance with the Trust Agreement. The term "serial Bonds" means Bonds for which no sinking fund payments are provided. The term o'Term Bonds" means Bonds which are payable on or before their specified maturity dates from sinking fund payments established for that purpose and calculated to retire such Bonds on or before their specifi ed maturity dates. The term "Certificate of Completion" means a Certificate of the City certifuing that the Project has been completed, meeting the requirements specified for such a Certificate in the Trust Agreement. The term "Certificate of the Authority" means an instrument in writing signed by the Chair, Vice- Chair, Executive Director, Secretary or Treasurer of the Authority, or by any other person (whether or not an officer of the Authority) who is specifically authorized by resolution of the Authority for that purpose. The term "Certificate of the City" means an instrument in writing signed by the Mayor, Vice- Mayor, City Manager or Finance Director/Treasurer of the City, or by any such officials' duly appointed designee, or by any other officer or employee of the City duly authorized by the City Council of the City for that purpose. The tenn "City Bonds" means all revenue bonds of the City authorized, executed, issued and delivered by the City under and pursuant to applicable law, the interest and principal and redemption premium, if any, are payable from System Revenues on a parity with the payment of the Installment Payments. The term o'Code" means the Internal Revenue Code of 1986, as amended. OHSUSA:763800162.4 c-l The term "Continuing Disclosure Ceftificate" means that certain Continuing Disclosure Certificate executed by the City and the Trustee summarized in APPENDIX D hereto. The term "Contracts" means all installment sale contracts, loan agreements, capital leases or similar obligations of the City authorized and executed by the City under and pursuantto applicable law, the interest and principal and prepayment premium, if any, payments under and pursuant to which are payable from System Revenues on a parity with the payment of the Installment Payments. The term "Costs of Issuance" means all items of expense directly or indirectly payable by or reimbursable to the City or the Authority and related to the authorization, execution and delivery of the Installment Sale Agreement, the Trust Agreement and the issuance and sale of the Bonds, including, but not limited to, costs of preparation and reproduction of documents, costs of rating agencies and costs to provide information required by rating agencies, filing and recording fees, fees and charges of the Trustee, legal fees and charges, fees and disbursements ofconsultants and professionals, fees and charges for preparation, execution and safekeeping of the Bonds, fees of the Authority and any other authorized cost, charge or fee in connection with the issuance of the Bonds. The term "Costs of Issuance Fund" means the fund by that name established pursuant to the Trust Agreement. The term "Debt Seryice" means, for any Fiscal Year, the sum of: (l) the interest accruing during such Fiscal Year on all outstanding City Bonds, assuming that all outstanding serial City Bonds are retired as scheduled and that all outstanding term City Bonds are redeemed or paid from sinking fund payments as scheduled (except to the extent that such interest is to be paid from the proceeds of sale of any City Bonds), (2) that portion of the principal amount of all outstanding serial City Bonds maturing on the next succeeding principal payment date that would have accrued during such Fiscal Year if such principal amount were deemed to accrue daily in equal amounts from the next preceding principal payment date or during the year preceding the first principal payment date, as the case may be, (3) that portion of the principal amount of all outstanding term City Bonds required to be redeemed or paid on the next succeeding redemption date (together with the redemption premiums, if any, thereon) that would have accrued during such Fiscal Year if such principal amount (and redemption premiums) were deemed to accrue daily in equal amounts from the next preceding redemption date or during the year preceding the first redemption date, as the case may be, and (4) that poftion of the installment payments required to be made at the times provided in the Contracts that would have accrued during such Fiscal Year if such installment payments were deemed to accrue daily in equal amounts from, in each case, the next preceding Installment Payment Date of interest or principal or the date of the pertinent Contract, as the case may be; but less the Refundable Credits to be received by the City during such Fiscal Year; provided, that (a) if any of such City Bonds are Capital Appreciation Bonds or if the installment payments due under any of such Contracts secure Capital Appreciation Bonds, then the Accreted Value payment shall be deemed a principal payment and interest that is compounded and paid as Accreted Value shall be deemed due on the scheduled redemption or payment date of such CapitalAppreciation Bond; (b) if any of such City Bonds or if the installment payments due under any such Contracts bear interest payable pursuant to a variable interest rate formula, the interest rate on such City Bonds or OHSUSA:763800162.4 c-2 such Contracts for periods when the actual interest rate cannot yet be determined, shall be assumed to be equal to the greater of (i) the actual rate on the date of calculation, or if such City Bonds or Contracts are not yet outstanding, the initial rate (if then established and binding), (ii) if the City Bonds or Contracts have been outstanding for at least twelve months, the average rate over the twelve months immediately preceding the date of calculation, and (iiixl) if interest on such City Bonds or Contracts is excludable from gross income under the applicable provisions of the Internal Revenue Code, the most recently published "Bond Buyer 25 Bond Revenue Index" (or comparable index if no longer published) or (2) if interest is not so excludable, the interest rate on direct U.S. Treasury obligations with comparable maturities plus fifty (50) basis points; (c) if any of such City Bonds or Contracts is secured by an irrevocable letter of credit issued by a bank having a combined capital and surplus of at least one hundred million dollars ($100,000,000), the principal payments or deposits with respect to such City Bonds or Contracts nominally due in the last Fiscal Year in which such City Bonds or Contracts mature may, at the option of the City, be treated as if they were due as specified in any loan agreement or reimbursement agreement issued in connection with such letter of credit or pursuant to the repayment provisions of such letter of credit and interest on such City Bonds or Contracts after such Fiscal Year shall be assumed to be payable pursuant to the terms of such loan agreement or reimbursement agreement or repayment provisions and (d) if any of such City Bonds or Contracts is not secured by a letter of credit as described in clause (c) of this definition and 20o/o or more of the original principal of such City Bonds or the installment payments due under such Contracts is not due until the final stated maturity of such City Bonds or the installment payments due under such Contracts, such principal may, at the option of the City, be treated as if it were due based upon a level amortization of such principal over the term of such City Bonds or installment payments or twenty-five (25) years, whichever is greater. The term "DTC" means The Depository Trust Company, New York, New York. The terrn "Event of Default" for purposes of the Installment Sale Agreement is defined herein under "lnstallment Sale Agreement--Events of Default." The term o'Event of Default" for purposes of the Trust Agreement is defined herein under "Trust Agreement-- E,vents of Default; Remedies of Bondholders". The term "Financial Newspaper" means The Wall Street Journal or The Bond Buyer, or any other newspaper or journal printed in the English language, publishing financial news, and selected by the Authority. The term "Fiscal Year" means the twelve (12) month period terminating on June 30 of each year, or any other annual accounting period selected and designated by the Authority as its Fiscal Year in accordance with applicable law. The term'oGovernment Securities" means: l. U.S. Treasury Cemificates, Notes and Bonds (including State and Local Government Series - (SLGs)). Z. Direct obligations of the U.S. Treasury which have been stripped by the U.S. Treasury itself. OHSUSA:763800162 4 c-3 3. Resolution Funding Corp. ("REFCORP"). Only the interest component of REFCORP strips which have been stripped by request to the Federal Reserve Bank of New York in book entry form are acceptable. 4. Pre-refunded municipal bonds rated "Aaa" by Moody's and "AAA" by S&P. If, however, the issue is only rated by S&P (i.e., there is no Moody's rating) then the pre-refunded bonds must have been pre-funded with cash, direct U.S. or U.S. guaranteed obligations, or AAA rated pre- refunded municipals to satisfu this condition. 5. Obligations issued by the following agencies which are backed by the full faith and credit of the U.S.: U.S. Export-Import Bank (Eximbank) Direct obligations or fully guaranteed certificates of beneficialownership b. Farmers Home Administration (FmHA) Federal Financing Book General Services Administration Participation Certifi cates U.S. Maritime Administration Guaranteed Title XI financing f. U.S. Department of Housing and Urban Development (HUD) Project Notes Local Authority Bonds New communities Debentures - u.s. government guaranteed debentures U.S. Public Housing Notes and Bonds - U.S. government guaranteed public housing notes and bonds. The term "lndependent Certified Public Accountant" means any certified public accountant or firm of such accountanti duly licensed and entitled to practice and practicing as such under the laws of the State or a comparable successor, appointed and paid by the Authority or the City, and who, or each of whom -- (l) is in fact independent according to the Statement of Auditing Standards No. I and not under the domination of the Authority or the City; (Z) does not have a substantial financial interest, direct or indirect, in the operations of the Authority or the City; and (3) is not connected with the Authority or the City as a member, officer or employee of the Authority or the City, but who may be regularly retained to audit the accounting records of and make reports thereon to the Authority or the City. The term "lnformation Seryices" means the Electronic Municipal Market Access System of the Municipal Rulemaking Board; and in accordance with then current guidelines of the Securities and Exchange Commission, such other addresses and/or such other services providing information with a. c. d. e. OHSUSA:763800162.4 c-4 respect to called bonds, or such services as the Authority may designate in a Certificate of the Authority delivered to the Trustee. The term "Installment Payments" means the Installment Payments scheduled to be paid by the City under and pursuant to the Installment Sale Agreement. The term "Installment Sale Agreement" means the 2016Installment Sale Agreement, dated as of February 7,2076, by and between the Authority and the City, as such may be amended or supplemented from time to time. The term oolnsurance Consultant" means (a) the Risk Manager for the City or (b) any insurance consultant or firm of insurance consultants generally recognized to be well qualified in insurance consulting matters relating to storm drainage and other municipal systems, appointed and paid by the City, and who or each of whom - (1) is in fact independent and not underthe domination of the City; (2) does not have a substantial financial interest, direct or indirect, in the operations of the City; and (3) is not connected with the City as a councilmember, officer, or employee of the City, but may be regularly retained to make reports to the City. The term "Interest Payment Date" means January 1 and July I in each year, commencing July 1, 2016. The term "Joint Powers Agreement" means the Joint Exercise of Powers Agreement by and between the City and the Redevelopment Agency of the City of Burlingame, dated May 15, 1995, as originally execuied and as it may from time to time be amended or supplemented pursuant to the provisions of the Trust Agreement and thereof. The term "Maximum Annual Debt Service" means the greatest total Debt Service due in any Fiscal Year during the period commencing with the next ensuing Fiscal Year and terminating with the Fiscal Year in which payments are due under the last outstanding City Bonds or the last outstanding Contract, whichever is later. The term ooMoody's" means Moody's Investors Service, Inc. a corporation duly organized and existing under and by virtue of the laws of the State of Delaware, and its successors and assigns, except that ifiuch corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, then the term "Moody's" shall be deemed to refer to any other nationally recognized securities rating agency selected by the City. The term "Opinion of Counsel" means a written opinion of counsel of recognized national standing in the field of law relating to municipal bonds, appointed by the City. The term "Ordinance" means Ordinance No. 1836 of the City entitled "Ordinance of the City of Burlingame Adding Chapter 4.30 to the Burlingame Municipal Code to Administer A Storm Drainage Fee." The term "Outstanding," when used as of any particular time with reference to Bonds, means (subject to the provisions of the Trust Agreement) allBonds except OHSUSA:763 800162.4 c-5 (1) Bonds theretofore cancelled by the Trustee or surrendered to the Trustee for cancellation; (2) Bonds paid or deemed to have been paid within the meaning of the defeasance provisions of the Trust Agreement; and (3) Bonds in lieu of or in substitution for which other Bonds shall have been executed, issued and delivered by the Authority pursuant to the Trust Agreement. The term "Parity Obligations" means, collectively, City Bonds and Contracts. The term "Permitted Investments" means any of the following, if and to the extent each is permissible for investment of funds of the Authority, as stated in its current investment policy and pursuant to applicable laws (provided that the Trustee shall be entitled to rely upon any Written Request of the City as conclusive ceftification to the Trustee that the investments described therein are included in its current investment policy and authorized under the laws of the State): A. Direct obligations of the United States of America (including obligations issued or held in book-entry form on the books of the Department of the Treasury, and CATS and TIGRS) or obligations the principal of and interest on which are unconditionally guaranteed by the United States of America. B. Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following federal agencies and provided such obligations are backed by the full faith and credit of the United States of America (stripped securities are only permitted if they have been stripped by the agency itself): U.S. Export-lmport Bank (Eximbank) Direct obligations or fully guaranteed certificates of beneficial ownership Farmers Home Administration (FmHA) Certifi cates of Benefi cial Ownership Federal Financing Bank Federal Housing Administration Debentures (FHA) General Services Administration Participation Certifi cates Governmental National Mortgage Association (GNMA or Ginnie Mae) GNMA - guaranteed mortgage-backed bonds GNMA - guaranteed pass-through obligations U.S. Maritime Adrninistration Guaranteed Title XI financing U.S. Department of Housing and Urban Development (HUD) Project Notes Local Authority Bonds New Communities Debentures - U.S. government guaranteed debentures 2 ) 4 5 6. 8 OHSUSA:763800162.4 c-6 U.S. Public Housing Notes and Bonds - U.S. government guaranteed public housing notes and bonds C. Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following federal agencies which are not backed by the full faith and credit of the United States of America (stripped securities are only permitted if they have been stripped by the agency itself): Federal Home Loan Bank System Senior debt obligations Federal Home Loan Mortgage Corporation (FHLMAC or Freddie Mac) Participation Certificate Senior debt obligations FederalNational Mortgage Association (FNMA or Fannie Mae) Mortgage-backed securities and senior debt obligations 4. Student Loan Marketine r\$aciatia!(SLMA or Sallie Mae) Senior debt obligations Resolution Funding Corp, (REFCORP) obligations Farm Credit System Consolidated systemwide bonds and notes D. Money market funds registered under the Federal Investment Company Act of 1940, whose shares are registered under the Federal Securities Act of 1933, and having a rating by S&P of AAAm-G; AAA-m; or AA-m and if rated by Moody's rated Aaa, Aal or Aa2 including funds for which the Trustee or its affiliates provide investment advisory or other management services. E. Certificates of deposit secured at all times by collateral described in (A) and/or (B) above. Such certificates must be issued by commercial banks, savings and loan associations or mutual savings banks which may include the Trustee and its affiliates. The collateral must be held by a third party and the bondholders must have a perfected first security interest in the collateral. F. Cefiificates of deposit, savings accounts, deposit accounts or money market deposits which are fully insured by FDIC, including BIF and SAIF including those of Trustee and its affiliates. G. Investment Agreements, including GIC's, Forward Purchase Agreements and Reserve Fund Put agreements. H. Commercial paper rated, at the time of purchase,'oPrime -1" by Moody's and "A-1" or better by S&P. I. Bonds or notes issued by any state or municipality which are rated by Moody's and S&P in one of the two highest rating categories assigned by such rating agencies. J. Federal funds or bankers acceptances with a maximum term of one year of any bank which has an unsecured, uninsured and unguaranteed obligation rating of "Prime - 1" or "A3" or better by Moody's and "A-1" or ooA" or better by S&P. 2 J 5 6 OHSUSA:763 800162.4 c-7 K. Repurchase Agreements ("Repos") for 30 days or less must follow the following criteria. Repos provide for the transfer of securities from a dealer bank or securities firm (seller/borrower) to a municipal entity (buyer/lender), and the transfer of cash from a municipal entity to the dealer bank or securities firm with an agreement that the dealer bank or securities firm will repay the cash plus a yield to the municipal entity in exchange for the securities at a specified date. l. Repos must be between the municipal entity and a dealer bank or securities firm. a. Primary dealers on the Federal Reserve reporting dealer list which are rate 'oA" or better by S&P and "A2" or better by Moody's, or b. Banks rated "A" or better by S&P and"A2" or better by Moody's. 2. The written repurchase agreement must include the following: a. Securities which are acceptable for transfer are: (1) Direct obligations of the United States of America referred to in clause A above, or (2) Obligations of federal agencies referred to in clause B above (3) Obligations of FNMA and FHLMC b. The term of the Repos may be up to 30 days. c. The collateral must be delivered to the municipal entity, trustee (if trustee is not supplying the collateral) or third party acting as agent for the trustee is (if the trustee is supplying the collateral) before/simultaneous with payment (perfection by possession of certificated securities). d. Valuation of Collateral. (l) the securities must be valued weekly, marked-to-market at current market price plus accrued interest. (2) The value of collateral must be equal to 104% of the amount of cash transferred by the municipal entity to the dealer bank or security firm under the repo plus accrued interest. If the value of securities held as collateral slips below 104% of the value of the cash transferred by the municipalentity, then additional cash and/or acceptable securities must be transferred. If, however, the securities used as collateral are FNMA or FHLMC, then the value of the collateralmust equal 105%. 