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20171206 - Agenda Packet - Board of Directors (BOD) - 17-30
SPECIAL MEETING BOARD OF DIRECTORS OF THE MIDPENINSULA REGIONAL OPEN SPACE DISTRICT Administrative Office 330 Distel Circle Los Altos, CA 94022 Wednesday, December 6, 2017 Closed Session starts at 5:00 PM* Study Session starts at 6:00 PM* Special Meeting starts at 7:00 PM* REVISED A G E N D A 5:00 SPECIAL MEETING OF THE BOARD OF DIRECTORS OF THE MIDPENINSULA REGIONAL OPEN SPACE DISTRICT – CLOSED SESSION ROLL CALL 1. CONFERENCE WITH REAL PROPERTY NEGOTIATORS (Government Code Section 54956.8) Property: End of Lucy Lane, Half Moon Bay, CA, Portion of San Mateo County APN 066- 320-160 Agency Negotiator: Michael Williams, Real Property Manager Negotiating Party: Jo Chamberlain and Jonathan Lundell, Property Owners Under Negotiation: Price and terms and conditions of Conservation Easement ADJOURNMENT 6:00 SPECIAL MEETING OF THE BOARD OF DIRECTORS OF THE MIDPENINSULA REGIONAL OPEN SPACE DISTRICT – STUDY SESSION ROLL CALL 1. Report on Space Needs Assessment and Program for the New Administrative Office (R-17- 128) Staff Contact: Tina Hugg, Senior Planner, Planning Department General Manager’s Recommendation: Receive presentation on space needs assessment and program for the New Administrative Office, and accept the final report. ADJOURNMENT Meeting 17-30 7:00 SPECIAL MEETING OF THE BOARD OF DIRECTORS OF THE MIDPENINSULA REGIONAL OPEN SPACE DISTRICT ORAL COMMUNICATIONS The Board President will invite public comment on items not on the agenda. Each speaker will ordinarily be limited to three minutes; however, the Brown Act (Open Meeting Law) does not allow action by the Board of Directors on items not on the agenda. If you wish to address the Board, please complete a speaker card and give it to the District Clerk. Individuals are limited to one appearance during this section. ADOPTION OF AGENDA SPECIAL ORDERS OF THE DAY • Introduction of staff O Erik Viik – Lead Open Space Technician CONSENT CALENDAR All items on the Consent Calendar may be approved without discussion by one motion. Board members, the General Manager, and members of the public may request that an item be removed from the Consent Calendar during consideration of the Consent Calendar. 1. Approve November 15, 2017 Minutes 2. Award of Contract for Legal Services (R-17-129) Staff Contact: Hilary Stevenson, Assistant General Counsel General Manager’s Recommendation: Authorize the General Manager to enter into a contract with Gary Baum, Esq. to provide legal services in an amount not to exceed $150,000. 3. Award of Contract with Terry Martin and Associates for design, engineering, permitting assistance, and construction administration services for the proposed New South Area Field Office at 240 Cristich Lane in Campbell (R-17-130) Staff Contact: Whitney Berry, Planner II General Manager’s Recommendation: 1. Authorize the General Manager to enter into a multi-year contract with Terry Martin and Associates for design, engineering, permitting assistance, and construction administration services for the proposed New South Area Field Office for a base contract amount of $267,350. 2. Authorize a 15% contingency of $40,100, to be expended only if necessary to cover unforeseen conditions, for a total not-to-exceed contract amount of $307,450. 4. Claims Report BOARD BUSINESS The President will invite public comment on agenda items at the time each item is considered by the Board of Directors. Each speaker will ordinarily be limited to three minutes. Alternately, you may comment to the Board by a written communication, which the Board appreciates. 5. Proposed Quitclaim of a Cultural Conservation Easement to the Amah Mutsun Tribal Band over the Mount Umunhum property (Santa Clara County Assessor’s Parcel Number 562-08- 003) at Sierra Azul Open Space Preserve, related Memorandum of Agreement, and amendment of the property’s Use and Management Plan (R-17-131) Staff Contact: Michael C. Williams, Real Property Manager and Elish Ryan, Real Property Planner III General Manager’s Recommendation: 1. Determine that the activities authorized under the recommended actions have previously been evaluated in the Mount Umunhum Environmental Restoration and Public Access Project Final Environmental Impact Report and have been mitigated to less than significant by the Mitigation Measures adopted as part of the Project, and that there will be no new significant environmental effects or substantial increase in the severity of previously identified significant effects. 2. Determine that the Quitclaim of a Cultural Conservation Easement, and amendment to the Use and Management Plan are categorically exempt under the California Environmental Quality Act (CEQA), as set out in the staff report. 3. Adopt a Resolution authorizing the Quitclaim of a Cultural Conservation Easement to the Amah Mutsun Tribal Band. 4. Adopt a Resolution authorizing the General Manager to enter into a Memorandum of Agreement with the Amah Mutsun Tribal Band for implementation of authorized activities included in the Cultural Conservation Easement. 5. Adopt the Amended Use and Management Plan, as set out in the staff report. 56. Resolutions approving the Preliminary Official Statements (POS) for the Issuance of the Green Bonds, 2017 Refunding Series A, and Parity Bonds, 2017 Series B and the Measure AA Series 2018 General Obligation Bonds (Green Bonds), and authorizing the contribution of up to $1,000,000 into the refunding escrow. The issuance of the Bonds was authorized at the November 8, 2017 Board meeting. The POS resolutions provide for board approval of the disclosure documents to be used in the marketing of the Bonds. (R-17-132) Staff Contact: Stefan Jaskulak, Chief Financial Officer General Manager and Controller’s Recommendation: 1. Adopt a Resolution approving the Preliminary Official Statement for the Issuance of the Green Bonds, 2017 Refunding Series A and Parity Bonds, 2017 Series B 2. Adopt a Resolution approving the Preliminary Official Statement for the Issuance of the Measure AA Series 2018 General Obligation Bonds (Green Bonds) 3. Authorize the contribution of up to $1,000,000 into the refunding escrow 4. Adopt a Resolution authorizing a budget adjustment of up to $715,000 for the escrow contribution INFORMATIONAL REPORTS – Reports on compensable meetings attended. Brief reports or announcements concerning activities of District Directors and staff; opportunity to refer public or Board questions to staff for information; request staff to report to the Board on a matter at a future meeting; or direct staff to place a matter on a future agenda. Items in this category are for discussion and direction to staff only. No final policy action will be taken by the Board. Committee Reports Staff Reports Director Reports ADJOURNMENT *Times are estimated and items may appear earlier or later than listed. Agenda is subject to change of order. In compliance with the Americans with Disabilities Act, if you need assistance to participate in this meeting, please contact the District Clerk at (650) 691-1200. Notification 48 hours prior to the meeting will enable the District to make reasonable arrangements to ensure accessibility to this meeting. Written materials relating to an item on this Agenda that are considered to be a public record and are distributed to Board members less than 72 hours prior to the meeting, will be available for public inspection at the District’s Administrative Office located at 330 Distel Circle, Los Altos, California 94022. CERTIFICATION OF POSTING OF AGENDA I, Jennifer Woodworth, District Clerk for the Midpeninsula Regional Open Space District (MROSD), declare that the foregoing agenda for the special meetings of the MROSD Board of Directors was posted and available for review on December 1, 2017, at the Administrative Offices of MROSD, 330 Distel Circle, Los Altos California, 94022. The agenda and any additional written materials are also available on the District’s web site at http://www.openspace.org. Jennifer Woodworth, MMC District Clerk R-17-128 Meeting 17-30 December 6, 2017 STUDY SESSION AGENDA ITEM 1 AGENDA ITEM Report on Space Needs Assessment and Program for the New Administrative Office GENERAL MANAGER’S RECOMMENDATION Receive presentation on space needs assessment and program for the New Administrative Office, and accept the final report. SUMMARY At its June 28, 2017 Board meeting, the Board of Directors (Board) approved a contract amendment for MKThink to conduct basic space programming for the new Administrative Office (R-17-54). Since then, MKThink has conducted interviews and working sessions with all District departments for input on workspace and storage needs, short- and long-term staffing projections, and collaborative adjacencies. On October 25, 2017, MKThink conducted an interactive workshop with the Board, seeking input regarding public and Board space needs (R- 17-116 and Attachment 1). MKThink has assessed and tabulated the District’s current and future space needs based on Board and staff feedback. This information will be incorporated into a future Scope of Work for the Request for Proposals (RFP) for design architect teams. DISCUSSION MKThink inventoried existing space use and future space needs through site visits and interviews with all departments. With input from the General Manager’s Office, MKThink incorporated the Financial Sustainability Operations Model (FOSM) staffing projections in year 2022 when the District moves into the new AO and in year 2045 when the District reaches FOSM’s maximum build out. Space needs are organized by type and sizes using industry standards: 1. Dedicated space (offices and work stations) 2. Hoteling space (shared drop-in work stations) 3. Shared space for lobby, Board room, and meeting rooms 4. Shared space for user support (kitchen, restrooms/showers, copy room, server, storage, etc.) MKThink tallied the above space need square footages, used modest contingencies (5-15%) for unanticipated growth, and then applied a grossing factor that takes into account unusable space like corridors, mechanical systems, etc. The result is a space program that reflects existing true R-17-128 Page 2 space needs (currently not accommodated by the existing offices), move-in space needs, and maximum space needs. The 5050 El Camino Real building is 39,040 square feet in size. Space not immediately needed for District use is planned to become rentable space if feasible, and will be a program element that a future architect team will need to incorporate into the overall layout of the building. Space Program Summary Current Need (2018) Future Scenario 1: Move-In (2021/22) Future Scenario 2: FOSM Max (2045) Number of staff 100 108 137 Dedicated space 8,010 s.f. 8,586 s.f. 10,414 s.f. Hoteling space 659 s.f. 709 s.f. 880 s.f. Lobby, Board room, and meeting room space 6,264 s.f. 6,394 s.f. 6,524 s.f. User support space 2,975 s.f. 3,075 s.f. 3,175 s.f. Grand total square footage with 35% grossing factor 28,683 s.f. 30,089 s.f. 33,799 s.f. Remaining square footage 11,317 s.f. 9,911 s.f. 6,201 s.f. The above information, including additional technical detail, will be incorporated into a RFP for architectural design services expected to be issued next spring. FISCAL IMPACT The FY2017-18 budget includes $805,000 for the AO Project (Project #31202), and includes sufficient funding for the work anticipated to be complete by the end of the fiscal year. FY2017-18 Project #31202 Budget $805,000 Spent–to-Date (as of 11/20/17): $98,650.04 Encumbrances: $34,418.35 Budget Remaining (Proposed): $671,931.61 BOARD COMMITTEE REVIEW The full Board met on this project on October 25, 2017 and provided input during the basic programming phase. The Board expressed interest in receiving additional information on the applicability of a Design-Build approach for this project. PUBLIC NOTICE Public notice was provided as required by the Brown Act. R-17-128 Page 3 CEQA COMPLIANCE This item is not a project subject to the California Environmental Quality Act. Future environmental review will be conducted on the proposed site improvements as part of the permitting process. NEXT STEPS On January 24, 2018, staff will recommend a proposed process for the design and construction of 5050 El Camino to the Board of Directors for consideration and approval. The process will outline the project phasing, opportunities for Board input, project decision milestones, and the project timeline. At that meeting, the Board will also have the opportunity to provide staff direction regarding the nature of policy input (full Board, Ad Hoc Committee, public, etc.). In preparation for this discussion, staff will conduct informational briefings in early January with each Board member and provide an overview of the design, construction, and project delivery process alternatives. A summary of the questions and comments stemming from the informational briefings will be included in the presentation materials for full Board consideration and review on January 24. Attachment 1. Summary of Board Input on Space Needs Responsible Department Head: Jane Mark, AICP, Planning Department Prepared by: Tina Hugg, Senior Planner, Planning Department Graphics prepared by: MKThink, Inc. Board Needs Assessment November 30, 2017 MIDPENINSULA REGIONAL OPEN SPACE DISTRICT 2 Midpeninsula Regional Open Space District — Space Programming and Adjacency Planning Midpeninsula Regional Open Space District Board MIDPENINSULA REGIONAL OPEN SPACE DISTRICT BOARD ENGAGEMENT SESSION DATE Board Meeting held on October 25, 2017 ATTENDEES Nonette Hanko Cecily Harris Larry Hassett Yoriko Kishimoto Curt Riffle Pete Siemens Absent: Jed Cyr TOTAL NUMBER OF POST-ITS USED 61 TOP CATEGORIES DISCUSSED Technology Board room attributes Lobby/public space Board room size Parking CATEGORY RETAIN ENHANCE INTRO.DISCARD TOTAL Technology 1 2 7 1 11 Board room attributes 4 2 3 1 10 Lobby/public space 4 3 3 0 10 Board room size 1 7 0 0 8 Parking 0 0 6 0 6 Closed Session Room 0 2 2 0 4 Meeting Space 0 0 4 0 4 Environmental Factors 0 1 1 1 3 Promote mission by bringing the outdoors in 0 2 0 0 2 Childcare 0 0 1 0 1 Board ideas 1 0 0 0 1 Privacy for staff 0 1 0 0 1 TOTAL 11 20 27 3 61 Percent 18%33%44%5%100% 3 Midpeninsula Regional Open Space District Board ENVIRONMENTAL FACTORS »Lighting easier on the eyes (LED) »Double pane windows or closeable drapes »Heating air ducts/hot water heating CHILDCARE »Childcare facilities?? (if not enough in area) BOARD IDEAS »Consider other ideas from board members PRIVACY FOR STAFF »Limit public access to work areas PROMOTE MISSION BY BRINGING THE OUTDOORS IN »Incorporate redwoods + nature into the space (+1) »Incorporate outdoor space/environment LOBBY/PUBLIC SPACE »Reception »Welcome lobby with information and reception »Friendly, accessible reception and “lobby” »Entrance for public directly to reception »Music in lobby (-1, -1, -1) »Entry lobby that reflects the ?? of open space »Building experience for all of our constituents »“Open space” experience/feel; welcome experience »Separate lobby – Quiet away from board room »Ability to leave entrance doors completely open »Use for all staff/call in from desk »Make sure smaller meetings don’t feel overwhelmed »Public chairs BOARD ROOM SIZE »Side entry »4x larger space »Better seating for public »Board room for 80-100?? Not too large »Good AV »More room/space for board »Board room to accommodate 115 occupants »Larger board room (public space about 100 people) PARKING »Improve VTA bus stop to encourage regular use »Include bike parking underground for staff and outside public »Limit underground parking to staff »EV charging stations »More bike parking for public and staff »Consider parking for other 2-wheel vehicles (like scooters) MEETING SPACE »More community and meeting rooms for partners and public »Meeting space for volunteers, community groups »Classrooms/meeting rooms for talks, training, outreach »Workspaces/links for partners CLOSED SESSION ROOM »Larger closed session room »Larger closed session room to accommodate 25 »Board room include more offices? For board members »Green room or quiet space for Board to sit before meetings TECHNOLOGY »Sound system »Up to date technology for Board Room/ entire lobby »Board room – IT/AV, public speaker, room »Streaming Public TV (+1) »AV screen »Remote or call in – board and public »Monitors that everyone can see »Employee key cards »Public TV online capability for board room »Two viewing screens – 1 board, 1 public – always visible to all »Public’s microphone (battery) BOARD ROOM ATTRIBUTES »Try to retain existing board seating arrangement »Board horseshoe »Quietude »Same closeness to one another in board room »Improve public seating »Board seating not too comfy »Flexible in board room arrangements POST-IT NOTES Each Post-It from the Board engagement session is listed below. »Retain »Enhance »Introduce »Discard 4 Midpeninsula Regional Open Space District — Space Programming and Adjacency Planning Midpeninsula Regional Open Space District Board 1. DO YOU HAVE ANY SPECIFIC PARAMETERS OR GOALS WITH REGARD TO THE BOARD AND PUBLIC SPACE NEEDS? §Not ostentatious board room §Like the map of spaces §Like the brag wall/awards §Nice to have art §Interior walls where can display things (like timeline, photographs of District) §Future: Be more welcoming to a more diverse group of people (social, economic, physical) §Have flat seating - public on the same level as Board or very close/be able to see all (6-8 inches up) §Limit the number of steps up to the Board Room (accessibility) §Have Board Room on first floor of the building 2. WHAT WORKS AND DOESN’T WORK WITH THE BOARD’S CURRENT SPACES? §All the wires under the table §Welcome the public - Make it easy and comfortable for them to talk (only people in front of you, not behind you) §Like the big circle shape of public seating and Board Room horseshoe §Like the speaking podium off to the side (more comfortable for the public) §Important for public to be able to see who the Board members are §Able to see how your representative actually voted on a screen in the Board Room §Rental of Board Room to another entity who needs a Board Room 3. WHAT WORKS AND DOESN’T WORK REGARDING THE CURRENT LAYOUT AND ALLOCATIONS FOR PUBLIC AREAS? §Not big enough §Works: Accessible, openness, welcoming, has lots of information, has Reggie (the mountain lion) §Nice addition to have off of Board Room §How much does Midpen want to be a hub for other open space groups? Could have a public meeting room for use of other open space groups/ agencies §Meeting rooms can be flexible and for various uses (not mutually exclusive rooms/spaces) §Having office space for environmental groups - Don’t need to talk about tonight §Need to have available meeting space for other open space groups and community groups §Security/ability to open up only one room for community groups §What are other efficiencies for technology for the Board Room? Leave flexibility for technology changes §Get rid of current/bad ceiling tiles §Design for technology/wiring flexibility ADDITIONAL DISCUSSION QUESTIONS Below are the notes from the Board’s discussion about the four questions MKThink asked as homework prior to and as part of the session. 5 Midpeninsula Regional Open Space District Board 4. DO YOU ANTICIPATE ANY SIGNIFICANT CHANGES IN HOW THE BOARD WORKS OR HOW THE ORGANIZATION WORKS OVER THE NEXT 15 YEARS? §Changes in Board members §Make-up of the organization lends itself to working at home/remotely - Lots of opportunities for this §Could be working out of remote offices more with technology because of nature of fieldwork §Public transportation - Hoping that happens “Parking Lot” List - A number of topics, concerns, and issues came up at the meeting that have been tabled for later discussion or will be raised and considered at a later point in the design and development process. November 15, 2017 Board Meeting 17-29 SPECIAL MEETING BOARD OF DIRECTORS MIDPENINSULA REGIONAL OPEN SPACE DISTRICT Menlo Park Senior Center 100 Terminal Ave. Menlo Park, CA 94025 Wednesday, November 15, 2017 DRAFT MINUTES SPECIAL MEETING – STUDY SESSION District Clerk Jennifer Woodworth called the special meeting to order at 6:00 p.m. and recessed the meeting due to a lack of quorum. Vice-President Riffle called the special meeting of the Midpeninsula Regional Open Space District to order at 6:20 p.m. ROLL CALL Members Present: Jed Cyr, Nonette Hanko, Curt Riffle, and Pete Siemens Members Absent: Cecily Harris, Larry Hassett, and Yoriko Kishimoto Staff Present: General Manager Steve Abbors, General Counsel Sheryl Schaffner, Assistant General Manager Ana Ruiz, Chief Financial Officer/Administrative Services Director Stefan Jaskulak, Acting Assistant General Manager Christine Butterfield, District Clerk/Assistant to the General Manager Jennifer Woodworth, Planning Manager Jane Mark, GIS Administrator Casey Hiatt, Natural Resources Manager Kirk Lenington 1. Open Space Vision Plan Overview (R-17-124) Natural Resources Manager Kirk Lenington provided an overview of the Open Space Vision Plan and the process used to develop it, including numerous public engagement workshops, Community Advisory Committee, individual preserve visitor interviews, and online MindMixer forum. Director Harris arrived at 6:23 p.m. President Hassett arrived at 6:25 p.m. Meeting 17-29 Page 2 GIS Administrator Casey Hiatt summarized the work completed as part of the planning and analysis processes for the Vision Plan, such as studying how the District can support agriculture on the Coast, mapping sensitive species and habitats, and opportunities for public access. Much of the information is included in the Conservation Atlas, which resulted from the Vision Plan, and is used to help inform much of staff’s natural resources and preservation work today. Director Kishimoto arrived at 6:31 p.m. Mr. Lenington explained how goals were created from each of the five Vision Plan themes to further focus the work of the Vision Plan. From the goals, staff developed a comprehensive list of possible actions or projects to implement the goals for each theme. After further refinement of the priority actions at public deliberation and Board meetings, a final list of 54 priority action was compiled, and the top 25 portfolios were identified for inclusion in the Measure AA ballot language. Planning Manager Jane Mark provided an overview of implementation actions the District has undertaken since Measure AA was approved by the voters in 2014. Staff worked with the Board to prioritize over 60 projects within the top 25 portfolios for implementation within the first five years of Measure AA implementation. The Board will periodically revisit the five-year project list to update it, and reprioritization is planned for early 2018. Ms. Mark summarized completion of numerous Measure AA projects since June 2014 to support land conservation, natural resource protection & preservation, and public access & education. Director Riffle inquired how often similar presentations could be provided to the Board. Assistant General Manager Ana Ruiz suggested similar presentations may be provided at least every four to five years prior to Board creation and approval of the five-year project prioritization list. General Manager Steve Abbors also suggested similar presentations would be helpful for any newly elected Board members and staff members, as needed. Director Harris requested clarification on the creation of the five-year project list and whether it is a new project list or a reprioritization of projects. Ms. Mark explained completed projects would be removed from the prioritized project list, and projects on the six to ten year priority and “parking lot” list may be prioritized into the five-year list. Director Siemens requested an update on all portfolios to better understand how much of a portfolio’s allocated funds have been spent in contract to the amount of work remaining to complete the projects within a portfolio. Public comment opened at 7:04 p.m. No speakers present. Public comment closed at 7:04 p.m. Meeting 17-29 Page 3 President Hassett adjourned the special meeting of the Board of Directors of the Midpeninsula Regional Open Space District at 7:04 p.m. SPECIAL MEETING President Hassett called the special meeting of the Midpeninsula Regional Open Space District to order at 7:08 p.m. ROLL CALL Members Present: Jed Cyr, Nonette Hanko, Cecily Harris, Larry Hassett, Yoriko Kishimoto Curt Riffle, and Pete Siemens Members Absent: None Staff Present: General Manager Steve Abbors, General Counsel Sheryl Schaffner, Controller Mike Foster, Assistant General Manager Ana Ruiz, Chief Financial Officer/Administrative Services Director Stefan Jaskulak, Acting Assistant General Manager Christine Butterfield, District Clerk/Assistant to the General Manager Jennifer Woodworth, Assistant General Counsel Hilary Stevenson, and Finance Manager Andrew Taylor ORAL COMMUNICATIONS No speakers present. ADOPTION OF AGENDA Motion: Director Cyr moved, and Director Kishimoto seconded the motion to adopt the agenda. VOTE: 7-0-0 President Hassett announced that the closed session item following the special meeting related to real property negotiations have shifted on the other side from the Amah Mutsun Land Trust to the Amah Mutsun Tribal Band, with the negotiating party to be Tribal Chairman Val Lopez. The remaining details related to the closed session item are the same. REPORT OUT OF CLOSED SESSION President Hassett reported the full Board met in closed session on November 6, 2017 to discuss the appointment of an interim General Manager, pending the recruitment for the permanent position. The Board voted 6-1, with Director Harris dissenting, to appoint Ana Ruiz as Acting General Manager for the period between General Manager Steve Abbors’s retirement at the end of the year, and the conclusion of the recruitment process. CONSENT CALENDAR Public comment opened at 7:18 p.m. Meeting 17-29 Page 4 No speakers present. Public comment closed at 7:18 p.m. Motion: Director Siemens moved, and Director Riffle seconded the motion to approve the Consent Calendar. VOTE: 7-0-0 1. Approve November 8, 2017 Minutes 2. Award of contract for demolition of an unoccupied structure at 16075 Overlook Drive in El Sereno Open Space Preserve (R-17-126) General Manager’s Recommendation: 1. Authorize the General Manager to enter into contract with Cal Excavation and Underground Inc., of Hughson, California for a not-to-exceed base contract amount of $103,285. 2. Authorize a 15% contract contingency of $15,493 to be reserved for unanticipated issues, thus allowing the total contract amount not-to-exceed $118,778. President Hassett inquired if any funds are included in the contract for land recontouring and rehabilitation. Land and Facilities Supervisor Omar Smith explained the original slope of the hillside is unchanged, but some recontouring will be done at the deck. Minimal disturbance of the hillside is expected, and reseeding and remulching of the hillside is included in the contract. 3. Award of Contract with Waterways Consulting, Inc., for the preparation of construction level documents for road infrastructure improvements at Russian Ridge, Monte Bello, and Tunitas Creek Open Space Preserves (R-17-125) General Manager’s Recommendation: 1. Authorize the General Manager to enter into a professional services contract with Waterways Consulting, Inc., to prepare construction level documents for road infrastructure improvements, for a base contract amount of $49,247.50. 