3. A legal opinion which must be delivered to the municipal entity that states that the Repo meets guidelines under state law for legal investment of public funds. L. The Local Agency Investment Fund of the State of California; and M. Any other investment selected by the City which does not adversely affect the then- current rating on the Bonds. The term "Principal Payment Date" means any date on which principal of the Bonds is required to be paid (whether by reason of maturity, redemption or acceleration). OHSIJSA:763800162.4 c-8 The term "Project Account" means each account established within the Acquisition and Construction Fund relating to capital improvements financed under the Installment Sale Agreement for such Project. The term "Project Costs" means all costs of acquisition, construction and improvement of the Projects and of expenses incident thereto (or for making reimbursements to the Authority or the City or any other person, firm or corporation for such costs theretofore paid by him or it), including, but not limited to, construction costs, architectural and engineering fees and expenses, interest during construction, tests and inspection, surveys, land acquisition, insurance premiums, losses during construction not insured against because of deductible amounts, costs related to the Trustee during construction, costs of accounting, feasibility, environmental and other repofts, inspection costs, permit fees, filing and recording costs, printing costs, reproduction and binding costs. The term "Projects" means the acquisition, construction and improvement of the public capital improvements of the City financed pursuant to Parity Obligations. The term "2012 Project" means the capital improvements described in Exhibit A to the Installment Sale Agreement and such additions, substitutions and deletions as shall be specified in a Certificate of the City stating that such additions, substitutions or deletions constitute part of the 2012 Project. The term "Rating Agencies" means, as of any date, (a) Moody's, if Moody's then maintains a rating on the Bonds, and (b) S&P, if S&P then maintains a rating on the Bonds. The term "Rating Category" means one of the general long-term (or short-term, if so specifically provided) rating categories of either Moody's and S&P, without regard to any refinement or gradation of such rating category by a numerical modifier or otherwise. The term "Refundable Credits" means the amounts which are payable by the Federal government under Section 6431 of the Tax Code, which the City elected to receive under Section saAA(g)(1) of the Tax Code, and which relate to the 2016 Installment Sale Agreement and Parity Obligations. The term "Reserve Account" means the account of that name established under the Trust Agreement. The term "Reserve Account Requirement" means the least of (i) the maximum annual Installment Payments, (ii) 125% of average annual Installment Payments, and (iii) l0%o of the original principal amount of the Installment Payments; provided, however, such amount shall not exceed the amount permitted by the arbitrage bond regulations issued by the United States Department of the Treasury, as such regulations are, at the time, applicable and in effect, without the imposition of yield restrictions. The term "Responsible Officer" means any officer of the Trustee assigned to administer its duties under the Trust Agreement. The term ooRevenues" rreans (i) all Installment Payments and other payments paid by the City and received by the Authority pursuant to the Installment Sale Agreement, and (ii) all interest or other income from any investment, pursuant to the Trust Agreement, of any money in any fund or account (other than the Rebate Fund) established pursuant to the Trust Agreement or the Installment Sale Agreement. The term "Securities Depositories" means: The Depository Trust Company, or such other securities depositories as the Authority may designate to the Trustee. OHSUSA:763800162.4 c-9 The term "S&P" means Standard & Poor's Ratings Services, a Standard & Poor's Financial Services LLC business, its successors and assigns, except that if such entity shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, then the term S&P shall be deemed to refer to any other nationally recognized securities rating agency selected by the City. The term "State" means the State of California. The term "Storm Drainage Fee" means the storm drainage fee imposed pursuant to the Ordinance. The term "Supplemental Trust Agreement" means any trust agreement then in full force and effect which has been duly executed and delivered by the Authority and the Trustee amendatory of the Trust Agreement or supplemental thereto; but only if and to the extent that such Supplemental Trust Agreement is executed and delivered pursuant to the provisions of the Trust Agreement, The term "System Revenues" means all proceeds of the Storm Drainage Fee, the proceeds of the Refundable Credits, and all gross income and revenue received by the City from the ownership and operation of the System, determined in accordance with Generally Accepted Accounting Principles, including, without limiting the generality of the foregoing, (a) all other income, rents, rates, fees, connection fees, charges or other moneys derived from the System, (b) the earnings on and income derived from the investment of such income, rents, rates, fees, charges or other moneys (including all investment earnings credited by the Trustee to the Revenue Fund), and (c) the proceeds derived by the City directly or indirectly from the sale, lease or other disposition of a part of the System as permitted in the Installment Sale Agreement; provided, however, that the term "System Revenues" shall not include customers' deposits or any other deposits subject to refund until such deposits have become the properly of the City. The term "System Revenue Fund" means the fund by that name established pursuant to the Installment Sale Agreement. The term "Tax Certificate" means the Tax Certificate delivered by the Authority at the time of the issuance and delivery of the Bonds, as the same may be amended or supplemented in accordance with its terms. The term "Treasurer" means the Treasurer and Controller of the Authority designated pursuant to the Joint Powers Agreement. The term "Trust Agreement" means the Trust Agreement, dated as of February 1,2016, between the Authority and the Trustee, as originally executed and as it may from time to time be amended or supplemented by all Supplemental Trust Agreements executed pursuant to the provisions of the Trust Agreement. The term ooTrustee" means The Bank of New York Mellon Trust Company, N.A., or any other association or corporation which may at any time be substituted in its place as provided in the Trust Agreement. The term "System" means properties and assets, real and personal, tangible and intangible, of the City used or pertaining to storm drainage, including all additions, extensions, expansions, improvements and betterments thereto and equippings thereof, together with any other properties or assets determined by the City Council of the City to be part of the System. OHSUSA:763800162.4 c- 10 The term "Written Request of the Authority" means an instrument in writing signed by or on behalf of the Authority by its Chair, Vice-Chair, Executive Director or Treasurer or by any other person (whether or not an officer of the Authority) who is specifically authorized by resolution of the Authority for that purpose. The term "Written Request of the City" means an instrument in writing to the Trustee signed by the Mayor, Vice-Mayor, City Manager, or the Finance Director/Treasurer of the City, or by any such officer's duly appointed designee, or by any other officer or employee of the City duly authorized by the City for that purpose. INSTALLMENT SALE AGREEMENT The 20l6lnstallment Sale Agreement, dated as of February 1,2016, by and between the City, as purchaser, and the Authority, as seller, is referred to herein as the "lnstallment Sale Agreement," Certain provisions of the Installment Sale Agreement are briefly summarized herein. Design. Acquisition. Construction and Sale of the 2016 Project The Authority agrees to design, acquire and construct the 2016 Project for, and to sell the 2016 Project to, the City. In order to implement this provision, the Authority appoints the City as its agent for the purpose of such design, acquisition and construction, and the City agrees to enter into such engineering, design and construction contracts and purchase orders as may be necessary, as agent for the Authority, to provide forthe complete design, acquisition and construction of the 2016 Project. The City agrees that as such agent it will cause the acquisition and construction of the 2016 Project to be diligently completed after the deposit of funds in the Acquisition Fund for such purpose pursuant to the Trust Agreement, and that it will use its best efforts to cause the design, acquisition and construction of the 2016 Project to be completed as soon as reasonably practicable. The City agrees to purchase the 2016 Project from the Authority on the terms and conditions specified in the Installment Sale Agreement. Purchase Price The Purchase Price to be paid by the City to the Authority under the Installment Sale Agreement is the sum of the principal amount of the City's obligation thereunder plus the interest to accrue on the unpaid balance of such principal amount from the date thereof over the term thereof, subject to prepayment as provided in the Installment Sale Agreement. Pa)rrnent of lnstallment Payments The City shall, subject to prepayment as provided in the Installment Sale Agreement, pay the Authority the Purchase Price, without offset or deduction of any kind, by paying the principal installments of the Installment Payments due annually on July l, together with interest installments of the Installment Payments, which interest installments shall be paid semiannually on each January I and July l, commencing July 1, 2016. In order to carry out and effectuate the obligation of the City contained in each Installment Sale Agreement to pay the Purchase Price by paying the Installment Payments, the City agrees and covenants that all System Revenues received by it shall be deposited when and as received in trust in the System Revenue Fund, which is pledged and a security interest is granted therein and which fund the City agrees and covenants to maintain so long as any Installment Payments remain unpaid, and all money on deposit in the System Revenue Fund shall be applied and used only as provided in the Installment Sale OHSUSA:763800162.4 c-11 Agreement. All amounts on deposit in the System Revenue Fund shall be set aside and deposited by the City at the following times in the following order of priority: Transfers to Trustee. (l) Revenue Fund Deposits. On or before the fourth Business Day before each date on which a Installment Payment becomes due and payable under the Installment Sale Agreement, the City shall, from the money in the System Revenue Fund, transfer to the Trustee for deposit in the Revenue Fund established pursuant to the Trust Agreement a sum equal to the Installment Payments becoming due and payable under the Installment Sale Agreement on such due date, except that no such deposit need be made to the extent the Trustee then holds money for such purpose in the Revenue Fund available to pay the Installment Payment becoming due and payable under the Installment Sale Agreement on such date. The City shall also, from moneys in the System Revenue Fund, pay to the parfy entitled thereto or transfer o1. .uuri to be transferred to any applicable debt service or other payment fund or account for any Parity Obligations, without preference or priority between transfers made pursuant to this sentence and the preceding sentence, and in the event of any insufficiency of such moneys ratably without any discrimination or preference, on the dates specified in the proceedings relating to such Parity Obligations, the sum or sums required to be paid or deposited in such debt service or other payment fund or account with respect to principal, premium, if any, and interest on Parity Obligations in accordance with the terms of such Parity Obligations. (2) Reserve Account Deposits. On or before the fourth Business Day before each Installment Payment Date, the City shall, from the remaining money on deposit in the System Revenue Fund after deposits and transfers pursuant to paragraph (1) above, transfer to the Trustee for deposit in the Reserve Aicount that sum, if any, necessary to restore the Reserve Account to an amount equal to the Reserve Account Requirement. The City shall also, from such remaining moneys in the System Revenue Fund, transfer or cause to be transferred to any applicable reserve fund or account for any Parity Obligations for which a separate reserye has been funded pursuant to Section 4.01(d) of the Installment Sale Agreement, without preference or priority between transfers made pursuant to this sentence and the preceding sentence, and in the event of any insufficiency of such moneys ratably without any discrimination or preference, the sum or sums, if any, equal to the amount required to be deposited therein in accordance with the terms of such Parity Obligations. After making the foregoing deposits and transfers hereinabove required to be made, or, if sooner, at such time as amounts remaining on deposit in the System Revenue Fund shall be sufficient to make the remaining transfers hereinabove required to be made in the next twelve months with respect to Installment Payments and Parity Obligations, the City shall apply any remaining money in the System Revenue Fund for any lawful purpose of the City permitted pursuant to the Ordinance. The City shall distribute System Revenues available for Outstanding lnstallment Payments and debt service on all Outstanding Parity Obligations on a pro rata basis without regard to whether each such parity Obligation has a funded debt service reserve or a surety bond or other similar funding instrument. Pledge of System Revenues All System Revenues are irrevocably pledged to the payment of the Installment Payments; provided, that out of the System Revenues there may be apportioned such sums for such purposes as are permitted by the Installment Sale Agreement. This pledge shall constitute a lien on the System Revenues for the payment of the Installment Payments and Parity Obligations. OHSUSA:763800162.4 c-12 Conditions for the Execution of Paritv Obligations The City shall not incur any obligation, the payment of which is payable from and secured by a lien and charge on the System Revenues prior to the lien and charge on System Revenues securing the Installment Payments under the Installment Sale Agreement. The City may at any time execute and deliver any Parity Obligation, the payment of which is payable from and secured by a lien and charge on the System Revenues on a parity with the lien and charge on System Revenues securing the Installment Payments due under the Installment Sale Agreement, provided: (a) Either - (1) as evidenced by a Certificate of the City, during any twelve (12) consecutive calendar months out of the immediately preceding l8 calendar month period, the System Revenues were at least equal to 110% of the Maximum Annual Debt Service for all Outstanding Installment Payments and all Outstanding Parity Obligations plus the Parity Obligation proposed to be executed; or (2) as evidenced by a Certificate of the City, the projected System Revenues during the first Fiscal Year in which Debt Service on the Parity Obligation is payable (other than from Bond or Contract proceeds), is at least equalto I l0% of the Maximum Annual Debt Service for allOutstanding Installment Payments and all Outstanding Parity Obligations plus the Parity Obligation proposed to be executed; (b) The proceeds of such Parity Obligation proposed to be executed shall be used solely to finance or refinance (including reimbursement to the City of amounts advanced for such costs) one or more betterments or improvements to the System as designated by the City and to pay any incidental costs and expenses related thereto including the costs of issuance, execution or delivery of such proposed Parity Obligation; (c) There shall have been delivered to the City an Opinion of Counsel substantially to the effect that (1) the City has the right and power under applicable law to execute and deliver the Parity Obligation, and the Parity Obligation is a valid and binding special obligation of the City, and (2) such Parity Obligation has been duly and validly authorized and issued in accordance with the Installment Sale Agreement; (d) The City is not in default under the Installment Sale Agreement. For purposes ofcalculating the coverage test described in clauses (a) and (b) above, the proceeds of the Refundable Credits received by the City will not be included in System Revenues and will be subtracted from the amount of interest payable in calculating Maximum Annual Debt Service. Notwithstanding the foregoing provisions, neither clause (a) nor clause (b) above shall limit the ability of the City to execute any Parity Obligations at any time to refund any Outstanding Installment Payments or Outstanding Parity Obligations if the annualDebt Service for each FiscalYear during which such Parity Obligation is Outstanding will not be increased by reason of the issuance of such Parity Obligation. Subordinate Obligations The City may incur Subordinate Obligations without meeting any of the tests described above under " - Condition for the Execution of Parity Obligations." OHSUSA:763800162.4 c-13 Compliance with Installment Sale Agreement and Trust Agreement The City will punctually pay the Installment Payments in strict conformity with the terms of the Installment Sale Agreement and will faithfully obserue and perform all the agreements, conditions, covenants and terms contained therein required to be observed and performed by it, and will not terminate the Installment Sale Agreement for any cause including, without limiting the generality of the foregoing, any acts or circumstances that may constitute failure of consideration, destruction of or damage to the 2012 Project or the System, commercial frustration of purpose, any change in the tax or other laws of the United States of America or of the State of California or any political subdivision of either or any failure of the Authority to observe or perform any agreement, condition, covenant or term contained in the Installment Sale Agreement required to be observed and performed by it, whether express or implied, or any duty, liability or obligation arising out of or connected therewith or the insolvency, or deemed insolvency, or bankruptcy or liquidation of the Authority or any force majeure, including Acts of God, tempest, storm, earthquake, war, rebellion, riot, civil disorder, acts of public enemies, blockade or embargo, strikes, industrial disputes, lockouts, lack of transportation facilities, fire, explosion, or acts or regulations of governmental authorities. The City will faithfully observe and perform all the agreements, conditions, covenants and terms contained in the Trust Agreement required to be observed and performed by it, and it is expressly understood and agreed by and among the parties to the Installment Sale Agreement and the Trust Agreement that each of the agreements, conditions, covenants and terms contained in each such agreement is an essential and material term of the obligation of the City to repay the costs of the acquisition and construction of the 2012Project and the costs and expenses incidentalthereto paid by the Authority pursuant to, and in accordance with, and as authorized under law and the Installment Sale Agreement. Against Encumbrances The City will pay or cause to be paid when due all sums of money that may become due or purporting to be due for any labor, services, materials, supplies or equipment furnished, or alleged to have been furnished, to or for the City in, upon, about or relating to the System and will keep the System free of any and all liens against any portion of the System. In the event any such lien attaches to or is filed against any portion of the System, the City will cause each such lien to be fully discharged and released at the time the performance of any obligation secured by any such lien matures or becomes due, except that if the City desires to contest any such lien it may do so. If any such lien shall be reduced to final judgment and such judgment or any process as may be issued forthe enforcement thereof is not promptly stayed, or if so stayed and such stay thereafter expires, the City willforlhwith pay or cause to be paid and discharged such judgment. The City will, to the maximum extent permitted by law, indemnifu and hold the Authority and the Trustee harmless from, and defend each of them against, any claim, demand, loss, darnage, liability or expense (including attorneys' fees) as a result of any such lien or claim of lien against any portion of the System. Against Sale or Other Disposition of Properf-v The City will sell, lease, transfer or otherwise dispose of any of the facilities of the System or comprising a part of the System only if such a sale, transfer or other disposition of the facilities or property of the System are not material to the operation of the System, or shall have become unserviceable, inadequate, obsolete or unfit to be used in the operation of the System, or are no longer necessary, material or useful to the operation of the System and if such transfer will not reduce the System Revenues below the requirements to be maintained under the Installment Sale Agreement. OHSUSA:763800162.4 c-14 Tax Covenants (a) The City will not directly or indirectly use or permit the use of any proceeds of the obligation provided in the Installment Sale Agreement or any other funds of the City or take or omit to take any action that would cause such obligation to be an "arbitrage bond" within the meaning of Section la8(a) of the Code or a "federal-guaranteed obligation" within the meaning of Section 149(b) of the Code or a "private activity bond" as described in Section l4l of the Code. To that end, as long as any Installment Payments are unpaid, the City will comply with all requirements of such sections of the Code to the extent applicable to the obligations provided in the Installment Sale Agreement. In the event that at any time the City is of the opinion that for purposes of this section it is necessary to restrict or to limit the yield on the investment of any moneys held by the City under the Installment Sale Agreement or by the Trustee under the Trust Agreement, the City shall so instruct the Trustee in writing and the trustee, as appropriate, shall act in accordance with such instructions. The City and the Authority covenant that they will at all times do and perform all acts necessary or desirable in order to assure that the interest on the tax-exempt Bonds will not be included in gross income of the registered owners thereof for federal income tax purposes and will take no action that would result in such interest being so included. (b) Notwithstanding any provision of this section, if the City receives an opinion of Bond Counsel that any specified action required under this section is no longer required or that some further or different action is required to maintain the exclusion from gross income for federal income tax purposes on the tax-exempt Bonds, the City may conclusively rely on such opinion in complying with the requirements of this section, and the covenants underthe Installment Sale Agreement shall be deemed to be modified to that extent. Acquisition and Construction of the 2016 Project The City will take all necessary and appropriate steps to acquire and construct the 2016 Project, as agent of the Authority. Maintenance and Operation of the System: Budgets The City will maintain and preserve the System in good repair and working order at all times and will operate the System in an efficient and economical manner and will pay all maintenance and operation costs as they become due and payable. Compliance with Contracts The City will comply with, keep, observe and perform all agreements, conditions, covenants and terms, express or implied, required to be performed by it contained in all contracts for the use of the System and all other contracts affecting or involving the System to the extent that the City is a party thereto. Insurance The City will procure and maintain such insurance relating to the System which it shall deem advisable or necessary to protect its interests and the interests of the Authority and the Trustee, which insurance shall afford protection in such amounts and against such risks as are usually covered in OHSUSA:763800162.4 c-15 connection with municipal storm drainage systems similar to the System; provided, that any such insurance may be maintained under a self-insurance program so long as such self-insurance is maintained in the amounts and manner usually maintained in connection with municipal storm drainage systems similar to the System and is, in the opinion of an Insurance Consultant, financially sound. All policies of insurance required to be maintained in the Installment Sale Agreement shall provide that the Authority and the Trustee shall be given thirty 30 days' written notice of any intended cancellation thereof or reduction of coverage provided thereby. Accountins Records and Financial Statements The City will keep appropriate accounting records in which complete and comect entries shall be made of all transactions relating to the System, which records shall be available for inspection by the Authority and the Trustee at reasonable hours and under reasonable conditions. The City will prepare and file with the Authority and the Trustee annually within 210 days after the close of each Fiscal Year (commencing with the Fiscal Year ending June 30,2016) financial statements of the City for the preceding Fiscal Year prepared in accordance with generally accepted accounting principles, together with an Accountant's Report thereon' Pa)rment of Taxes and Compliance with Governmental Regulations The City will pay and discharge all taxes, assessments and other governmental charges which may be lawfully imposed upon the System or any part thereof when the same shall become due. The City wii auty obserue and conform with all valid regulations and requirements of any governmental authority relative to the operation of the System or any part thereof, but the City shall not be required to comply with any regulaiions or requirements so long as the validity or application thereof shall be contested in good faith. Collection of Storm Drainage Fees The City will collect the Storm Drainage Fee pursuant to the provisions of Section 4.30.060 of the Ordinance. The City will take all actions authorized by the Ordinance (including, if necessary, increasing the Storm Drainage Fee pursuant to the provisions of Section 4.30.030 of the Ordinance) to collect System Revenues during each Fiscal Year through the 2037-2038 Fiscal Year in an amount at least equal to one hundred ten percent (110%) of Debt Service for such FiscalYear. For purposes of calculating the fee covenant described in the preceding paragraph, the proceeds of the Refundable Credits received by the City will not be included in System Revenues and will be subtracted from the amount of interest payable in calculating Debt Service for each Fiscal Year. Continuing Disclosure The City covenants and agrees that it will comply with and carry out all of its obligations under the Continuing Disclosure Certificate to be delivered by the City in connection with the execution and delivery of the Bonds. Notwithstanding any other provision of the Installment Sale Agreement, failure of the City to comply with the Continuing Disclosure Certificate shall not be considered an Event of Default under the Installment Sale Agreement; provided, however, that any beneficial owner of Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the City to comply with its obligations in the Installment Sale Agreement and the Continuing Disclosure Certifi cate. OHSUSA:763800162 4 c-16 Events of Default If one or more of the following Events of Default shall happen, that is to say - (l) if default shall be made in the due and punctual payment of any Installment Payment or of any Parity Obligation when and as the same shall become due and payable; (2) if default shall be made by the City in the performance of any of the agreements or covenants contained in the Installment Sale Agreement required to be performed by it, and such default shall have continued for a period of 60 days after the City shall have been given notice in writing of such default by the Authority or the Trustee; or (3) if default shall be made by the City in the performance of any of the agreements or covenants contained in any Parity Obligation required to be performed by it, other than as set forth in clause (l) above, and such default shall have continued after any notice and grace period provided by such Parity Obligation; or (4) if the City shall file a petition or answer seeking arrangement or reorganization under the federal bankruptcy laws or any other applicable law of the United States of America or any state therein, or if a court of competent jurisdiction shall approve a petition filed with or without the consent of the City seeking arrangement or reorganization under the federal bankruptcy laws or any other applicable law of the United States of America or any state therein, or if under the provisions of any other law for the relief or aid of debtors any court of competent jurisdiction shall assume custody or control of the City or of the whole or any substantial part of its property; then the Trustee shall have the right -(a) by mandamus or other action or proceeding or suit at law or in equity to enforce its rights against the City or any councilmember, officer or employee thereof, and to compel the City or any such councilmember, officer or employee to perform and carry out its or his duties under law and the agreements and covenants required to be performed by it or him contained in the Installment Sale Agreement; (b) by suit in equity to enjoin any acts or things which are unlawful or violate the rights of the Authority or the Trustee; or (c) by suit in equity upon the happening of an Event of Default to require the City and its councilmembers, officers and employees to account as the trustee of an express trust. Discharge of Obl i gations (a) If the City shall pay or cause to be paid all the Installment Payments at the times and in the manner provided in the Installment Sale Agreement, the right, title and interest of the Authority in the Installment Sale Agreement and the obligations of the City thereunder shall thereupon cease, terminate, become void and be completely discharged and satisfied. (b) Any unpaid principal installment of the Installment Payments shall on its payment date or date of prepayment be deemed to have been paid within the meaning of and with the effect expressed in subsection (a) of this section if the Ciry makes payment of such Installment Payments and the prepayment premium, if applicable, in the manner provided in the Installment Sale Agreement. OHSUSA:763800162.4 c-17 (c) All or any portion of unpaid principal installments of the Installment Payments shall, prior to their payment dates or dates of prepayment, be deemed to have been paid within the meaning of and with the effect expressed in subsection (a) of this section if (i) notice is provided by the City to the Trustee as required by the Trust Agreement, (ii) there shall have been deposited with the Trustee either money in an amount which shall be sufficient, or Government Securities, the interest on and principal of which when paid will provide money which, together with money, if any, deposited with the Trustee, shall be sufficient in the opinion of an Independent Certified Public Accountant to pay when due the principal installments of such Installment Payments or such poftions thereof on and prior to their payment dates or their dates of prepayment, as the case may be, and the prepayment premiums, if any, applicable thereto, and (iii) an opinion of nationally recognized bond counsel is filed with the Trustee to the effect that the action taken pursuant to this subsection will not cause the interest on the tax-exempt Bonds to be includable in gross income under the Code for federal income tax purposes. Liabilitlz of Ciry Limited to Sizstem Revenues Notwithstanding anything contained in the Installment Sale Agreement, the City shall not be required to advance any moneys derived from any source of income other than the System Revenues for the payment of the Installment Payments or for the performance of any agreements or covenants required to be performed by it contained in the Installment Sale Agreement. The City may, however, advance moneys for any such purpose so long as such moneys are derived from a source legally available for such purpose and may be legally used by the City for such purpose. The obligation of the City to make the Installment Payments is a special obligation of the City payable solely from the System Revenues as provided in the Installment Sale Agreement, and does not constitute a debt of the City or of the State of California or of any political subdivision thereof within the meaning of any constitutional or statutory debt limitation or restriction. Assignment The Installment Sale Agreement and any rights thereunder shall be assigned by the Authority to the Trustee as provided in the Trust Agreement; to which assignment the City expressly acknowledges and consents. TRUST AGREEMENT Certain provisions of the Trust Agreement setting forth the terms of the Bonds, the redemption provisions thereof and the use of the proceeds of the Bonds are set forth elsewhere in this Official Statement. See "THE BONDS" and "SECURITY FOR THE BONDS" herein. The Trustee The Bank of New York Mellon Trust Company, N.A. has been appointed by the Authority as Trustee. The Trustee will receive all of the Bond proceeds and the Revenues for disbursement in conformity with the Trust Agreement. In addition, the Trustee will act as registrar of the Bonds. Payments of principal of, interest or redemption premiums, if any, on the Bonds will be made through the principal corporate trust office of the Trustee. Assignment The Authority assigns to the Trustee all of the Authority's right, title and interest in the Installment Sale Agreement as security for payment of the Bonds. OHSUSA:763800162.4 c-18 Pledge ofRevenues All Revenues and any other amounts (including proceeds of the sale of the Bonds) held by the Trustee in any fund or account established under the Trust Agreement (other than amounts on deposit in the Rebate Fund created pursuant to the Trust Agreement) are irrevocably pledged to the payment of the interest and premium, if any, on and principal of the Bonds as provided in the Trust Agreement, and the Revenues and other amounts pledged under the Trust Agreement shall not be used for any other purpose while any of the Bonds remain Outstanding; provided, however, that out of the Revenues and other moneys there may be applied such sums for such purposes as are permitted under the Trust Agreement. This pledge shall constitute a pledge of and charge and first lien upon the Revenues, all other amounts pledged under the Trust Agreement and all other moneys on deposit in the funds and accounts established under the Trust Agreement (excluding amounts on deposit in the Rebate Fund) for the payment of the interest on and principal of the Bonds in accordance with the terms thereof and of the Trust Agreement. Establishment of Funds and Accountsl Flow of Funds The Trust Agreement provides for the establishment of the following special accounts or funds, among others: the Revenue Fund (including the Interest Account, the Principal Account and the Reserve Account), the Costs of Issuance Fund, the Acquisition and Construction Fund and the Rebate Fund. All money in the Interest Account will be used and withdrawn by the Trustee solely for the purpose of paying interest on the Bonds as it becomes due and payable (including accrued interest on any Bonds purchased or redeemed prior to maturity). On or before the final two Interest Payment Dates, the Trustee shall set aside from the Reserve Account and deposit in the Interest Account the amount of money which is equal to the amount of interest becoming due and payable on all Outstanding Bonds on such Interest Payment Dates. All money in the Principal Account will be used and withdrawn by the Trustee solely for the purpose of paying the principal of the Bonds as it becomes due and payable. All money in (or available to) any Reserve Account will be used to replenish the Interest Account and the Principal Account, in that order, in the event of any deficiency at any time in any such account. All money in the Costs of lssuance Fund will be used to pay the Costs of Issuance of the Bonds upon receipt by the Treasurer of a Written Request of the Authority. Moneys in the Acquisition and Construction Fund will be used to pay Project Costs and expenses incident thereto or shall be used for the payment of interest on the Bonds. Moneys in the Rebate Fund will be used to make rebate payments to the United States of America, if required. Revenue Fund Moneys in the Revenue Fund will be transferred to and deposited in the following respective accounts in the following order of priority: (1) Interest Account. On or before each Interest Payment Date, the Trustee shall set aside from the Revenue Fund and deposit in the Interest Account that amount of money which is equal to the amount of interest becoming due and payable on all Outstanding Bonds on the next succeeding Interest Payment Date. No deposit need be made in the Interest Account if the amount contained therein and available to pay interest on the Bonds is at least equal to the aggregate amount of interest becoming due and payable on all Outstanding Bonds on such Interest Payment Date. (2) Principal Account. On or before each July l, the Trustee shall set aside from the Revenue Fund and deposit in the Principal Account an amount of money equalto the principal amount of OHSUSA:763800162.4 c-19 all Outstanding Serial Bonds maturing on such July I and the principal amount of all Outstanding Term Bonds being redeemed on July l. No deposit need be made in the Principal Account if the amount contained therein and available to pay principal of the Bonds is at least equal tothe aggregate amount of the principalof all Outstanding Serial Bonds maturing by their terms on such July I and the principal amount of all Outstanding Term Bonds being redeemed on such July l. On or before the final principal payment date, the Trustee shall set aside from the Reserve Account and deposit in the Principal Account an amount of money equal to the principal amount of Bonds maturing on such date. Reserve Account The Reserve Account shall be available for the purpose of replenishing the Interest Account and the Principal Account. Earnings on amounts in the Reserve Account in excess of the Reserve Account Requirements shall be transferred to the Revenue Fund on January 1 and July 1 ofeach year. Acquisition and Construction Fund When the Project shall have been completed, the City shall (l) deliver to the Trustee a Certificate of Completion stating that all such costs of construction and incidental expenses have been determined and paid (or that all of such costs and expenses have been paid less specified claims which are subject to dispute and for which a retention in the Project Account of the Acquisition and Construction Fund is to be maintained in the full amount of such claims until such dispute is resolved); (2) the Trustee shall transfer from the Project Account of the Acquisition and Construction Fund for deposit in the Reserve Account such amount as is necessary to make the amount on deposit therein equal the Reserve Account Requirement; and (3) subject to the covenants contained in Section 6.03 of the Trust Agreement, the Trustee shall transfer any moneys remaining in the Acquisition and Construction Fund (but less the amount of any such retention) for deposit in the Revenue Fund to be applied as a credit against the Installment Payments. Investments Subject to the Trust Agreement, all money held by the Trustee and the Treasurer in any of the accounts or funds established pursuant to the Trust Agreement shall be invested in Permitted Investments at the Written Request of the City or, if no instructions are received, in money market funds described in paragraph (D) of the definition of Permitted Investments. Such investments shall, as nearly as practicable, mature on or before the dates on which such money is anticipated to be needed for disbursement under the Trust Agreement. For purposes of this restriction, Permitted Investments containing a withdrawal option, repurchase option or put option by the investor shall be treated as having a maturity of no longer than such option. Subject to the Trust Agreement, all interest or profits received prior to the completion of a Project on any money invested in the funds held under the Trust Agreement (excluding the Rebate Fund) shall be deposited in the Acquisition and Construction Fund, and all interest or profits received subsequent thereto on any money so invested shall be deposited first in the Reserve Account, to the extent necessary to make amounts on deposit in the Reserve Account equal to the Reserve Account Requirement, and then in the Revenue Fund. The Trustee and its affiliates may act as principal, agent, sponsor or advisor with respect to any investments. The Trustee shall not be liable for any losses on investments made in accordance with the terms and provisions of the Trust Agreement. OHSUSA:763800162.4 c-20 Investments purchased with funds on deposit in the Revenue Fund shall mature not later than the payment date or redemption date, as appropriate, immediately succeeding the investment, Investments in any and all funds and accounts may be commingled for purposes of making, holding and disposing of investments, notwithstanding provisions in the Trust Agreement for transfer to or holding in particular funds and accounts amounts received or held by the Trustee under the Trust Agreement, provided that the Trustee shall at all times account for such investments strictly in accordance with the funds and accounts to which they are credited and otherwise as provided in the Trust Agreement. Limitations on the Issuance of Obligations Payable from Revenues The Authority will not, so long as any of the Bonds are Outstanding, issue any obligations or securities, however denominated, payable in whole or in part from Revenues except the following: (a) Obligations owing with respect to a Reserve Facility, including principal, interest and fees relating thereto; provided such obligations shall be payable on a subordinate basis to principal and interest on the Bonds; and (b) Obligations which are junior and subordinate to the payment of the principal, premium, interest and Reserve Account Requirements for the Bonds and which subordinated obligations are payable as to principal, premium, interest and Reserve Account Requirements, if any, only out of Revenues after the prior payment of all amounts then required to be paid under the Trust Agreement from Revenues for principal, premium, interest and Reserve Account Requirements for the Bonds, as the same become due and payable and at the times and in the manner as required in the Trust Agreement. Covenant Against Encumbrances The Authority will not make any pledge or assignment of or place