2. Authorize a contingency of $7,387.50, to cover unforeseen expenditures, for a not-to- exceed total contract amount of $56,635. BOARD BUSINESS 4. Annual bond disclosure training for the members of the Board of Directors, members of the Disclosure Working Group, and Contributors (R-17-127) Chief Financial Officer Stefan Jaskulak introduced Jacquelynne Jennings partner with the District’s disclosure counsel Schiff Hardin who presented the annual training on Bond Disclosure obligations, responsibilities, and potential liabilities of members of District staff and members of the Board of Directors to the Board members of the Disclosure Working Group. Meeting 17-29 Page 5 Public comment opened at 8:12 p.m. No speakers present. Public comment closed at 8:12 p.m. No Board action required. INFORMATIONAL MEMORANDA • Tenant Notification Regarding Cannabis Cultivation INFORMATIONAL REPORTS A. Committee Reports No committee reports B. Staff Reports General Counsel Sheryl Schaffner provided an update on the Gullicksen property neighboring the Saratoga Gap Open Space Preserve reporting Mr. Gullicksen entered a no contest plea regarding the charges of trespassing and was ordered to pay restitution to the District. Additionally, Mr. Gullicksen must stay off the District’s property. C. Director Reports The Board members submitted their compensatory reports. President Hassett adjourned the special meeting of the Board of Directors of the Midpeninsula Regional Open Space District into closed session at 8:15 p.m. SPECIAL MEETING – CLOSED SESSION 1. CONFERENCE WITH REAL PROPERTY NEGOTIATORS (Government Code Section 54956.8) Property: Santa Clara County Assessor’s Parcel Number 562-08-003 Agency Negotiator: Michael Williams, Real Property Manager Negotiating Party: EkOngKar Singh Khalsa, Executive Director, Amah Mutsun Land Trust Under Negotiation: Conservation Easement President Hassett adjourned the special meeting of the Board of Directors of the Midpeninsula Regional Open Space District into closed session at 9:50 p.m. ________________________________ Jennifer Woodworth, MMC District Clerk R-17-129 Meeting 17-30 December 6, 2017 AGENDA ITEM 2 AGENDA ITEM Award of Contract for Legal Services GENERAL MANAGER’S RECOMMENDATIONS Authorize the General Manager to enter into a contract with Gary Baum, Esq. to provide legal services in an amount not to exceed $150,000. SUMMARY As recently announced, upon the General Counsel’s retirement, the District’s Assistant General Counsel will serve as Acting General Counsel, leaving the Assistant General Counsel position vacant for approximately seven months. After a review of four proposals to perform the duties of the position on an interim basis, and on recommendation of the current Assistant General Counsel Hilary Stevenson, General Counsel Sheryl Schaffner recommends contracting with Mr. Gary Baum to assist with the workload. He and his firm are highly qualified to fill the position and provide legal services at a fair and reasonable price. Salary savings arising from the General Counsel’s retirement will cover the cost of the proposed contract. DISCUSSION The District’s General Counsel will retire at the end of calendar year 2017. The Board of Directors asked the District’s Assistant General Counsel, Hilary Stevenson, to step up and take on the role of Acting General Counsel, pending the completion of a recruitment and selection process to fill the General Counsel position. The net effect is that the District’s internal attorney staffing will be reduced by one-half, from two to one attorney, during this period. To reduce the impact of the staffing gap, staff solicited four proposals from attorneys who are well-qualified to perform legal services on a contract basis. Staff carefully reviewed the proposals and considered the mix of skills, experience, rate structures, and availability to provide Assistant General Counsel level services beginning in January 2018 for approximately seven months. All four proposers have previously served in similar positions throughout the area and their rates range from $150 to $285 per hour. With the concurrence of District General Counsel Sheryl Schaffner regarding this selection, Ms. Stevenson recommends contracting with Mr. Gary Baum. Mr. Baum is highly qualified, having worked in many municipal law offices and completed his distinguished public sector career as City Attorney for the City of Palo Alto. He has the relevant experience in the public sector, including experience with public contracts, real estate transactions, wireless leases, personnel R-17-129 Page 2 matters, and principles of public finance. He has served in an interim capacity to numerous small public law offices similar to the District General Counsel’s Office over the past several years since his retirement. Mr. Baum offers his services at a fair and reasonable rate, and approaches the opportunity to serve the District and its mission with wholehearted enthusiasm. Mr. Baum can be available for 16-20 hours per week of work. Mr. Baum has agreed to be available in the Administrative Office twice a week to provide “office hours” in person, to meet with staff and attend other meetings, and would also be available via telephone and email as needed. The vacancy of the General Counsel position creates a salary and benefits savings of $21,300 per month. Mr. Baum’s contract can be funded from these salary savings. With a concurrent vacancy in the General Manager position beginning in January 2018, the Board has decided that it will recruit a new General Manager before commencing the recruitment for the new General Counsel. The proposed seven-month term is an approximation, intended to cover the period of time needed for the Board to fill these positions. If the office is fully staffed earlier than July, the District can terminate the agreement with Mr. Baum with reasonable notice. If there are changes to this timeline, the General Counsel will return to the Board to obtain additional contract help to fulfill staffing needs. It is important to recognize that the salary savings fund about half of the hours of service the District is accustomed to receiving from the Assistant General Counsel position, which is fairly typical when obtaining outside counsel services. Assuring the effective operation of the General Counsel’s Office while it is partially vacant will also require the cooperation and patience of District staff during this transition period. FISCAL IMPACT The Legal Department’s FY2017-18 budget includes $21,300 monthly for salaries and benefits for the General Counsel position, which will be available as salary savings during the vacancy in the General Counsel position, to offset the costs of this contract. BOARD COMMITTEE REVIEW The Board Appointee Committee was previously informed of the proposed contract to address the gap in staffing arising from the temporary vacancy in the General Counsel position. PUBLIC NOTICE Public notice was provided as required by the Brown Act. CEQA COMPLIANCE The award of contract is not a project subject to the California Environmental Quality Act. R-17-129 Page 3 NEXT STEPS Following Board approval, the General Counsel and General Manager will execute a contract with Gary Baum, Esq. Responsible Department Head: Sheryl Schaffner, General Counsel Prepared by: Hilary Stevenson, Assistant General Counsel R-17-130 Meeting 17-30 December 6, 2017 AGENDA ITEM 3 AGENDA ITEM Award of Contract with Terry Martin and Associates for design, engineering, permitting assistance, and construction administration services for the proposed New South Area Field Office at 240 Cristich Lane in Campbell GENERAL MANAGER’S RECOMMENDATIONS 1. Authorize the General Manager to enter into a multi-year contract with Terry Martin and Associates for design, engineering, permitting assistance, and construction administration services for the proposed New South Area Field Office for a base contract amount of $267,350. 2. Authorize a 15% contingency of $40,100, to be expended only if necessary to cover unforeseen conditions, for a total not-to-exceed contract amount of $307,450. SUMMARY The Midpeninsula Regional Open Space District (District) needs a qualified architecture firm with industrial building expertise to provide architectural and engineering design services, prepare construction plans and specifications, and provide permitting and construction administration support for the new South Area Field Office (SAO). The District obtained a Conditional Use Permit in September and has one year to submit plans to the City of Campbell for a building permit. Given the tight timeline and Terry Martin and Associates (TMA)’s demonstrated expertise, the General Manager recommends awarding a sole source contract to TMA for architectural services to design the new SAO for a total amount not-to-exceed $307,450. The Fiscal Year (FY) 2017-18 budget includes sufficient funds to cover costs through the end of this fiscal year. The proposed FY2018-19 Action Plan and Budget will include additional funds to complete design, engineering and construction work. This project qualifies as a sole source contract under the General Manager’s authority as specified in District policies. BACKGROUND The District has long sought to locate an additional, permanent staff facility in the southern reaches of its jurisdiction to provide a management presence for its southerly preserves. The staff increase and the operational needs resulting from the recent opening of Mount Umunhum at Sierra Azul Open Space Preserve and the near term opening of the Bear Creek Redwoods Open Space Preserve have warranted a larger, more functional field office located in the southern area of the District. R-17-130 Page 2 In March 2017, the Board approved the purchase of an industrial property at 240 Cristich Lane in the City of Campbell (City) that has the capacity to serve as the new SAO (R-17-38). In September 2017, the District acquired a Conditional Use Permit from the City allowing the District to use the property as a new field office and associated corporation yard. TMA provided exemplary service to the District throughout this conceptual design process, enabling permit acquisition within an expedited timeframe. Implementation of this project will fulfill the goals of the Board-accepted Financial and Operational Sustainability Model (R-15- 82), and the Board-approved goals related to staff facilities (R-15-157). DISCUSSION TMA will lead a standard architectural/engineering (A/E) team that will develop design drawings and construction documents for the new building. The team’s scope of work includes an evaluation of the existing building to determine the necessary structural and exterior upgrades needed to comply with current building code requirements. Certain improvements to the site and building are necessary to accommodate the District’s new SAO, and to meet the conditions of approval of the Conditional Use Permit for the site. Improvements will include but are not necessarily limited to: • Demolition of the unfinished structure at rear of property and replacement with new storage building and shed in same location; • Relocation of diesel fuel dispenser and removal of existing fuel pump; • New concrete paving and striping for 24 parking spaces; • New automatic vehicular gate; • New site lighting and security fencing; • New signage and flagpole; • New curb, gutter, and sidewalk; • New five-foot wide landscaped buffer around the property edge; • New bioretention area for stormwater treatment; and • New trash and recycling enclosure. Over the past year, TMA has demonstrated their industrial building expertise, their familiarity with the City’s permitting process, their solid relationship with City staff, and their understanding of District needs. Based on this, the General Manager recommends utilizing the sole-sourcing exception provided in Board Policy 3.03 “Public Contract Bidding, Vendor and Professional Consultant Selection, and Purchasing Policy” to enter into a new contract with TMA to provide design, engineering, permitting assistance, and construction administration services for the new SAO. FISCAL IMPACT The Fiscal Year (FY) 2017-18 budget includes $199,000 for the new SAO project, and additional funds are allocated in the three-year Capital Improvement Program as outlined in the table below. There are sufficient funds in the project budget to cover the recommended action and expenditures anticipated this fiscal year. R-17-130 Page 3 Any contract amount remaining will be included when the project budget for next fiscal year (FY2018-19) is developed during the next Budget and Action Plan cycle. The recommended action is not funded by Measure AA. BOARD COMMITTEE REVIEW The final design of the proposed improvements will be presented to the Planning and Natural Resources (PNR) Committee in the third quarter of FY2017-18. PUBLIC NOTICE Public notice of this Agenda Item was provided as required by the Brown Act. CEQA COMPLIANCE District staff prepared a Categorical Exemption for the project and determined that the project would not result in any impacts to the environment defeating the eligibility for the exemption. The District found that the proposed remodel and improvements at 240 Cristich Lane and its subsequent use as a field office and corporation yard were categorically exempt from CEQA pursuant to CEQA Guidelines Sections 15301, 15302, 15303, 15304, and 15311: Section 15301 – Existing Facilities: The project proposes interior and exterior alterations to the existing industrial building that would involve a negligible or no expansion of use. The project will generate vehicle trips equivalent to the trips of the previous occupancy of the building and would not result in any significant traffic impacts. The proposed modifications will not substantially change the site’s function as an industrial building with employees and surface parking. Section 15302 – Replacement or Reconstruction: The project includes the demolition and removal of an unfinished wooden accessory structure, and construction of a new storage building (250 sf) and shed (700 sf) of substantially the same purpose and capacity at the same location. Section 15303 – New Construction or Conversion of Small Structures: The project includes construction of new storage building (250 sf) and shed (700 sf), replacing an unfinished accessory structure at the rear of the site. FY 2018 FY 2019 FY 2020 Total Project #31601 - New SAO Budget: $199,000 $602,000 $1,366,000 $2,167,000 Spent-to-Date $0 Encumbrances $0 Award of Proposed Contract, including contingency amount $115,000 $138,000 $54,450 $ Budget Remaining (Proposed): $84,000 $0 $ R-17-130 Page 4 Section 15304 – Minor Alterations to Land: The project includes new landscaping and minor trenching and backfilling where the surface is restored. There will be no extensive grading on site. Section 15311 – Accessory Structures: The project includes the placement of an on- premise sign and flagpole that would be appurtenant to the District’s facility. A Notice of Exemption was filed with the County of Santa Clara on July 21, 2017 and was posted for a period of 30 days in accordance with CEQA. As a Responsible Agency under CEQA, the City concurred that the project qualified for a categorical exemption at the time the City issued the Conditional Use Permit. NEXT STEPS Following Board approval, the General Manager will direct staff to enter into a contract with Terry Martin and Associates for design, engineering, permitting assistance, and construction administration services for the proposed New South Area Field Office. The project’s tentative schedule below is driven in part by the City-imposed deadline of September 2018 to submit for building permits. Phase Tentative Time Period Evaluation of Building / Confirm programming Winter 2018 Schematic / Design Development Winter - Spring 2018 Construction Document Development / Permitting Summer – Fall 2018 Construction Bidding Winter 2018 Construction Spring – Summer 2019 Attachments: 1. Approved CEQA Exemption for the Proposed Remodel of 240 Cristich Lane 2. Conditional Use Permit for 240 Cristich Lane Responsible Department Head: Jane Mark, AICP, Planning Manager Prepared by: Whitney Berry, Planner II Attachment 1 Attachment 1 Attachment 1 Attachment 1 Attachment 2 Attachment 2 Attachment 2 Attachment 2 Attachment 2 Attachment 2 Attachment 2 Attachment 2 Attachment 2 Attachment 2 Attachment 2 Attachment 2 Attachment 2 page 1 of 5 CLAIMS REPORT MEETING 17-30 DATE 11-29-17 MIDPENINSULA REGIONAL OPEN SPACE DISTRICT Check Number Notes Vendor No. and Name Invoice Description Check Date Payment Amount 76540 11716 - O.C. JONES & SONS, INC.Mt. Umunhum Road Rehabilitation Project 11/08/2017 369,727.89 76524 11709 - D-LINE CONSTRUCTORS, INC.Mt. Umunhum Summit Public Access Improvements Project 11/08/2017 159,340.03 76572 11369 - BANK OF THE WEST COMMERCIAL CARD USA $1,671.27 Building Permit for 1470 Monte Bello Road 11/15/2017 85,886.67 $1,638.78 Workshop, Training, Conference Registration Fees & Field Supplies 11/15/2017 $893.34 Uniform - Shoes, Car Wash for District Vehicle, Contractor Bee Removal Fee for Hawthorns Historic House & Ice 11/15/2017 $203.78 Office Supplies - CA State Flag, Frame for Newburn Proclamation, Headset & Battery 11/15/2017 $1,250.00 Field Supplies - Registration Fees for CCIWS, Hydraulic Excavator Thumb & Pesticide Applicators Professional Assoc. Renewal Fee 11/15/2017 $43.58 Wiper blades 11/15/2017 $13,000 FP Assoc Medical Group/Employee Tests 11/15/2017 $25,638.09 Fuel for District Vehicles, Uniform Patches, Radio Reference Subscription & Legal Ads for Tree Service Contractors 11/15/2017 $88.08 SFO - Shop Lights 11/15/2017 $2,093.54 SFO Kitchen/Field Supplies - OSP Sign Cleaner, Batteries, Clipboard, Keys, Labels, Air Freshener, Laminating Supplies, Paper towels, Pens, Lodging for Training Class & Petroleum 11/15/2017 $1,183.20 Web Hosting, Wufoo Web Forms, Video Captioning, Facebook Ads, Webstore, Web Forwarding Solutions, Mailchimp & ICA Training Course 11/15/2017 $728.08 Equipment/Vehicle Supplies - Grease Guns & Coupler, Cab Handles, Mini Excavator Keys & Truck Hitch 11/15/2017 $2,551.49 Business Meeting Meals, Professional Laser Range Meter Kit, Digital Measuring Wheel, Desktop File Sorter, Tape Measure & Design-Build Conference Workshop 11/15/2017 $327.60 Field Supplies - Lumber, Bandsaw Blade, Rope Crimping Tool & Chainsaw Supplies 11/15/2017 $1,188.41 Refrigerator for Staff Residence 11/15/2017 $274.72 FFO Field/Kitchen Supplies - Coffee, Wildlife Ramp & Battery 11/15/2017 $125.12 FFO Field Supplies - Bolts for Entrance Signs, Paint Brushes & CCIWS Registration Fee 11/15/2017 $35 Ranching In Carnivore County Registration Workshop 11/15/2017 $46.65 Herbicide Equipment Belts 11/15/2017 $534.50 CCIWS Registration Fee, Storage Tool Box, Deckmate Screws & Water Chlorine System Supplies 11/15/2017 $118.83 Batteries & Lumber for Shelving 11/15/2017 $142.30 FFO Field Supplies - Ratchet Tie-Down for Water Tank & District Vehicle Car Visor Radio Clips 11/15/2017 $64.38 Mt. Umunhum Vault Toilet Repair Supplies 11/15/2017 $158.75 Volunteer Supplies & Equipment - Towels, Buckets, Kneeling Cushion 11/15/2017 $13,705.33 Mt. Umunhum Grand Opening Event Rental Equipment Fees, Valet Parking Services, Tshirt Design Fee, Dropbox Cloud Storage & Top Facilitation Method Training Class 11/15/2017 $270.63 Field Supplies - Folders, Sheet Protectors, Cable Ties, Screwdriver Set, Ripping Chisel & Combo Wrench Set 11/15/2017 $208.81 Field Supplies - Battery for Yamaha Rhino & Vehicle Bolt 11/15/2017 $334.15 Field Supplies - Lumber, Homer Bucket, Concrete Mix & Tube 11/15/2017 $1,198.50 CEQA Essentials Workshop Training, Lodging & Airfare & Registration Fee for Ranching in Carnivore Country - CCRC 11/15/2017 $316.40 IT supplies - Cannon Plotter Monthly Imaging Fees & GIS Monthly Subscription 11/15/2017 $2,182.27 Monitors, Docks for Notebooks, Replacement Tablet & Case, HDMI Cables & Lodging for MISAC Conference 11/15/2017 $397.96 LA Times Ongoing Subscription & Environmental Negotiation Training Course 11/15/2017 $250 IRWA Membership Renewal Dues 11/15/2017 $1,447.51 Airfare, Lodging for AFP Training Conference & Membership Fees 11/15/2017 $478.29 District Patrol Truck Pumper Maintenance 11/15/2017 $535.89 Driveway Alert Devices, Propane Tank Rental, PC Speakers & Outdoor Security Mirror 11/15/2017 $305.27 Field Supplies - Tire on Wheel with Hub & Bearings & Lockout Hasp 11/15/2017 $47.19 Volunteer Supplies 11/15/2017 $243.46 Field Supplies - Homer Bucket, Coil Chain, PVC Bushing, Motor Oil & Mt. Umunhum Restroom Repair Supplies 11/15/2017 $24.99 Car Wash for District Vehicle 11/15/2017 $420.26 Blank Check Stock for Finance 11/15/2017 $963.75 Employee & Volunteer Name Badges, Public Storage Fee, Mailings, Tea, Labels, Folders, Erasable Wall Calendar 11/15/2017 $40.31 Staff Recognition Event -Supplies 11/15/2017 $167.12 Windshield Fluid, JPIA Webinar 11/15/2017 $162.06 Field Supplies - Lumber & Culvert Materials (BCR)11/15/2017 $79.70 Gate Project - Lumber & Auger (LH)11/15/2017 $104.21 Field Supplies - Batteries & Hex Adapter 11/15/2017 $704.14 American Red Cross Training Fee, Snacks for Training, HP Keyboard & Books 11/15/2017 $661.08 Field Supplies - Bobcat yearly Maintenance Service & Supplies, Door Jam Repairs (Annex) & Tool Rack for Volunteer Shed 11/15/2017 $354.34 Lodging for CSDA Conference 11/15/2017 $400.10 Wall Repair, Plumbing Repair, Lamps, Cleaning Supplies (AO3)11/15/2017 $2,644.11 Lodging for Spice Works IT Conference, Storage cabinet & Ethernet cables 11/15/2017 $23.98 Two USB Drives 11/15/2017 $54.35 Field Supplies - Hex Bolt, Paint & Tape 11/15/2017 $271.14 Recruitment & Staff Recognition Event Expenses 11/15/2017 $165.82 Field Supplies - Pest Glue Traps, Utility Hook, Wood Screws, Countersink, Washers & Flashlight 11/15/2017 $385.37 Hazmat Supplies - Siphon Pro XL, 5 Gallon Drum, Lockable Lid Funnel & CCIWS Registration Fee 11/15/2017 $1,979.77 MMANC Conference Fee, Food for Board Meetings, Facility Rental Deposit Fee for Board Training in January & Janitorial Services, Food for Tour (BOC)11/15/2017 $302.69 Food for Board Meetings 11/15/2017 76680 11820 - TOP LINE ENGINEERS, INC.Harkins Bridge Replacement (PC)11/21/2017 80,085.00 76676 11858 - STUDENT CONSERVATION ASSOCIATION Student GIS Work Project (10 Members & 2 Leaders)11/21/2017 47,183.00 page 2 of 5 CLAIMS REPORT MEETING 17-30 DATE 11-29-17 MIDPENINSULA REGIONAL OPEN SPACE DISTRICT Check Number Notes Vendor No. and Name Invoice Description Check Date Payment Amount 76738 11854 - RECON ENVIRONMENTAL, INC.Plant Maintenance and Revegetation Sites (OSP)11/29/2017 45,479.70 76646 11501 - HARRIS DESIGN Public Access Design, Engineering & Construction Oversight (BCR)11/21/2017 43,525.56 76758 *11152 - WELLINGTON PARK INVESTORS December Rent (A02, A03 & A04)11/29/2017 29,807.00 76640 10546 - ECOLOGICAL CONCERNS INC Vegetation Management for Fire Protection/IPM Implementation (BCR), Vegetation Management - Early Detection/Rapid Response (PCR)11/21/2017 29,378.50 76518 11842 - CALIFORNIA COMMERCIAL FENCE Tunitas Creek Ranch Boundary Fence 11/08/2017 25,932.30 76581 11542 - DEERE & COMPANY 2017 Gator Utility Vehicle (FFO)11/15/2017 22,936.66 76591 10728 - IDEAL RESTORATION Lead Removal Services - Harrington Creek Bridge 11/15/2017 21,920.00 76682 11853 - U.S.D.A. FOREST SERVICE Nursery Certification 11/21/2017 20,872.00 76671 11432 - SAN MATEO COUNTY RESOURCE CONSERVATION DISTRICT Control of Slender False Brome 11/21/2017 17,156.95 76593 10794 - JOHN NORTHMORE ROBERTS & ASSOC Bear Creek Stables Improvements Design Development 11/15/2017 17,052.27 76638 11848 - CASE SYSTEMS, INC.Mt. Umunhum Emergency Call Boxes - Case Systems 11/21/2017 15,906.35 76710 *10214 - DELTA DENTAL December 2017 Dental 11/29/2017 15,717.94 76623 10222 - HERC RENTALS INC Excavator Rental for Mt Thayer 11/17/2017 15,551.73 76643 10005 - GRASSROOTS ECOLOGY Native Planting (Cooley Landing) & FY17/18 1st Qtr payment for Hawthorns & Russian Ridge Stewardship Agreement 11/21/2017 14,103.77 76729 11855 - OREGON STATE UNIVERSITY Test Revegetation Sites for Soil Diseases - Sudden Oak Death Monitoring & Research (Not Preserve Specific)11/29/2017 13,810.25 76587 11593 - H.T. HARVEY & ASSOCIATES Alma College Bat Relocation & Habitat Replacement, Bio On-Call Nesting Habitat & Plant Survey (RV), Pre Demo Bay Survey (Rosetta Property)11/15/2017 13,661.93 76634 10012 - BIOSEARCH ASSOCIATES Western Pond Turtle Population Study (BCR) & Turtle Trapping - Alpine Lake 11/21/2017 13,147.86 76574 10723 - CALLANDER ASSOCIATES Ravenswood Bay Trail Connection Design & Construction Management 11/15/2017 12,194.83 76734 11523 - PGA DESIGN, INC.Alma College Site Rehabilitation Implementation 11/29/2017 10,218.11 76543 10082 - PATSONS MEDIA GROUP Printing of Mt. Umunhum & RSA Trail Brochures, Employee Business Cards & Mt. Umunhum Closure Postcard 11/08/2017 10,099.10 76684 11871 - WARE ASSOCIATES, INC Mt. Umunhum Summit Project (SA)11/21/2017 10,027.50 76723 *10419 - LINCOLN NATIONAL LIFE INSURANCE COMPANY AD&D/Life/LTD Employee Benefit 11/29/2017 9,924.19 76519 11391 - CHAVAN & ASSOCIATES, LLP Auditing/CAFR Services for 2016-17 FY 11/08/2017 9,750.00 76668 Voided 11588 - RONALD SEEVER Mindego Pond Improvement Fencing 11/21/2017 9,654.00 76605 11552 - ROBERT HALF TECHNOLOGY SharePoint Development Services W/E 10/6 + 10/13 11/15/2017 9,600.00 76667 11552 - ROBERT HALF TECHNOLOGY SharePoint Development Services W/E 10/20 + 10/27 11/21/2017 9,600.00 76742 11588 - RONALD SEEVER Mindego Pond Improvement Fencing 11/29/2017 9,564.00 76602 11241 - QUESTA ENGINEERING CORPORATION Harkins Bridge Design Aug-Sep 2017 11/15/2017 9,495.77 76733 *10180 - PG & E Electricity/Gas - 11/17 - 20 Locations 11/29/2017 9,297.36 76635 11836 - BONKOWSKI AND ASSOCIATES, INC Hydro On-Call Stevens Canyon Ranch 11/21/2017 8,884.00 76513 11772 - AHERN RENTALS, INC.Equipment Rentals - Excavator w/bucket & Dozer with Rip (CM & RR)11/08/2017 8,643.39 76531 11492 - HAWK DESIGN & CONSULTING Drawings & Specifications for 5755 Alpine Rd, La Honda (RR)11/08/2017 8,437.50 76624 10223 - HEXAGON TRANSPORTATION CONSULTANTS, INC Phase I Public Access (BCR)11/17/2017 7,045.00 76752 10112 - TIMOTHY C. BEST Coal Creek RTI Revision - Road & Trail Erosion Assessment 11/29/2017 7,025.00 76747 11860 - SIGNAL PERFECTION Listening devices for docent program 11/29/2017 6,846.06 76694 11772 - AHERN RENTALS, INC. Equipment Rentals - Bulldozer - Road Work (RR & LH), Auger - Fences, Gates & Signs, Harrington Trail & Folger Loop Sign Gate (LH), Excavator with Auger - Sears Ranch Road Folger Loops Trail (LH)11/29/2017 6,275.63 76586 10509 - GEOCON CONSULTANTS INC Phase II Assessment of Abandoned Oil Tank Facilities -Purisima Uplands 11/15/2017 6,182.51 76722 10774 - LANGLEY HILL QUARRY Baserock for Road Surfacing, Trails & Mindego Hill Road (LH) (RR)11/29/2017 6,173.24 76569 11460 - ASBESTOS MANAGEMENT GROUP OF CALIFORNIA Mt. Umunhum Flagpole Refurbishing 11/15/2017 6,042.00 76564 11772 - AHERN RENTALS, INC.Equipment Rentals - Mini Excavator for Sears Ranch Trail Construction & Roller for Event Center Road Work (RR) (LH)11/15/2017 5,780.08 76613 11825 - TEGRASTAFF, INC Temporary Staff for E&C Department W/E 10/8 + 10/15 & Mileage Reimbursement 11/15/2017 5,682.48 76537 10791 - LSA ASSOCIATES INC Biological