any charge or lien upon the Revenues except as provided in the Trust Agreement, and will not issue any bonds, notes or obligations payable from the Revenues or secured by a pledge of or charge or lien upon the Revenues except as provided in the Trust Agreement. Tax Covenants The Authority has covenanted to comply with all requirements of Sections 148 and I 49(b) of the Code to the extent applicable to the Bonds, and to not use or permit the use of any proceeds of the Bonds or any funds of the Authority, directly or indirectly, in any manner, or to take or omit to take any action, that would cause any of the Bonds to be treated as an obligation not described in Section 103(a) of the Code. In the event that at any time the Authority is of the opinion that it is necessary to restrict or to limit the yield on the investment of any moneys held by the Trustee under the Trust Agreement, the Authority shall so instruct the Trustee in writing, and the Trustee shall take such action as may be necessary in accordance with such instructions. The Authority and the Trustee (as directed by the Authority) specifically covenant to comply with the provisions and procedures of the Tax Certificate; provided that the Trustee shallnot be bound by this covenant if an Event of Default has occurred and is continuing. Events of Default: Remedies of Bondholders If one or more of the following Events of Default under the Trust Agreement shall occur, that is to sav OHSUSA:763800162.4 c-21 (a) if default shall be made by the Authority in the due and punctual payment of the interest on any Bond when and as the same shall become due and payable; (b) if default shallbe made by the Authority in the due and punctual payment of the principal of or redemption premium, if any, on any Bond when and as the same shall become due and payable, whether at maturity as therein expressed or by proceedings for redemption; (c) if default shall be made by the Authority in the performance of any of the other agreements or covenants required in the Trust Agreement to be performed by the Authority, and such default shall have continued for a period of 30 days after the Authority shall have been given notice in writing of such default by the Trustee; (d) if the Authority shall file a petition or answer seeking alrangement or reorganization under the federal bankruptcy laws or any other applicable law of the United States of America or any state therein, or if a court of competent jurisdiction shall approve a petition filed with or without the consent of the Authority seeking arrangement or reorganization under the federal bankruptcy laws or any other applicable law of the United States of America or any state therein, or if under the provisions of any other law for the relief or aid of debtors any court of competent jurisdiction shall assume custody or control of the Authority or of the whole or any substantial part of its properfy; or (e) if an Event of Default has occurred under the Installment Sale Agreement; then the Trustee may, and upon the written request of the Bondholders of a majority in principal amount of the Bonds then Outstanding, and in each case upon being indemnified to its reasonable satisfaction therefor, shall, proceed to protect or enforce its rights or the rights of the Bondholders of Bonds under the Trust Agreement and the Installment Sale Agreement by a suit in equity or action at law, either for the specific performance of any covenant or agreement contained in the Trust Agreement or in aid of the execution of any power therein granted, or by mandamus or other appropriate proceeding for the enforcement of any other legal or equitable remedy as the Trustee shalldeem most effectual in support of any of its rights and duties under the Trust Agreement, provided that the acceleration of principal of the Bonds shall not be an available remedy. No Bondholder of any Bond issued under the Trust Agreement shall have the right to institute any suit, action or proceeding at law or equity, for any remedy under or upon the Trust Agreement, unless (a) such Bondholder shall have previously given to the Trustee written notice of the occurrence of an Event of Default thereunder; (b) the Bondholders of at least a majority in aggregate principal amount of all the Bonds then Outstanding shall have made written request upon the Trustee to exercise the powers granted in the Trust Agreement or to institute such suit, action or proceeding in its own name; (c) said Bondholders shall have tendered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; and (d) the Trustee shall have refused or omitted to comply with such request for a period of 60 days after such request shall have been received by, and said tender of indemnity shall have been made to, the Trustee. Amendment of Documents Trust Agreement. The Trust Agreement and the rights and obligations of the Authority and of the Bondholders may be amended at any time by a Supplemental Trust Agreement which shall become binding when the written consents of the Bondholders of a majority in aggregate principal amount of the Bonds then Outstanding, exclusive of Bonds disqualified as provided in the Trust Agreement, are filed with the Trustee; provided that if such modification or amendment will, by its terms, not take effect so long as any Bonds of any parlicular maturity remain Outstanding, the consent of the Holders of such Bonds shallnot be required and such Bonds shall not be deemed to be Outstanding forthe purpose of any OHSUSA:763800162.4 f\ ,,)., calculation of Bonds Outstanding under the Trust Agreement. No such amendment shall (l) extend the maturity of or reduce the interest rate on or amount of interest on or principal of or redemption premium, if any, on any Bond without the express written consent of the Bondholder of such Bond, or (2) permit the creation by the Authority of any pledge of or charge or lien upon the Revenues as provided in the Trust Agreement superior to or on a parity with the pledge, charge and lien created thereby for the benefit of the Bonds, or (3) reduce the percentage of Bonds required for the written consent to any such amendment, or (4) modifu any rights or obligations of the Trustee, the Authority, or the City without their prior written assent thereto, respectively. It shall not be necessary for the consent of the Bondholders to approve the particular form of any Supplemental Trust Agreement, but it shall be sufficient if such consent shall approve the substance thereof. Promptly after the execution by the Authority and the Trustee of any Supplemental Trust Agreement pursuant to the Trust Agreement, the Trustee shall mail a notice on behalf of the Authority, setting forth in general terms the substance of such Supplemental Trust Agreement to the Bondholders at the addresses shown on the registration books maintained by the Trustee. Any failure to give such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such Supplemental Trust Agreement. The Trust Agreement and the rights and obligations of the Authority and of the Bondholders may also be amended at any time by a Supplemental Trust Agreement which shall become binding upon adoption without the consent of any Bondholders for any one or more of the following purposes: (i) to add to the agreements and covenants required in the Trust Agreement to be performed by the Authority other agreements and covenants thereafter to be performed by the Authority, or to surrender any right or power reserved in the Trust Agreement to or conferred therein on the Authority; (ii) to make such provisions for the purpose of curing any ambiguity or of correcting, curing or supplementing any defective provision contained in the Trust Agreement or in regard to questions arising under the Trust Agreement which the Authority may deem desirable or necessary; (iii) to add to the agreements and covenants required in the Trust Agreement, such agreements and covenants as may be necessary to qualify the Trust Agreement under the Trust Indenture Act of 1939; or (iv) any other purpose that will not materially adversely affect the interests of the Bondholders. Installment Sale Agreement. The Authority shall not supplement, amend, modifu or terminate any of the tenns of the Installment Sale Agreement, or consent to any such supplement, amendment, modification or termination, without the prior written consent of the Trustee. The Trustee shall give such written consent if such supplement, amendment, modification or termination (a) will not materially adversely affectthe interests of the Bondholders or result in any material impairment of the security given by the Trust Agreement for the payment of the Bonds, (b) is to add to the agreements, conditions, covenants and terms required to be observed or performed thereunder by any party thereto, or to surrender any right or power therein reserved to the Authority or the City, (c) is to cure, correct or supplement any ambiguous or defective provision contained therein, or (d) if the Trustee first obtains the written consent of the Bondholders of a majority in principal amount of the Bonds then Outstanding to such supplement, amendment, modification or termination; provided, that no such supplement, amendment, modification or termination shall reduce the amount of Installment Payments to be made to the Authority or the Trustee by the City pursuant to the Installment Sale Agreement, or extend the time for making such payments, or permit the creation of any lien prior to or on a parity with the lien created by the Trust Agreement on the Installment Payments (except as expressly provided in the Installment Sale Agreement), in each case without the written consent of all of the Bondholders of the Bonds then Outstanding. Discharge of Trust Agreement If the Authority shall pay or cause to be paid or there shall otherwise be paid to the Bondholders of all Outstanding Bonds the interest thereon and principal thereof and redemption premiums, if any, thereon at the times and in the manner stipulated in the Bonds and the Trust Agreement, and the Authority OHSUSA:763800162.4 c-23 shall pay in full all other amounts due under the Trust Agreement, then the Bondholders of such Bonds shall cease to be entitled to the pledge of and charge and lien upon the Revenues as provided in the Trust Agreement, and all agreements, covenants and other obligations of the Authority to the Bondholders of such Bonds under the Trust Agreement shall thereupon cease, terminate and become void and be discharged and satisfied. In such event, the Trustee shall execute and deliver to the Authority all such instruments as may be necessary or desirable to evidence such discharge and satisfaction, the Trustee shall pay over or deliver to the Authority all money or securities held by it pursuant to the Trust Agreement which are not required for the payment of the interest on and principal of and redemption premiums, if any, on such Bonds and for the payment of all other amounts due under the Trust Agreement and under the Installment Sale Agreement. Any Outstanding Bonds shall prior to the maturity date or redemption date thereof be deemed to have been paid within the meaning of and with the effect expressed in subparagraph (a) above if (1) in case any of such Bonds are to be redeemed on any date prior to their maturity date, the Authority shall have given to the Trustee in form satisfactory to it irrevocable instructions to provide notice in accordance with the Trust Agreement, (2) there shall have been deposited with the Trustee (A) money in an amount which shall be sufficient and/or (B) Government Securities, the interest on and principal of which when paid will provide money which, together with the money, if any, deposited with the Trustee at the same iime, shall be sufficient, in the opinion of an Independent Certified Public Accountant, to pay when due the interest to become due on such Bonds on and prior to the maturity date or redemption date thereoi as the case may be, and the principal of and redemption premiums, if any, on such Bonds, and (3) in the event such Bonds are not by their terms subject to redemption within the next succeeding 60 days, the Authority shall have given the Trustee in form satisfactory to it irevocable instructions to mail as soon as practicable, a notice to the Bondholders of such Bonds that the deposit required by clause (2) above has teen made with the Trustee and that such Bonds are deemed to have been paid in accordance with the Trust Agreement and stating the maturity date or redemption date upon which money is to be available for the payment of the principal of and redemption premiums, if any, on such Bonds. Unclaimed Moneys Any money held by the Trustee in trust for the payment and discharge of any of the Bonds or interest thereon which remains unclaimed for 2 years after the date when such Bonds or interest thereon have become due and payable, either at their stated maturity dates or by call for redemption prior to maturity, if such money was held by the Trustee at such date, or for 2 years after the date of deposit of such money if deposited with the Trustee after the date when such Bonds have become due and payable, shall be repaid by the Trustee to the Authority as its absolute property free from trust, and the Trustee shall thereupon be released and discharged with respect thereto and the Bondholders shall not look to the Trustee for the payment of such Bonds; provided, however, that before being required to make any such payment to the Authority, the Trustee may, and at the request of the Authority shall, at the expense of the Authority, cause to be published once a week for 2 successive weeks in a Financial Newspaper of general circulation in Los Angeles and in San Francisco, California, and in the same or a similar Financial Newspaper of general circulation in New York, New York, a notice that such money remains unclaimed and that, after a date named in such notice, which date shall not be less than 30 days after the date of the first publication of each such notice, the balance of such money then unclaimed will be retumed to the Authority. OHSUSA:763800162.4 c-24 APPENDIX D FORM OF CONTINUING DISCLOSURE CERTIFICATE This Continuing Disclosure Certificate (the "Disclosure Certificate") is executed and delivered by the City of Burlingame, California (herein the "City") in connection with the issuance of the Burlingame Financing Authority Storm Drainage Revenue Bonds, Series 2016 (the "Bonds"). The Bonds are being issued pursuant to a Trust Agreement, dated as of February 1,2016 (the "Trust Agreement"), between the Burlingame Financing Authority and The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee"). The City covenants and agrees as follows: SECTION l. Purpose of this Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the City for the benefit of the Owners and Beneficial Owners of the Bonds and in order to assist the Participating Underwriter in complying with Securities and Exchange Commission ("S.E.C.") Rule 1 5c2- 1 2(bX5). SBCTION 2. Definitions. In addition to the definitions set forth in the Trust Agreement, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalized terms shall have the following meanings: "Annual Report" shall mean any Annual Report provided by the City pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate. "Beneficial Owner" shall mean any person which has or shares the power, directly or indirectly, to make investment decisions concerning ownership of any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries)' "Dissemination Agent" shall mean the City, or any successor Dissemination Agent designated in writing by the City and which has filed with the City a written acceptance of such designation. ooHolder" shall mean the person in whose name any Bond shall be registered. "Listed Events" shall mean any of the events listed in Section 5(a) or (b) of this Disclosure Certificate. "MSRB" shall mean the Municipal Securities Rulemaking Board or any other entity designated or authorized by the Securities and Exchange Commission to receive reports pursuant to the Rule. Until otherwise designated by the MSRB or the Securities and Exchange Commission, filings with the MSRB are to be made through the Electronic Municipal Market Access (EMMA) website of the MSRB, currently located at http://emma.msrb.org. "Participating Underwriter" shall mean the original underwriter of the Bonds required to comply with the Rule in connection with offering of the Bonds. "Rule" shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. SECTION 3. Provision of Annual Reports. oHSUSA.763800162 4 D-1 (a) The City shall, or shall cause the Dissemination Agent to, not later than seven months after the end of the City;s fiscal year (which shall be February 1 of each year, so long as the City's fiscal year ends on June 30), commencing with the report for the 2015-16 fiscal year (which is due not later than February 1, 20ll), provide to the MSRB an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Certificate. The Annual Report may cross-reference other information as provided in Section 4 of this Disclosure Certificate; provided, thatthe audited financial statements of the blty ,uy be submitted separately from the balance of the Annual Report and later than the date required above for the filing of the Annual Reporl if they are not available by that date. If the City's fiscal year changes, it shall give notice of such change in a filing with the MSRB. The Annual Reporl shall be submitted on a standard form in use by industry participants or other appropriate form and shall identifu the Bonds by name and CUSIP number. (b) Not later than 15 business days prior to said date, the City shall provide the Annual Report to the Dissemination Agent (if other than the City). If the City is unable to provide to the MSRB an Annual Report by the date required in subsection (a), the City shall, in a timely manner, send or cause to be sent to the MSRB a notice in substantially the form attached as Exhibit A. (c) The Dissemination Agent shall (if the Dissemination Agent is other than the City) file a report with the City certifing that the Annual Report has been provided pursuant to this Disclosure Ceftificate, stating the date it was provided to the MSRB. SBCTION 4. Content of Annual Reports. The City's Annual Reporl shall contain or include by reference the following: ( I ) The audited financial statements of the City for the preceding fiscal year, prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Govemmental Accounting Standards Board. If the City's audited financial statements are not available by the time the Annual Report is required to be provided to the MSRB pursuant to Section 3(a), the Annual Report shall contain unaudited financial statements in a format ii-ilur to the financial statements contained in the final Official Statement, and the audited financial statements shall be provided to the MSRB in the same manner as the Annual Report when they become available. To the extent not included in the audited financial statement of the City, the Annual Report shall also include the following: (2) Updated Fees Paid by Largest Fee Payers table. (3) The Storm Drainage Fees and Debt Service Coverage for the fiscal year. (4) In the event the County has discontinued the Teeter Plan with respect to the Storm Drainage Fees, the Secured Taxes and Delinquencies for the fiscal year. Any or all of the items listed above may be set forth in one or a set of documents or may be included by specific reference to other documents, including official statements of debt issues of the City or related public entities, which have been made available to the public on the MSRB's website. The City shall clearly identifu each such other document so included by reference. SECTION 5. Reporting of Significant Events. OHSUSA:763800162.4 D-2 (a) The City shallgive, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds in a timely manner not later than ten business days after the occurrence ofthe event: 1. Principal and interest payment delinquencies; Z, Unscheduled draws on debt sewice reserves reflecting financial difficulties; 3. Unscheduled draws on credit enhancements reflecting financial difficulties; 4. Substitution of credit or liquidity providers, or their failure to perform; 5. Adverse tax opinions or issuance by the Internal Revenue Service of proposed or final determination of taxability or of a Notice of Proposed Issue (IRS Form 5701 TEB); 6. Tender offers; 7. Defeasances; 8. Rating changes; or g. Bankruptcy, insolvency, receivership or similar event of the obligated person' Note: for the purposes of the event identified in subparagraph (9), the event is considered to occur when any of the iollowing occur: the appointment of a receiver, fiscal agent or similar officer for an obligated person in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the obligated person, or if such jurisdiction has been assumed by leaving the existing governmental body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a pian of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the obligated person. (b) The City shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bondi, if material, in a timely manner not later than ten business days after the occurrence ofthe event: l. Unless described in paragraph 5(a)(5), other material notices or determinations by the Internal Revenue Service with respect to the tax status of the Bonds or other material events affecting the tax status of the Bonds; 2. Modifications to rights of Bond holders; 3. Optional, unscheduled or contingent Bond calls; 4. Release, substitution, or sale of properly securing repayment of the Bonds; 5. Non-payment related defaults; 6. The consummation of a merger, consolidation, or acquisition involving an obligated person or the sale of all or substantially all of the assets of the obligated person, other OHSUSA:763800162.4 D-3 than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than Pursuant to its terms; or 7 . Appointment of a successor or additional trustee or the change of name of a trustee. (c) Upon the occurrence of a Listed Event described in Section 5(a), or upon the occurence of a Listed Event described in Section 5(b) which the City determines would be material under applicable federal securities laws, the City shall within ten business days of occurrence file a notice of such occurrence with the MSRB. Notwithstanding the foregoing, notice of the Listed Event described in subsection (b)(3) need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to Holders of affected Bonds pursuant to the Trust Agreement' SECTION 6. Format for Filings with MSRB. Any report or filing with the MSRB pursuant to this Disclosure Certificate must be submitted in electronic format, accompanied by such identifring information as is prescribed by the MSRB. SECTION 7. Termination of Reporting Obligation. The City's obligations under this Disclosure Certificate shallterminate upon the legaldefeasance, prior redemption or payment in full of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the City shall give notice of such termination in a filing with the MSRB. SECTION 8. Dissemination Agent. The City may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Cerlificate, and may discharge uny rrih Dissemination Agent, with or without appointing a successor Dissemination Agent. The Diisemination Agent shall not be responsible in any manner for the content of any notice or report prepared by the City fursuant to this Disclosure Certificate. The initial Dissemination Agent shall be the City. SECTION 9. Amendment: Waiver. Notwithstanding any other provision of this Disclosure Certificate, the City may amend this Disclosure Certificate, and any provision of this Disclosure Cerlificate rnay be waived, provided that the following conditions are satisfied: (a) If the amendment or waiver relates to the provisions of Sections 3(a),4, or 5(a) or (b), it may only-be made in connection with a change in circumstances that arises from a change in legal requirernents, change in law, or change in the identiry, nature or status of an obligated person with respect to the Bonds, or the type ofbusiness conducted; (b) The undertaking, as amended or taking into account such waiver, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the original i5run.. of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and (c) The amendment or waiver does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the Holders or Beneficial Owners of the Bonds. In the event of any amendment or waiver of a provision of this Disclosure Certificate, the City shall describe such amendment in the next Annual Report, and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the type (or in the case of a change of accounting principles, on the presentation) of financial information or operating data being p...Jrt"d by the City-. ln addition, if the amendment relates to the accounting principles to be followed in OHSUSA:763800162.4 D-4 preparing financial statements, (i) notice of such change shall be given in a filing with the MSRB, and (ii) the Annual Report for the year in which the change is made should present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. SECTION 10. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the City from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice required to be filed pursuant to this Disclosure Certificate, in addition to that which is required by this Disclosure Certificate. If the City chooses to include any information in any Annual Report or notice in addition to that which is specifically required by this Disclosure Certificate, the City shall have no obligation under this Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event or any other event required to be reported. SECTION 11. Default. In the event of a failure of the City to comply with any provision of this Disclosure Certificate, any Holder or Beneficial Owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the City to comply with its obligations under this Disclosure Certificate. The sole remedy under this Disclosure Certificate in the event of any failure of the City to comply with this Disclosure Certificate shall be an action to compel performance. SBCTION 12. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the City, the Dissemination Agent, the Participating Underwriter and Holders and Beneficial Owners from time to time of the Bonds, and shallcreate no rights in any other person or entity. Date By OHSUSA:763800162.4 D-5 CITY OF BURLINGAME. CALIFORNIA APPENDIX E FORM OF LEGAL OPINION lro coMEl OHSUSA:763 800162.4 E-1 APPENDIX F BOOK.ENTRY ONLY SYSTEM Book-Entry Only System The idormation in this section concerning DTC and DTC's book-entry system has been obtainedfrom DTC. The Authority and City take no responsibility for the qccuracy or completeness thereof. The Authority and City cannot and do not give any qssurances thqt DTC, DTC Participanls or Indirect Participants will dislribute to the Beneficial Owners (a) payments of interest, principal or premium, d ony, with respect to the Bonds, (b) certificates representing ownership interesl in or other confirmalion of ownership interest in the Bonds, or (c) redemption or other notices sent to DTC or Cede & Co., its nominee, as the regislered owner of the Bonds, or that they will so do on a tinely basis or that DTC, DTC Participqnts or DTC Indirect Participants will act in the manner described in this Official Statement. The current "Rules" applicable to DTC are on file with the Securities and Exchange Commission and the current "Procedures" of DTC to befollowed in dealingwilh DTC Participonts are onfilewith DTC. DTC will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Bond certificate for each maturity will be issued for the Bonds in the aggregate principal amount of each maturity, and will be deposited with DTC. DTC, the world's largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3,5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments from over 100 countries that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants ofsales and other securities transactions in deposited securities through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). DTC has a Standard & Poor's rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com. The information contained in such website is not incorporated by reference herein. Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC's records. The ownership interest of each actual purchaser of each Bond ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Bonds, except in the event that use of the book-entry system for the Bonds is discontinued. OHSUSA:763800162.4 E-2 To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults and proposed amendments to the bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them. Redemption notices shall be sent to DTC. If less than all of the Bonds within a maturity are being redeemed, DTC's practice is to determine by lot the amount of interest of each Direct Participant in such maturity to be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Bonds unless authorized by a Direct Panicipant in accordance with DTC's Procedures. Under its usual procedures, DTC mails an omnibus proxy (the "Omnibus Proxy") to the City as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Principal and interest payments on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from the Authority or the Trustee, on payable dates in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, the Trustee, or the Authority, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Authority or the Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as securities depository with respect to the Bonds at any time by giving reasonable notice to the Authority or the Trustee, or the Authority or City may decide to discontinue use of the system of book-entry transfers through DTC. Under such circumstances, in the event that a successor securities depository is not obtained, Bond certificates are required to be printed and delivered in accordance with the provisions set forth in the Trust Agreement. OHSUSA:763800162.4 E-3 Stradling Yocca Carlson & Rauth Draft of 1/6/16 $ BURLINGAME FINANCING AUTHORITY Storm Drainage Revenue Bonds, Series 2016 PURCHASE AGREEMENT February _,2016 Burlingame Financing Authority c/o City of Burlingame Department of Finance 501 Primrose Road Burlingame, Cal ifornia 9 401 0-3997 Attention: Executive Director City of Burlingame c/o City of Burlingame Department of Finance 501 Primrose Road Burlingame, California 9 4010-3997 Ladies and Gentlemen The undersigned, Stifel, Nicolaus & Company, Incorporated (the "Underwriter"), acting not as a fiduciary or agent for you, but on behalf of itself, offers to enter into this purchase agreement (the "Purchase Agreement") with the Burlingame Financing Authority (the "Authority") and the City of Burlingame (the "Cit),"), which will be binding upon the Authority, the City and the Underwriter upon the acceptance hereof by the Authority and the City. This offer is made subject to its acceptance by the Authority and the City by execution of this Purchase Agreement and its delivery to the Underwriter on or before I l:59 p.m., California Time, on the date hereof. All terms used herein and not otherwise defined shall have the respective meanings given to such terms in the Trust Agreement, dated as of February 1,2016 (the "Trust Agreement"), by and between the Authority and The Bank of New York Mellon Trust Company, N.A., as trustee (the 'oTrustee"). l. Purchase and Sale. Upon the terms and conditions and upon the basis of the representations, warranties and agreements hereinafter set forth, the Underwriter hereby agrees to purchase from the Authority and the City, and the Authority and the City hereby agree to sell to the Underwriter,al1(butnot1essthanall)ofthe$-aggregateprincipa1amountof Burlingame Financing Authority Storm Drainage Revenue Bonds, Series 2016 (the "Bonds"). The purchase price for the Bonds shall be equal to $_ (being the aggregate principal amount thereof plus/less a net original issue premium/discount of $_ and less an Underwriter's discount of $). 2. Description of the Bonds. The Bonds shall be issued and sold to the Underwriter by the Authority pursuant to the Trust Agreement, the Authority's Joint Exercise of Powers Agreement (the "JPA Agreement"), the Constitution and the laws of the State of California (the "State"), the Joint Exercise of Powers Act (California Government Code Title 1, Division 7, Chapter 5, Section 6500 et seq.) (the "JPA Act"), Resolution No. FA_-2016 of the Authority adopted by the Governing Board of the Authority on January _,2016 (the "Authority Resolution"), ResolutionNo. T2-20l2of the City adopted on January _, 2016 (the "City Authorizing Resolution") and the Judgment in Validation Proceedings (Case. No.CIV 494233) entered on April 20, 2010 (the "Validation Judgment"). The City Authorizing Resolution, together with Ordinance No. 1836 of the City entitled "Ordinance of the City of Burlingame Adding Chapter 4.30 to the Burlingame Municipal Code to Administer A Storm Drainage Fee" adopted on January 20,2009 imposing storm drainage fees (the "Cit), Ordinance"), (approved by the voters in a mailed ballot election held on May 5, 2009) are collectively referred to herein as the "City Resolutions." The Bonds shall be as described in the Trust Agreement and the Official Statement (as such term is defined herein) relating to the Bonds and shall mature and bear interest as set forth in Exhibit A attached hereto and incorporated herein by reference. Proceeds of the Bonds will be applied: (i) to provide funds to finance certain improvements to the City's storm drainage system; [and] (ii) [to provide for a reserve account for the Bonds; and (iii)] to pay the costs of issuance of the Bonds. The Bonds, this Purchase Agreement, the Trust Agreement, the JPA Agreement, the Authority Resolution and the Installment Sale Agreement, dated as of February 1,2016 (the "lnstallment Sale Agreement"), by and between the City and the Authority, are collectively referred to herein as the "@." This Purchase Agreement, the City Resolutions, the Installment Sale Agreement and the Continuing Disclosure Certificate, dated as of the Closing Date (as such term is defined herein) and entered into by the City (the "Continuing Disclosure Certificate") are collectively referred to herein as the "ejlyleqlqgil!." 3. Public Offering. The Underwriter agrees to make a bona fide public offering of all of the Bonds initially at the public offering prices (or yields) set forth on Exhibit A attached hereto and incorporated herein by reference. Subsequent to the initial public offering, the Underwriter reserves the right to change the public offering prices (or yields) as it deems necessary in connection with the marketing of the Bonds, provided that the Underwriter shall not change the interest rates set forth on Exhibit A. The Bonds may be offered and sold to certain dealers at prices lower than such initial public offering prices. The City and the Authority acknowledge and agree that: (i) the purchase and sale of the Bonds pursuant to this Purchase Contract is an arm's-length commercial transaction between the City, Authority and the Underwriter; (ii) in connection therewith and with the discussions, undertakings and procedures leading up to the consummation of such transaction, the Underwriter is and has been acting solely as principal and are not acting as Municipal Advisor (as such term is defined in Section l5B of The Securities Exchange Act of 1934, as amended) to the City or the Authority; (iii) the Underwriter has not assumed an advisory or fiduciary responsibility in favor of the City of Authority with respect to the offering contemplated hereby or the discussions, undertakings and procedures leading thereto (irrespective of whether the Underwriter has provided other services or is currently providing other services to the City or Authority on other matters); (iv) the Underwriter has financial and other interests that differ from and be adverse to those of the City and the Authority; and (v) the City and Authority have consulted their own legal, financial and other advisors to the extent that they have deemed appropriate. 4. Deliverv of Official Statement. The Authority and the City have delivered or caused to be delivered to the Underwriter prior to the execution of this Purchase Agreement copies of the 2 Preliminary Official Statement relating to the Bonds (the "Preliminary Official Statement"). Such Preliminary Official Statement is the official statement deemed final by the City and the Authority for purposes of Rule 15c2-12 promulgated under the Securities Exchange Act of 1934 (the "Rule"), except for information permitted to be omitted therefrom pursuant to the Rule, and approved for delivery by resolution of the City. Within seven (7) Business Days from the date hereof, the Authority and the City shall deliver to the Underwriter a final Official Statement, executed on behalf of the Authority by an authorized representative of the Authority and dated the date hereof, which shall include information permitted to be omitted by paragraph (bXl) of the Rule and with such other amendments or supplements as shall have been approved by the Authority, the City and the Underwriter (the "Final Official Statement"). The Preliminary Official Statement and the Final Official Statement, including the cover pages, the appendices thereto and all information incorporated therein by reference are hereinafter referred to collectively as the "Official Statement." The Underwriter agrees that it will not confirm the sale of any Bonds unless the confirmation of sale is accompanied or preceded by the delivery of a copy of the Final Official Statement. The Underwriter agrees to deliver a copy of the Final Official Statement to the Municipal Securities Rulemaking Board (the "MSRB") through the Electronic Municipal Marketplace Access website of the MSRB, currently maintained on the Internet at http://emma.msrb.orgl, on or before the Closing Date (as such term is defined herein), and the Underwriter agrees to comply with the requirements of MSRB Rule G-32 for delivery of a copy of the Final Official Statement, upon request of any customer who purchases a Bond, and otherwise to comply with all applicable statutes and regulations in connection with the sale of the Bonds. 5. The Closing. At 8:00a.m., Pacific Standard Time, on February_, 2016 (the "Closing Date"), or at such other time or on such earlier or later Business Day as shall have been mutually agreed upon by the City and the Underwriter, the Authority and the City will deliver: (i) the Bonds to the respective accounts of the Underwriter (through the facilities of The Depository Trust Company, New York, New York or through the FAST system), duly executed; and (ii) the closing documents hereinafter mentioned at the offices of Orrick, Herrington & Sutcliffe LLP ("Bond Counsel"), in San Francisco, California, or at another place to be mutually agreed upon by the Authority, the City and the Underwriter. The Underwriter shall order CUSIP identification numbers and the Authority shall cause such CUSIP identification numbers to be printed on the Bonds, but neither the failure to print any such number on any Bond nor any error with respect thereto shall constitute cause for failure or refusal by the Underwriter to accept delivery of and pay for the Bonds in accordance with the terms of this Purchase Agreement. The Underwriter will accept such delivery and pay the purchase price of the Bonds as set forth in Section I hereof by federal wire transferto the orderoftheTrusteeonbehatfoftheCity. Thispaymentanddelivery,togetherwiththedeliveryof the aforementioned documents, is herein called the "Closing'" 6. City Representations. Warranties and Covenants. The City represents and covenants to the Authority and the Underwriter that: (a) The City is a municipal corporation and general law city duly organized and existing under and by virtue of the laws of the State. (b) The City has full legal right, power and authority to adopt or enter into, as the case may be, and to carry out and consummate the transactions on its part contemplated by the City Documents. 