Services for Harkins Bridge Replacement Project & Woodrat Trapping (ECDM)11/08/2017 5,477.23 76620 *11118 - WEX BANK Fuel for District vehicles 11/15/2017 5,279.84 76532 10222 - HERC RENTALS INC Equipment Rentals - Mini Excavator & Tractor Loader for (GP)11/08/2017 5,102.56 76661 10082 - PATSONS MEDIA GROUP Printing Services - Mt. Umunhum Poster & Trail Guide 11/21/2017 4,681.95 76571 11799 - Aztec Leasing, Inc.Lease Payment for Sharp Copier September/October 2017 11/15/2017 4,625.44 76718 10222 - HERC RENTALS INC Mini Excavator Rental (BCR)11/29/2017 4,508.51 76579 10024 - CONSERVATION BY DESIGN Docent & Volunteer Program Structure Study 11/15/2017 4,491.91 76654 10714 - LANGAN ENGINEERING & ENVIRONMENTAL SERVICES INC Sears Ranch Rd Parking Area & Road Geotech Study 11/21/2017 4,347.50 76678 11825 - TEGRASTAFF, INC Temporary Staff for E&C Department W/E 10/16 - 10/29 11/21/2017 4,200.00 76530 11697 - H & N ENTERPRISES Pedestrian Walk-Thru Gates (LH)11/08/2017 4,136.77 76753 11841 - TJKM Professional Services - Traffic Engineering (BCR)11/29/2017 3,780.00 76614 10307 - THE SIGN SHOP Signage - (SA - Mt. Umunhum)11/15/2017 3,740.83 76720 10313 - JOHN SHELTON INC Lawrence Creek Culvert (CM)11/29/2017 3,732.30 76607 11589 - SEAN M. TRACTOR AND TRUCKING Trailer Removal - Event Center & Flagpole House 11/15/2017 3,700.00 76611 11055 - SYSTEMS FOR PUBLIC SAFETY Background Checks for Ranger Candidates 11/15/2017 3,537.68 76728 10076 - OFFICE TEAM Temporary Employee for Public Affairs 11/29/2017 3,432.00 76583 11803 - ELLISON SCHNEIDER HARRIS & DONLAN LLP Water Law Counsel 11/15/2017 3,395.20 76608 11703 - SHIFT KEY SOLUTIONS Microsoft Project Classes 11/15/2017 3,339.45 76675 11496 - STRUCTURE GROUPS On Call Geotech Eng - Harkins Bridge Replacement 11/21/2017 3,300.00 76590 11770 - HYDROSCIENCE ENGINEERS Fire & Potable Water System Design Consultant (BCR)11/15/2017 3,275.00 76563 11379 - CALTRANS Cooperative Agreement with CalTrans - Hwy 17 Wildlife Crossing 11/15/2017 3,146.03 76526 10524 - ERGO WORKS Ergo Items - Setup Installation & Delivery 11/08/2017 3,107.47 76567 11837 - APPLEONE EMPLOYMENT SERVICES Preserve Use Survey - Temp Support 11/15/2017 3,040.94 76698 11862 - BEE FREE Bee Removal Hawthorns House 11/29/2017 3,000.00 76745 10697 - SANDIS Mt. Um Rehabilitation Project - Mt. Umunhum Road QSP Services Inspections July - Sept 2017, 11/29/2017 2,985.00 76754 10583 - TPX COMMUNICATIONS Utilities- Telephone 11/16/17 thru 12/15/17 11/29/2017 2,981.14 76588 10222 - HERC RENTALS INC Equipment Rental - Mini Excavator & Backhoe Bucket for Work (GP)11/15/2017 2,977.06 page 3 of 5 CLAIMS REPORT MEETING 17-30 DATE 11-29-17 MIDPENINSULA REGIONAL OPEN SPACE DISTRICT Check Number Notes Vendor No. and Name Invoice Description Check Date Payment Amount 76692 10001 - AARON'S SEPTIC TANK SERVICE Public Restroom Vault Pumping (PC - Lower) & Sanitation Services (RSACP)11/29/2017 2,975.00 76701 11766 - BLANKINSHIP & ASSOCIATES, INC.Pesticide Toxicological Services 11/29/2017 2,951.25 76656 11813 - LEIGH ANN GESSNER Professional Services - Newsletter Communications, Press Release, Talking Points & Awards 11/21/2017 2,947.50 76585 10169 - FOSTER BROTHERS SECURITY SYSTEMS District Gate Locks 11/15/2017 2,944.36 76633 10830 - BIMARK INC.Production of Goods for Mt. Umunhum Web Store Items 11/21/2017 2,856.34 76751 10307 - THE SIGN SHOP Mt. Umunhum Signs & Gate Numbers 11/29/2017 2,846.88 76566 11814 - AMERICAN PORTABLES Septic Tank Cleaning (PCR)11/15/2017 2,750.00 76724 10791 - LSA ASSOCIATES INC Biological Services for Harkins Bridge Replacement Projecrt 11/29/2017 2,720.00 76655 11778 - LCI - LETTIS CONSULTANTS INTERNATIONAL, INC.Alma College Fault Rupture Hazard Study 9/12 - 10/27 11/21/2017 2,603.30 76626 10001 - AARON'S SEPTIC TANK SERVICE Public Restroom Septic Services (PC/MB) & Sanitation Services (RSA & DHF)11/21/2017 2,500.00 76697 11349 - BAY NATURE INSTITUTE Sponsorship of 2018 Local Hero Awards Dinner "Badger" Level 11/29/2017 2,500.00 76597 10190 - METROMOBILE COMMUNICATIONS Radio for M223 & Radio Installation for ATV3 11/15/2017 2,486.24 76744 11869 - RW Jones and Associates Health & Safety Training HAZWOPER Training 11/29/2017 2,470.00 76663 10265 - PRIORITY 1 Vehicle Equipment Repair - P86 11/21/2017 2,450.79 76679 10146 - TIRES ON THE GO Tires - M205, WT02, M33 11/21/2017 2,349.67 76516 11681 - BERKEY WILLIAMS LLP Mt. Umunhum Cultural Conservation Easement 11/08/2017 2,326.50 76539 11617 - MIG, INC.Professional Services September 2017 - ADA Self-Evaluation 11/08/2017 2,323.70 76631 11873 - BEST BEST & KRIEGER LLP Legal Services 11/21/2017 2,294.00 76748 *11730 - STANDARD INSURANCE COMPANY RV Basic & Supplemental Life Insurance Benefit 11/29/2017 2,256.62 76603 11518 - RANCHING BY NATURE Removal of Dirt at Toto Ranch 11/15/2017 2,240.00 76709 10032 - DEL REY BUILDING MAINTENANCE Janitorial Cleaning Services & Supplies (AO)11/29/2017 2,139.88 76601 10140 - PINE CONE LUMBER CO INC Hardware for Preserve Signs & Lumber for Harrington Bridge (LH)11/15/2017 2,044.88 76685 10069 - WILFRED JARVIS INSTITUTE Professional Services in Leadership, Organizational Effectivenes 11/21/2017 1,968.75 76618 11388 - WAGNER & BONSIGNORE Water Rights (BCR)11/15/2017 1,965.00 76760 11586 - WH DEMPSEY ENGINEERING Septic System Locate & Value Replacement at Event Center 11/29/2017 1,931.00 76732 11129 - PETERSON TRUCKS INC.BIT Inspection For M29,T7,M17,WT2,M26,M2,M22,M15,M207,T37 & Mini Excavator Parts 11/29/2017 1,897.00 76514 *10128 - AMERICAN TOWER CORPORATION Repeater Site Lease - Coyote Peak 11/08/2017 1,876.00 76517 10684 - BUTANO GEOTECHNICAL ENGINEERING Mt. Um Road Rehabilitation Geotechnical 2017 11/08/2017 1,845.00 76645 10344 - GREG'S TRUCKING SERVICE INC Trucking Service Rock Delivery (BCR)11/21/2017 1,812.00 76735 *10212 - PINNACLE TOWERS LLC Tower rental 11/29/2017 1,764.22 76546 11282 - PROELIA DEFENSE AND ARREST TACTICS, LLC Defensive Tactics Training October 2017 11/08/2017 1,749.96 76515 11837 - APPLEONE EMPLOYMENT SERVICES Preserve Use Survey - Temp Support 11/08/2017 1,705.20 76662 10140 - PINE CONE LUMBER CO INC Sears Ranch Road Sign Posts (LH)11/21/2017 1,702.81 76557 10107 - SUNNYVALE FORD Maintenance Service & Tires P105, M33 11/08/2017 1,640.95 76673 *10580 - SHARP BUSINESS SYSTEMS Monthly Maintenance Contract 9/30 - 10/30 11/21/2017 1,622.73 76651 11465 - JANA SOKALE ENVIRONMENTAL PLANNING Environmental Planning - Hendrys Creek Restoration 11/21/2017 1,595.00 76637 10723 - CALLANDER ASSOCIATES Mt. Um Summit Public Access 11/21/2017 1,505.58 76659 10641 - OVERLOOK ROAD MAINTENANCE ASSOC Road Maintenance Agreement (ES)11/21/2017 1,501.00 76627 11640 - Acorn Media Sears Ranch Rd Staging Area - Restroom Cabinet 11/21/2017 1,430.49 76553 11559 - SIFUENTES-WINTER, JONATHAN Expense Reimbursement for Travel, Lodging, and Meals 11/08/2017 1,426.35 76647 10222 - HERC RENTALS INC Rental of Ford Dump Truck F550 11/21/2017 1,414.79 76756 *10213 - VISION SERVICE PLAN-CA Vision Employee Benefit - December 2017 11/29/2017 1,387.22 76736 11335 - PITNEY BOWES GLOBAL FINANCIAL SERVICES LLC Postage Machine Lease 12/30/16 - 9/29/17 11/29/2017 1,267.11 76582 10654 - DUTRA MATERIALS Rock (BCR)11/15/2017 1,263.93 76609 11870 - SMITH, OMAR Reimbursement of Legal Ads for El Sereno Demolition Permit 11/15/2017 1,259.98 76612 10152 - TADCO SUPPLY Janitorial Supplies (SA-MT UM)11/15/2017 1,172.33 76578 *10445 - COMMUNICATION & CONTROL INC Repeater Site Lease 11/15/2017 1,172.00 76556 10143 - SUMMIT UNIFORMS Employee Uniform Items - Shirt, Pants, Belt, Jacket & Hat 11/08/2017 1,076.11 76625 11465 - JANA SOKALE ENVIRONMENTAL PLANNING Hendrys Creek Restoration Project Regulatory Permit Applications 11/17/2017 1,051.25 76681 11779 - TURNROSE LAND SURVEYING Lobitos Creek Conservation Easement Surveying (PCR)11/21/2017 1,050.00 76699 11681 - BERKEY WILLIAMS LLP Professional Services - Mt. Umunhum Cultural Conservation Easement 11/29/2017 1,048.98 76696 11837 - APPLEONE EMPLOYMENT SERVICES Preserve Use Survey Employee Services 11/29/2017 1,046.29 76570 11749 - ASKAY, MELANIE LTA Conference Airfare, Lodging, Meals & Transportation Expenses 11/15/2017 1,014.19 76512 11722 - ADLER TANK RENTALS LLC Mt. Umunhum Water Tank Rental 10/1 - 10/31 11/08/2017 1,013.70 76672 11816 - SCOTT-SOFIA, MEGAN Ranger Law Enforcement Academy Reimbursement 11/21/2017 1,012.50 76657 11752 - LIN, JASON Design Build Institute of America Training, Mileage Reimbursement 11/21/2017 930.99 76522 10022 - CONCERN Employee Assistant Program 11/08/2017 900.00 76740 10094 - RESTORATION DESIGN GROUP, INC.Mt. Umunhum Summit Professional Services 11/29/2017 869.20 76561 11599 - VULCAN CONSTRUCTION MATERIALS LP Road Materials (ES)11/08/2017 867.64 76677 11055 - SYSTEMS FOR PUBLIC SAFETY Background Check - Ranger Candidate 11/21/2017 850.00 76630 11233 - BAY AREA WATER TRUCKS Water Delivery to Burkhart 11/21/2017 825.00 76560 *10403 - UNITED SITE SERVICES INC Sanitation Service (FOOSP) (SA)11/08/2017 816.80 76712 11821 - DUNKINWORKS MidPen Leadership Academy 11/29/2017 815.12 76705 10014 - CCOI GATE & FENCE Gates Service (SA-MT UM)11/29/2017 800.00 76538 10190 - METROMOBILE COMMUNICATIONS Equipment for District Vehicles - Chargers & Adapters 11/08/2017 791.08 76568 11048 - ARC Printing Services for Alma College Parking Area & Trailhead 11/15/2017 743.30 76652 10313 - JOHN SHELTON INC Culverts 11/21/2017 699.41 76551 *10136 - SAN JOSE WATER COMPANY Water Service (RSACP)11/08/2017 695.04 76700 11744 - BERRY, WHITNEY Tuition & APA Membership Reimbursement 11/29/2017 695.00 page 4 of 5 CLAIMS REPORT MEETING 17-30 DATE 11-29-17 MIDPENINSULA REGIONAL OPEN SPACE DISTRICT Check Number Notes Vendor No. and Name Invoice Description Check Date Payment Amount 76535 11786 - JAECKEL, DAVID Lodging for MMANC 2017 Conference 11/08/2017 691.79 76644 *11551 - GREEN TEAM OF SAN JOSE Garbage Service (RSACP)11/21/2017 688.88 76577 10352 - CMK AUTOMOTIVE INC P97 Maintenance Repair & Service - P97, P94, Battery Replacement P98 11/15/2017 663.84 76558 10152 - TADCO SUPPLY Janitorial Supplies (RSA&CP)11/08/2017 644.64 76691 0000A -ELIZABETH STETSON Mileage for MROSD Preserve use survey 11/21/2017 644.62 76610 10107 - SUNNYVALE FORD Maintenance Service P99, A93 11/15/2017 644.56 76521 11530 - COASTSIDE.NET SFO Internet Access 11/08/2017 550.00 76599 10288 - MISSION VALLEY FORD TRUCK SALES, INC M29 Service / Repair 11/15/2017 544.09 76628 10294 - AMERIGAS-SAN JOSE Propane Tank Serv ice 11/21/2017 539.80 76573 *10454 - CALIFORNIA WATER SERVICE CO-949 Water Service (FFO)11/15/2017 536.72 76706 10352 - CMK AUTOMOTIVE INC Service / Repair M201, A91 11/29/2017 520.47 76555 10302 - STEVENS CREEK QUARRY INC Base Rock (BCR)11/08/2017 509.72 76714 10169 - FOSTER BROTHERS SECURITY SYSTEMS Locks & Keys 11/29/2017 509.58 76660 10925 - PAPE` MACHINERY Tractor Parts 11/21/2017 506.79 76616 10403 - UNITED SITE SERVICES INC Mt. Umunhum Summit Construction Trailer Rental Fee October 2017 11/15/2017 489.41 76683 10403 - UNITED SITE SERVICES INC Mt. Umunhum Summit Construction Trailer Rental Fee November 2017 11/21/2017 489.41 76606 11042 - SANTA CLARA COUNTY-OFFICE OF THE SHERIFF Live Scan Services - September 2017 11/15/2017 483.00 76598 10917 - MILLS, AMANDA Mileage Reimbursement & Field Supplies for Mt. Umunhum Planting 11/15/2017 480.06 76669 11479 - ROOTID Website Maintenance - 5 Retainer Hours 11/21/2017 472.50 76554 10447 - SIMMS PLUMBING & WATER EQUIPMENT Replaced Faucet - Rental Residence 11/08/2017 454.33 76592 11041 - INTERSTATE ALL BATTERY CENTER - SILICON VALLEY Radio Batteries 11/15/2017 452.35 76707 10544 - CORELOGIC INFORMATION SOLUTION Property Research Services 11/29/2017 450.00 76757 10438 - VP II LLC Mt. Umunhum Custom Temporary Tattoos 11/29/2017 439.45 76604 10194 - REED & GRAHAM INC Restoration (SA-MT UM)11/15/2017 437.00 76544 *10180 - PG & E Electricity & Gas Services - 6 Locations 11/08/2017 425.30 76731 11144 - PENINSULA MOTOR SPORTS ATV 2 - Annual Service 11/29/2017 408.99 76528 10168 - G & K SERVICES INC Shop Towel Service (FFO & SFO)11/08/2017 381.52 76541 10271 - ORLANDI TRAILER INC Trailer Repair M17 11/08/2017 371.39 76565 11670 - AMERICAN DEBRIS BOX SERVICE, INC.Cunha Garage Debris Cleanup (LH)11/15/2017 366.25 76664 *10261 - PROTECTION ONE Alarm Services (AO) (FFO)11/21/2017 348.25 76596 11867 - MCDANIEL, JORDAN Reimbursements for Mt. Umunhum Supplies & Purchases 11/15/2017 343.97 76688 0000A -STEPHEN BENNETT Mileage for MROSD Preserve Use Survey 11/21/2017 332.29 76689 0000A - JOHN PRIOR Mileage for MROSD Preserve Use Survey 11/21/2017 326.99 76666 10093 - RENE HARDOY 10/17 Gardening Services 11/21/2017 325.00 76550 10324 - RICH VOSS TRUCKING INC Base Rock Delivery (BCR)11/08/2017 322.00 76670 10182 - ROYAL BRASS INC CAT Excavator Parts 11/21/2017 307.55 76520 10352 - CMK AUTOMOTIVE INC Maintenance Service & Repairs A68, P109 11/08/2017 297.58 76562 11176 - ZORO TOOLS Respirator Filters 11/08/2017 271.38 76653 10119 - KWIK KEY LOCK & SAFE CO INC ReKey Gate Locks (SA-MT UM)11/21/2017 262.68 76545 10140 - PINE CONE LUMBER CO INC Hardware & Sign Supplies (RSA)11/08/2017 259.80 76575 10496 - CHUNG, JEAN Mileage Reimbursement 11/15/2017 259.48 76749 11825 - TEGRASTAFF, INC Temporary Staff for E&C Department 11/29/2017 257.01 76639 10352 - CMK AUTOMOTIVE INC Maintenance Service M206 11/21/2017 256.26 76549 11526 - REPUBLIC SERVICES Monthly Garbage Services (ECM)11/08/2017 246.18 76580 10284 - DAVISON, STEVE Water Treatment Certification Review-Grades 1-2 11/15/2017 244.63 76622 10268 - COTTEREL, SCOTT Water Treatment Certification Review -Grades 1-2 11/17/2017 238.96 76716 *10173 - GREEN WASTE Garbage/Recycle (SFO)11/29/2017 238.64 76621 11176 - ZORO TOOLS Outside Shop Light Replacement & Key Cabinet for Event Center 11/15/2017 238.08 76739 10195 - REDWOOD GENERAL TIRE CO INC Tire Repairs M10 11/29/2017 225.00 76589 10493 - HSIEH, BENNY MISAC User Conference 11/15/2017 224.88 76687 0000A - COLETTE BAILEY Mileage for MROSD Preserve use survey 11/21/2017 220.31 76755 10360 - VILLARREAL, JAIME CAL-IPC Conference Expense Reimbursement 11/29/2017 215.94 76686 11176 - ZORO TOOLS Storage Clips 11/21/2017 206.90 76636 *10172 - CALIFORNIA WATER SERVICE CO-3525 Water Service for Rental Residences 11/21/2017 205.92 76650 10897 - ISHIBASHI, ALLEN International Right of Way Association Class 11/21/2017 203.97 76595 11866 - MARSHALL, TRISHA 2017 California Invasive Plant Council Symposium 11/15/2017 203.00 76617 11865 - VIZENA, JESSICA 2017 California Invasive Plant Council Symposium 11/15/2017 203.00 76548 10091 - R & B COMPANY Mindego Driveway Water Line Repair (RR)11/08/2017 200.27 76743 10182 - ROYAL BRASS INC Hose Fittings 11/29/2017 198.83 76594 11326 - LEXISNEXIS Online Subscription Service October 2017 11/15/2017 198.00 76523 10185 - COSTCO OST Skills Test Staff Food & Drinks, Kitchen Supplies 11/08/2017 191.54 76642 10168 - G & K SERVICES INC Shop Towel Service (FFO & SFO)11/21/2017 190.76 76690 0000A - ANN RINBURG Mileage for MROSD Preserve use survey 11/21/2017 190.62 76713 10038 - ERGO VERA Onsite Ergonomic Evaluation 11/29/2017 184.80 76703 *10454 - CALIFORNIA WATER SERVICE CO-949 Water Service (AO)11/29/2017 180.80 76629 10706 - BAY AREA NEWS GROUP (MERCURY NEWS)Subscription Renewal: 9/16/17-12/15/17 (13 wks)11/21/2017 169.39 76741 11875 - RODRIGUEZ, ALEX CAL-IPC Travel Expense Reimbursement 11/29/2017 169.00 76534 11041 - INTERSTATE ALL BATTERY CENTER - SILICON VALLEY Battery for P96 11/08/2017 163.21 76737 10176 - RE BORRMANN'S STEEL CO Sign Mounting Materials for New Gates (LH)11/29/2017 160.39 page 5 of 5 CLAIMS REPORT MEETING 17-30 DATE 11-29-17 MIDPENINSULA REGIONAL OPEN SPACE DISTRICT Check Number Notes Vendor No. and Name Invoice Description Check Date Payment Amount 76615 10230 - UNITED RENTALS NORTH AMERICA INC Final Billing for Pickup Truck Rental for Mt. Um Rd Project 11/15/2017 156.81 76759 11030 - WELLS FARGO BANK Easement Fee for 501 Lucy Lane 11/29/2017 150.00 76704 10170 - CASCADE FIRE EQUIPMENT COMPANY Fire Maintenance Supplies 11/29/2017 148.99 76726 10135 - MADCO Oxygen Replacement Tanks 11/29/2017 148.87 76727 10160 - OFFICE DEPOT CREDIT PLAN Office Supplies - Pens, White-out (FFO)11/29/2017 145.46 76619 10527 - WASTE MANAGEMENT Debris Disposal (SA)11/15/2017 140.55 76674 10585 - SOL'S MOBILE AUTO & TRUCK REPAIR, INC.Routine 5K Service (P107)11/21/2017 134.96 76761 0000A - ALEX COLLIER Mileage for MROSD Preserve use survey 11/29/2017 133.32 76658 *10664 - MISSION TRAIL WASTE SYSTEMS Garbage Services (AO)11/21/2017 130.91 76600 10082 - PATSONS MEDIA GROUP Printing of MROSD Letterhead 11/15/2017 130.00 76527 10186 - FEDERAL EXPRESS Shipping Charges (AO)11/08/2017 108.56 76719 10394 - INTERSTATE TRAFFIC CONTROL PRO Parking Lot Bumper (FOOSP)11/29/2017 107.66 76632 10011 - BILL'S TOWING SERVICE Towing Fees - A93 11/21/2017 105.00 76721 10906 - KERN, GRANT Maintenance Management School 11/29/2017 103.00 76725 11531 - MACKESSY, DONALD Maintenance Management School 11/29/2017 103.00 76641 11829 - EDMONSTON, HAYLEY Mileage Reimbursement 11/21/2017 101.65 76529 10187 - GARDENLAND POWER EQUIPMENT Chainsaw Parts 11/08/2017 100.35 76533 10421 - ID PLUS INC Employee Name Tags 11/08/2017 97.50 76717 10267 - HALF MOON BAY REVIEW Legal Ad for On Call Contractor RFQ 11/29/2017 96.00 76695 10294 - AMERIGAS-SAN JOSE Propane Tank Rental 11/29/2017 92.44 76552 11054 - SAN MATEO COUNTY HUMAN RESOURCES DEPARTMENT Training Building Effective Workplace Relationships 11/08/2017 85.00 76750 10162 - TERMINIX PROCESSING CENTER Pest Control (AO)11/29/2017 83.00 76547 10261 - PROTECTION ONE Alarm Services (AO) 11/08/2017 82.73 76542 *10481 - PACIFIC TELEMANAGEMENT SERVICE Campsite Phone Monthly Service Fee (MB)11/08/2017 78.00 76730 *10481 - PACIFIC TELEMANAGEMENT SERVICE Campsite Phone Monthly Service Fee (MB)11/29/2017 78.00 76649 10394 - INTERSTATE TRAFFIC CONTROL PRO Gate Materials (SA-MT-UM)11/21/2017 75.22 76536 10313 - JOHN SHELTON INC Culvert Supplies (BCR)11/08/2017 70.65 76559 11704 - The Party Helpers Staff Recognition Event Linen rental 11/08/2017 58.18 76576 10488 - CLEAN HARBORS ENVIRONMENTAL SE HazMat Disposal 11/15/2017 55.50 76702 *10172 - CALIFORNIA WATER SERVICE CO-3525 Water Service (WH)11/29/2017 51.27 76693 10240 - ACE FIRE EQUIPMENT & SERVICE INC Fire Extinguisher 11/29/2017 48.94 76525 11829 - EDMONSTON, HAYLEY Mileage Reimbursement 11/08/2017 48.15 76708 *11210 - DATA SAFE Shredding Services (AO)11/29/2017 40.00 76746 11289 - SANTA CLARA CO. PUBLIC HEALTH LAB Water Tests (SAO-1&2)11/29/2017 40.00 76665 10134 - RAYNE OF SAN JOSE Water Service (FOOSP)11/21/2017 27.25 76648 10421 - ID PLUS INC Name Tags - Perry 11/21/2017 24.50 76715 10187 - GARDENLAND POWER EQUIPMENT Equipment Parts 11/29/2017 23.93 76711 11149 - DEPARTMENT OF MOTOR VEHICLES Duplicate Title P92 11/29/2017 20.00 76584 11151 - FASTENAL COMPANY Door Repair Supplies (RSA-Mora Res)11/15/2017 9.82 Grand Total 1,567,126.72$ *Annual Claims **Hawthorn Expenses CCIWS = Central California Invasive Weed Symposium MISAC = Municipal Information Systems Association of California BCR = Bear Creek Redwoods LH = La Honda Creek PR = Pulgas Ridge SG = Saratoga Gap TC = Tunitas Creek CC = Coal Creek LR = Long Ridge PC = Purisima Creek SA(U) = Sierra Azul (Mt Um) WH = Windy Hill ECM = El Corte de Madera LT = Los Trancos RSA = Rancho San Antonio SR= Skyline Ridge AO2, 3, 4 = Administrative Office lease space ES = El Sereno MR = Miramontes Ridge RV = Ravenswood SCS = Stevens Creek Shoreline Nature FFO = Foothills Field Office FH = Foothills MB = Monte Bello RR = Russian Ridge TH = Teague Hill SFO = Skyline Field Office FO = Fremont Older PIC= Picchetti Ranch SJH = St Joseph's Hill TW = Thornewood SAO = South Area Outpost RR/MIN = Russian Ridge - Mindego Hill PR = Pulgas Ridge CM = Corte Madera DHF = Dear Hollow Farm OSP = Open Space Preserve P## or M## = Patrol or Maintenance Vehicle R-17-131 Meeting 17-30 December 6, 2017 AGENDA ITEM 5 AGENDA ITEM Proposed Quitclaim of a Cultural Conservation Easement to the Amah Mutsun Tribal Band over the Mount Umunhum property (Santa Clara County Assessor’s Parcel Number 562-08-003) at Sierra Azul Open Space Preserve, related Memorandum of Agreement, and amendment of the property’s Use and Management Plan. GENERAL MANAGER’S RECOMMENDATIONS 1.Determine that the activities authorized under the recommended actions have previously been evaluated in the Mount Umunhum Environmental Restoration and Public Access Project Final Environmental Impact Report and have been mitigated to less than significant by the Mitigation Measures adopted as part of the Project, and that there will be no new significant environmental effects or substantial increase in the severity of previously identified significant effects. 2.Determine that the Quitclaim of a Cultural Conservation Easement, and amendment to the Use and Management Plan are categorically exempt under the California Environmental Quality Act (CEQA), as set out in the staff report. 3.Adopt a Resolution authorizing the Quitclaim of a Cultural Conservation Easement to the Amah Mutsun Tribal Band. 4. Adopt a Resolution authorizing the General Manager to enter into a Memorandum of Agreement with the Amah Mutsun Tribal Band for implementation of authorized activities included in the Cultural Conservation Easement. 5. Adopt the Amended Use and Management Plan, as set out in the staff report. SUMMARY The General Manager recommends that the Midpeninsula Regional Open Space District (District) Quitclaim a Cultural Conservation Easement (conservation easement) to the Amah Mutsun Tribal Band (AMTB) over the 36-acre Mount Umunhum summit property (summit) and enter into a Memorandum of Agreement (MOA) with the AMTB to implement the authorized activities identified in the conservation easement in a manner compatible with the uses approved by the Board of Directors (Board) in 2012 as the Mount Umunhum Environmental Restoration and Public Access Project (Mount Umunhum Project). This Report contains a description of the R-17-131 Page 2 property, an Amended Use and Management Plan, findings of the environmental review for the recommended actions, terms and conditions, and financial considerations. DISCUSSION Background (see attached map) In 1986, the District purchased the former Almaden Air Force Station (AFS) on the summit, with the intent to restore the area to a natural condition and provide public access (R-86-20). In subsequent years, the District cooperated with the Federal Government in their efforts to remove defunct structures, equipment, and hazardous materials from the property. In 2009, the United States Congress appropriated $3.2 million for the District to complete the remaining cleanup. The subsequent cleanup of the former Almaden AFS was completed in 2014. In 2004, the District began a formal Preserve-wide Master Plan effort. In 2009, the Board recognized the need for a specific site planning process for the summit and suspended the Preserve Master Plan effort. From 2010 to 2012, the District conducted a design and planning process for public access to the summit. All options included a robust interpretive element that would interpret military use of Mount Umunhum, explain the significance of the site as the center of the local Native American community’s creation story, highlight the unique local wildlife and native plant community, and the need to protect and restore these habitats. In September and October 2012, the Board approved the project elements identified in the Mount Umunhum Project. The Project outlined the remaining site restoration needed, and identified public access improvements, interpretation elements, and ecological restoration. In 2016, the District began to construct public improvements on the summit. The improvements were completed in early September 2017 and on September 18, 2017, the District opened the summit to the public. It is now available for public enjoyment 365 days a year. Restoration of the summit’s native habitat began in 2016 and will continue for a number of years. Radar Tower as an addition to the Santa Clara County Heritage Resource Inventory The Almaden AFS was an early-warning radar facility that operated between 1958 and 1980. The only structure retained from the site cleanup was the radar tower, which was the base for a long-range radar sail. In 2015, work began to seal, clean, and provide safety repairs to the tower in anticipation of future public access at the summit. Prior to the completion of this work, the Santa Clara County Board of Supervisors added the radar tower to the County’s Heritage Resource Inventory on May 10, 2016. On June 8, 2016, the District’s Board of Directors selected the “Retain and Seal” option for the radar tower. Work to seal the radar tower was completed in July 2016. The District is currently preparing cost estimates for additional repairs and maintenance of the radar tower. Mount Umunhum’s Cultural Significance to the Ohlone Peoples As part of efforts to prepare the Mount Umunhum Project, the District learned that Mount Umunhum is a sacred site to the Amah Mutsun Tribal Band and Muwekma Ohlone Tribe of the San Francisco Bay Area, descendants of the Ohlone people in this region. The mountain’s name comes from the Ohlone word for Hummingbird, the central figure of the Amah Mutsun creation story, who according to this story delivered fire from that very summit hundreds of generations R-17-131 Page 3 ago. The mountain continues to be a sacred site for many and a site of great cultural value. Over the years, the District and the AMTB have worked collaboratively to identify, interpret, and conserve the important cultural resources of Mount Umunhum, and to educate the public about these resources. Representatives from the AMTB provided input into the design of the Mount Umunhum Project, assisted in the development of cultural resources interpretive panels installed in the visitor use areas at the summit, and participated in the ceremonies to open Mount Umunhum for public use. Conservation Easement The purpose of the proposed conservation easement is to further collaborative efforts between the District and the AMTB to protect and preserve Mount Umunhum in perpetuity. The conservation easement with the AMTB will protect in perpetuity the property’s Conservation Values, including: cultural and historic, educational, natural resource, scenic, and open space values. Protection and use will occur in a manner compatible with the site restoration and public open space uses approved under the Mount Umunhum Project. In consideration for the quitclaim of the conservation easement, the AMTB will provide Native American history, cultural knowledge, ecological interpretation, and education services of significant public benefit. The conservation easement will deepen and expand the benefits of the collaborative work done by the AMTB and the District, provide key relevant spaces to further this work, enrich the District’s understanding of related historical and natural resource matters, assist in the habitat restoration of the summit, and further enhance the visitor experience at Mount Umunhum. Prohibited Uses. The conservation easement prohibits the following uses: • Subdivision of the property • Development of property for commercial or industrial uses • Expanding footprint or use of radar tower for permanent or occupied uses • Building or expansion of existing or new buildings, except employee or residence uses for land management purposes • Excavation or removal of archeological resources, except