3 (c) By all necessary official action, the City has duly adopted, authorized and approved the City Documents, has duly authorized and approved the Preliminary Official Statement and the Final Official Statement, and has duly adopted or authorized and approved the execution and delivery of, and the performance by the City of the obligations on its part contained in, the City Documents and the consummation by it of all other transactions contemplated by the City Documents in connection with the issuance of the Bonds. As of the date hereof, such authorizations and approvals are in full force and effect and have not been amended, modified or rescinded. When executed and delivered, and assuming due execution and delivery by the other parties thereto, if applicable, the City Documents will constitute the legally valid and binding obligations of the City enforceable in accordance with their respective terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or affecting creditors' rights generally, or by the exercise ofjudicial discretion and the limitations on legal remedies against municipal corporations in the State. The City has complied, and will at the Closing be in compliance in all respects, with the terms of the City Documents. (d) To the best of its knowledge, the City is not in any material respect in breach of or default under any applicable constitutional provision, law or administrative regulation of any state or of the United States of America, or any agency or instrumentality of either, or any applicable judgment or decree, or any loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the City is a party, which breach or default has or may have an adverse effect on the ability of the City to perform its obligations under the City Documents, and no event has occurred and is continuing which with the passage of time or the giving of notice, or both, would constitute such a default or event of default under any such instrument; and the adoption, execution and delivery of the City Documents, if applicable, and compliance with the provisions on the City's part contained therein, will not conflict in any material way with or constitute a material breach of or a material default under any constitutional provision, law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the City is a party, nor will any such adoption, execution, delivery or compliance result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of the property or assets of the City or under the terms of any such law, regulation or instrument, except as may be provided by the City Documents. (e) To the best of its knowledge, all material authorizations, approvals, licenses, permits, consents and orders of any governmental authority, legislative body, board, agency or commission having jurisdiction of the matter which are required for the due authorization by, or which would constitute a condition precedent to or the absence of which would materially adversely affect the due performance by the City of its obligations in connection with the City Documents have been duly obtained or, when required for future performance, are expected to be obtained, other than such approvals, consents and orders as may be required underthe Blue Sky or securities laws of any state in connection with the offering and sale of the Bonds, and except as described in or contemplated by the Preliminary Official Statement and the Final Official Statement, all authorizations, approvals, licenses, permits, consents and orders of any governmental authority, board, agency or commission having jurisdiction of the matter which are required for the due authorization by, or which would constitute a condition precedent to or the absence of which would materially adversely affect the due performance by, the City of its obligations under the City Documents have been duly obtained. (l) The Preliminary Official Statement was as of its date, and the Final Official Statement is, and at all times subsequent to the date of the Final Official Statement up to and 4 including the Closing will be, true and correct in all material respects, and the Preliminary Official Statement and the Final Official Statement do not and will not contain and up to and including the Closing will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein, in the light of the circumstances under which they were made, not misleading (except that this representation does not include information regarding The Depository Trust Company and its book-entry only system, information under the caption "UNDERWRITING," CUSP numbers, prices and yields for the Bonds and any other information provided by the Underwriter, as to which no view is expressed). (g) The City will advise the Underwriter promptly of any proposal to amend or supplement the Official Statement and will not effect or consent to any such amendment or supplement without the consent of the Underwriter, which consent will not be unreasonably withheld. The City will advise the Underwriter promptly of the institution of any proceedings known to it by any governmental authority prohibiting or otherwise affecting the use of the Official Statement in connection with the offering, sale or distribution of the Bonds. (h) As of the time of acceptance hereof and the Closing, except as disclosed in the Official Statement, there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, governmental authority, public board or body, pending, with service of process having been accomplished, or threatened in writing to the City: (i) in any way questioning the corporate existence of the City or the titles of the officers of the City to their respective offices; (ii) affecting, contesting or seeking to prohibit, restrain or enjoin the issuance or delivery of any of the Bonds, or the payment or collection of any amounts pledged or to be pledged to pay installment payments pursuant to the Installment Sale Agreement or the principal of and interest on the Bonds, or in any way contesting or affecting the validity of the Bonds, the Validation Judgment, the City Documents or the consummation of the transactions contemplated thereby or hereby, or the exclusion of the interest on the Bonds from taxation or contesting the powers of the Authority or its authority to issue the Bonds; (iii) which would be likely to result in any material adverse change relating to the business, operations or financial condition of the City; or (iv) contesting the completeness or accuracy of the Preliminary Official Statement or the Final Official Statement or any supplement or amendment thereto, or asserting that the Preliminary Official Statement or the Final Official Statement contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (i) There is no basis for any action, suit, proceeding, inquiry or investigation of the nature described in clauses (i) through (iv) ofparagraph 6(h). 0) Until the date which is twenty-five (25) days after the "end of the underwriting period" (as such term is defined herein), if any event occurs of which the City is aware that would cause the Official Statement to contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements in the Official Statement, in light of the circumstances under which they were made, not misleading, the City shall forthwith notify the Underwriter of any such event of which it has knowledge and shall cooperate fully in furnishing any information available to it for any supplement to the Official Statement necessary, in the Underwriter's reasonable opinion, so that the statements therein as so supplemented will not be misleading in light of the circumstances existing at such time and the City shall promptly furnish to the Underwriter a reasonable number of copies of such supplement. As used herein, the term "end of the underwriting period" means the later of such time as: (i) the Authority delivers the Bonds to the 5 Underwriter; or (ii) the Underwriter does not retain, directly or as a member of an underwriting syndicate, an unsold balance of the Bonds for sale to the public. Unless the Underwriter gives notice to the contrary, the "end of the underwriting period" shall be deemed to be the Closing Date. Any notice delivered pursuant to this provision shall be written notice delivered to the Underwriter at or prior to the Closing Date of the Bonds and shall specify a date (other than the Closing Date) to be deemed the "end of the underwriting period." (k) The City will refrain from taking any action, or permitting any action to be taken, to reduce the amount of the Storm Drainage Fee (as such term is defined in the Installment Sale Agreement) below the amounts required to comply with the Installment Sale Agreement while the Bonds are Outstanding, and the City will collect the Storm Drainage Fee in accordance with the Installment Sale Agreement and the City Ordinance. (l) Except as disclosed in the Preliminary Official Statement and the Final Official Statement, the City has not within the last five years failed to comply in any material respect with any continuing disclosure undertakings with regard to the Rule. (m) The City will refrain from taking any action, or permitting any action to be taken, with regard to which the City may exercise control, that results in the loss of the tax-exempt status of the interest on the Bonds. 7. Representations and Covenants of the Authority. The Authority represents and covenants to the Underwriter and the City that: (a) The Authority is a public body, duly organized and existing under the Constitution and laws of the State, including the JPA Act, and the JPA Agreement' (b) The Authority has full legal right, power and authority to adopt or enter into, as the case may be, and to carry out and consummate the transactions on its part contemplated by the Authority Documents. (c) By all necessary official action, the Authority has duly adopted, authorized and approved the Authority Documents, has duly authorized and approved the Preliminary Official Statement, will, by execution thereof, duly authorize and approve the Final Official Statement and has duly adopted or authorized and approved the execution and delivery of, and the performance by the Authority of the obligations on its part contained in, the Authority Documents and the consummation by it of all other transactions contemplated by the Authority Documents in connection with the issuance of the Bonds. As of the date hereof, such authorizations and approvals are in full force and effect and have not been amended, modified or rescinded. When executed and delivered, and assuming due execution and delivery by the other parties thereto, if applicable, the Authority Documents will constitute the legally valid and binding obligations of the Authority enforceable in accordance with their respective terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or affecting creditors' rights generally, or by the exercise of judicial discretion and the limitations on legal remedies against joint powers authorities in the State. The Authority has complied, and will at the Closing be in compliance in all respects, with the terms of the Authority Documents. (d) To the best of its knowledge, the Authority is not in any material respect in breach of or default under any applicable constitutional provision, law or administrative regulation of 6 any state or of the United States of America, or any agency or instrumentality of either, or any applicable judgment or decree, or any loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the Authority is a party which breach or default has or may have an adverse effect on the ability of the Authority to perform its obligations under the Authority Documents, and no event has occurred and is continuing which with the passage of time or the giving of notice, or both, would constitute such a default or event of default under any such instrument; and the adoption, execution and delivery of the Authority Documents, if applicable, and compliance with the provisions on the Authority's part contained therein, will not conflict in any material way with or constitute a material breach of or a material default under any constitutional provision, law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the Authority is a party, nor will any such adoption, execution, delivery and compliance result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of the property or assets of the Authority or under the terms of any such law, regulation or instrument, except as may be provided by the Authority Documents. (e) To the best of its knowledge, all material authorizations, approvals, licenses, permits, consents and orders of any governmental authority, legislative body, board, agency or commission having jurisdiction of the matter which are required for the due authorization by, or which would constitute a condition precedent to or the absence of which would materially adversely affect the due performance by the Authority of its obligations in connection with the Authority Documents have been duly obtained or, when required for future performance, are expected to be obtained, other than such approvals, consents and orders as may be required under the Blue Sky or securities laws of any state in connection with the offering and sale of the Bonds; and except as described in or contemplated by the Preliminary Official Statement and the Final Official Statement, all authorizations, approvals, licenses, permits, consents and orders of any governmental authority, board, agency or commission having jurisdiction of the matter which are required for the due authorization by, or which would constitute a condition precedent to or the absence of which would materially adversely affect the due performance by, the Authority of its obligations under the Authority Documents have been duly obtained. (0 The Authority hereby agrees that it will notify the other parties hereto if, within the period from the date of this Purchase Agreement to and including the date twenty-five (25) days following the end of the underwriting period, the Authority discovers any pre-existing or subsequent fact or becomes aware of the occurrence of any event, in any such case, which might cause the Official Statement (as the same may have then been supplemented or amended) to contain any untrue statement of a material fact or to omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (g) As of the time of acceptance hereof and the Closing, except as disclosed in the Official Statement, there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, governmental authority, public board or body, pending, with service of process having been accomplished, or threatened in writing to the Authority: (i) in any way questioning the corporate existence of the Authority or the titles of the officers of the Authority to their respective offices; (ii) affecting, contesting or seeking to prohibit, restrain or enjoin the issuance or delivery of any of the Bonds, or the payment or collection of any amounts pledged or to be pledged to pay the principal of and interest on the Bonds, or in any way contesting or affecting the validity of the Bonds, the Validation Judgment or the other Authority Documents or the consummation of the transactions contemplated thereby or hereby, or contesting the exclusion of the 7 interest on the Bonds from taxation or contesting the powers of the Authority or its authority to issue the Bonds; (iii) which would be likely to result in any material adverse change relating to the business, operations or financial condition of the Authority; or (iv) contesting the completeness or accuracy of the Preliminary Official Statement orthe Final Official Statement or any supplement or amendment thereto or asserting that the Preliminary Official Statement or the Final Official Statement contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (h) There is no basis for any action, suit, proceeding, inquiry or investigation of the nature described in clauses (i) through (iv) of paragraph 7(g). (i) The information in the Official Statement set forth under the captions "INTRODUCTION-The Authority" and "THE AUTHORITY" does not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. 0) Except as disclosed in the Preliminary Official Statement and the Final Official Statement, the Authority has not within the last five years failed to comply in any material respect with any continuing disclosure undertakings with regard to the Rule. (k) The Authority will refrain from taking any action, or permitting any action to be taken, with regard to which the Authority may exercise control, that results in the loss of the tax-exempt status of the interest on the Bonds. 8. Closing Conditions. The Underwriter has entered into this Purchase Agreement in reliance upon the representations, warranties and covenants herein and the performance by the City and the Authority of their obligations hereunder, both as of the date hereof and as of the Closing Date. The Underwriter's obligations under this Purchase Agreement to purchase and pay for the Bonds shall be subject to the following additional conditions: (a) The representations, warranties and covenants of the City and the Authority contained herein shall be true, complete and correct in all material respects at the date hereof and at the time of the Closing, as if made on the Closing Date. (b) At the time of the Closing: (i) the City Documents and the Authority Documents shall be in full force and effect, and shall not have been amended, modified or supplemented except with the written consent of the Underwriter; and (ii) there shall be in full force and effect such resolutions as, in the opinion of Bond Counsel, shall be necessary in connection with the transactions contemplated by the Official Statement, the City Documents and the Authority Documents. (c) The Underwriter shall have the right to terminate this Purchase Agreement, without liability therefor, by notification to the City if at any time at or prior to the Closing: (i) any event shall occur which causes any statement contained in the Official Statement to be materially misleading or results in a failure of the Official Statement to state 8 a material fact necessary to make the statements in the Official Statement, in the light of the circumstances under which they were made, not misleading; or (ii) the marketability of the Bonds or the market price thereof, in the opinion of the Underwriter, has been materially adversely affected by an amendment to the Constitution of the United States or by any legislation in or by the Congress of the United States or by the State, or the amendment of legislation pending as of the date of this Purchase Agreement in the Congress of the United States, or the recommendation to Congress or endorsement for passage (by press release, other form of notice or otherwise) of legislation by the President of the United States, the Treasury Department of the United States, the Internal Revenue Service or the Chairman or ranking minority member of the Committee on Finance of the United States Senate or the Committee on Ways and Means of the United States House of Representatives, or the proposal for consideration of legislation by either such Committee or by any member thereof, or the presentment of legislation for consideration as an option by either such Committee, or by the staff of the Joint Committee on Taxation of the Congress of the United States, or the favorable reporting for passage of legislation to either House of the Congress of the United States by a Committee of such House to which such legislation has been referred for consideration, or any decision of any federal or State couft or any ruling or regulation (final, temporary or proposed) or official statement on behalf of the United States Treasury Department, the Internal Revenue Service or other federal or State authority materially adversely affecting the federal or State tax status of the City or the Authority, or the interest on bonds or notes or obligations of the general character of the Bonds; or (iii) any legislation, ordinance, rule or regulation shall be introduced in, or be enacted by any governmental body, department or district of the State, or a decision by any court of competent jurisdiction within the State or any court of the United States shall be rendered which, in the reasonable opinion of the Underwriter, materially adversely affects the market price of the Bonds; or (iv) legislation shall be enacted by the Congress of the United States, or a decision by a court of the United States shall be rendered, or a stop order, ruling, regulation or official statement by, or on behalf of, the Securities and Exchange Commission or any other governmental district having jurisdiction of the subject matter shall be issued or made to the effect that the issuance, offering or sale of obligations of the general character of the Bonds, or the issuance, offering or sale of the Bonds, including all underlying obligations, as contemplated hereby or by the Official Statement, is in violation or would be in violation of, or that obligations of the general character of the Bonds, or the Bonds, are not exempt from registration under, any provision of tn. federal securities laws, including the Securities Act of 1933, as amended and as then in effect, or that the Trust Agreement needs to be qualified under the Trust Indenture Act of 1939, as amended and as then in effect; or (v) additional material restrictions not in force as of the date hereof shall have been imposed upon trading in securities generally by any governmental authority or by any national securities exchange, which restrictions materially adversely affect the Underwriter's ability to trade the Bonds; or (vi) a general banking moratorium shall have been established by federal or State authorities; or 9 (vii) the United States has become engaged in hostilities which have resulted in a declaration of war or a national emergency or there has occurred any other outbreak of hostilities or a national or international calamity or crisis, or there has occurred any escalation of existing hostilities, calamity or crisis, financial or otherwise, the effect of which on the financial marketi of the United States being such as, in the reasonable opinion of the Underwriter, would affect materially and adversely the ability of the Underwriter to market the Bonds; or (viii) the ratings of the Bonds shall have been downgraded, suspended or withdrawn by a national rating service, which, in the Underwriter's reasonable opinion, materially adversely affects the marketability or market price of the Bonds; or (ix) the commencement of any action, suit or proceeding described in Paragraph 6(i) hereof which, in the judgment of the Underwriter, materially adversely affects the market price of the Bonds; or (x) there shall be in force a general suspension of trading on the New York Stock Exchange. (d) At or prior to the Closing, the Underwriter shall receive with respect to the Bonds (unless the context otherwise indicates) the following documents; provided that the acceptance of the Bonds by the Underwriter on the Closing Date shall conclusively evidence the satisiaction of the requirements of this subsection (d) or the waiver by the Underwriter of any discrepancies in documents which are not in strict conformity with the requirements of this subsection (d): (i) Bond counsel opinion An approving opinion of Bond counsel dated the Closing Date and substantially in the form appended to the Offrcial Statement, together with a letter from such counsel, addressed to the Underwriter and dated the Closing Date, to the effect that the approving opinion may be relied upon by the Underwriter to the same extent as if such opinion were addressed to the Underwriter. (ii) Supplemental Opinion. A supplemental opinion or opinions of Bond Counsel, addressed to the Underwriter, in form and substance acceptable to the Underwriter, and dated the Closing Date substantially to the