as part of an archeological investigation approved in consultation with the AMTB Authorized Activities. The conservation easement provides that the AMTB may conduct the following authorized activities on the Mount Umunhum property. Activities that are inconsistent with District Regulations are prohibited unless authorized by permit: • Restore, conserve and steward natural and cultural resources. • Promote cultural stewardship through the application and sharing of traditional ecological knowledge related to sustainable resource management practices such as seed and plant gathering, planting, and dispersing. • Provide educational services about traditional cultural and ecological knowledge and stewardship. • Plant and maintain a native education garden (Tribal Garden) at former Almaden AFS recreational area. • Host tribal ceremonies at the newly constructed Ceremonial Space near the summit R-17-131 Page 4 • Perform a cultural resource survey of Mount Umunhum to identify whether additional cultural resources or archeological sites are to be protected. • Perform research on the Los Gatos, Guadalupe and Alamitos Creek watershed and natural resources. • Install cultural improvements (such as a round house), subject to future review and discretionary approval by the District’s Board of Directors, including environmental review under CEQA. • Engage in traditional, cultural and educational activities such as ceremonies, dances, games and knowledge sharing workshops. All existing public access, recreational, natural resource, and visitor improvements and uses remain unaltered. The District retains the full scope of rights necessary to adaptively manage the summit for the benefit of public access, other compatible uses, and educational opportunities at Mount Umunhum. Nothing in the conservation easement, for example, prohibits the District from implementing the possible future addition of housing for District employees, additional parking areas, shelters, restrooms, trails, habitat restoration, vegetation management, events, or any other non-commercial use not in conflict with the Conservation Values or the Mount Umunhum Project. The District and AMTB staff will meet annually to monitor the conservation easement, coordinate and schedule collaborative restoration projects, use of Ceremonial Space, Tribal Garden, and other areas of the Mount Umunhum property. Memorandum of Agreement The proposed MOA between the District and the AMTB is for the implementation and coordination of the Authorized Activities in a manner that is compatible with the District’s public open space uses and natural resource objectives. The District and AMTB staff will meet annually to coordinate, share and develop work plans, schedule activities, and for the District to issue permits where necessary. This annual collaboration will coincide with the conservation easement monitoring each year. The District will issue permits to address activities that require special arrangements or parameters to maximize coordination and minimize effects on District site management needs, access by other members of the public, or risk management issues, such as: • Any Authorized Activities that may be inconsistent with the District’s Regulations such as seed gathering outside of the Tribal Garden, use of fire for any purpose, etc. • AMTB gatherings that may include more than 30 people. • After Hours Uses of the Tribal Garden or scheduled use of the Ceremonial Space to address notification, use of gates, number of vehicles, etc. • Uses that could have an impact on District and public uses such as use of large trucks or heavy equipment. As part of the annual coordination meeting, the District and AMTB will collaborate on natural resource plans to support restoration goals, including AMTB’s goals for the Tribal Garden, and avoid contamination by invasive plants and plant pathogen transport. The MOA also identifies R-17-131 Page 5 an area below the Tribal Garden for future tribal use and collaborative restoration and revegetation projects performed by AMTB and/or District. There is a preference stated within the proposed MOA to have the permits issued annually, and that the District and the Tribe meet annually to discuss any implementation issues that have arisen, and to address those in an adaptive manner. These adaptive responses might also require associated minor modifications to the MOA. Given that this kind of collaborative arrangement is new to the District and calls for adaptive management to address practical issues, the General Manager is requesting that the Board approve the entry into the MOA at the outset, but that the General Manager be given the authority to make amendments to the MOA as experience on the ground and newly arising issues might dictate. Any such amendments would be reported to the Board within 30 days, along with a report to the Board in open session if desired. USE AND MANAGEMENT Planning Considerations Amended Use and Management Plan The Board adopted an Interim Use and Management Plan for the Mount Umunhum area of the Sierra Azul Open Space Preserve in 1983. It was amended in 1986 to include the Almaden AFS property purchase. In subsequent years, minor amendments to the Use and Management Plan were approved in response to additional purchases, cleanup efforts, etc. The Interim Use and Management Plan remains effective until it is amended or the Board approves either a Comprehensive Use and Management Plan or a Master Plan for the Open Space Preserve. The District last amended the Use and Management Plan on September 12, 2012 and October 19, 2012 to include project elements of the Mount Umunhum Project. Proposed new amendments to the Use and Management Plan are shown in underlined text. They include maintenance of the site in its current improved condition and authorized activities to be conducted by the AMTB. If changes to land use or the physical environment are proposed in the future, further amendments to the Use and Management Plan or consideration of another Open Space Use and Management Plan process would be subject to further environmental review. Name: Mount Umunhum Area, Sierra Azul Open Space Preserve Public Access: Continue to provide public access, as approved under the Mount Umunhum Project and operated under standard District rules and procedures, except for public access limitations identified within the conservation easement for the Tribal Garden and during specified Tribal ceremonial events. Limited Access: Visitor Services will track and evaluate public use, demand and traffic at Mount Umunhum over the next year to determine the manageable level of future public permit access. R-17-131 Page 6 Authorized Activities Allow all Authorized Activities by the AMTB as identified in the conservation easement and the MOA. Any of the Authorized Activities that are or may become inconsistent with Regulations for the Use of Midpeninsula Open Space District Lands (“District Regulations”) as are now in existence or as may be amended from time-to-time (including, but not limited to, any activity that may be attended by 30 or more people, the use of fire for any purpose, after hours activities, seed harvesting, etc.) are prohibited unless authorized by special use permit. Patrol Continue to perform routine patrol, using existing roads and patrol easements. Fencing Signs, Site Security Continue to maintain fences and gates as necessary to prevent unauthorized vehicular entry. Install private property, closed area, interpretive, regulatory and preserve boundary signs where appropriate as identified in the Mount Umunhum Project. Site Safety: Continue to Implement Site Safety measures as identified in the Mount Umunhum Project, and in accordance with District Regulations. A special use permit must be obtained for any use of fire, which will include additional requirements or limitations to ensure public safety. Structures and Improvements: Maintain all existing visitor-service related structures and improvements constructed for the uses identified in the Mount Umunhum Project. Repair and maintain the radar tower, consistent with the District’s approved Retain and Seal option, approved June 2016, and to any degree required by the County of Santa Clara, based on its health and safety regulatory authority, or based on the structure’s status on the County’s Heritage Resource Inventory, or as needed in the District’s discretion for natural resource management, health and safety purposes, provided in all cases that the tower is not expanded in footprint or height or use. Resource Management: Continue to perform site restoration and cultural, historic, educational, natural resource, and scenic resource management as identified in the Mount Umunhum Project. Water Rights: Hold and use all existing water rights on the conservation easement for the benefit of the property, to apply for additional riparian or appropriative rights, and to obtain water supplies from any source permitted by applicable law. Roads and Trails: Continue to maintain all roads and trails for the uses identified in the Mount Umunhum Project. Wildfire Fuel Management: Continue to Implement Wildland Fire Management measures identified in the Mount Umunhum Project, and in accordance with District Regulations. Consult with the AMTB and appropriate fire agencies in developing a site- specific fuel modification and management program. Continue to maintain appropriate defensible space clearances around use areas and improvements. Dedication: Continue to withhold dedication of the property as open space at this time. R-17-131 Page 7 Subsequent Planning: Develop a long-term plan for the larger Sierra Azul Open Space Preserve, incorporating the uses authorized in the Mount Umunhum Project and the conservation easement. The planning process will include consultations with the AMTB, public workshops to gather input, and public hearings to review draft and final plans, consistent with the District’s Use and Management Planning Policy. Any long-term plan will be subject to further environmental review. Subsequent Environmental Review: This Amended Use and Management Plan generally assumes implementation of standard District policies and procedures, including but not limited to those related to resource management, wildland fuel management, and road and trail maintenance. Further information gathering over time will determine where physical changes to the environment may be proposed. If further site-specific projects are identified, prepare further environmental review as needed. CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) COMPLIANCE Project Description The Project consists of the quitclaim of a conservation easement over 36 acres owned by the District to the AMTB to preserve and maintain the property for the conservation values identified in the conservation easement. The property subject to the conservation easement is located within the District’s Sierra Azul Open Space Preserve, in an unincorporated area of Santa Clara County, identified as Assessor’s Parcel Number 562-08-003. The Project includes the execution of an MOA between the District and the AMTB. The proposed MOA allows for the coordination and implementation of the Authorized Activities identified in the conservation easement in a manner that is compatible with the District’s public open space uses, interpretative, educational and natural resource objectives. The project also includes an amendment to the District’s Use and Management Plan for the property. The proposed amendment to the Use and Management Plan will allow continued management of the site under standard District policies and procedures, including but not limited to resource management, wildland fuel management, and road and trail maintenance. Previous EIR All uses identified under Allowable Activities in the conservation easement and in the MOA were identified in the Project Description of the EIR for the Mount Umunhum Project. In addition to contemplating site restoration and public use activities, all four options considered in the EIR included activities to support a robust interpretive element that would interpret the military use of Mount Umunhum, explain the significance of the site as the center of the local Native American community’s creation story, highlight the unique local wildlife and native plant communities, and educate visitors on how to protect and restore these habitats. The type of activities associated with these project elements were analyzed under CEQA and mitigation measures to reduce any impacts to less than significant were identified. The District adopted the EIR in June 2012 (R-12-59). In September 2012, the Board approved select Project elements (R- 12-91). In October 2012, the Board approved the remaining Project Elements, with the exception R-17-131 Page 8 of backcountry camping, and adopted a Mitigation Monitoring and Reporting Plan for the Project (R-12-104). An Addendum to the EIR was approved in 2015 for a limited access road easement granted to the District to support the project and additional road gates (R-15-165). A second Addendum to the EIR was approved in 2016 (R-16-96) to use excess soil generated by project implementation to restore contours and to add three gabion retaining walls to Mt. Umunhum Road repairs. Section 15162 of the CEQA Guidelines provides that after project approval, an agency need not prepare a subsequent EIR for a project unless the agency determines that substantial changes to the project are proposed, or substantial changes occur with respect to the circumstances under which the project is undertaken, or new information of substantial importance would require major revisions of the previous EIR due to the involvement of new significant environmental effects, more severe significant effects, or new or different mitigation measures should be evaluated. Here, the EIR and its two Addenda fully analyzed the Mount Umunhum Project and mitigated any impacts to less than significant with the adoption of mitigation measures. Uses and conditions analyzed in the EIR have not substantially changed. No uses or impacts as a result of the Project to quitclaim a conservation easement, enter into a MOA with the AMTB, or further amend the Use and Management Plan have been identified that were not already analyzed and mitigated for under the previous EIR, and no new significant environmental effects or substantial increase in the severity of previously identified significant effects have been identified Exemptions The District is the Lead Agency for this Project under CEQA. The District concludes that this Project will not have a significant effect on the environment. It is categorically exempt from CEQA under Article 19, Section 15325 of the CEQA Guidelines, “Transfer of Ownership of Interest in Land to Preserve Existing Natural Conditions and Historical Resources,” and Section 15301 of the CEQA Guidelines, “Existing Facilities,” as follows: Section 15325 (c) Acquisition, sale, or other transfer to allow restoration of natural conditions, including plant or animal habitats. The quitclaim of a conservation easement and execution of a MOA between the District and the AMTB to preserve and maintain the Conservation Values identified in the conservation easement in a manner compatible with the District’s public open space uses and natural resource objectives will not have an impact on the environment. Section 15301 Existing Facilities consists of the operation, the repair, maintenance, permitting, leasing, licensing, or minor alteration of existing public or private structures, facilities, or topographical features, involving negligible or no expansion of use beyond that existing at the time of the lead agency’s determination. The proposed amendments to the Use and Management Plan specify no alteration or expansion of use beyond those activities approved under previous CEQA actions or associated with implementation of standard District policies and procedures, including but not limited to those related to resource management, wildland fuel management, and road and trail maintenance within the conservation easement. R-17-131 Page 9 FISCAL IMPACT The proposed conservation easement will have no impact on the District’s budget. BOARD COMMITTEE RECOMMENDATIONS The proposed conservation easement was not reviewed by a Board Committee. The full Board did consider this proposed item in closed session. PUBLIC NOTICE Public notice was provided as required by the Brown Act and District noticing policy. No additional notice is required. NEXT STEPS Upon approval by the Board of Directors, the conservation easement will be executed by the parties, and staff will proceed with recording the conservation easement. The District will enter into the Memorandum of Agreement with AMTB. Attachments: 1. Resolution Authorizing the General Manager, President of the Board of Directors or Other Officer to Execute a Quitclaim of Conservation Easement to the Amah Mutsun Tribal Band, and Authorizing General Manager to Execute any and all Other Documents. 2. Resolution Authorizing the General Manager to Execute a Memorandum of Agreement with the Amah Mutsun Tribal Band, and Authorizing the General Manager to Execute any and all Other Documents. 3. Location Map Prepared by: Michael C. Williams, Real Property Manager Elish Ryan, Real Property Planner III Graphics prepared by: Nathan Greig, GIS Technician Resolutions/2017/R-17-___AMLTConservationEasement 1 RESOLUTION NO. 17-____ RESOLUTION OF THE BOARD OF DIRECTORS OF THE MIDPENINSULA REGIONAL OPEN SPACE DISTRICT AUTHORIZING THE GENERAL MANAGER, PRESIDENT OF THE BOARD OF DIRECTORS OR OTHER APPROPRIATE OFFICER TO EXECUTE A QUITCLAIM DEED OF CULTURAL CONSERVATION EASEMENT TO THE AMAH MUTSUN TRIBAL BAND, AND AUTHORIZING THE GENERAL MANAGER TO EXECUTE ANY AND ALL OTHER DOCUMENTS NECESSARY OR APPROPRIATE TO THE CLOSING OF THE TRANSACTION (MOUNT UMUNHUM PROPERTY, SIERRA AZUL OPEN SPACE PRESERVE – AMAH MUTSUN TRIBAL BAND) ______________________________________________________________________________ The Board of Directors of the Midpeninsula Regional Open Space District does resolve as follows: Section One. The Board of Directors of the Midpeninsula Regional Open Space District does hereby authorize the General Manager, President of the Board of Directors or other appropriate officer to execute the Quitclaim Deed of Cultural Conservation Easement (Conservation Easement) conveying certain real property rights by the Midpeninsula Regional Open Space District to the Amah Mutsun Tribal Band. Section Two. The Conservation Easement is categorically exempt under the California Environmental Quality Act (CEQA), and the CEQA findings more fully set forth in Midpeninsula Regional Open Space District Board Report R-17-131 are incorporated herein by this reference. Section Three. The General Manager or the General Manager’s designee is further authorized to execute any and all other documents necessary or appropriate to the closing of the transaction. Section Four. The General Manager and General Counsel are further authorized to approve any technical revisions to the Conservation Easement, which do not involve any material change to any terms of the Conservation Easement, which are necessary or appropriate to the closing or implementation of this transaction. * * * * * * * * * * * * * * * * * * * PASSED AND ADOPTED by the Board of Directors of the Midpeninsula Regional Open Space District on _________, 2017, at a Regular Meeting thereof, by the following vote: AYES: NOES: ABSTAIN: ABSENT: ATTACHMENT 1 Resolutions/2017/R-17-___AMLTConservationEasement 2 ATTEST: APPROVED: Secretary Board of Directors President Board of Directors APPROVED AS TO FORM: General Counsel I, the District Clerk of the Midpeninsula Regional Open Space District, hereby certify that the above is a true and correct copy of a resolution duly adopted by the Board of Directors of the Midpeninsula Regional Open Space District by the above vote at a meeting thereof duly held and called on the above day. District Clerk Resolutions/2017/R-17-___AMLT_MOAApproval 1 RESOLUTION NO. 17-____ RESOLUTION OF THE BOARD OF DIRECTORS OF THE MIDPENINSULA REGIONAL OPEN SPACE DISTRICT AUTHORIZING THE GENERAL MANAGER, TO EXECUTE A MEMORANDUM OF AGREEMENT WITH THE AMAH MUTSUN TRIBAL BAND, AND AUTHORIZING THE GENERAL MANAGER TO EXECUTE ANY AND ALL OTHER DOCUMENTS NECESSARY OR APPROPRIATE TO ENTER INTO THIS AGREEMENT (MOUNT UMUNHUM PROPERTY, SIERRA AZUL OPEN SPACE PRESERVE – AMAH MUTSUN TRIBAL BAND) _______________ The Board of Directors of the Midpeninsula Regional Open Space District does resolve as follows: Section One. The Board of Directors of the Midpeninsula Regional Open Space District does hereby authorize the General Manager to execute the Memorandum of Agreement (Agreement) with the Amah Mutsun Tribal Band. Section Two. The activities authorized in the Agreement have previously been evaluated in the Mount Umunhum Environmental Restoration and Public Access Project Final Environmental Impact Report and have been mitigated to less than significant by the Mitigation Measures adopted as part of the Project, and there will be no new significant environmental effects or substantial increase in the severity of previously identified significant effects within the meaning of the California Environmental Quality Act (CEQA). The CEQA findings more fully set forth in Midpeninsula Regional Open Space District Board Report R-17-131 are incorporated herein by this reference. Section Three. The General Manager or the General Manager’s designee is further authorized to execute any and all other documents necessary or appropriate to implementing this Agreement. Section Four. The General Manager is further authorized to approve revisions to the Agreement as necessary to ensure its smooth and efficient implementation as intended and to address issues in an adaptive manner as they arise. Any such revisions shall be reported back to the Board of Directors within thirty (30) days after any such change or revision. * * * * * * * * * * * * * * * * * * * PASSED AND ADOPTED by the Board of Directors of the Midpeninsula Regional Open Space District on _________, 2017, at a Regular Meeting thereof, by the following vote: AYES: NOES: ABSTAIN: ABSENT: ATTACHMENT 2 Resolutions/2017/R-17-___AMLT_MOAApproval 2 ATTEST: APPROVED: Secretary Board of Directors President Board of Directors APPROVED AS TO FORM: General Counsel I, the District Clerk of the Midpeninsula Regional Open Space District, hereby certify that the above is a true and correct copy of a resolution duly adopted by the Board of Directors of the Midpeninsula Regional Open Space District by the above vote at a meeting thereof duly held and called on the above day. District Clerk !!! ! ! ! !!!!!!! ! ! ! !!! ! ! ! ! ! ! !!! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !!!!!!!!!!!!! ! ! !!!!!!!!!!!!!!!!!!!!!! ! ! ! ! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!! ! ! ! ! ! !!!!!!!!!!!!!!!!! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!!!!! ! ! ! ! ! ! ! !!!!!!!!!!!!! ! ! ! ! ! ! ! ! ! ! ! ! !!!!!!!!!!!!!!!!!!!!! ! ! ! ! ! ! ! ! ! ! ! ! ! !!!!!!!!!!!!!!!!!!!!!! ! ! ! ! ! ! ! ! ! ! ! ! ! !!!!!!!!!! ! ! !!!!!!! ! ! ! ! ! ! ! ! !! ! ! ! ! ! ! ! ! ! ! !!!! ! ! ! ! ! !!!!!!!!!!!!!!!!! ! ! ! ! ! ! ! ! !!! !!!!!!!!!!!!! ! !!!!!!!!!! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !!!!!!!!! !!!!!!!!!!!! ! ! ! ! ! ! !! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !!!!! ! ! ! ! ! ! ! ! ! ! ! ! ! !!!! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !!!!! !!!! ! ! ! ! !!!!!!!!!!!! ! !!!!! ! ! !!!!!!!!!!!!!! ! ! ! ! !!!!!!!!!!!!!!!!!!!!!!!! ! ! ! ! ! ! ! ! ! ! ! ! !! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !!!!!!!!!!!!!!!!!!! ! ! ! ! ! ! ! ! ! ! ! ! ! !! ! ! ! ! ! ! ! ! !!!! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !!!!!!!!!!!!!!!!!!!!!!!!!!!! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! ! ! ! !!!!!!!!!!! !!!!!!!!! ! ! ! ! ! !!! ! ! ! ! LANDING ZONE CEREMONIAL SPACE TOWER TRAILHEAD SHELTER SUMMIT SHELTER EAST SUMMIT VIEWPOINT P A R K I N G TOILET Mo u n t U m u n h u m R o a d M t.U mu n h u m T r ail TRIBAL GARDEN AREA APN: 56208004 APN: 56208011 APN: 56208012 APN: 56208003 Midpeninsula Regional Open Space District (MROSD) November 2017 Mount Umunhum Summit Project* Pa t h : G : \ P r o j e c t s \ S i e r r a _ A z u l \ M t _ U m u n h u m _ A F S \ S u m m i t \ C o n s e r v a t i o n E a s e m e n t \ S A _ M t U m _ S u m m i t _ C E _ T r i b a l A r e a _ B W . m x d Cr e a t e d B y : n g r e i g 0 300 600 FeetI While the District strives to use the best available digital data, thiese data do not represent a legal survey and are merely a graphic illustration of geographic features. Sierra Azul Open Space Preserve *Underlying CAD file provided by Restoration Design Group, Inc. as of April 16, 2016 Sierra Azul Open Space Preserve Limit of Work (L.O.W.)Santa Clara County Parcel Tribal Garden Area ! ! ! ! ! !Proposed Trail Corridor Attachment 3 R-17-132 Meeting 17-30 December 6, 2017 AGENDA ITEM 6 AGENDA ITEM Resolutions approving the Preliminary Official Statements for the Issuance of the Green Bonds, 2017 Refunding Series A, and Parity Bonds, 2017 Series B and the Measure AA Series 2018 General Obligation Bonds (Green Bonds), and authorizing the contribution of up to $1,000,000 into the refunding escrow. The issuance of the Bonds was authorized at the November 8, 2017 Board meeting. The POS resolutions provide for board approval of the disclosure documents to be used in the marketing of the Bonds. GENERAL MANAGER AND CONTROLLER’S RECOMMENDATIONS 1.Adopt a Resolution approving the Preliminary Official Statement for the Issuance of the Green Bonds, 2017 Refunding Series A and Parity Bonds, 2017 Series B 2. Adopt a Resolution approving the Preliminary Official Statement for the Issuance of the Measure AA Series 2018 General Obligation Bonds (Green Bonds) 3. Authorize the contribution of up to $1,000,000 into the refunding escrow 4. Adopt a Resolution authorizing a budget adjustment of up to $715,000 for the escrow contribution SUMMARY Two Resolutions approve the Preliminary Official Statements for the Green Bonds, 2017 Refunding Series A and Parity Bonds, 2017 Series B and the Measure AA Series 2018 General Obligation Bonds. The purpose of the 2017 Refunding Series A Green Bonds is to refinance the callable portion of the District’s 2012 Refunding Promissory Notes (“Prior Bonds”) to take advantage of today’s very low interest rates and achieve significant debt service savings. The purpose of the 2017 Series B Parity Bonds (non-Measure AA) is to provide sufficient cash available for the acquisition and remodeling of new staffing facilities. The purpose of the 2018 Series General Obligation Bonds (Green Bonds) is to provide the next tranche of funding under Measure AA for capital projects and land acquisitions. In addition to the approval of the two Preliminary Official Statements, staff requests authorization to contribute up to $1,000,000 to the Series 2017 A Refunding Bonds escrow fund to ensure the entire refunding bonds series can be issued on a tax-exempt basis. The first $285,000 of the escrow contribution can be funded from interest savings from the refunded 2012 Bonds, augmented by a budget amendment transferring an amount not to exceed $715,000 from General Fund Unassigned Reserves to the Debt Service Fund. R-17-132 Page 2 DISCUSSION The Preliminary Official Statements are the disclosure documents necessary for the marketing of the bonds, the proceeds of which will be used to advance refund the 2012 Refunding Promissory Notes, provide new money for facilities and to issue a new tranche of Measure AA Bonds: • Green Bonds, 2017 Refunding Series A • Parity Bonds, 2017 Series B • Measure AA 2018 Series General Obligation Bonds (Green Bonds) Green Bonds, 2017 Refunding Series A The 2012 Refunding Promissory Notes were issued by the District to refund the 1999 Revenue Bonds a portion of which had previously advance refunded 1992 Promissory Notes. An advance refunding of the 2012 Refunding Promissory Notes provides the District the opportunity to generate approximately $17.7 million in cash-flow savings, based on calculations on November 14, 2017. The net present value of these savings would be $8.75 million and reduces the final maturity by five years, from 2041 to 2037. The projected savings and final maturity are subject to change due to market fluctuations. Principal Amount Not to exceed $30 million Debt Service Savings At least 5.00% Final Maturity No later than September 1, 2041 Parity Bonds, 2017 Series B The District is purchasing staff facilities, including field facilities and a new Administrative Office (AO), which requires remodeling. The District currently has $30 million in committed reserves for infrastructure. The acquisition cost is approximately $35 million and the remodel cost is estimated at approximately $9 million. The 2017 Series B Parity Bonds will provide adequate funds to complete the acquisitions and remodels. This series is expected to have a maturity of 10 years, with an anticipated call feature at 5 years. Principal Amount Not to exceed $20 million Total Interest Cost Not to exceed 5.00% Final Maturity No later than September 1, 2032 Measure AA 2018 Series General Obligation Bonds (Green Bonds) The first tranche of bonds authorized under Measure AA was issued in 2015 ($40 million tax- exempt Series A and $5 million taxable Series B). The proceeds from the tax-exempt bonds have been expended and need to be replenished by the proposed bond issue in order to continue progress on Measure AA capital projects, as well as potential land acquisitions under Measure AA. Principal Amount Not to exceed $60 million Total Interest Cost Not to exceed 5.00% Final Maturity No later than September 1, 2048 R-17-132 Page 3 Taxable component According to current IRS rules, a tax-exempt bond can only be advance refunded once, and a portion of the 2012 Refunding Prommisory Notes can be traced to a prior advance refunding of 1992 Promissory Notes. Based on calculations by tax counsel and the underwriters, the District would need to issue approximately $680,000 in taxable bonds (the amount may fluctuate depending on final pricing and interest rates) in order to refund this portion. This relatively small and separate issue complicates the administration and future tracking of the bonds and is not as easy to sell. This can be mitigated by placing the required amount, not to exceed $1,000,000, in escrow and essentially paying off the amount that would need to be issued as a taxable bond. Based on placing $680,000 in escrow, the savings from refunding the 2012 Promissory Notes increases by approximately $1,500,000, or $800,000 on a Net Present Value basis. THE DISTRICT’S DISCLOSURE OBLIGATIONS The attached Preliminary Official Statements have been reviewed and approved for transmittal to the Board of Directors by staff and the District’s financing team. The distribution of the Preliminary Official Statements by the District is subject to federal securities laws, including the Securities Act of 1933 and the Securities Exchange Act of 1934. These laws require the Preliminary Official Statements to include all facts that would be material to an investor in making a decision to purchase the 2017 Parity Bonds or the 2018 General Obligation Bonds. The Securities and Exchange Commission (the “SEC”), the agency with regulatory authority over the District’s compliance with the federal securities laws, has issued guidance as to the duties of the Board of Directors with respect to its approval of the Preliminary Official Statement. In its “Report of Investigation in the Matter of County of Orange, California as it Relates to the Conduct of the Members of the Board of Supervisors” (Release No. 36761 / January 24, 1996) (the “Release”), the SEC stated that, if a member of the Board has knowledge of any facts or circumstances that an investor would want to know about prior to investing in the issuer’s bonds being marketed with the Preliminary Official Statement, whether relating to their repayment, tax-exempt status, undisclosed conflicts of interest with interested parties, or otherwise, he or she should endeavor to discover whether such facts are adequately disclosed in the Preliminary Official Statement. In the Release, the SEC stated that the steps that a member of the Board could take include becoming familiar with the Preliminary Official Statement and questioning staff and consultants about the disclosure of such facts. FISCAL IMPACT Based on current rates and calculations, the sale of the proposed 2017 Refunding Series A Green Bonds will reduce overall District debt service payments by approximately $17.7 million over the next twenty-five years. The 2017 Series B Parity Bonds are currently estimated to have a $1.64 million annual debt service for 10 years. The Measure AA 2018 Series General Obligation Bonds are currently estimated to have a $2.6-$2.8 million annual debt service for 30 years. The callable portion of the 2012 bonds have an interest payment scheduled for March 1, 2018 in the amount of $285,000. This will be applied to the refunding escrow. The balance of the refunding escrow requirement, not to exceed a combined total of $1,000,000, will be transferred from the General Fund Unassigned Reserve. R-17-132 Page 4 The proposed bond issuances are consistent with the District’s long-term financial model. BOARD COMMITTEE REVIEW The sale of the proposed bonds was not reviewed by a committee. PUBLIC NOTICE Notice was provided pursuant to the Brown Act. No additional notice is necessary. CEQA COMPLIANCE No compliance is required as this action is not a project under CEQA. NEXT STEPS If approved by the Board, staff will proceed with finalization of the documents and sell the 2017 Parity Bonds and the 2018 General Obligation Bonds. Within a month of closing of the transaction, a post-sale evaluation report will be brought to the Board. Attachments: 1. Resolution approving the Preliminary Official Statement for the Issuance of the Green Bonds, 2017 Refunding Series A and Parity Bonds, 2017 Series B 2. Preliminary Official Statement for the Issuance of the Green Bonds, 2017 Refunding Series A and Parity Bonds, 2017 Series B 3. Resolution approving the Preliminary Official Statement for the Issuance of the Measure AA 2018 General Obligation Bonds 4. Preliminary Official Statement for the Issuance of the Measure AA 2018 General Obligation Bonds 5. Resolution Amending the Budget for Fiscal Year 2017-18 to Authorize the Contribution of up to $715,000 to the Refunding Escrow Account Responsible Manager: Stefan Jaskulak, Chief Financial Officer Prepared by: Stefan Jaskulak, Chief Financial Officer Resolutions/2017/R-17-___2017Bonds-ApprovePOS 1 RESOLUTION NO. 17-____ A RESOLUTION OF THE MIDPENINSULA REGIONAL OPEN SPACE DISTRICT APPROVING THE FORM OF AND AUTHORIZING THE EXECUTION AND DELIVERY OF AN OFFICIAL STATEMENT IN CONNECTION WITH THE ISSUANCE OF THE GREEN BONDS, 2017 REFUNDING SERIES A AND THE PARITY BONDS, 2017 SERIES B WHEREAS, pursuant to resolution adopted on November 8, 2017 (the “Authorizing Resolution”), this Board of Directors (the “Board”) of the Midpeninsula Regional Open Space District (the “District”), authorized the issuance and sale of two series or such subseries of bonds as shall be convenient, which bonds, due to the potential changes in the tax law relating to the issuance of tax-exempt bonds are to be called the “Midpeninsula Regional Open Space District Green Bonds, 2017 Refunding Series A” (the “2017 Series A Refunding Bonds”) and its “Midpeninsula Regional Open Space District Parity Bonds, 2017 Series B” (the “2017 Series B Parity Bonds” and, together with the 2017 Series A Refunding Bonds, the “Bonds”); WHEREAS, there has been submitted, and is on file with the District Clerk, a proposed form of Official Statement (the “Official Statement”), in preliminary form, and the Board hereby desires to authorize the completion, execution and distribution of such document in connection with the sale of the Bonds; NOW, THEREFORE, BE IT RESOLVED by the Midpeninsula Regional Open Space District, as follows: Section 1. Recitals. The District hereby specifically finds and declares that the actions authorized hereby constitute and are with respect to public affairs of the District and that the statements, findings and determinations of the District set forth above are true and correct. Section 2. Official Statement. The Official Statement relating to the Bonds, in substantially the form on file with the District Clerk, is hereby approved with such changes, additions and corrections as any of General Manager or his written designee, the Controller, or the Chief Financial Officer / Director of Administrative Services, (each an “Authorized Officer”) may hereafter approve, and the underwriter of the Bonds is hereby authorized to distribute copies of such Official Statement in its preliminary form to persons who may be interested in purchasing the Bonds. Any Authorized Officer is hereby authorized to certify to the underwriters, on behalf of the District, that the preliminary form of the Official Statement is deemed final as of its date within the meaning of Rule 15c2-12 promulgated under the Securities Exchange Act of 1934 (the “Rule”) (except for the omission of certain final pricing, rating and related information as permitted by said Rule). Any Authorized Officer is hereby authorized and directed to sign said Official Statement in its final form, including the final pricing information, and such execution and delivery shall constitute conclusive evidence of the approval by the District of any changes or revisions to the Official Statement from the form submitted herewith. The underwriter is hereby authorized and directed to deliver copies of such Official Statement in final form to the purchasers of the Bonds. Section 3. Approval of Further Actions. Any Authorized Officer is hereby authorized and directed, jointly and severally, to execute and deliver any and all certificates and Attachment 1 Resolutions/2017/R-17-___2017Bonds-ApprovePOS 2 representations concerning the contents of the Official Statement, which any of them deem necessary or desirable. Section 4. Effective Date: This Resolution shall take effect from and after its date of adoption. * * * * * * * * * * * * * * * * * * * * PASSED AND ADOPTED by the Board of Directors of the Midpeninsula Regional Open Space District on _______, 2017, at a regular meeting thereof, by the following vote: AYES: NOES: ABSTAIN: ABSENT: ATTEST: APPROVED: Secretary Board of Directors President Board of Directors APPROVED AS TO FORM: General Counsel I, the District Clerk of the Midpeninsula Regional Open Space District, hereby certify that the above is a true and correct copy of a resolution duly adopted by the Board of Directors of the Midpeninsula Regional Open Space District by the above vote at a meeting thereof duly held and called on the above day. District Clerk Attachment 1 Resolutions/2017/R-17-___2017Bonds-ApprovePOS 3 CLERK’S CERTIFICATE I, Jennifer Woodworth, District Clerk of the Board of the Midpeninsula Regional Open Space District, hereby certify as follows: The foregoing is a full, true and correct copy of a resolution duly adopted at a regular meeting of the Board of Directors of said District duly and regularly held at the regular meeting place thereof on the 6th day of December, 2017, of which meeting all of the members of said Board had due notice and at which a majority thereof were present; and at said meeting said resolution was adopted by the following vote: AYES: NOES: ABSTAIN: ABSENT: An agenda of said meeting was posted at least 72 hours before said meeting at 330 Distel Circle, Los Altos, California, a location freely accessible to members of the public, and a brief general description of said resolution appeared on said agenda. I have carefully compared the same with the original minutes of said meeting on file and of record in my office; the foregoing resolution is a full, true and correct copy of the original resolution adopted at said meeting and entered in said minutes; and 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. WITNESS my hand and the seal of the Midpeninsula Regional Open Space District this day of December, 2017. ________________________________________ District Clerk Attachment 1 SH DRAFT #3 11/30/2017 PRELIMINARY OFFICIAL STATEMENT DATED DECEMBER __, 2017 NEW ISSUE — BOOK-ENTRY ONLY RATINGS: Fitch: “___” S&P: “___” (See “RATINGS”) In the opinion of Orrick, Herrington & 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 2017 Series Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 and is exempt from State of California personal income taxes. In the further opinion of Bond Counsel, interest on the 2017 Series 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 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 2017 Series Bonds. See “TAX MATTERS.” [District Logo] MIDPENINSULA REGIONAL OPEN SPACE DISTRICT (Counties of Santa Clara, San Mateo and Santa Cruz, California) $__,___,000* GREEN BONDS 2017 REFUNDING SERIES A $__,___,000* PARITY BONDS 2017 SERIES B Dated: Date of Delivery Due: September 1, see inside cover Authorization; Purpose. The Midpeninsula Regional Open Space District (the “District”) is issuing $__,___,000* principal amount of its Green Bonds, 2017 Refunding Series A (the “2017 Series A Refunding Bonds”) and $__,___,000* principal amount of its Parity Bonds, 2017 Series B (the “2017 Series B Parity Bonds,” together with the 2017 Series A Refunding Bonds, the “2017 Series Bonds”). The 2017 Series Bonds are issued pursuant to the Constitution and laws of the State of California (the “State”), including the provisions of Article 3 of Chapter 3 of Division 5 of the Public Resources Code (the “District Act”), and all laws amendatory thereof or supplemental thereto, including Articles 10 and 11 of Chapter 3 of Part 1 of Division 2 of Title 5 of the Government Code of the State of California (together with the District Act, the “Law”) and an Indenture, dated as of September 1, 2016 (the “Master Indenture”), as amended and supplemented by a First Supplemental dated as of December 1, 2017 (the “First Supplemental Indenture” and together with the Master Indenture, the “Indenture”), each by and between the District and ZB, National Association dba Zions Bank, as trustee (the “Trustee”). See “PLAN OF FINANCE” and “THE 2017 SERIES BONDS–Authority for Issuance; Purpose.” The 2017 Series A Refunding Bonds are being issued to: (i) provide funds to defease and redeem a portion of the District’s outstanding 2012 Refunding Promissory Notes (1999 Project Lease) (Current Interest Notes) (the “2012 Current Interest Notes”) currently outstanding in the aggregate principal amount of $13,730,000 and 2012 Refunding Promissory Notes (1999 Project Lease) (Capital Appreciation Notes) (the “2012 Capital Appreciation Notes” and, together with the 2012 Current Interest Notes, the “2012 Notes”) currently outstanding in the aggregate principal amount of $15,474,707.20; and (ii) pay costs of Attachment 2 issuance of the 2017 Series A Refunding Bonds. See “PLAN OF FINANCE–2017 Series A Refunding Bonds” and “THE 2017 SERIES BONDS–Designation of 2017 Series A Refunding Bonds as Green Bonds.” The 2017 Series B Parity Bonds are being issued to: (i) finance a portion of the cost of acquiring and improving staffing facilities for use by the District; and (ii) pay costs of issuance of the 2017 Series B Parity Bonds. See “PLAN OF FINANCE–2017 Series B Parity Bonds.” Security and Source of Payment. The 2017 Series Bonds are limited obligations of the District and are payable from and secured solely by Revenues of the District (as defined herein), consisting primarily of the District’s share of the general 1% ad valorem property tax levied in the District by the Board of Supervisors of the County of Santa Clara and by the Board of Supervisors of the County of San Mateo (together, the “Counties”) upon all property subject to taxation and allocated to the District. See “SECURITY AND SOURCE OF PAYMENT FOR THE 2017 SERIES BONDS” and “AD VALOREM PROPERTY TAXATION WITHIN THE DISTRICT.” No Reserve Fund will be established for the 2017 Series Bonds. Book-Entry Only. The 2017 Series Bonds will be issued in book-entry only form, initially registered in the name of Cede & Co., as nominee of The Depository Trust Company (“DTC”), New York, New York. Individual purchases of the 2017 Series Bonds will be made in principal amounts of $5,000 and integral multiples thereof under the book-entry only system maintained by DTC. Purchasers of the 2017 Series Bonds will not receive physical certificates representing their interests in the 2017 Series Bonds. So long as DTC, or its nominee for disbursement to DTC Participants, is the registered owner of the 2017 Series Bonds, payments of principal and interest with respect to the 2017 Series Bonds will be made by the Trustee directly to DTC or its nominee, which will in turn remit such payments to the DTC participants for disbursement to the beneficial owners of the 2017 Series Bonds. See APPENDIX G–“DTC AND THE BOOK- ENTRY ONLY SYSTEM.” Payments. Interest on the 2017 Series Bonds is payable on September 1 and March 1, of each year, commencing March 1, 2018. Principal on the 2017 Series Bonds is payable on September 1 in the amounts and in the years set forth on the inside cover. Payments of principal and interest on the 2017 Series Bonds will be paid by the Trustee to DTC for subsequent disbursement to DTC Participants, which will remit such payments to the Beneficial Owners of the 2017 Series Bonds. See “THE 2017 SERIES BONDS–Payment of Principal and Interest” and APPENDIX G–“DTC AND THE BOOK-ENTRY ONLY SYSTEM.” Redemption. The 2017 Series A Refunding Bonds and the 2017 Series B Parity Bonds are all subject to redemption prior to their stated maturities. See “THE 2017 SERIES BONDS–Redemption Provisions.” Maturity Schedule. See inside cover. Investor Considerations. This cover page contains information for general reference only. It is not a summary of the security or terms of this issue. Investors must read the entire Official Statement for a discussion of special factors which should be considered, in addition to the other matters set forth in this Official Statement, in considering the investment quality of the 2017 Series Bonds. Legal Matters. The 2017 Series Bonds are offered when, as and if sold and issued, and accepted by the Underwriter, subject to the approval as to their validity by Orrick, Herrington & Sutcliffe LLP, San Francisco, California, Bond Counsel to the District. Attachment 2 Certain legal matters will be passed upon for the District by its General Counsel and by Schiff Hardin LLP, San Francisco, California, Disclosure Counsel. Hawkins Delafield & Wood LLP, San Francisco, California is serving as counsel to the Underwriter. Delivery. It is anticipated that the 2017 Series Bonds in book-entry form, will be available for delivery through the facilities of DTC in New York, New York, on or about December __, 2017. Morgan Stanley Dated: _______, 2017. ______________ * Preliminary, subject to change. Attachment 2 MATURITY SCHEDULE (Base CUSIP†: ________) $__,__,000* MIDPENINSULA REGIONAL OPEN SPACE DISTRICT GREEN BONDS 2017 REFUNDING SERIES A Maturity Date Principal Interest (September 1) Amount Rate Yield Price CUSIP No.† $__,__,000* MIDPENINSULA REGIONAL OPEN SPACE DISTRICT PARITY BONDS 2017 SERIES B Maturity Date Principal Interest (September 1) Amount Rate Yield Price CUSIP No.† _____________ * Preliminary, subject to change. † Copyright © 2017 CUSIP Global Services. CUSIP is a registered trademark of the American Bankers Association. CUSIP data are provided by CUSIP Global Services, managed on behalf of the American Bankers Association by S&P Global Market Intelligence, and are provided for convenience of reference only. Neither the District nor the Underwriter assumes any responsibility for the accuracy of these CUSIP data. This data is not intended to create a database and does not serve in any way as a substitute for the CUSIP Service. The CUSIP number for a specific maturity is subject to being changed after the issuance of the 2017 Series Bonds as a result of various subsequent actions including, but not limited to, a refunding in whole or in part of such maturity. Attachment 2 i GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT No Offering May Be Made Except by this Official Statement. No broker, dealer, salesperson or other person has been authorized to give any information or to make any representations with respect to the 2017 Series Bonds other than as contained in this Official Statement, and if given or made, such other information or representation must not be relied upon as having been authorized. 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. No Unlawful Offers or Solicitations. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy in any state in which such offer or solicitation is not authorized or in which the person making such offer or solicitation is not qualified to do so or to any person to whom it is unlawful to make such offer or solicitation. Effective Date. This Official Statement speaks only as of its date, and the information and expressions of opinion contained in this Official Statement are subject to change without notice. Neither the delivery of this Official Statement nor any sale of the 2017 Series Bonds will, under any circumstances, create any implication that there has been no change in the affairs of the District or any other parties described in this Official Statement. Use of this Official Statement. This Official Statement is submitted in connection with the sale of the 2017 Series Bonds referred to herein and may not be reproduced or used, in whole or in part, for any other purpose. This Official Statement is not a contract with the purchasers of the 2017 Series Bonds. Preparation of this Official Statement. The information contained in this Official Statement has been obtained from sources that are believed to be reliable, but this information is not guaranteed as to accuracy or completeness. Document References and Summaries. All references to and summaries of the Indenture or other documents contained in this Official Statement are subject to the provisions of those documents and do not purport to be complete statements of those documents. Bonds are Exempt from Securities Laws Registration. The issuance and sale of the 2017 Series Bonds have not been registered under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, in reliance upon exemptions for the issuance and sale of municipal securities provided under Section 3(a)(2) of the Securities Act of 1933 and Section 3(a)(12) of the Securities Exchange Act of 1934. Stabilization of Prices. In connection with this offering, the Underwriter may overallot or effect transactions which stabilize or maintain the market price of the 2017 Series 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 Underwriter may offer and sell the 2017 Series Bonds to certain dealers and others at prices lower than the public offering prices set forth on the cover page hereof and said public offering prices may be changed from time to time by the Underwriter. Forward-Looking Statements. Certain statements contained in this Official Statement reflect not historical facts but forecasts and “forward-looking statements.” In this respect, the words “estimate,” “project,” “anticipate,” expect,” “intend,” “believe,” “plan,” “budget,” and similar expressions are intended to identify forward-looking statements. Projections, forecasts, assumptions, expressions of opinions, estimates and other forward statements are not to be construed as representations of fact and are qualified in their entirety by the cautionary statements set forth in this Official Statement. The achievement of certain results or other expectations contained in such forward-looking statements involve known and unknown risks, uncertainties and other factors that 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. The District does not plan to issue any updates or revisions to those forward-looking statements if or when events, conditions or circumstances on which such statements are based occur or do not occur. District Website. The District maintains a website. References to website addresses presented in this Official Statement are for information purposes only and are solely for the convenience of the reader. The information presented on any website is not a part of this Official Statement are not incorporated into, and are not a part of, this Official Statement, and should not be relied upon in making an investment decision with respect to the 2017 Series Bonds. Attachment 2 ii Regional Map [To Come] Attachment 2 iii Regional Map [To Come] Attachment 2 iv MIDPENINSULA REGIONAL OPEN SPACE DISTRICT DISTRICT BOARD OF DIRECTORS Pete Siemens, Ward 1, Board Secretary Yoriko Kishimoto, Ward 2, Board Member Jed Cyr, Ward 3, Board Treasurer Curt Riffle, Ward 4, Board Vice President Nonette Hanko, Ward 5, Board Member Larry Hassett, Ward 6, Board President Cecily Harris, Ward 7, Board Member DISTRICT STAFF Stephen E. Abbors, General Manager(1) Ana Ruiz, Assistant General Manager(2) Michael L. Foster, Controller Sheryl Schaffner, Esq., General Counsel(1) Hilary W. Stevenson, Esq., Assistant General Counsel(3) Stefan Jaskulak, Chief Financial Officer/Director of Administrative Services Christine Butterfield, Acting Assistant General Manager PROFESSIONAL SERVICES Orrick, Herrington & Sutcliffe LLP San Francisco, California Bond Counsel Schiff Hardin LLP San Francisco, California Disclosure Counsel Backstrom McCarley Berry & Co., LLC San Francisco, California Financial Advisor ZB, National Association dba Zions Bank Los Angeles, California Trustee The Bank of New York Mellon Trust Company, N.A. Los Angeles, California Escrow Agent _____________ (1) This member of the District staff will retire effective December 29, 2017. See APPENDIX A–“DISTRICT GENERAL, FINANCIAL, AND OPERATING INFORMATION; AND ECONOMIC AND DEMOGRAPHIC INFORMATION REGARDING SANTA CLARA AND SAN MATEO COUNTIES–DISTRICT GENERAL INFORMATION–Administration.” (2) On December 30, 2017, Ms. Ruiz will be the Acting General Manager of the District. (3) On December 30, 2017, Ms. Stevenson will be the Acting General Counsel of the District. Attachment 2 v TABLE OF CONTENTS Page Page INTRODUCTION ............................................. 1 General ........................................................ 1 The District .................................................. 1 Authority for Issuance; Purpose .................. 2 Security for the Bonds ................................. 2 Other Outstanding Debt ............................... 