following effect: (A) The Purchase Agreement has been duly executed and delivered by the City and, assuming due authorization, execution and delivery by the other parties thereto, if applicable, constitutes the valid and binding agreement of the City; (B) The statements contained in the Official Statement pertaining to the Bonds under the captions "INTRODUCTION," "THE BONDS," "SECURITY FOR THE BONDS," "TAX MATTERS" and in Appendix C-"SUMMARY OF PRINCIPAL LEGAL DOCUMENTS" and Appendix E-"FORM OF LEGAL OPINION," insofar as such statements purport to summarize certain provisions of the Bonds, the Trust Agreement, the Installment Sale igiee*ent and the final approving opinion of Bond Counsel, excluding any material that may be trJated as included under suCh captions by cross-reference, are accurate in all material respects; and l0 (C) The Bonds are exempt from registration under the Securities Act of 1933, as amended, and the Trust Agreement is exempt from qualification as an indenture under the Trust Indenture Act of 1939, as amended. (iii) City Auorney Opinion. An opinion of the City Attorney, addressed to the Underwriter, in form and substance acceptable to Bond Counsel and the Underwriter, dated the Closing Date substantially to the following effect (and including such additional matters as may be reasonably required by Bond Counsel or the Underwriter): (A) The City is a municipal corporation and general law city, duly organized and existing under and by virtue of the laws of the State; (B) The City Resolutions have been duly adopted at meetings of the City that were duly called, noticed and conducted, at which a quorum was present and acting throughout, and the City Resolutions are in full force and effect and have not been modified, amended, rescinded or repealed since the respective dates of their adoption; (C) The City Documents have been duly authorized, executed and delivered by the City and, assuming due authorization, execution and delivery by the other parties thereto, if applicable, constitute the valid, legal and binding agreements of the City enforceable in accordance with their respective terms; (D) The information in the Official Statement (excluding therefrom financial statements and other statistical data, information regarding The Depository Trust Company and its book-entry only system, infotmation under the caption "UNDERWRITING," CUSiP numbers, prices and yields for the Bonds and any other information provided by the Underwriter, as to which no view need be expressed) does not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; (E) Except as otherwise disclosed in the Official Statement and to the best knowledge of such counsel after due inquiry, there is no litigation, proceeding, action, suit, or investigation ai law or in equity before or by any coutt, governmental authority or body, pending, with service of process having been accomplished, or threatened in writing against the City, challenging the creation, organization or existence of the City, or the validity of the City Documents or the Validation Judgment, seeking to restrain or enjoin the repayment of the Bonds, in any way contesting or affecting the validity of the City Documents or the Validation Judgment or contesting the authoiity of the City to enter into or perform its obligations under any of the City Documents, or which, in any manner, questions the right of the City to pay the 20l6lnstallment Payments underthe Installment Sale Agreement or affects in any manner the right or ability of the City to collect or pledge the Revenues (as such term is defined in the Trust Agreement); and (F) Except as otherwise disclosed in the Official Statement, there are no outstanding bonds, notes or other obligations of the City which are payable from the Revenues. (iv) Disclosure counsel opinion. An opinion of orrick, Herrington & Sutcliffe LLP, as Disclosure Counsel to the City ("Disclosure Counsel"), dated the Closing Date and addressed to the Underwriter, to the effect that, based on the information made available to it in their ll role as Disclosure Counsel. without having undertaken to determine independently the accuracy, completeness or fairness of the statements contained in the Official Statement, but on the basis of its participation in conferences with the Underwriter, Stradling Yocca Carlson & Rauth, a Professional Corporation, counsel to the Underwriter ("Underwriter's Counsel"), the City, the City Attorney and others, and their examination of certain documents, no information has come to the attention of the attorneys in the firm rendering legal services in connection with the issuance of the Bonds which would lead them to believe that the Official Statement as of its date and as of the Closing Date contained any untrue statement of a material fact or omitted to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (except that no opinion or belief need be expressed as to any financial, statistical and demographic data or forecasts, numbers, charts, estimates, projections, assumptions or expressions of opinion, the engineer's report, and information regarding DTC and its book-entry only system contained in the Official Statement). (v) Trustee Counsel Opinion. An opinion of counsel to the Trustee, addressed to the Underwriter and dated the Closing Date, in form and substance satisfactory to the Underwriter and to Bond Counsel. (vi) Authority Counsel Opinion. An opinion of legal counsel to the Authority, addressed to the Underwriter, in form and substance acceptable to Bond Counsel and the Underwriter, dated the Closing Date substantially to the following effect (and including such additional matters as may be reasonably required by Bond Counsel or the Underwriter): (A) The Authority is a public body, organized and existing under the Constitution and laws of the State, including the JPA Act and the JPA Agreement; (B) The Authority Resolution has been duly adopted, at a meeting of the Authority that was duly called, noticed and conducted, at which a quorum was present and acting throughout, and the Authority Resolution is in full force and effect and has not been modified, amended, rescinded or repealed since the date of its adoption; (C) The Authority Documents have been duly authorized, executed and delivered by the Authority and, assuming due authorization, execution and delivery by the other parties thereto, if applicable, constitute valid, legal and binding agreements of the Authority enforceable in accordance with their respective terms; and (D) Except as otherwise disclosed in the Official Statement and to the best knowledge of such counsel after due inquiry, there is no litigation, proceeding, action, suit, or investigation at law or in equity before or by any court, governmental authority or body, pending, with service of process having been accomplished, or threatened in writing against the Authority, challenging the creation, organization or existence of the Authority, the validity of the Authority Documents or the Validation Judgment, seeking to restrain or enjoin the repayment of the Bonds or in any way contesting or affecting the validity of the Authority Documents or the Validation Judgment or contesting the authority of the Authority to enter into or perform its obligations under any of the Authority Documents. (vii) City Documents (A) A certified copy of the City Resolutions; and t2 (B) A certificate of the City Clerk to the effect that the City Resolutions and the Storm Drainage Fee (as such term is defined in the Installment Sale Agreement) are in full force and effect and have not been modified, amended, rescinded or repealed since the respective dates of their adoption or imposition, as applicable. (viii) Authority Documents. (A) A certified copy of the Authority Resolution; and (B) A certificate of the Secretary of the Authority's Governing Board to the effect that such Authority Resolution is in full force and effect and has not been modified, amended, rescinded or repealed since the date of its adoption. (ix) Official Stqtement. The Preliminary Official Statement and the executed Final Official Statement and each supplement or amendment, if any, thereto. (x) Trust Agreement. The Trust Agreement, executed by the Authority and the Trustee (xi) Installment Sale Agreement. The Installment Sale Agreement, executed by the Authority and the City. (xii) Continuing Disclosure Certificate. The Continuing Disclosure Certificate, executed by the City. (xiii) Trustee Resolution. A certified copy of the general resolution of the Trustee authorizing the execution and delivery of certain documents by certain officers of the Trustee, which resolution authorizes the execution and delivery of the Trust Agreement and the authentication and delivery of the Bonds by the Trustee. (xiv) JPA Agreement. Certified copies of the JPA Agreement and all amendments thereto and related certificates issued by the Secretary of State of the State. (xv) Purchase Agreement. This Purchase Agreement, executed by the Authority, the City and the Underwriter. (xvi) City Rule 15c2-12 Certificate. A certificate, dated the date of the Preliminary Official Statement, of the City to the effect that, for purposes of compliance with the Rule, the City deems the Preliminary Official Statement to be final as of its date. (xvii) Authority Rule l5c2-12 Certificate. A certificate, dated the date of the Preliminary Official Statement, of the Authority to the effect that, for purposes of compliance with the Rule, the Authority deems the Preliminary Official Statement to be final as of its date. (xviii) Tax Certificate. A Tax Certificate with respect to maintaining the tax-exempt status of the Bonds, duly executed by the City and the Authority. (xix) Notices to State. Copies of the preliminary and final notices to the California Debt and Investment Advisory Commission relating to the Bonds. l3 (xx) City Certificate. A certificate of the City, dated the Closing Date, signed on behalf of the City by a duly authorized officer of the City to the following effect: (A) The representations, warranties and covenants of the City contained herein are true and correct in all material respects on and as of the Closing Date as if made on the Closing Date, and the City has complied with all of the terms and conditions of this Purchase Agreement required to be complied with by the City at or prior to the Closing Date; and (B) No event affecting the City has occurred since the date of the Official Statement which has not been disclosed therein or in any supplement or amendment thereto that would cause the Official Statement to contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. (xxi) Authority Certificate. A certificate of the Authority, dated the Closing Date, signed on behalf of the Authority by a duly authorized officer of the Authority, to the effect that: (A) The representations, warranties and covenants of the Authority contained herein are true and correct in all material respects on and as of the Closing Date as if made on the Closing Date and the Authority has complied with all of the terms and conditions of this Purchase Agreement required to be complied with by the Authority at or prior to the Closing Date;and (B) no event affecting the Authority has occurred since the date of the Official Statement which has not been disclosed therein or in any supplement or amendment thereto that would cause the Official Statement to contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. (xxii) Trustee's Certificate. A certificate of the Trustee, addressed to the City and the Underwriter and dated the Closing Date, in form and substance acceptable to the Underwriter and to Bond Counsel. (xxiii) Trustee Resolution. A certified copy of the general resolution of the Trustee authorizing the execution and delivery of certain documents by certain officers of the Trustee, which resolution authorizes the execution and delivery of the Trust Agreement and the authentication and delivery of the Bonds by the Trustee. (xxiv) Ratings. Evidence that the ratings on the Bonds are as described in the Official Statement. (xxv) Specimen Bonds. Specimen Bonds, executed by the Authority and authenticated by the Trustee. (xxvi) Underwriter's Counsel Opinion. An opinion of Underwriter's Counsel, addressed to the Underwriter and in form and substance satisfactory to the Underwriter. 14 (xxvii) Letter of Representations. A copy of the executed Blanket Issuer Letter of Representations by and between the Authority and DTC relating to the book entry system, or an acknowledgement from DTC that such a letter is on file with DTC. (xxviii)DAC Report. A report of Digital Assurance Certification LLC as to compliance by the City and the Authority and/or related entities with their respective continuing disclosure undertakings. (xxix) Other. Such additional legal opinions, certificates, proceedings, instruments and other documents as the Underwriter may reasonably request to evidence the truth and accuracy, as of the Closing Date, of the representations contained herein and in the Official Statement and the due performance or satisfaction by the Trustee, the City and the Authority at or prior to such time of all agreements then to be performed and all conditions then to be satisfied in connection with the delivery and sale of the Bonds. If the Authority and City shall be unable to satisfy the conditions contained in this Purchase Agreement, or if the obligations of the Underwriter shall be terminated for any reason permitted by this Purchase Agreement, this Purchase Agreement shall terminate and neither the Underwriter, the Authority or the City shall be under any further obligation hereunder. 9. Expenses. The Authority will pay or cause to be paid the expenses incident to the performance of its obligations hereunder and certain expenses relating to the sale of the Bonds, including, but not limited to: (a) the cost of the preparation and printing or other reproduction of the City Documents and the Authority Documents (other than this Purchase Agreement); (b) the fees and disbursements of Bond Counsel and Disclosure Counsel, the City's financial advisor and any other experts or other consultants retained by the City or the Authority; (c) the costs and fees of the credit rating agencies; (d) the cost of preparing and delivering the definitive Bonds; (e) the cost of providing immediately available funds on the Closing Date; (f) the cost of the printing or other reproduction of the Official Statement and any amendment or supplement thereto, including a reasonable number of certified or conformed copies thereof; (g) the Underwriter's out-of-pocket expenses incurred with the financing. including air travel and hotel costs in connection with the pricing of the Bonds, investor meetings, the rating agency trip and the Bond closing, meals and transportation for the Underwriter during the rating agency trip and pricing, expenses related to attending working group meetings such as parking, meals and transportation and any other miscellaneous closing costs; and (h) expenses (included in the expense component of the spread) incurred on behalf of the City's employees which are incidental to implementing this Purchase Agreement, including, but not limited to, meals, transportation, lodging and entertainment of such employees. The Underwriter will pay the expenses of the preparation of this Purchase Agreement and all other expenses incurred by the Underwriter in connection with the public offering and distribution of the Bonds, including California Debt and Investment Advisory Commission fees and the fee and disbursements of Underwriter's Counsel and all other expenses incurred by the Underwriter in connection with the public offering and distribution of the Bonds. I 0. Notices. Any notice or other communication to be given to the City or the Authority under this Purchase Agreement may be given by delivering the same in writing to such entity at the addresses set forth above. Any notice or other communication to be given to the Underwriter under this Purchase Agreement may be given by delivering the same in writing to Stifel, Nicolaus & 15 Company, Incorporated,5l5 South Figueroa Street, Suite 1800, Los Angeles, California 90071, Attention:John W. Kim. I L Entire Agreement. This Purchase Agreement, when accepted by the Authority and the City, shall constitute the entire agreement among the City, the Authority and the Underwriter and is made solely for the benefit of the City, the Authority and the Underwriter (including the successors or assigns of the Underwriter). No other person shall acquire or have any right hereunder by virtue hereof, except as provided herein. All of the City's and the Authority's representations, warranties and agreements in this Purchase Agreement shall remain operative and in full force and effect, regardless of any investigation made by or on behalf of the Underwriter, until the earlier of: (i) delivery of and payment for the Bonds hereunder; and (ii) any termination of this Purchase Agreement. 12. Counterparts. This Purchase Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. 13. Severability. In case any one or more of the provisions contained herein shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision hereof. 14. State of California Law Governs. The validity, interpretation and perforrnance of this Purchase Agreement shall be governed by the laws of the State. [REMAINDER OF PAGE LEFT INTENTIONALLY BLANK] l6 15. No Assignment. The rights and obligations created by this Purchase Agreement shall not be subject to assignment by the Underwriter, the Authority or the City without the prior written consent ofthe other parties hereto. STIFEL, NICOLAUS & COMPANY, INCORPORATED By: Its:Authorized Officer Accepted as of the date first stated above: CITY OF BURLINGAME By: Its:City Manager BURLINGAME FINANCING AUTHORITY Executive Director By: Its: s-l Maturing July I EXHIBIT A MATURITY SCHEDULE BURLINGAME FINANCING AUTHORITY Storm Drainage Revenue Bonds, Series 2016 Amount Yield PriceCoupon + Term Bondsc Priced to the optional redemption date of July 1,20-at -' %%$ A-l t !111912016 1 Energy Efficiency Study Updat€, City of Burliilame n G Inc. -t 7 I City's Accomplishments in Energy Efficiency Total kWh usage for City Buildings 1,750.000 1,700,000 1,650,000 1,600,0@ 1.550,000 1,500,000 1,450,000 1,400,000 -relncludes City Hall, Rec Center, Easton Library, Main Library Police Station and PW Corp.\ 111912016 Conversion of T12 lamps to T8 lamps at City Facilities Winner of Gold Level Beacon Spotlight Award for Energy Savings e ---<t stations Conversion of various pumpVariable Speed (VFD) applied to pumps at Scope of work: Scope of work included assessment of 1 1 building facilities and 10 public parking lots for energy efficiency opportunities. . 11 Buildings (205,000 GSF): Police Station, Main Library, Public Work Corporation Yard, Parks Yard & Grandstand, Bayside Park, Donnelly Parking, Village Park School, Easton Library, Fire #34, Fire Station #35, and Fire Station #36 . 10 Public Parking lots: B-1, C, D, E, H, J, K, M, R and W PurposeI ''t -r{t Ildentify Energy Efficiency lVeasures Reduce Energy Cost and GHG Emissions Energy Efficiency Study 2 Examples of Measures lmplemented Previously 111912016 Parking Lots Totals Building Facilities 38,567 kwh 1,600,291 kwh IElectricity Use 1,561,724 kwh Note: Energy use and costs are estimated on an annual basis. nla nla & $7,124 $268,747 $296,647 26,637 therms $261,623 $27,900 26,637 therms Electricity Cost Total Energy Cost Gas Use Gas Cost $27,900 Eledricity Electricig Use(kwh)Cost Natural Gas Cost Building GSF Yard 54,7 re $ Main Library 45,000 $ 98.540 7,013 408,480 $ 59.450 6,735Police Station 13,s00 Fire Station #34 $ 22,185 7,759 $ Parks Yard and Grandstand 19,256 $ 3,696 $ 603 8,906 49,449 $ 7.432 1,192Fire Station #36 0verall Therns/SFT,{ ar Total Co$ @ BuildingVStructues 0.13 % Cost in $289,523 90%5,616 28,728 $ 5.375 7,287Fire Station #35 20,30s 504 390Easton Library 4,865 $ 1.015 480Village Park Preschool 118,153 $ 22.977Bayside Park and Field $ 261.623 11TOTAL205,574 1,591,724 3 City Energy Use and Gost Natural Gas Use (thermsl $ it 637 7.13t s0.557 29.867 570,240 72.101 133 580 s29o o21 11 2.400 $ 4.017 2.000 s 290 450 . 26.637 Summary of Usage and Gosts in :,i;,,,,,i,:,,,,, Building Facilitigs .,...