3 Redemption ................................................. 3 Continuing Disclosure ................................. 3 Summaries Not Definitive ........................... 3 THE DISTRICT ................................................. 3 PLAN OF FINANCE ......................................... 4 2017 Series A Refunding Bonds ................. 4 2017 Series B Parity Bonds ......................... 5 ESTIMATED SOURCES AND USES OF FUNDS.............................................. 5 THE 2017 SERIES BONDS .............................. 6 Authority for Issuance ................................. 6 Designation of 2017 Series A Refunding Bonds as Green Bonds ............................. 6 Payment of Principal and Interest ................ 6 Redemption Provisions ................................ 7 Redemption Procedures ............................... 8 Defeasance ................................................... 9 DEBT SERVICE SCHEDULES ..................... 10 SECURITY AND SOURCE OF PAYMENT FOR THE 2017 SERIES BONDS .............................................. 12 Pledge of Revenues ................................... 12 Allocation of Revenues ............................. 12 No Debt Service Reserve Fund ................. 13 Additional Bonds and Parity Obligations .. 13 AD VALOREM PROPERTY TAXATION WITHIN THE DISTRICT ....................................................... 13 Allocation of Property Taxes ..................... 14 Dissolution of Redevelopment Agencies .. 14 General Fund Tax Receipts ....................... 15 Assessed Valuations .................................. 17 Taxation of State-Assessed Utility Property .................................................. 18 Assessed Valuation by Land Use .............. 18 Assessed Valuation of Single-Family Residential Properties ............................ 19 Largest Secured Property Taxpayers in District ................................................... 20 Tax Rate Areas .......................................... 21 Appeals of Assessed Value ....................... 22 Property Tax Collections ........................... 23 Direct and Overlapping Debt Obligations ............................................. 24 CONSTITUTIONAL AND STATUTORY LIMITATIONS ON DISTRICT TAX REVENUES AND APPROPRIATIONS ....................................... 26 Article XIII A of the State Constitution .... 26 Article XIII B of the State Constitution .... 26 Article XIII C and XIII D of the State Constitution ............................................ 27 Proposition 1A; Proposition 22 ................. 28 Unitary Property ........................................ 28 Future Initiatives ....................................... 29 TAX MATTERS ............................................. 29 CONTINUING DISCLOSURE ....................... 31 General ...................................................... 31 Past Instances of Non-Disclosure .............. 31 UNDERWRITING .......................................... 32 LEGAL MATTERS ........................................ 32 FINANCIAL ADVISOR ................................. 33 NO MATERIAL LITIGATION ...................... 33 POST-ISSUANCE COMPLIANCE WITH FEDERAL TAX LAW .................................... 33 RATINGS ........................................................ 33 VERIFICATION OF MATHEMATICAL COMPUTATIONS .......................................... 34 FINANCIAL REPORTS ................................. 34 MISCELLANEOUS ........................................ 35 Attachment 2 vi MAPS, CHARTS AND TABLES Regional Map .............................................................................................................................................. ii Flow of Funds Chart ................................................................................................................................... 13 Table 1 - Estimated Sources and Uses of Funds .................................................................................. 5 Table 2A - Debt Service Schedule ........................................................................................................ 10 Table 2B - Aggregate General Fund Senior Obligations Debt Service Schedule ................................ 11 Table 3 - General Fund Tax Receipts ................................................................................................ 15 Table 4 - Historical and Projected Annual General Fund Debt Service Coverage ............................ 16 Table 5 - Projected Revenues for General Fund Debt ....................................................................... 16 Table 6 - Summary of Assessed Valuation ........................................................................................ 17 Table 7 - 2015-16 Assessed Valuation and Parcels by Land Use ...................................................... 18 Table 8 - Per Parcel 2015-16 Assessed Valuation of Single Family Homes ..................................... 19 Table 9 - Largest Local Secured Taxpayers ....................................................................................... 20 Table 10 - Typical Total Tax Rates per $100 of Assessed Valuation .................................................. 21 Table 11 - Statement of Direct and Overlapping Bonded Debt ........................................................... 25 APPENDICES Appendix A - District General, Financial, and Operating Information; and Economic and Demographic Information Regarding Santa Clara and San Mateo Counties ....... A-1 Appendix B - Annual Financial Report for Fiscal Year Ended June 30, 2017 .................................. B-1 Appendix C - District Investment Policy ........................................................................................... C-1 Appendix D - Definitions and Summary of Certain Provisions of the Indenture ............................... D-1 Appendix E - Form of Continuing Disclosure Certificate ................................................................. E-1 Appendix F - Form of Opinion of Bond Counsel ............................................................................... F-1 Appendix G - DTC and the Book-Entry Only System ....................................................................... G-1 Attachment 2 MIDPENINSULA REGIONAL OPEN SPACE DISTRICT (Counties of Santa Clara, San Mateo and Santa Cruz, California) $__,___,000* GREEN BONDS 2017 REFUNDING SERIES A $__,___,000* PARITY BONDS 2017 SERIES B INTRODUCTION This introduction contains only a brief summary of certain of the terms of the 2017 Series Bonds being offered, and a brief description of the Official Statement. All statements contained in this introduction are qualified in their entirety by reference to the entire Official Statement. Capitalized terms used in this Official Statement and not otherwise defined shall have the meanings given to such terms as set forth in the Indenture. See APPENDIX D–“DEFINITIONS AND SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE– Definitions.” General The purpose of this Official Statement (which includes the cover page, inside cover page and the Appendices) is to provide information concerning the issuance of $__,___,000* principal amount of Midpeninsula Regional Open Space District Green Bonds, 2017 Refunding Series A (the “2017 Series A Refunding Bonds”) and $__,___,000* principal amount of Midpeninsula Regional Open Space District Parity Bonds, 2017 Series B (the “2017 Series B Parity Bonds,” together with the 2017 Series A Refunding Bonds, the “2017 Series Bonds”). The District General. The Midpeninsula Regional Open Space District (the “District”) was formed in 1972 to acquire and preserve public open space land in northern and western portions of the County of Santa Clara. In June 1976, the southern and eastern portions of the County of San Mateo were annexed to the District. The District annexed three parcels located in the northern tip of Santa Cruz County in 1992, but the 1% ad valorem property tax is not levied on this land for the benefit of the District. In September 2004, the District completed the Coastside Protection Program, which extended the District boundaries to the Pacific Ocean in the County of San Mateo County, from the southern borders of Pacifica to the San Mateo/Santa Cruz County line. The District encompasses over 550 square miles of land located in the County of Santa Clara (approximately 200 square miles), the County of San Mateo (approximately 350 square miles) and the County of Santa Cruz County (approximately 2.6 square miles). The Counties of Santa Clara and San Mateo are referred to together as the “Counties.” As of the 2010 decennial census, approximately 720,000 people lived within the boundaries of the District. A map of the District is located on page ii. Governing Board and Management. A seven-member Board of Directors, elected by ward (the “Board of Directors”), establishes policies for the District. Specifically, the Board sets general operating objectives for the District, authorized debt, monitors financial and long-range planning, establishes policies governing conditions of employment, and sets policies to protect and enhance the natural and cultural resources of the District. Members of the Board of Directors are elected for staggered four-year terms. ___________ * Preliminary, subject to change. Attachment 2 2 For additional information about the operations and finances of the District, see APPENDIX A– “DISTRICT GENERAL, FINANCIAL, AND OPERATING INFORMATION; AND ECONOMIC AND DEMOGRAPHIC INFORMATION REGARDING SANTA CLARA AND SAN MATEO COUNTIES.” Authority for Issuance; Purpose The 2017 Series Bonds are issued pursuant to the Constitution and laws of the State of California (the “State”), including the provisions of Article 3 of Chapter 3 of Division 5 of the Public Resources Code (the “District Act”), and all laws amendatory thereof or supplemental thereto, including Articles 10 and 11 of Chapter 3 of Part 1 of Division 2 of Title 5 of the Government Code of the State of California (together with the District Act, the “Law”) and an Indenture, dated as of September 1, 2016 (the “Master Indenture”), as amended and supplemented by a First Supplemental dated as of December 1, 2017 (the “First Supplemental Indenture” and together with the Master Indenture, the “Indenture”), each by and between the District and ZB, National Association dba Zions Bank, as trustee (the “Trustee”). See “PLAN OF FINANCE” and “THE 2017 SERIES BONDS–Authority for Issuance; Purpose.” 2017 Series A Refunding Bonds. The 2017 Series A Refunding Bonds are being issued to: (i) provide funds to redeem a portion of the District’s outstanding 2012 Refunding Promissory Notes (1999 Project Lease) (Current Interest Notes) (the “2012 Current Interest Notes”) currently outstanding in the aggregate principal amount of $13,730,000 and 2012 Refunding Promissory Notes (1999 Project Lease) (Capital Appreciation Notes) (the “2012 Capital Appreciation Notes” and, together with the 2012 Current Interest Notes, the “2012 Notes”) currently outstanding in the aggregate principal amount of $15,474,707.20 and (ii) pay costs of issuance of the 2017 Series A Refunding Bonds. See “PLAN OF FINANCE–2017 Series A Refunding Bonds.” 2017 Series B Parity Bonds. The 2017 Series B Parity Bonds are being issued to: (i) finance a portion of the cost of acquiring and improving staffing facilities for use by the District; and (ii) pay costs of issuance of the 2017 Series B Parity Bonds. See “PLAN OF FINANCE–2017 Series B Parity Bonds.” Security for the Bonds General. The 2017 Series Bonds are limited obligations of the District payable from “Revenues,” defined in the Indenture as the revenues, income, and investment earnings received by the District, including the District’s share of the general 1% ad valorem property tax levied in the District by the Board of Supervisors of the County of Santa Clara and by the Board of Supervisors of the County of San Mateo and allocated to the District, except for any revenue restricted to a specified purpose and not legally available to pay Debt Service such as the ad valorem property taxes levied for the payment of the District’s voter approved general obligation bonds. The District has debt outstanding and may issue additional bonds or incur additional obligations payable from Revenues on a parity with the 2017 Series Bonds. See “SECURITY AND SOURCE OF PAYMENT FOR THE 2017 SERIES BONDS–Additional Bonds and Parity Obligations,” and “AD VALOREM PROPERTY TAXATION WITHIN THE DISTRICT–Direct and Overlapping Debt Obligations.” No Reserve Fund. No reserve fund will be established as security for the 2017 Series Bonds. See “SECURITY AND SOURCE OF PAYMENT FOR THE SERIES 2017 BONDS.” Parity Obligations. As of June 30, 2017, the District had outstanding general fund obligations in the aggregate amount of approximately $105.8 million consisting of Green Bonds, 2016 Refunding Series (the “2016 Green Bonds”), notes (the “Promissory Notes”), and lease obligations securing payment of the Midpeninsula Regional Open Space District Financing Authority (the “Authority”) lease revenue bonds Attachment 2 3 (collectively, the “Authority Bonds”) the payments of which are secured by a pledge of and lien on Revenues on a parity with the payment of the 2017 Series Bonds, inclusive of the $29.6 million 2012 Notes being refunded but excluding the 2017 Series Bonds. See “PLAN OF FINANCE” and “SECURITY AND SOURCE OF PAYMENT FOR THE 2017 SERIES BONDS.” Other Outstanding Debt The District also has outstanding $43.35 million of general obligation bonds authorized by Measure AA secured by and payable from separately levied ad valorem property taxes, excluding $__,___,000* aggregate principal amount of General Obligation (Green Bonds) Series 2018 expected to be issued in 2018. For a description of Measure AA, see APPENDIX A–“DISTRICT GENERAL, FINANCIAL, AND OPERATING INFORMATION; AND ECONOMIC AND DEMOGRAPHIC INFORMATION REGARDING SANTA CLARA AND SAN MATEO COUNTIES–DISTRICT FINANCIAL INFORMATION–General.” Redemption The 2017 Series A Refunding Bonds and the 2017 Series B Parity Bonds are all subject to optional redemption prior to their stated maturities. See “THE 2017 SERIES BONDS–Redemption Provisions.” Continuing Disclosure The District has covenanted for the benefit of Owners and Beneficial Owners of the 2017 Green Bonds to provide certain financial information and operating data relating to the District not later than 210 days after the end of the fiscal year (ending June 30) of the District, commencing with report due January 26, 2019 (the “Annual Report”), and to provide notices of the occurrence of certain significant events. The Annual Report and the notices of significant events will be filed with the Municipal Securities Rulemaking Board (the “MSRB”) through its Electronic Municipal Market Access site. The specific nature of the information to be contained in the Annual Report and the notices of significant events is set forth in APPENDIX E–“FORM OF CONTINUING DISCLOSURE CERTIFICATE.” These covenants have been made in order to assist the Underwriter in complying with S.E.C. Rule 15c2-12(b)(5). Summaries Not Definitive The summaries and references of documents, statutes, reports and other instruments referred to in this Official Statement do not purport to be complete, comprehensive or definitive, and each such summary and reference is qualified in its entirety by reference to each document, statute, report, or instrument. Copies of the documents described in this Official Statement will be available at the General Manager’s office, Midpeninsula Regional Open Space District, 330 Distel Circle, Los Altos, California 94022, telephone: 650-691-1200. The District may impose a charge for copying and mailing. THE DISTRICT The District, a special district created by the District Act and voter approval, is located in the San Francisco Bay Area and has boundaries that encompass over 550 square miles of land in the Counties. The District operates 26 open space preserves, which comprise more than 63,000 acres, providing a regional greenbelt preserve system of diverse and natural beauty in one of the largest metropolitan areas in the country. The preserves, ranging from 55 to 1,800 acres, are open to the public, all year, free of charge. ___________ * Preliminary, subject to change Attachment 2 4 The mission of the District is to acquire and preserve, or return to its natural state, open space land in perpetuity for scenic beauty and enjoyment, for the protection of natural vegetation, wildlife and agriculture, to establish boundaries for urban growth, and enhance quality of life, for recreation in nature, and for educational opportunities through the creation of a regional greenbelt. For additional information on the District see APPENDIX A–“DISTRICT GENERAL, FINANCIAL, AND OPERATING INFORMATION; AND ECONOMIC AND DEMOGRAPHIC INFORMATION REGARDING SANTA CLARA AND SAN MATEO COUNTIES.” PLAN OF FINANCE 2017 Series A Refunding Bonds A portion of the proceeds from the sale of the 2017 Series A Refunding Bonds will be used by the District, together with other available moneys, to defease and redeem $___,___,000* principal amount of the District’s outstanding 2012 Current Interest Notes maturing after September 1, 2023, and $___,___, 000* principal amount of the District’s outstanding 2012 Capital Appreciation Notes that are subject to redemption on September 1, 2022. The 2012 Notes were issued by the District pursuant to the terms and conditions of an Indenture, dated as of February 1, 2012 (the “2012 Notes Indenture”) by and between the District and The Bank of New York Mellon Trust Company, N.A., as trustee. The proceeds from the 2012 Notes were used to prepay certain obligations, the proceeds of which were used to acquire or to refinance the acquisition of “open space” located within the District. “Open space” is defined by the District as land or water area that remains in its natural state, is used for agriculture, or is otherwise essentially undeveloped and the benefits of open space include enhanced survival prospects for endangered plant and animal species, increased public safety through the minimization of flood erosion, landslide, earthquake, and fire hazards, and the creation of more livable urban environments. An escrow fund (the “2012 Notes Escrow Fund”) will be established pursuant to an Escrow Agreement, dated as of December 1, 2017 (the “2012 Escrow Agreement”) by and between the District and The Bank of New York Mellon Trust Company, N.A., as escrow agent for the 2012 Notes. The amounts deposited in the 2012 Notes Escrow Fund with respect to the 2012 Notes will be invested in noncallable defeasance securities, the principal of and interest on which, when received, will be sufficient to pay interest when due to and the redemption price of the 2012 Notes on the redemption date of September 1, 2022. Upon such deposit, such 2012 Notes will no longer be deemed outstanding under the 2012 Notes Indenture. The mathematical computations used to determine the sufficiency of the escrow deposit to defease and prepay, as applicable, the 2012 Notes will be verified by Causey Demgen & Moore P.C. (the “Verification Agent”) who will deliver a report to such effect upon delivery of the 2017 Series Bonds. See “VERIFICATION OF MATHEMATICAL COMPUTATIONS.” The remaining proceeds of the 2017 Series A Refunding Bonds will be used to pay costs associated with the issuance of the 2017 Series A Refunding Bonds. ______________ * Preliminary, subject to change. Attachment 2 5 2017 Series B Parity Bonds A portion of the proceeds from the sale of the 2017 Series B Parity Bonds will be used by the District to finance a portion of the costs of acquiring and making improvements to an approximately 39,000 square foot, two-story staff facility, located on an approximately 1.45 acre lot at 5050 El Camino Real, Los Altos, California and purchasing and improving an approximately 5,600 square foot building for an additional staff facility located on an approximately 0.68 acre lot at 240 Cristich Lane, Campbell, California (together, the “2017 Project”), and to pay costs associated with the issuance of the 2017 Series B Parity Bonds. ESTIMATED SOURCES AND USES OF FUNDS The estimated sources and uses of funds received from the sale of the 2017 Series Bonds are set forth below: Table 1 Estimated Sources and Uses of Funds 2017 Series A Refunding Bonds 2017 Series B Parity Bonds Total SOURCES OF FUNDS: Principal Amount of Bonds Original Issue Premium District Equity Contribution(1) TOTAL SOURCES USES OF FUNDS: Deposit into 2012 Notes Escrow Fund(2) Deposit into Project Fund(3) Costs of Issuance(4) TOTAL USES _____________ (!) To defease and redeem the 2012 Notes that are not subject to refunding with proceeds of tax exempt bonds. (2) See “PLAN OF FINANCE–2017 Series A Refunding Bonds.” (3) See “PLAN OF FINANCE–2017 Series B Parity Bonds.” (4) Includes legal fees, financial advisory fees, Underwriter’s discount, Trustee’s fees, Verification Agent Fees, printing expenses, rating agency fees and other costs associated with the issuance of the 2017 Series Bonds. Attachment 2 6 THE 2017 SERIES BONDS Authority for Issuance The 2017 Series Bonds are issued pursuant to the Constitution and laws of the State, including the Law, and the Indenture. The 2017 Series Bonds are authorized to be issued by a resolution of the District adopted on November 8, 2017. For additional information about the provisions of the Indenture, see APPENDIX D–“DEFINITIONS AND SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE.” Designation of 2017 Series A Refunding Bonds as Green Bonds The mission of the District is to acquire and preserve a regional greenbelt of open space land in perpetuity; protect and restore the natural environment; and provide opportunities for ecologically sensitive public employment and education. The District is issuing the 2017 Series A Refunding Bonds as “Green Bonds,” to allow investors to invest directly in bonds which finance such environmentally beneficial projects. The owners of the 2017 Series A Refunding Bonds do not assume any specific project risk or economic benefit related to the projects as a result of the Green Bonds designation. Use of Proceeds. The proceeds from the 2017 Series A Refunding Bonds will be used to redeem the 2012 Notes, the original proceeds of which were used to acquire or refinance the acquisition of “open space” located within the District, see “PLAN OF FINANCE–2017 Series A Refunding Bonds.” See also, “ESTIMATED SOURCES AND USES OF FUNDS.” The District acquires and preserves, or returns to its natural state, land, for scenic beauty and enjoyment, to protect natural vegetation, wildlife and agriculture, to establish boundaries for urban growth, enhance quality of life, and to provide opportunities for education and recreation in nature through the creation of a regional greenbelt. Project Evaluation and Selection. Expansion of open space preserves by the District is based on location and the opportunity to acquire properties to support the creation of a regional greenbelt. The District prioritizes acquisitions based on an evaluation of opportunities to link preserves with federal, State, county, and city parklands, potential public trail uses, and protect wildlife, watersheds, and other natural resources. Management of Proceeds and Reporting. A portion of the proceeds from the sale of the 2017 Series A Refunding Bonds will be applied to redeem the 2012 Notes and will be deposited into the 2012 Escrow Fund. The amounts deposited in the 2012 Escrow Fund will be invested in noncallable defeasance securities, the principal of and interest on which, when received, will be sufficient to pay interest when due to and the redemption price of the 2012 Notes on the redemption date of September 1, 2022. The proceeds of the 2012 Notes were expended as summarized in “PLAN OF FINANCE–2017 Series A Refunding Bonds.” Because all projects financed by the 2012 Notes are complete, the District does not intend to report on the use of proceeds. The District provides information on its open space preserves on its website (http://www.openspace.org/). Payment of Principal and Interest The 2017 Series Bonds will mature on September 1 in the principal amounts and in the years indicated on the inside cover page hereof and will bear interest at the rates set forth on the inside cover page hereof payable on March 1 and September 1 of each year, commencing on March 1, 2018 (each, an “Interest Payment Date”), computed using a year of 360 days comprising twelve 30-day months. Attachment 2 7 Payment of Interest. Payment of interest on any Bond on each Interest Payment Date (or on the following business day, if the Interest Payment Date does not fall on a business day) will be made to the person appearing on the registration books of the Trustee as the registered owner thereof (the “Owner”) on each Record Date, such interest to be paid by check or draft mailed to such Owner at such Owner’s address as it appears on such registration books or at such other address as the Owner may have filed with the Trustee for that purpose on or before the Record Date. The Owner of an aggregate principal amount of $1,000,000 or more of Bonds may request in writing to the Trustee that such Owner be paid interest by wire transfer to the bank and account number on file with the Trustee as of the applicable Record Date. So long as the 2017 Series Bonds are held by Cede & Co., as nominee of DTC, payment will be made by wire transfer to DTC in accordance with its procedures. See APPENDIX G–“DTC AND THE BOOK-ENTRY ONLY SYSTEM.” Payment of Principal. Principal will be payable at maturity, or upon redemption prior to maturity, upon surrender of Bonds by the registered owner thereof at the principal office of the Trustee. The interest, principal and premiums, if any, on the 2017 Series Bonds will be payable in lawful money of the United States of America from Revenues deposited by the District with the Trustee under the Indenture. So long as all outstanding Bonds are held in book-entry form and registered in the name of a securities depository or its nominee, all payments of principal of, premium, if any, and interest on the 2017 Series Bonds and all notices with respect to such Bonds will be made and given, respectively, to such securities depository or its nominee and not to Beneficial Owners. See APPENDIX G–“DTC AND THE BOOK-ENTRY ONLY SYSTEM.” Redemption Provisions 2017 Series A Refunding Bonds Optional Redemption. The 2017 Series A Refunding Bonds maturing on or before September 1, 20__ are not subject to optional redemption prior to maturity. The 2017 Series A Refunding Bonds maturing on or after September 1, 20__ are subject to redemption prior to their respective stated maturity dates at the option of the District, from any source of available funds, as a whole or in part on any date on or after September 1, 20__, at a redemption price equal to the principal amount of such 2017 Series A Refunding Bonds called for redemption, together with accrued interest thereon to the date fixed for redemption, without premium. 2017 Series A Refunding Bonds Mandatory Sinking Fund Redemption. The 2017 Series A Refunding Bonds maturing on September 1, 20__ (the “Series 2017A Term Bond”) are also subject to mandatory sinking fund redemption on each Mandatory Sinking Fund Redemption Date in the respective principal amounts set forth below, at a redemption price equal to 100% of the principal amount to be redeemed, without premium together with accrued interest thereon to the date fixed for redemption. Series 2017A Term Bond Due September 1, 20__ Mandatory Sinking Fund Redemption Date Principal Amount to be (September 1) Redeemed ____________ † Final Maturity. 2017 Series B Parity Bonds Optional Redemption. The 2017 Series B Parity Bonds maturing on or before September 1, 20__ are not subject to optional redemption prior to maturity. The 2017 Series B Parity Bonds maturing on or after September 1, 20__ are subject to redemption prior to their respective stated maturity dates at the option of the District, from any source of available funds, as a whole or in part on any date on or after September 1, 20__, at a redemption price equal to the principal amount of such 2017 Attachment 2 8 Series B Parity Bonds called for redemption, together with accrued interest thereon to the date fixed for redemption, without premium. Mandatory Sinking Fund Redemption. The 2017 Series B Parity Bonds maturing on September 1, 20__ (the “2017 Series B Parity Term Bond”) are also subject to mandatory sinking fund redemption on each Mandatory Sinking Fund Redemption Date in the respective principal amounts set forth below, at a redemption price equal to 100% of the principal amount to be redeemed, without premium together with accrued interest thereon to the date fixed for redemption. 2017 Series B Parity Term Bond Due September 1, 20__ Mandatory Sinking Fund Redemption Date Principal Amount to be (September 1) Redeemed ____________ † Final Maturity. Redemption Procedures Partial Redemption. If less than all of the 2017 Series Bonds are to be redeemed at any one time, the District is required to select the maturities of the 2017 Series Bonds and the principal amount of each such maturity to be redeemed in its sole discretion. If less than all Bonds maturing by their terms on any one date are to be redeemed at any one time, the Trustee is required to select the 2017 Series Bonds of such maturity to be redeemed by lot and is required to promptly notify the District in writing of the numbers of such 2017 Series A Bonds so selected for redemption. For purposes of such selection, Bonds will be deemed to be composed of $5,000 multiples and any such multiple may be separately redeemed. Notice of Redemption. Notice of redemption are to be mailed by first-class mail by the Trustee, not less than 20 nor more than 60 days prior to the redemption date to the Owners of the 2017 Series Bonds designated for redemption at their addresses appearing on the registration books of the Trustee. Each notice of redemption is required to state the date of such notice, the redemption price, the place of redemption (including the name and appropriate address of the Trustee), the CUSIP number of the maturity or maturities, and, if less than all of any such maturity is to be redeemed, the distinctive certificate numbers of the 2017 Series Bonds of such maturity to be redeemed, the redemption price thereof and, in the case of 2017 Series Bonds to be redeemed in part only, the respective portions of the principal amount thereof to be redeemed. Each such notice is also required to state that on said date there will become due and payable on each of said 2017 Series Bonds the redemption price thereof and in the case of a 2017 Series Bond to be redeemed in part only, the specified portion of the principal amount thereof to be redeemed, together with interest accrued thereon to the redemption date, and that from and after such redemption date interest thereon will cease to accrue, and will require that such 2017 Series Bonds be then surrendered at the address of the Trustee specified in the redemption notice. Neither failure to receive any such notice nor any defect therein will affect the validity of the proceedings for redemption of such 2017 Series Bonds or the cessation of the accrual of interest on the redemption date. Effect of Redemption. If notice of redemption has been duly given as required in the Indenture and money for the payment of the redemption price of the 2017 Series Bonds called for redemption is held by the Trustee, then on the redemption date designated in such notice 2017 Series Bonds so called for redemption will become due and payable, and from and after the date so designated interest on such 2017 Series Bonds will cease to accrue, and the Owners of such 2017 Series Bonds will have no rights in respect thereof except to receive payment of the redemption price thereof. Attachment 2 9 Conditional Notice of Redemption. Any notice of optional redemption of the 2017 Series Bonds may be conditional and if any condition stated in the notice of redemption shall not have been satisfied on or prior to the redemption date, said notice will be of no force and effect, the District will not be required to redeem such 2017 Series Bonds, the redemption will be cancelled, and the Trustee is required within a reasonable time thereafter to give notice to the persons and in the manner in which the notice of redemption was given, that such condition or conditions were not met and that the redemption was cancelled. Rescission or Cancellation of Redemption. The District has the right to rescind any optional redemption by written notice of rescission. In addition, any notice of optional redemption will be cancelled and annulled if for any reason funds are not available on the date fixed for redemption for the payment in full of the 2017 Series Bonds then called for redemption. Any such rescission or cancellation shall not constitute an Event of Default under the Indenture. The Trustee is required to mail notice of rescission or cancellation of such redemption in the same manner as the original notice of redemption was sent. Defeasance All or a portion of the 2017 Series Bonds may be defeased prior to the scheduled maturity dates thereof if the District deposits with the Trustee or escrow agent: (i) either money in an amount which is sufficient or Defeasance Securities which are not subject to redemption prior to maturity, the interest on and the principal of which when paid will provide money which, together with the money, if any, deposited with the Trustee or escrow agent at the same time, is sufficient (as evidenced by a report of an Independent Certified Public Accountant or verification agent obtained by the District and filed with the Trustee) to pay when due the interest to become due on such 2017 Series Bonds on and prior to the maturity dates thereof or the redemption dates thereof and the principal of and the redemption premiums, if any, on such 2017 Series Bonds on the maturity dates thereof or the redemption dates thereof; and (ii) the District has given the Trustee (in form satisfactory to the Trustee) irrevocable instructions to mail, as soon as practicable, a notice to the Owners of such 2017 Series Bonds that the deposit of money and/or Defeasance Securities has been made with the Trustee and that such 2017 Series Bonds are deemed to have been paid in accordance with the Indenture, and stating the maturity dates thereof or the redemption dates thereof upon which money is to be available for the payment of the principal of and the redemption premiums, if any, on such 2017 Series Bonds; provided, that no Defeasance Securities or money deposited with the Trustee or escrow agent pursuant to the Indenture (nor any interest on or principal payments of such Defeasance Securities) will be withdrawn or used for any purpose other than, and such Defeasance Securities and money will be held in trust for, the payment of the interest on and the principal of and the redemption premiums, if any, on such 2017 Series Bonds as provided in the Indenture, except that any money received from such interest on or principal payments of such Defeasance Securities deposited with the Trustee or escrow agent which is not then needed for the foregoing purpose is required, to the extent practicable, to be reinvested as specified in a Written Request of the District filed with the Trustee or escrow agent in Defeasance Securities maturing at the times and in the amounts sufficient to pay when due the interest on and the principal of and the redemption premiums, if any, on such 2017 Series Bonds on and prior to such maturity dates thereof or redemption dates thereof, and all interest earned from such reinvestments is required to be deposited in the Revenue Fund. Any money, deposits, or investments held by the Trustee pursuant to the Indenture which are not required for the payment of the interest and principal and redemption premiums, if any, on the 2017 Series Bonds so defeased will be paid to the District. See also APPENDIX D–“DEFINITIONS AND SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE–Defeasance.” Attachment 2 10 DEBT SERVICE SCHEDULES Table 2A shows the debt service schedule with respect to the 2017 Series Bonds (assuming no optional redemptions). Table 2B shows the aggregate debt service schedule for all Authority Bonds, Promissory Notes and the 2016 Green Bonds of the District (excluding duplicative debt service securing those Authority Bonds) payable directly or indirectly from the District general fund, excluding the 2017 Series Bonds and the including the 2012 Notes and subordinate obligations of the District. For a summary of outstanding long- term debt of the District see Table A-3–“District Outstanding Debt” in APPENDIX A–“DISTRICT GENERAL, FINANCIAL, AND OPERATING INFORMATION; AND ECONOMIC AND DEMOGRAPHIC INFORMATION REGARDING SANTA CLARA AND SAN MATEO COUNTIES.” Table 2A Debt Service Schedule Fiscal Year 2017 Series A Refunding Bonds 2017 Series B Parity Bonds Ending Total (June 30) Principal Interest Principal Interest Debt Service Attachment 2 11 Table 2B Aggregate General Fund Senior Obligations Debt Service Schedule(1) Fiscal Year Ending (June 30) 2011 Authority Bonds 2012 Notes(2) 2015 Notes 2016 Green Bonds 2017 Series Bonds* Total 2018 $189,450 $1,034,550.00 $1,821,550 $5,995,108 $9,040,658.00 2019 213,600 1,034,050.00 1,856,725 5,771,850 8,876,225.00 2020 240,700 1,032,950.00 1,884,725 5,275,200 8,433,575.00 2021 266,400 1,031,250.00 1,918,675 5,497,200 8,713,525.00 2022 290,700 1,031,150.00 1,939,375 5,509,200 8,770,425.00 2023 – 1,032,725.00 1,967,125 5,818,575 8,818,425.00 2024 – 1,029,150.00 1,995,750 5,852,325 8,877,225.00 2025 – 1,030,025.00 1,990,875 5,893,575 8,914,475.00 2026 – 1,351,400.00 2,002,750 5,678,075 9,032,225.00 2027 – 1,347,900.00 1,996,250 5,457,200 8,801,350.00 2028 – 1,351,950.00 2,006,250 5,211,700 8,569,900.00 2029 – 4,659,000.00 1,992,750 1,510,825 8,162,575.00 2030 – 4,579,875.00 1,951,875 1,537,200 8,068,950.00 2031 – 4,570,000.00 1,899,500 1,569,575 8,039,075.00 2032 – 4,465,000.00 1,826,375 1,613,400 7,904,775.00 2033 – 4,355,000.00 1,728,625 1,644,200 7,727,825.00 2034 – 4,250,000.00 1,602,625 1,671,800 7,524,425.00 2035 – 3,810,534.00 1,440,125 1,706,000 6,956,659.00 2036 – 6,183,820.80 – 1,751,300 7,935,120.80 2037 – 5,660,252.95 – 1,777,700 7,437,952.95 2038 – 5,135,000.00 – 1,815,200 6,950,200.00 2039 – 5,102,650.00 – 1,030,200 6,132,850.00 2040 – 5,078,158.80 – – 5,078,158.80 2041 – 5,045,588.10 – – 5,045,588.10 2042 – 5,510,000.00 – – 5,510,000.00 TOTAL $1,200,850 $80,711,979.65 $33,821,925 $79,587,408 $_________* $195,322,162.65 _____________ (1) For a summary of outstanding long-term general fund debt obligations, including subordinate obligations, see Table A-3 in APPENDIX A–“DISTRICT GENERAL, FINANCIAL, AND OPERATING INFORMATION; AND ECONOMIC AND DEMOGRAPHIC INFORMATION REGARDING SANTA CLARA AND SAN MATEO COUNTIES–DISTRICT FINANCIAL INFORMATION–Long Term Debt of the District.” (2) Includes the 2012 Notes to be redeemed. See “PLAN OF FINANCE–2017 Series A Refunding Bonds.” * Preliminary, subject to change. Attachment 2 12 SECURITY AND SOURCE OF PAYMENT FOR THE 2017 SERIES BONDS Pledge of Revenues Pursuant to Section 5544.2(f) of the District Act and the Indenture, the District pledges all Revenues to the payment of the 2017 Series Bonds and all bonds executed, issued and delivered by the District under and pursuant to the Law and the Indenture the payments of which are on a parity with each other and which are secured by a pledge of and lien on Revenues (collectively, the “Bonds”); provided that out of Revenues there may be apportioned such sums for such purposes as permitted by the Indenture. Allocation of Revenues The District agrees and covenants in the Indenture that all Revenues received by the District will be deposited when and as received in the Midpeninsula Regional Open Space District Revenue Fund (the “Revenue Fund”), which fund the District agrees and covenants to maintain so long as any Bonds remain Outstanding. Based upon the adopted budget of the District, amounts to be received in the Revenue Fund exceeding the deposits for the debt service requirements set forth below for the Bonds, including all Parity Obligations, will be surplus funds, which surplus funds may be budgeted and applied for any lawful purpose of the District. The District is required to transfer the following amounts from the Revenue Fund into the following respective funds at the times and in the manner and priority summarized below: provided that from the Revenue Fund the District is required, on a parity basis, to set aside or transfer to the respective trustee or owner of Parity Obligations, in accordance with the terms and proceedings of such Parity Obligations, amounts required to be paid or deposited with respect to such Parity Obligations when due, which deposits and amounts are required to be proportionate in the event such Revenues are insufficient to provide for all deposits and amounts required as of any date to be made with respect to the Bonds and such Parity Obligations. First: To the Interest Fund. On or before the 25th day of the month next preceding each Interest Payment Date (commencing on February 25, 2018), the District shall deposit in the Interest Fund an amount equal to the interest becoming due and payable to but not including such Interest Payment Date. All money in the Interest Fund is required to be used and withdrawn by the Trustee solely for the purpose of paying the interest on the Bonds to but not including their respective Interest Payment Dates. Second: To the Principal Fund. On or before the 25th day of the month next preceding each Principal Payment Date (commencing on August 25, 2018), the District is required to deposit in the Principal Fund an amount equal to the principal of the Bonds becoming due and payable on such date. All moneys in the Principal Fund shall be used and withdrawn by the Trustee solely for the purpose of paying the principal of the Bonds on their respective Principal Payment Dates or redemption dates. Third: To the Bond Redemption Fund. At the time that any payment is due to the Trustee for the purpose of optional or mandatory redemption, the District is required to deposit in the Bond Redemption Fund an amount equal to the principal amount of, and interest on the Bonds being redeemed, plus the redemption premium, if any. All money in the Bond Redemption Fund will be used and withdrawn by the Trustee solely for the purpose of paying the principal of, interest on, and redemption premium, if any due on the Bonds on their respective redemption dates. Fourth: Excess Funds. Unless the District otherwise directs in writing, any amounts remaining in the Interest, Principal, and Bond Redemption Funds on the Business Day following September 1 of each year will be returned to the District for deposit in the Revenue Fund. Attachment 2 13 No Debt Service Reserve Fund The 2017 Series Bonds are secured by and payable solely from Revenues consisting primarily of the District’s share of the general one percent ad valorem property taxes levied on all taxable property in the District. Therefore, the Indenture does not require the District to establish a reserve fund for the 2017 Series Bonds. Additional Bonds and Parity Obligations The District agrees and covenants in the Indenture that, until payment in full of all interest on and principal of the 2017 Series Bonds (or provision satisfactory for such payment has been made), it will incur no additional indebtedness or obligations payable from the Revenues having any priority in payment to the payment of the interest on or principal of the 2017 Series Bonds. The District further agrees and covenants in the Indenture that it will incur no additional indebtedness or obligations that are secured by a pledge of and lien on or payable from the Revenues received by the District on a parity in payment of the interest on or principal of the 2017 Series Bonds; unless: (i) such issuance is in compliance with the District Act which act currently requires that the aggregate principal amount of the proposed debt and of all Bonds and Promissory Notes that will be outstanding after the issuance of such debt does not exceed an amount equal to the anticipated property tax revenue allocations for the next five-year period; and (ii) the District files a certificate with the Trustee showing that: (A) total Revenues received by the District in its most recent audited fiscal year, as shown by the most recent audited financial statement of the District, (B) the maximum annual Debt Service that will be payable following the proposed additional debt on (1) all outstanding Parity Obligations of the District, (2) the outstanding Bonds, and (3) the proposed additional indebtedness that is to be secured by a pledge of and lien on or payable from the Revenues received by the District on a parity in payment of the interest on or principal of the 2017 Series Bonds, and (C) the total defined in clause (A) above is at least 125% of the total defined in clause (B) above. Notwithstanding the above, there are no limitations under the Indenture on the ability of the District to: (i) issue any Bonds at any time to refund any outstanding Promissory Notes or other Parity Obligations (provided that such refunding produces at least $1 of net present value savings); or (ii) execute any contract which is payable from Revenues on a subordinate basis to the payment by the District of the 2017 Series Bonds. AD VALOREM PROPERTY TAXATION WITHIN THE DISTRICT Taxes are levied by the Counties for each fiscal year (ending June 30) on taxable real and personal property which is situated in the District as of the preceding January 1. For assessment and collection purposes, property is classified either as “secured” or “unsecured” and is listed accordingly on separate parts of the assessment roll. The “secured roll” is that part of the assessment roll containing State-assessed public utilities property and real property having a tax lien which is sufficient, in the opinion of the County Assessors of the Counties, to secure payment of the taxes. Other property is assessed on the “unsecured roll.” Property taxes on the secured roll are due in two installments, on November 1 and February 1 of each fiscal year (ending June 30). If unpaid, such taxes become delinquent on December 10 and April 10, respectively, and a 10% penalty attaches to any delinquent payment. Property on the secured roll with respect to which taxes are delinquent becomes tax defaulted on or about June 30 of the fiscal year. Such property may thereafter be redeemed by payment of a penalty of 1.5% per month to the time of redemption, Attachment 2 14 plus costs and a redemption fee. If taxes are unpaid for a period of five years or more, the property is subject to sale. Property taxes on the unsecured roll are due as of the January 1 lien date and become delinquent, if unpaid, on August 31. A 10% penalty attaches to delinquent unsecured taxes. If unsecured taxes are unpaid by 5:00 p.m. on October 31, an additional penalty of 1.5% attaches to them on the first day of each month until paid. The taxing authority has four ways of collecting delinquent unsecured personal property taxes: (i) bringing a civil action against the taxpayer; (ii) filing a certificate in the office of the County Clerk of a County specifying certain facts in order to obtain a lien on certain property of the taxpayer; (iii) filing a certificate of delinquency for record in the County Clerk and County Recorder’s office of the applicable County in order to obtain a lien on certain property of the taxpayer; and (iv) seizing and selling personal property, improvements, or possessory interests belonging or assessed to the assessee. Allocation of Property Taxes The allocation of ad valorem property taxes to local governments and, accordingly, the District, is subject to certain State statutes, which may change from time to time. However, the District believes that any such change will not adversely affect its ability to pay debt service on the 2017 Series Bonds. See also “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON DISTRICT TAX REVENUES AND APPROPRIATIONS– Proposition 1A; Proposition 22.” Dissolution of Redevelopment Agencies The California Legislature adopted a bill, “ABX1 26,” during the fiscal year (ending June 30) 2011-12 State budget process that amended the California Community Redevelopment Law to dissolve redevelopment agencies on a State-wide basis. On December 29, 2011, the California Supreme Court upheld ABX1 26 in the face of an expedited legal challenge. As a result, all California redevelopment agencies, including redevelopment agencies of cities located within the District, were dissolved as of February 1, 2012, and such redevelopment agencies were to cease operations and dismantle, and to transfer assets and responsibilities to a successor entity as of the same date. According to additional “trailer bill” legislation (AB 1484) effective on July 1, 2012, which further amended the Community Redevelopment Law, each County Auditor-Controller, the State Department of Finance and the State Controller may require the return of funds improperly spent or transferred to a public entity in conflict with the provisions of ABx1 26 and AB 1484 (together, the “Dissolution Law”) and, if funds are not returned within 60 days, the funds may be recovered through an offset of sales and use tax or property tax allocations to the local agency. As a consequence of the operation of the Dissolution Law, the District, as well as counties, school districts and other special districts, may receive higher amounts of ad valorem property tax allocations, due to future receipt of property tax increment amounts that had previously funded redevelopment agencies. However, such tax increment amounts, in some cases, is pledged to secure redevelopment agency bonds or otherwise contractually encumbered. The result is that the District experienced modest increases in tax revenues as a consequence of the Dissolution Law as shown in the following table. Attachment 2 15 General Fund Tax Receipts The following table shows the District’s general fund tax receipts for the past 10 fiscal years (ended each June 30). Table 3 MIDPENINSULA REGIONAL OPEN SPACE DISTRICT General Fund Tax Receipts for Past 10 Fiscal Years Ending June 30 District Secured and Unsecured Tax Receipts(1)(2) Fiscal Year(3) Santa Clara San Mateo (June 30) County County Total District 2007-08 $16,161,599 $8,146,356 $24,307,955 2008-09 17,641,902 8,737,514 26,379,416 2009-10 18,059,222 9,057,026 27,116,248 2010-11 17,836,555 9,020,424 26,856,979 2011-12 18,115,962 9,076,982 27,192,944 2012-13 19,141,070 9,455,338 28,596,408 2013-14 20,866,158 10,059,271 30,925,429 2014-15 22,490,410 10,758,474 33,248,884 2015-16 25,090,811 11,649,180 36,739,991 2016-17 26,919,254 12,444,655 39,363,919 _______________ (1) The District also receives a share of redemption fees, supplemental taxes and State subvention payments from each County in the District. This revenue totaled $1,281,970 for 2014-15, $1,421,981 for 2015-16 and $1,736,996 for Fiscal Year 2016-17. (2) During Fiscal Years 2014-15, 2015-16 and 2016-17, the District received $823,458, $1,302,223 and $1,227,089, respectively, related to the dissolution of redevelopment agencies within the District. See also “–Dissolution of Redevelopment Agencies.” (3) The County of Santa Clara and the County of San Mateo each provide property tax receipt based on their fiscal year ending June 30. The District does not receive any general fund taxes levied in the County of Santa Cruz. Source: District Controller. (Remainder of this Page Intentionally Left Blank) Attachment 2 16 Table 4 presents historic and proforma annual debt service coverage, for the District’s long-term general fund debt. Table 4 MIDPENINSULA REGIONAL OPEN SPACE DISTRICT Historical and Proforma Annual General Fund Debt Service Coverage Fiscal Years Ending March 31, 2013 through 2015, and Ending June 30, 2016 and 2017 ($ in Thousands) [To be Reviewed] As of March 31 As of June 30 2012-13 2013-14 2014-15 2015-16(4) 2016-17 General Fund Tax Revenues $30,270 $32,433 $35,082 $43,204 $42,282 Senior Debt Service(1) 6,058 5,607 5,570 7,733 8,273 Senior Coverage Ratio 5.0x 5.8x 6.3x 5.6x 5.1x Operating Revenue after Senior Debt(2) 26,027 28,543 31,363 37,560 35,802 Lease and Subordinate Obligations(3) 2,819 3,251 3,324 2,162 786 Subordinate Obligations Coverage Ratio 9.2x 8.8x 9.4x 17.4x 45.5x ______________ (1) Includes the 2012 Promissory Notes, the 2015 Refunding Promissory Notes, and 2016 Green Bonds. (2) Includes “Other Revenue” from property management and interest. (3) Includes private promissory notes, including a $1,500,000 private note, currently scheduled for repayment in Fiscal Year 2022-23 but the holder can demand repayment at any time. For the fiscal years ending March 31, 2013 through 2015, includes debt service on the Authority’s 2011 Revenue Bonds (the “2011 Authority Bonds”) issued as lease revenues bonds. A portion of the 2011 Authority Bonds were refunded from proceeds of the 2016 Green Bonds. See APPENDIX A–“DISTRICT GENERAL, FINANCIAL, AND OPERATING INFORMATION; AND ECONOMIC AND DEMOGRAPHIC INFORMATION REGARDING SANTA CLARA AND SAN MATEO COUNTIES–DISTRICT FINANCIAL INFORMATION–Long-Term Debt of the District–Promissory Notes.” (4) Due to change in fiscal year, 2015-16 results cover the 15 months ending June 30, 2016. Source: District Controller. Table 5 presents projected revenues for the District for the next five Fiscal Years. The Fiscal Years 2017-18 estimate reflects assessed valuations announced by County Assessors in July 2017 (an approximately 8.6% increase compared to Fiscal Year 2016-17), partially offset by expected reductions in redevelopment-related revenue and supplemental tax revenue. Based on interim assessed valuation reports since July 2017, tax revenue growth in Fiscal Year 2018-19 is estimated at 6%. Thereafter, the projection assumes tax revenue growth at 3% per year. The projected revenues do not include any future development grants or tax levies for general obligation bonds. No assurances can be given that the projections summarized below will be achieved. Actual results may differ materially than the projections presented below. Table 5 MIDPENINSULA REGIONAL OPEN SPACE DISTRICT Projected Revenues for General Fund Debt Fiscal Years Ending June 30 ($ in Thousands) Fiscal Year (June 30) Tax Revenues Other Revenue† Operating Revenue 2017-18 $45,370 $2,119 $47,489 2018-19 48,092 2,151 50,243 2019-20 49,535 2,183 51,718 2020-21 51,021 2,216 53,237 2021-22 52,552 2,249 