*;, & 111912016 Recommendations HVAC: 'Note: Only lighting measures are applicable forthe parking lots Lighting: LED Retrofitting lnsulation to Village Park Preschooland Fire Station 35 Controls (occupancy sensors) Photovoltaic Systems (solar panels) HVAC Modification - Upgrade HVAC System - Replace Doftop units with high efiiciencyunits - Replace variable air volume boxes and controls with new VAV boxes and DDC confols - Replace old fumace with condensing fumacesNetworked Thermostats Occupancy Controls Demand Control Ventilation Retro- commissioning ReJamping (32 watt to 28 watt FL; CFL and INC to LED) I 4 Understanding How Energy is Used . Understand energy usage by different systems . Helps identify opportunity areas and calculate savings accurately Electricity Use Natural Gas UseIOreall Electricity Use Breakdown Overall Natuol Gas Use Breakdown tl3 ,ax AI Otrc Un 6.aoaL{hrylla ldentified Energy Efficiency Measures Capital Renewal Type Measures (long term payback) 111912016 FIE St.tlon J.l iraln Llb,.ry P.rk. Y.rd & Grandatand Poll@ Statlon PublicWork! Corp Ye.d lnstallation of network thermostats x x X x x x x x x x Upgrades to HVAC system: high efficiency units and controls Control of HVAC units with occupancy sensors lnstallation of CO. sensors for demand controlled ventilation Mechanical Efficiency Recommendations Recommendations: Lighting: . LED retrofitting HPS - LED (49 fixtures) MH - LED (2 fixtures) Controls Exterior Smart Controls (51 controls) 5 Five largest sites: I ldentified Energy Efficiency Measures for Parking Lots e :_ \ 111912016 Building Related Estimated Cost: $ 495,000 Building Related Annual Energy Savings: $ 63,412 Parking Lots Related Estimated Cost: $ 75,184 Parking Lot Related Annual Energy Savings: $ 3,685 ' Excludes approximately $32,000 of utility incentives that may be available for energy conseryation measures to help reduce capital cost nmwkK 28 frfrA&&frAAA&fr& 0 -**h-d**&. fr6fr5&&Removing 28 cars from the road IkWh Production (Ac) Project Cost Cost Savings D Payback Period Building t a a E kW Generation (DC) Police Station 61 tl Public Works Corp. Yard 10c L8T,M $ 575,130 5 32,204 17.9 11,3 fi,014 $ 56,700 s 3,402 t6.7Fire Station #35 S mz,Em S a,otz 16,5Fire Station f36 26.s 39,6S Village Park Preschool 2.1 3,124 S rc,4m Sa6 16,1 s 18,900 s 1,230 15.4Easton Library 3.8 5,570 2U.7 360,330 $t,zls,nL s 54,902 18.iTotal Total payback Period: 1 8.7 yea6 - Itaic Analysis (Solar Panel) 6 Cost and Savings - Recommended Measures Total estimated cost for recommended improvements (.) = $570,t4+ TotalAnnual $ Energy Savings: $67,097 8.4 years payback Annual CO, Savings: 5 422,36r S 19,403 21,t 111912016 Presch@l Library **--.-at, Fire Station #35 kW:11.3 17,010 kW:2.1 3,120 kW:26.5 39,690 kW:3-8 5,670 3. PV solar installation on roof could be restrictive due to structural limits in older facilities. 4. Trees and building adjacencies require careful evaluation of PV at any given site 5. Financing using CEC low interest loan typically limited to 17 years of payback. l f: --t--i 7 b,EI kwi61 1 13,400 kW:100 141,440 Easton E"-;t-- Y\,n Summ ary of Challenges \ 111 912016 . Recommended measures: 1. Retrofit existing metal halide fixtures with LED area fixtures 2. lnstall applicable lighting controls on retrofitted fixtures. e I "*.drrale r . Recommended measures: 1. Re-lamp existing standard fluorescent fixtures with low-watt T8 lamps. 2. lnstall energy efficient lighting controls on retrofitted fixtures. f th LEDs are . Fluorescent fixtures at Donnelly are operated by timeclock and some are on 24 hours per day. E I Bayside Park and Field Lighting t& .t . Bayside Park and Field is lit by metal halide shoe box fixturesI 'j,- {t*t is ranging from 70 watts to 400 wafts. . There is also a selection of 52 !U watt LED area lights I \l J Donnelly Parking Structure Lighting -F{--O 1t1912016 . Recommended measures: 1. Re-lamp existing standard fluorescent fixtures with low-watt T8 lamps. 2. Re-lamp all interior screw-in incandescent and compact fl uorescent lamps with equivalent LED lamps. 3. lnstall energy efficient lighting controls on retrofi tted fixtures. TA$ION BNANCH LIBNAfrY il * U kitchen, office, and restrooms are occupancy sensors. ' Recommended measures: 1. Re-lamp existing standard fluorescent fixtures with low-watt T8 lamps. 2. Re-lamp all interior screw-in incandescent and compact fluorescent lamps with equivalent LED lamps. 3. lnstall energy efficient lighting controls on retrofitted fixtures. ..r\,v 5 k roombreathe and garage I Easton Library Lighting ffi-. :!t? Fire Station #35 Lighting ilililIt e -It ! r I t \ . Recommended measures: 1 . Re-lamp existing standard fluorescent fixtures with low-watt T8 lamps. 2. Re-lamp all interior screw-in incandescent and compact fluorescent lamps with equivalent LED lamps. 3. lnstall energy efficient lighting controls on retrofitted fixtures. lamps. e --*"*rfl\ 111912016 . Recommended measures: 1. Retrofit existing high pressure sodium and metal halide fixtures with LED area fixtures. 2. lnstall applicable lighting controls on retrofitted fixtures. e 3 -H. pressure sodium lamps.. Two parking lots are equipped with LED lamps on cobra head fixtures. 10 Fire Station #36 Lighting IT:[TFlrll 7 ilt J Parking Lot Lighting t sodium lamps. . There is a double head 100 Watt high pressure sodium area light at the entrance to the yard. . Recommended measures: 1. Re-lamp existing standard fluorescent fixtures with low-watt TS lamps. 2. Re-lamp all interior screw-in incandescent and compact fluorescent lamps with equivalent LED lamps. 3. Retrofit existing high pressure sodium fixtures with LED area fixtures. 4. lnstall applicable lighting controls on retrofitted fixtures. e employ 1119t2016 B. PV Solar - Future consideration as cost of the panel and technology become less expensive and review inhouse or outside financing to further reduce GHG Emissions C. Consider major capita! renewal items as funding becomes *\"a<\tratsr ruIutt 0available 11 Village Park Preschool Lighting I *?:^ A. Eight identified recommended measure types (4lighting improvements and 4 HVAC improvements) Total lnvestment Required: $ 570,184 TotalAnnual Savings: $ 67,097 TotalAnnual CO, Savings: 291.297 pounds Return on lnvestment: 8.4 years Payback Conclusion \\ ENERGY EFFICIET.ICY 111912016 12 Questions and Comments i, ,' I L n --l .'{ Zr7 r Fl-- r_- *t;'i' ule/20L6 City Council Meeting January rg, zo16 Enp;,irreerir.rg Division, Public Wolks Depal tment First Flood Insurance Rate Map (FIRM) was issued in r98r Current FIRM was issued in z'otz sl and includes: . LagunaArea . Easton CreekArea . Major Creeks . El Portal Creek ' TrousdaleChannel . Cilberth Channel . Mills Creek . Easton Creek ' Sanchez Creek . BurlingameCreek r Lnginecring I)ivision. PublicWorks l)epaltment 7 E..=-l Flood lnsurance Rate Map Update m -__L__ 11791201.6 Proposed Revised FIRM by FEMA Early zor3 - FEMA authorized the California Coastal Analysis and issued a new studyand FIRM for Burlingame November zot4 - staff presented to Council the basis of the study and results September 2015 - FEMA released preliminary FIRM Engineering, DiYision, Public Works l)ep.rrt$ent 2 crry or s.tr F'an.'3.d 1/Le12076 Early zor3 - FEMA authcrized the Califorrri.r Coast.rl Anall'sis and issued a new str.tdy and FIRM for Burling.rme November zat4- staffpresented to Council the basis of tl-re study and results September 2015 - FIIMA released preliminary FIRM January to March zo:16 - Appeal period April to August zo16 - Resolution of Appeals March zoLT - Adoption of new FIRM Mapping Tfmeline Engineering Division, Ptrblic Works l)cPortnlent a ! 3 Proposed Changes to FIRM 'a Existins Mao Affects * 334 parcels a Preliminarv Mao Adds - 358 parcels (z9o residential) (44 commercial) (3o4 commercial) (54 residential) Removes - 53 residential Engincering [)itision, Prrb]icWolLs l)cp,rrtnrcnt tlLel2oL6 ffio,Itrc ffimm*{ts @tfi t*mut E EI I ffi ll$.ffi l:50.m ?{ Ed, EeE e!r_-.I 80,0s l1s.m 'MBtrqimr:sffieff*snffimMMEE'I $75.m '325.m til.m $m,m E1'0'm *1s,00 tlm.om Policy Coverages . Building . $6okto $5ook . Personal content . $z5k to $5ook . Deductible . $zk to $lok linginrering Dir-ision, Public Wolks Depnrtnrcnt Commercial Property (lndustrial Area) . Lot - 58,6oo s{, Building - 4o,ooo sf Policy Coverage ' $z5ok building . $rook contents . gr,z5o deductible Policy Rate ' $3,4o9lyear. $t,7zglyear* *Preferred risk rate ilru lrnginccrins Division, Public \{br ks Dep.rrtmcnt I rd € 4 -4 ----- Example of Typical Flood lnsurance Coverages Example of Typical lnsurance Rates 7/191201,6 Residential Property . Lot - 6,zoosf, Structure * r,rrosf Policy Coverage ' $6ok building " $z5k contents Policy Rate ' $r,4oo/year ' S655/year* *Preferred risk rate lrnginrcrinll [)il isior, I\rblic Works L)epaft lrrent Public Outreach (Beginning in March zo16) Direct mailing . Public contacts " Public meetings " Available resources . Purchasing flood insurance . Options for reduced policy rates January 2ot7 - Second direct mailing . FIRM will be available on City website Fr.ngineering Division, Prrblic \{blks L)epaitment Next Steps 5 Example of Typical lnsurance Rates a a L/L9/20L6 Questions/Feed back Iirginrerin{], [)ir ision, I'ublic Works Departurrnt 6 a I LlLe/2016 gffi @ Qlriiiry,'"" ipg,X AErcolrt Purpose of the Project * lmprove Traffic Circulation/Mobility / Reducing Traffic Delays / Alleviate Traffic Congestion (Existing and Projected Peak Hour) / lmprove Traffic Flow across Railroad Crossing * lncrease Public Safety (vehicular; bicycle, and pedestrian) / lmprove Pedestrian and Bicycle Access * Offer an Opportunity for a Gateway treatment to Broadway i. Obtain Council Feedback on Alternatives Bffi ca@ @xii;{i,i,,". ipgX E@M Broadway 66de Welcome t i I LlLel2OL6 Community Meeting No. L March 1,L,2015 t ' x'# Approximately 100 people attended sffi-@ I ap-gx &-rCOMTtantpottationAulrrorrty Broadway Grad€ Separ4{on Community Meeting N o. 2 September L6,2015 Approximately 20 people attended *Sffi ca@ G)r;ii'i,*ri:!r*." ,pgX E@M 2 rff a-. r,. IE ry- o Broadway 6rade S€pslali&5tudv LlLe/2OL6 Project Area illllbEe St.tior City Llmlt3 Caltrri. Op.r.tlon.l Con.tnlnt St.tion Maior Constraints. Millbrae Station to the north . Burlingame Station to the south. Highway 101 to the east. Downtown Broadway Commercial District to the west. CaltEin Operational ConstEint gffi @ A,iiii'#*" ipgX E@M G rade Sepa ration I mprovements o\ ldar/qdhAv6r lldry/WduE I ', E.#J\ttu*.' l)1lr r frrttr tsffi ce@ e|iiii;r,,,*,,". ipgX E@M Broadway Grad€ s€paEuon Stdy 3 Erlstlng R.llro.d Cao$ln! .t Broadw.y Broadway Grade Separation sl$d{, 1 2 3 1./tel2ot6 Existing Condition - Traffic Delays Future 2040 Delay Weekday AM Delay* (sec)Delay* (sec)Delay' (sec) 65 249 153 381groedway/Us 101 ofr-Ramp/ Rolllni Road weekday PM weekend (Midday) 243 744 23 3826 207 2L 37 69 $!68 550 50 4s2 * Avemge delay per vehicle Broadway/ carolanAvenue Calirornia Drive gffi @ Glri#;i,r,i*"". ips.x /Flco[ G rade Sepa ration Im provements E\ ld'.y/q6Ln A16(itu&ry/Glf,dME t- a ,t1a L -4llr tr Sffi ce@ Glr;ir'iiiir..,,"" ip"Sx E@M 4 Existing [2015] Delay lntersection Broadway Grade S€paratlm Study 1, 2 3 I Hstrl + =t#tt t/19/2016 Future 2040 with Grade Separation 2040Traffic Delays Delay* (sec)Delay* (sec) groadway/Us lol Off-R.mp/ Rollins io.d t AveEge delay per vehicle Weekday PM Weekend (Midday) 249 37 744 /A 381 24 207 550 43 38 37 452 22 4! 38 15 431 33 Weekday AM lntersectlon Delayr (sec) gro.dwey/ CarolanAvenue Br@dw.y/ ctllfo.nlaDrive a pgx ,ECOilttanaporlallon Auaho.ity . Future Caltrain Service increase weekday trains from 92 to 114 trains . Future High Speed Rail to increase trains . Users save 680,000 hours in annual delays Travel Time Savings Travel Time Savings Description 680,000 hrs. s7,730,000 Average Annual lmpact Average Annual Benefit {t};-rgr:%;ca@ @iiiir,*,,." ipsx E@M 5 Future [2040] Delay without Grade Separation Broadway 6radr Sopratlon Strdg 7/ts1201.6 Fuel Savings & Air Quality Benefits Reduction of 395,000 ga/yr of idling fuel use $gOS,0O0/yr cost savings for drivers Greenhouse gas emissions and criteria air pollutants emission reductions valued at 5116,000 GHGEmissionReduction 4,736,000|bs CAP Emission Reduction 22,000|bs EMMlSIONS BENEFITS 395,000 ga! a I o $gos,oooFuel Use Description s85,ooo S31,ooo $tte,ooo Average Annual Average Annua! lmpact Benefit €3.liiiliili @ Qlx#i::u*" ipex ru.rot Broadway Grada Sepantlo Strdt Accidents . Average of 23 accidents per year at the adjacent Broadway intersections - 7 with injuries. . Total accident cost estimated to be 5970,000 Emergency Response . Reduced response times for police . Reduced response times for emergency services Safety Benefits B'q ca@ eN#iii:t:;,,." ipgX E@M 6 Broadway G.ade S€pmil,on $udv LlLs/2076 Distribution of Quantified Benefits r Travel Time Savings r Fuel Savings r lmproved Safety : GHG Emission Reduction r CAP Reduction 7.9% o.9% 8.6% ggffi @ Glriii;iii;r,"^ ipgX ffitt Broadway Grade Seperatld Study 6 Alternatives Evaluated Preliminary Costs Range from SZSSIVI to 5705M Alternative Ana lysis a a {s ca@ Q|riii;iii;,r,"" ipgx E@M &oadway G.ade S€pettuo lAdX 7 82.3% 7/79/2016 Maximum Fill Height = 29 ft Rail Fully Elevated and Roadway At€Ede Av ^*o- Order of lvlagnitude Cost SsloMAlternative Fr!fl lmPdtto Millbnc St.tbn.nd BAnT { opcntrnr Maior ConstGints and Cons: . lmpads to Caltcin Opentions . lmpacts to MillbGe Station and BART OpeEtions . Requires significant CaltEin tEck closuE for construction . Signiflcant Visual lmpact Maior ConstEints and Cons: . Complex construction . Significant impact to CaltEin opeEtions . Ripple€ffect on Eilrcad likely to cause impacts to MillbEe Station and BART opeEtions . TempoEry Closure of Brcadway . Eliminates Brcadway Parking lot . lmpacts to existing utilities lmp.d.Oknan OpcEtbnr gffi @ @ri;ii-i*,"" ips_x ffiM Maior ConstGints and Consi . lmpacts to CaltEin OpeEtions . lmpacts to MillbEe Station and BART OpeEtions . lmpacts to Burlingame Station . CaltEns closurc Equired for const.uction . Majo. flooding issues . Tree rcmoval . lmpacts Oak Grcve AtGEde Cossing Maximum Excavation Depth = 33 ft L St.tion I lmp.ca Eurlinsam. ft lMaior ConstEints and Cons: Orde. of Magnitude Cost STosMAlternative E Rail Fully DGpcssed and Roadmy At€ndelmpssto Millbn. St.tlonand BAnT opcntbns lmp.d!6hnln Opmtbnt lmpacts to historic Burlingame Station lmpact5 to existing utilities and infEstructure Difficult construction Significant impact to CaltEin opeEtions Ripple€ffect on Eilrcad likely to cause impacts to MillbEe Station and BART opeEtions Extrcm6ly high long-term maintenance costs ts.m ca@ q;rii,,!:i:;"'" apgx E@M 8 Broadway Grade sepilatloo Stud, Eroadway 6rad€ s€pa€tion ltudy ure/20t6 tilt26lt Rollins & Hry 101 Interchant€ Downtown Sroadway Comm.rciel Oinrid Alternative D Rail At-GEde and Roadway Fully Elevated Maximum Fill Height = 32 ft . Severe impact to adjacent business and resldences . Visual lmpacts . Sitnificantly impacts to Brcadmy Station Access . Eliminates BEadmy Station Parking . Significant impact to existinS utilities . Complex construction staging Order of MaBnitude Cost S27sM YW* Maior Constcints & Cons . Significant prcfile modification to grcadmy, California, Carclan and Rollins gffi @ @ri#i,i.iijr*. ipgx ffiM Prc . Reduced visual impact Maior ConstEints & Cons . SiSnificant p@file modification to Brcadway, California, Carolan and Rollins . Significant prcperty takes . SeveE impact to adjacent business and aesidences . Significantly impacts Brcadway Station Access . Eliminates Broad@y Station Parking . Sitnificaht impact to exi*ing utilities . Constructions staging will Equirc lane closures . RR structurc willEquircd tempoEry RR seruice outage o .j bwntown Bro.dwry 6mm.rcial Ot*rict LY' Alternative C Rollans & Hq 101 Int.mhan6. Order of lvlagnitude Cost S24oM RailAt€Ede and Roadmy Fully Deprcssed Maximum Excavation Depth = 28 ft gffi ce@ (D x:,i;lw""' apgx ,ECOM A 9 Broadway Grade Separathn Studv -f -_,1 Broadway Grad€ Scpentlotr tlidy Pros: . No lmpacts Caltcin OpeEtional ConstEint . No impacts to MillbGe Station or BARTOpeEtions . Minimized impacts to Downtown Brcadmy Commercial District and Rollins / Hwy 101 lnterchange . Minimizes Right{f-Way Takes . MinimalVisual lmpact . Maintains existing Oak GDve CDssing Oowntown Broadway Commercial Dktrict -----1--l'__ Cons: Alternative B No lmp.dto C.hEin op.ntbn.l Conilnlnt, Mlllba. stetbn or IARTOp.Eticnr Hith Sroundwater will requirc cutoff wall construction required along Eilroad corridor - significant impact to natuGl creeks and dEinate facilities - potential flooding issues Complex construction staging lmpacts to existing utilities and infEstructure Order of Magnitude Cost S360M Maximum Rail Excavation Depth = 17 ft Maximum Roadmy Fill Height = 18 ft tlEaunvE , S[PAMIALLY DEPRESSEO / ROAOWAY PARTIAUY €TEVATEO -.i __ Rollin.& Hq 101 lnt.rchant. €gffi @ A,iii;#i**. ipgX &rcf,i Broadway Grade Sepd6tlon Study 1./19/20L6 Alternative B - Sectional Views -JLI[- :- EI:rix:;Y: -tEi-a..utt .U IL- 782 ft At Brcadway Excavation Depth = 16 ft Excavataon Depth = 13 ft At Northpark Apanments South of Ercadway Excavation Depth= 6ft At Toyon 0rive South of Brcadway @.,Fdt-i l- **-*..+*, ..1 a a. . -:Fi r--er%::q. f;.I}* At Lincoln North of Bmadway Rail Excavation Depth = 17 ft Roadway Fill Height = 18 j-;-ET_6r $ ca@ Gliiiii**"" ipgX E@n &oadway Grade SepaBt on St dy 10 ft F ao Prcs: . No lmpacts to CaltGin OpeEtlonal ConstEint . No lmpacts to MillbEe Station and BART OpeEtions . Minimized impacts to Oowntown Brcadway Commercial District . Minimlzes Right€f-W.V Takes . Reduced Visual lmpact . No lmpacts to Oak Grove At.gEde CEssing Maximum Roadway Excavation Depth = 13 ft 7,300 ft Rollint & HW 101 lnt.rchanf I I il Alternative Att - I bwntown 8rc.dw.y Commcrciel Dinrkt Cons: Order of Magnitude Cost S23sM No lmp.drtoC.haln Op.ntlon.l 6n$Elnt, MlllbEc St.tbn or EAnT OpcBtbns ALTRMTIVEA IAIL PARIIATLY ELEVAIEO / ROAOWAY PAETIALTY OEPRESSED High tEundmter will rcquiG cutoff mllconstruction - only rcquired aEund Brcadway area Complex construction staging lmpacts to 6xi5ting utilities and infEst.ucture gffi @ (Nr.,iri,,},,.i.,". ipgx ffiM Broadway 6rade tlle/2076 Alternative A - Sectional View At Lincoln North of Brcadway EH- * , n-*.---rEEsr; -.._F:'_: i':'ix:':rF At Northpa* Apa.tm€nts South of Bpadmy 733 ft ! At BDadway Fill Height = 12 ft,&-&- --',:*ry-a-_. Fill Height = 10 ft FillHeight=6ft lo66l T'Efil- tt-/.r-rr- Maximum Rail Fill =13ft ? At Toyon Drive South of Brcadway Maximum Roadway Excavation Depth = 13 ft ..! -;:;':1u-{- -a-ug**l..$-._ra.r-d ,ia ^r-,t Il,-:. $ffi ca@ eliiiii,i,i*,,"" ipsx E@n 8rcadmy Grade separ.fion Sardr 7L . Color coded rating system . Ratings based on qualitative assessment and q ua ntitative assessment Significant lmprovement Severe lmpact Fatal Flaw Im pact Matrices No lmprovement Minimal lmpact Moderate lmpact sffi*.@^o apgx E@MA ffanrgottalio6 Aulhorlty 1./Ls/20L6 lmpacts grouped by category: lmpact Matrices Local lssues and Right-of-Way a a a a a Environmental Railroad Operations Users Sffi ce@ (!L,r;r!:#,". ipgx E@M 72 Broadway Grade Seperatlon $frrdy Alternatives F ) A :l'l o d6^o=1- Greenhouse Gas Emissions Criteria Air Pollutants Noise Groundwater Eucalyptus Tree Removal Historic Structures Aesthetics Environ menta I ADcBFE Sffi @ Qlril;:iiii;,"" ipgX &rc/r Broaduay 6rade Lltel20t6 D c B A Alternatives F I A tlO'--'-:*:-oii:if,fiffi ilGt'4- Service Outage During Construction Burlingame Station Closure Caltrain Operational lmpacts Long Term Maintenance Accommodates Broadway Station Caltrain Electrifi cation Accommodates HSR Existing Pedestrian Xing at Morrell Potential for Other Pedestrian Xings Railroad Operations F E S% ca@ €Dr,i;,i'.',,ii,,". ipgX E@M Bro.dwry 13 Users F E D c B Alternatives F ) A {T ,l Safety Community Connectivity Pedestrian & Bike Access Fuel Use Reliability Traffi c Delays (During Construction) Traffic Delays (Aft er Construction) $ffi @ Qlxi,iii;,i*,,"" ipgX ffior/. 1,119/2016 Local lssues & Right-of-Way B A Alternatives F ) A (e€-oS G-r --c-.- Parcels with Potential R/W lssues 1 1 23 19 Parcels with R/W Takes 7 7 0 0 Traffic in Local Neighborhoods Business Disruption (During conrtruction) Resident Disruption (Durinsconstruction) Existing Utility lnfrastructure Flooding & Groundwater lssues cFED {sffi ce@ (D T,i,r:i:;'"" apgx E@M Broadway Gndc 1,4 &oadway Grade Scpentl@ Studl 39 32 Impact Matrix Summary Alternatives F ) A ( I G-!---( Environmental Railroad Operations Users Local & Ritht-of-Way tssues Order of Magnitude Cost S27sM s240M S36oM S23sMss10M s70sM B ADcFE tt Only Alternatives without Fatal Flaws gffi @ elriiii,i:j#""" ipgx N@M ule/2016 3D Animation of Alternative A Bffi ce@ G)i;iii*,,"" ipeX E@M Broadmy GEde 15 Broadway Grad€ Sepantim Study BRoeowAY Gneoe SEeaRarroN Sruoy 3rd Public Outreach Meeting in February/March 2016 Complete Project Study Report (PSR) in March 2016 Follow-up City Council Presentation in April 201,6 visit Us at: www.burlingame.org/broadwaygradese p Email Us at: broadwavqradesep@burlinqame.ors Next Steps a a a For More lnformation: {B, @ Oriiiiiiii.,,"" ipgx E@M Broadway Grade Separatloo Study LlL9l2016 76 ,. City of Burlingame DECEMBER PERMIT ACTIVITY **The permit activity was positive for the month of December considering that this is the time of the year when the activity slows down a lot. "*There were no pre-application meetings this month to report. THIS MONTH THIS MONTH LAST YEAR DIFF F. Y. 2015 F. Y.2014 DIFF Permit Type WATER HEATER SWIMMING POOL SIGN ROOFING RETAINING WALL PLUMBING NEW SFD NEW COMMERCIAL NEW 5 UNIT APT OR CO NEW 3 OR 4I-INIT APT MECHANICAL KITCHEN UPGRADE FURNACE 12 75,501 I I 43,774 72 I 518,000 I 600,000 -14 7 34,990 6 32,714 7 50,500 3 81,854 -38 ##% -67 547 # I # I % -38 245 133 6,900 9 177,861 3 20,700 4 27,500 1,000 7 165,741 t9 t05,624 106 1,684,017 I 10,000 96 512,461 8 5,844,800 27 275,367 20 5\8,269 6 38,660 1,600 3 48,000 15 93,366 85 1,684,210 2 53,000 108 510,650 I I 7,045,800 23 209,318 15 435,654 0 0 -81 -t7 32 t92 J ELECTRICAL SERVICE 13,500 I 2,588 2 8,850 337 I 4,500 ) City of Burlingame MONTHLY PBRMIT ACTIVITY December 2015 THIS MONTH # l8 127,517 I 20,353 THIS MONTH LAST YEAR F. Y. 2015 F.Y.2014DIFF DIFF Permit Type ELECTRICAL BATHROOM UPGRADE # 5 aJ 30 t4 Yo lll,436 t4 39,000 -48 # 91 1,079,524 33 501,603 170 g,gg7,53g 60 20,417,256 70 1,032,706 31 432,810 174 10,372,104 58 11,627,413 #% l6 -4 76 4 ALTERATION RESIDENTI 22 I,085,076 1,258,543 -r4 ALTERATION NON RES 5 2,622,000 5,851,300 -55 Totals:84 4,736,699 g0 9,066,921 -41 646 41,143,449 598 33,555,480 23 I