54,801 _____________ † Includes revenues from property management and interest. Source: District Controller. Attachment 2 17 Assessed Valuations The assessed valuation of property in the District is established by the respective County Assessor of the Counties, except for public utility property, which is assessed by the State Board of Equalization. Assessed valuations are reported at 100% of the “full value” of the property, as defined in Article XIII A of the California Constitution. The full value may be adjusted annually to reflect inflation at a rate not to exceed 2% per year, or to reflect a reduction in the consumer price index or comparable data for the area, or to reflect declines in property value caused by substantial damage, destruction or other factors, including assessment appeals filed by property owners. For a discussion of how properties currently are assessed, see “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON DISTRICT TAX REVENUES AND APPROPRIATIONS.” Certain classes of property such as churches, colleges, not-for-profit hospitals, and charitable institutions, are exempt from property taxation and do not appear on the tax rolls. No reimbursement is made by the State for such exemptions. The Fiscal Year 2017-18 assessed valuation of the District in County of Santa Clara increased approximately 8.3% compared to the assessed valuation for Fiscal Year 2016-17. The Fiscal Year 2017-18 assessed valuation in the County of San Mateo increased approximately 7.6% compared to the assessed valuation for Fiscal Year 2016-17. Ad valorem taxes levied on the three parcels located in the County of Santa Cruz portion of the District do not benefit the District. Table 6 MIDPENINSULA REGIONAL OPEN SPACE DISTRICT Summary of Assessed Valuation Fiscal Years 2013-14 Through 2017-18 County of Santa Clara Portion Only Fiscal Year Total Before Total After (June 30) Local Secured Utility Unsecured Rdv. Increment Rdv. Increment 2013-14 $125,816,313,137 $5,192,456 $8,032,679,682 $133,854,185,275 $128,261,359,652 2014-15 134,293,818,913 3,616,356 8,134,278,301 142,431,713,570 136,364,265,861 2015-16 148,710,117,100 3,616,356 8,236,860,519 156,950,593,975 151,221,560,473 2016-17 161,457,836,934 3,616,356 8,664,926,704 170,126,379,994 163,586,434,289 2017-18 174,219,310,470 3,616,356 9,773,726,170 183,996,652,996 177,153,794,696 County of San Mateo Portion Only Fiscal Year Total Before Total After (June 30) Local Secured Utility Unsecured Rdv. Increment Rdv. Increment 2013-14 $57,513,572,325 $2,335,966 $2,180,554,159 $59,696,462,450 $55,714,674,355 2014-15 60,798,836,807 2,343,298 2,087,352,630 62,888,532,735 58,641,317,894 2015-16 66,177,632,738 3,085,789 2,363,781,063 68,544,499,590 63,519,108,202 2016-17 72,017,697,589 3,085,096 2,640,434,445 74,661,217,130 68,354,024,615 2017-18 78,506,564,096 3,084,835 2,996,701,078 81,506,350,009 73,565,159,409 Total District Fiscal Year Total Before Total After (June 30) Local Secured Utility Unsecured Rdv. Increment Rdv. Increment 2013-14 $183,329,885,462 $7,528,422 $10,213,233,841 $193,550,647,725 $183,976,034,007 2014-15 195,092,655,720 5,959,654 10,221,630,931 205,320,246,305 195,005,583,755 2015-16 214,887,749,838 6,702,145 10,600,641,582 225,495,093,565 214,740,668,675 2016-17 233,475,534,523 6,701,452 11,305,361,149 244,787,597,124 231,940,458,904 2017-18 252,725,874,566 6,701,191 12,770,427,248 265,503,003,005 250,718,954,105 _______________ Source: California Municipal Statistics, Inc. Attachment 2 18 Taxation of State-Assessed Utility Property Less than 1% of property tax revenue of the District is derived from utility property subject to assessment by the State Board of Equalization (“SBE”). Property valued by the SBE as an operating unit in a primary function of the utility taxpayer is known as “unitary property,” a concept designed to permit assessment of the utility as a going concern rather than assessment of each individual element of real and personal property owned by the utility taxpayer. State-assessed unitary and “operating nonunitary” property (which excludes nonunitary property of regulated railways) is allocated to the counties based on the situs of the various components of the unitary property. Except for unitary property of regulated railways and certain other excepted property, all unitary and operating nonunitary property is taxed at special county- wide rates and tax proceeds are distributed to taxing jurisdictions according to statutory formulae generally based on the distribution of taxes in the prior year. Assessed Valuation by Land Use The following table describes a distribution of taxable real property located in the District by principal purpose for which the land is used, and the assessed valuation and number of parcels for each use. Table 7 MIDPENINSULA REGIONAL OPEN SPACE DISTRICT 2017-18 Assessed Valuation and Parcels by Land Use 2017-18 % of No. of % of Assessed Valuation† Total Parcels Total Non-Residential: Agricultural/Rural $507,783,912 0.20% 629 0.32% Commercial/Office 38,533,674,656 15.25 6,212 3.13 Industrial 20,970,238,185 8.30 2,414 1.21 Recreational 453,955,556 0.18 123 0.06 Government/Social/Institutional 1,267,705,301 0.50 1,214 0.61 Miscellaneous 506,279,860 0.20 859 0.43 SUBTOTAL NON-RESIDENTIAL $62,239,637,470 24.63% 11,451 5.76% Residential: Single Family Residence $152,340,808,457 60.28% 139,979 70.44% Condominium/Townhouse 18,541,431,741 7.34 30,123 15.16 Mobile Home 231,807,132 0.09 3,769 1.90 2-4 Residential Units 3,950,588,463 1.56 5,974 3.01 5+ Residential Units/Apartments 12,610,299,866 4.99 2,769 1.39 Miscellaneous Residential 29,777,674 0.01 95 0.05 SUBTOTAL RESIDENTIAL $187,704,713,333 74.27% 182,709 91.95% Vacant Parcels 2,781,523,763 1.10% 4,555 2.29% TOTAL $252,725,874,566 100.00% 198,715 100.00% ____________ † Local Secured Assessed Valuation; excluding tax-exempt property. Source: California Municipal Statistics, Inc. Attachment 2 19 Assessed Valuation of Single-Family Residential Properties The following table focuses on single-family residential properties only, which comprise approximately 60% of the assessed value of taxable property in the District. The table provides a distribution of single-family residences in the District by assessed value. The average assessed value is $1,088,312, and the median assessed value is $784,679. Table 8 MIDPENINSULA REGIONAL OPEN SPACE DISTRICT Per Parcel 2017-18 Assessed Valuation of Single Family Homes (Ending June 30) 2017-18 Average Median No. of Assessed Assessed Assessed Parcels Valuation Valuation Valuation Single Family Residential 139,979 $152,340,808,457 $1,088,312 $784,679 2017-18 No. of % of Cumulative Total % of Cumulative Assessed Valuation Parcels† Total % of Total Valuation Total % of Total $0 - $99,999 9,335 6.669% 6.669% $703,268,205 0.462% 0.462% $100,000 - $199,999 14,638 10.457 17.126 2,090,680,803 1.372 1.834 $200,000 - $299,999 8,929 6.379 23.505 2,229,020,414 1.463 3.297 $300,000 - $399,999 7,870 5.622 29.127 2,742,754,679 1.800 5.098 $400,000 - $499,999 7,761 5.544 34.672 3,495,805,982 2.295 7.392 $500,000 - $599,999 7,886 5.634 40.305 4,336,677,190 2.847 10.239 $600,000 - $699,999 7,438 5.314 45.619 4,822,463,257 3.166 13.405 $700,000 - $799,999 7,217 5.156 50.775 5,412,243,747 3.553 16.957 $800,000 - $899,999 7,061 5.044 55.819 6,000,872,184 3.939 20.896 $900,000 - $999,999 7,014 5.011 60.830 6,653,309,208 4.367 25.264 $1,000,000 - $1,099,999 6,064 4.332 65.162 6,358,216,832 4.174 29.437 $1,100,000 - $1,199,999 5,024 3.589 68.751 5,769,941,044 3.788 33.225 $1,200,000 - $1,299,999 4,257 3.041 71.792 5,317,183,239 3.490 36.715 $1,300,000 - $1,399,999 3,934 2.810 74.603 5,308,192,675 3.484 40.200 $1,400,000 - $1,499,999 3,733 2.667 77.269 5,408,906,697 3.551 43.750 $1,500,000 - $1,599,999 3,365 2.404 79.673 5,210,200,030 3.420 47.170 $1,600,000 - $1,699,999 3,135 2.240 81.913 5,170,715,908 3.394 50.565 $1,700,000 - $1,799,999 2,648 1.892 83.805 4,632,101,078 3.041 53.605 $1,800,000 - $1,899,999 2,447 1.748 85.553 4,524,218,539 2.970 56.575 $1,900,000 - $1,999,999 2,072 1.480 87.033 4,034,514,729 2.648 59.223 $2,000,000 and greater 18,151 12.967 100.000 62,119,522,017 40.777 100.000 TOTAL 139,979 100.000% $152,340,808,457 100.000% _____________ † Improved single family residential parcels. Excludes condominiums and parcels with multiple family units. Source: California Municipal Statistics, Inc. Attachment 2 20 Largest Secured Property Taxpayers in District The 20 taxpayers in the District with the greatest combined secured assessed valuation of taxable property on the 2017-18 tax roll, and the assessed valuations thereof, are shown below. Table 9 MIDPENINSULA REGIONAL OPEN SPACE DISTRICT Largest Local Secured Taxpayers Fiscal Year 2017-18 (Ending June 30) 2017-18 Assessed % of Property Owner Primary Land Use Valuation Total 1. Board of Trustees, Leland Stanford Jr. University Various Property Holdings $6,263,480,917 2.48% 2. Google Inc. Office Building 3,490,159,677 1.38 3. Campus Holdings Inc. Office Building 3,076,341,978 1.22 4. Apple Computer Inc. Office Building 1,232,161,815 0.49 5. Lockheed Missiles and Space Co. Inc. Manufacturing 996,509,985 0.39 6. Sobrato Interests Office Building 784,903,661 0.31 7. Oracle Corp. Office Building 627,216,312 0.25 8. Menlo & Juniper Networks LLC Office Building 603,926,273 0.24 9. Network Appliance Inc. Office Building 504,704,678 0.20 10. Applied Materials Inc. Research and Development 491,685,941 0.19 11. Intuitive Surgical Inc. Office Building 417,657,237 0.17 12. Yahoo Inc. Office Building 413,254,823 0.16 13. Giant Properties LLC Office Building 386,735,241 0.15 14. Essex Portfolio LP Apartments 362,000,089 0.14 15. HCP Life Science REIT Inc. Research and Development 360,169,692 0.14 16. Americana I LLC Apartments 357,169,319 0.14 17. KR 555 Mathilda LLC Office Building 356,444,517 0.14 18. MP 521 LLC Office Building 352,097,380 0.14 19. Wells REIT II-University Circle LP Office Building 345,007,058 0.14 20. LinkedIn Corporation Office Building 343,702,251 0.14 SUBTOTAL $21,765,328,844 8.61% All Others Various 230,960,545,722 91.39 TOTAL $252,725,874,566 100.00% ____________ Source: California Municipal Statistics, Inc. Attachment 2 21 Tax Rate Areas Contained within the District’s boundaries are numerous overlapping local agencies. The following tables show ad valorem property tax rates for the last five tax years in the largest Tax Rate Area of the District in the County of Santa Clara and the County of San Mateo. Table 10 MIDPENINSULA REGIONAL OPEN SPACE DISTRICT Typical Total Tax Rates per $100 of Assessed Valuation(1) County of Santa Clara (Tax Rate Area 6-001)(2) 2013-14 2014-15 2015-16(3) 2016-17 2017-18 General $1.00000 $1.00000 $1.00000 $1.00000 1.00000 County Retirement Levy .03880 .03880 .03880 .03880 .03880 County Hospital Bond .00350 .00910 .00880 .00860 .00820 County Housing Bond – – – – .01266 City of Palo Alto .01770 .01594 .01477 .01290 .01177 Palo Alto Unified School District .09140 .08510 .08600 .07930 .07930 Foothill-De Anza Community College District .02900 .02760 .02400 .02340 .02200 Midpeninsula Regional Open Space District – – .00080 .00060 .00090 TOTAL ALL PROPERTY $1.18040 $1.17654 $1.17317 $1.16360 $1.17363 Santa Clara Valley Water District – State Water Project .00700 .00650 .00570 .00860 .00860 TOTAL LAND AND IMPROVEMENT .00700 .00650 .00570 .00860 .00860 County of Santa Mateo (Tax Rate Area 9-001)(4) 2013-14 2014-15 2015-16 2016-17 2017-18 General $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 Redwood City School District .0240 .0230 .0158 .0461 .0412 Sequoia Union High School District .0313 .0433 .0434 .0391 .0383 San Mateo Community College District .0194 .0190 .0250 .0247 .0235 Midpeninsula Regional Open Space District – – .0008 .0006 .0009 TOTAL $1.0747 $1.0853 $1.0850 $1.1105 $1.1039 _______________ (1) Due to the District’s size and that it is located in two counties (County of Santa Cruz excluded), there is no tax rate area that represents the typical total tax rate for the District. The above tax rate areas are the largest in terms of assessed valuation for each County’s portion of the District. (2) The 2017-18 assessed valuation of Tax Rate Area (TRA) 6-001 is $28,291,652,893, which is 10.66% of the District’s total assessed valuation. (3) Fiscal Year 2015-16 was the first year in which ad valorem property taxes authorized by Measure AA were levied. For a description of Measure AA, see APPENDIX A–“DISTRICT GENERAL, FINANCIAL, AND OPERATING INFORMATION; AND ECONOMIC AND DEMOGRAPHIC INFORMATION REGARDING SANTA CLARA AND SAN MATEO COUNTIES–DISTRICT FINANCIAL INFORMATION- General.” (4) The 2017-18 assessed valuation of TRA 9-001 is $9,444,516,021, which is 3.56% of the District’s total assessed valuation. Source: California Municipal Statistics, Inc. Attachment 2 22 Appeals of Assessed Value General. There are two types of appeals of assessed values that could adversely impact property tax revenues within the District. Appeals may be based on Proposition 8, a constitutional amendment approved by voters in November 1978, which requires that for each January 1 lien date, the taxable value of real property must be the lesser of its base year value, annually adjusted by the inflation factor pursuant to Article XIII A of the State Constitution, or its full cash value, taking into account reductions in value due to damage, destruction, depreciation, obsolescence, removal of property or other factors causing a decline in value. See “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON DISTRICT TAX REVENUES AND APPROPRIATIONS.” Under California law, property owners may apply for a reduction of their property tax assessment by filing a written application, in form prescribed by the State Board of Equalization, with the applicable County board of equalization or assessment appeals board. In most cases, the appeal is filed because the applicant believes that present market conditions (such as residential home prices) cause the property to be worth less than its current assessed value. Proposition 8 reductions may also be unilaterally applied by the applicable County Assessor. In Fiscal Years 2008-09, the Assessor of the County of Santa Clara reduced the assessed values of 90,836 properties in such County as of January 1, 2009, for a reduction in assessed valuation totaling $17.4 billion. In Fiscal Years 2010-11, the Assessor of the County of Santa Clara unilaterally reduced the assessed values of 118,690 properties in such County, for a reduction in assessed valuation of $14.3 billion. In the County of San Mateo, 16% of residential properties had declines in assessed valuations for Fiscal Year (ending June 30) 2010-11. By Fiscal Year (ending June 30) 2012-13, assessed valuation in the County of Santa Clara had rebounded to a level above that for Fiscal Year 2009-10, which had been the highest valuation in the history of the County of Santa Clara. For the County of San Mateo, assessed valuation in Fiscal Year (ending June 30) 2011-12 recovered to a level above that for Fiscal Year (ending June 30) 2009-10, which had been the highest valuation in the history of the County of San Mateo. No assurance can be given that property tax appeals in the future will not significantly reduce the assessed valuation of property within the District. Any reduction in the assessment ultimately granted as a result of such appeal applies to the year for which application is made and during which the written application was filed. These reductions are subject to yearly reappraisals and are adjusted back to their original values when market conditions improve. Once the property has regained its prior value, adjusted for inflation, it once again is subject to the annual inflationary factor growth rate allowed under Article XIII A. See “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON DISTRICT TAX REVENUES AND APPROPRIATIONS.” A second type of assessment appeal involves a challenge to the base year value of an assessed property. Appeals for reduction in the base year value of an assessment, if successful, reduce the assessment for the year in which the appeal is taken and prospectively thereafter. The base year is determined by the completion date of new construction or the date of change of ownership. Any base year appeal must be made within four years of the change of ownership or new construction date. Attachment 2 23 Property Tax Collections The District’s total secured tax collections and delinquencies are apportioned within each County on a County-wide basis, according to the District’s designated tax rate amount. Therefore, the total secured tax levies, as well as collections and delinquencies reported, do not represent the actual secured tax levies, collections and delinquencies of taxpayers within the tax areas of the District. In addition, the District’s total secured tax levy does not include special assessments, supplemental taxes or other charges that have been assessed on property within the District or other tax rate areas of the Counties. Each of the County of Santa Clara and the County of San Mateo has adopted the Alternative Method of Distribution of Tax Levies and Collections and of Tax Sale Proceeds (the “Teeter Plan”) as provided for in Sections 4701 through 4717 of the State Revenue and Taxation Code. The Teeter Plan requires that a county pay 100% of ad valorem secured property taxes due to local agencies in the fiscal year such taxes are due regardless of the actual payments and delinquencies. Under these provisions, each county operating under the Teeter Plan establishes a delinquency reserve and assumes responsibility for all secured delinquencies, assuming that certain conditions are met. The District is a participant in the Teeter Plan of each County. Because of this method of tax collection, districts located in counties operating under the Teeter Plan and participating in the Teeter Plan are assured of 100% collection of their secured tax levies if the conditions established under the applicable county’s Teeter Plan are met. However, such districts are no longer entitled to share in any penalties due on delinquent payments or in the interest that accrues on delinquent payments. The Teeter Plan, as applicable to the District, remains in effect unless the Board of Supervisors of either County orders its discontinuance or unless, prior to the commencement of any fiscal year (which commences on July 1), the Board of Supervisors of such County has received a petition for its discontinuance joined in by resolutions adopted by two thirds of the participating revenue districts in such County, in which event the Board of Supervisors is required to order discontinuance of the Teeter Plan effective at the commencement of the subsequent fiscal year. The Board of Supervisors of either County may, by resolution adopted not later than July 15 of the fiscal year for which it is to apply after holding a public hearing on the matter, discontinue the procedures under the Teeter Plan with respect to any tax levying agency or assessment levying agency in the County if the rate of secured tax delinquency in that agency in any year exceeds 3% of the total of all taxes and assessments levied on the secured rolls for that agency. In the event that the Teeter Plan is terminated, the amount of the levy of ad valorem taxes in the District would depend upon the collections of the ad valorem property taxes and delinquency rates experienced with respect to the parcels within the District. So long as the Teeter Plan remains in effect with respect to each County, the receipt of revenues by the District with respect to the levy of ad valorem property taxes in the Counties will not be dependent upon actual collections of the ad valorem property taxes by the Counties. See APPENDIX A–“DISTRICT GENERAL, FINANCIAL, AND OPERATING INFORMATION; AND ECONOMIC AND DEMOGRAPHIC INFORMATION REGARDING SAN MATEO AND SANTA CLARA COUNTIES– DISTRICT FINANCIAL INFORMATION–Long-Term Obligations” for a description of long-term debt payable from the District’s General Fund. Attachment 2 24 Direct and Overlapping Debt Obligations Set forth in Table 11 is a direct and overlapping debt report (the “Debt Report”) prepared by California Municipal Statistics, Inc. for debt issued as of November 1, 2017. The Debt Report is included for general information purposes only. The District has not reviewed the Debt Report for completeness or accuracy and makes no representation in connection therewith. The Debt Report generally includes long-term obligations sold in the public credit markets by public agencies whose boundaries overlap the boundaries of the District in whole or in part. Such long-term obligations generally are not payable from revenues of the District (except as indicated) nor are they necessarily obligations secured by land within the District. In many cases, long-term obligations issued by the specified public agency are payable only from the general fund or other revenues of such public agency. The contents of the Debt Report are as follows: (i) the first column indicates the public agencies which have outstanding debt as of the date of the Debt Report and whose territory overlaps the District; (ii) the second column shows the percentage of the assessed valuation of the overlapping public agency identified in column one which is represented by property located within the District; and (iii) the third column is an apportionment of the dollar amount of each public agency’s outstanding debt (which amount is not shown in the table) to property in the District, as determined by multiplying the total outstanding debt of each agency by the percentage of the District’s assessed valuation represented in column two. (Remainder of this Page Intentionally Left Blank) Attachment 2 25 Table 11 MIDPENINSULA REGIONAL OPEN SPACE DISTRICT Statement of Direct and Overlapping Bonded Debt (November 1, 2017) 2017-18 Assessed Valuation: $265,503,003,005 DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable Debt 11/1/17 Santa Clara County 40.909% $ 317,408,840 Foothill-De Anza Community College District 93.713 594,138,525 San Mateo Community College District 39.390 227,053,441 West Valley-Mission Community College District 29.259 144,863,950 Palo Alto Unified School District 100. 258,433,689 Fremont Union High School District 85.932 372,326,245 Sequoia Union High School District 91.518 461,763,221 Other High School Districts Various 188,201,849 Belmont-Redwood Shores School District and School Facilities Improvement Districts Nos. 1 and 2 7.975-93.305 53,439,524 Cupertino Union School District 75.622 204,579,204 Los Altos School District 100. 62,145,000 Los Gatos Union School District 98.049 83,513,236 Menlo Park City School District 100. 115,934,473 San Carlos School District 96.542 114,306,807 Mountain View-Whisman School District 100. 213,473,173 Sunnyvale School District 100. 193,580,820 Other Unified and Elementary School Districts Various 364,462,221 Cities 0.018-100. 92,419,067 El Camino Hospital District 98.872 216,935,055 Midpeninsula Regional Open Space District 100. 43,350,000 Community Facilities Districts 100. 27,550,000 Santa Clara Valley Water District Benefit Assessment District 40.909 37,204,690 1915 Act Bonds (Estimate) 100. 30,602,521 TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT $4,417,685,551 DIRECT AND OVERLAPPING GENERAL FUND DEBT: Santa Clara County General Fund Obligations 40.909% $259,972,469 Santa Clara County Pension Obligation Bonds 40.909 146,268,974 San Mateo County General Fund Obligations 39.390 151,352,954 County Board of Education Certificates of Participation 39.390-40.909 6,002,809 Foothill Community College District Certificates of Participation 93.713 28,382,923 West Valley-Mission Community College District General Fund Obligations 29.259 18,450,689 Union High School District General Fund Obligations Various 8,602,703 Mountain View-Whisman School District Certificates of Participation 100. 34,020,000 Other Unified and Elementary School District General Fund Obligations Various 8,262,824 City of Cupertino General Fund Obligations 93.368 31,465,016 City of Los Altos General Fund Obligations 100. 1,355,000 City of Palo Alto General Fund Obligations 100. 1,400,852 City of Redwood City General Fund Obligations 100. 692,368 City of Sunnyvale General Fund Obligations 99.995 17,094,145 Other City General Fund Obligations Various 184,232 Fire Protection Districts Certificates of Participation 100. 13,436,159 Santa Clara County Vector Control District Certificates of Participation 40.909 1,098,407 Midpeninsula Regional Open Space District General Fund Obligations 100. 107,294,707 (1) TOTAL GROSS DIRECT AND OVERLAPPING GENERAL FUND DEBT $835,337,231 Less: Santa Clara County supported obligations 178,379,022 TOTAL NET DIRECT AND OVERLAPPING GENERAL FUND DEBT $656,958,209 OVERLAPPING TAX INCREMENT DEBT (Successor Agencies): 100. % $142,738,002 GROSS COMBINED TOTAL DEBT $5,395,760,784 (2) NET COMBINED TOTAL DEBT $5,217,381,762 (1) Excludes accreted value of capital appreciation bonds. (2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded capital lease obligations. Ratios to 2017-18 Assessed Valuation: Direct Debt ($43,350,000) ............................................................................. 0.02% Total Direct and Overlapping Tax and Assessment Debt ............................... 1.66% Combined Direct Debt ($150,644,707) ......................................................... 0.06% Gross Combined Total Debt ............................................................................ 2.03% Net Combined Total Debt ................................................................................ 1.97% Ratios to Redevelopment Incremental Valuation ($14,784,048,900): Total Overlapping Tax Increment Debt ........................................................... 0.97% ____________ Source: California Municipal Statistics, Inc. Attachment 2 26 CONSTITUTIONAL AND STATUTORY LIMITATIONS ON DISTRICT TAX REVENUES AND APPROPRIATIONS Article XIII A of the State Constitution Article XIII A of the State Constitution, known as Proposition 13, was approved by the voters in June 1978 and has been amended on occasions, including on November 7, 2000 to reduce the voting percentage required for the passage of school bonds. Section l(a) of Article XIII A limits the maximum ad valorem tax on real property to 1% of “full cash value,” and provides that such tax shall be collected by the counties and apportioned according to State statutes. Section l(b) of Article XIII A provides that the 1% limitation does not apply to ad valorem taxes levied to pay interest or redemption charges on any (1) indebtedness approved by the voters prior to July 1, 1978, (2) bonded indebtedness for the acquisition or improvement of real property approved on or after July 1, 1978, by two-thirds of the votes cast by the voters voting on the proposition and (3) bonded indebtedness incurred by a school district, community college district or county office of education for the construction, reconstruction, rehabilitation or replacement of school facilities, including the furnishing and equipping of school facilities or the acquisition or lease of real property for school facilities, approved by 55% of the voters voting on the proposition. Under current law, local agencies are no longer permitted to levy directly any ad valorem property tax (except to pay voter-approved indebtedness). Section 2 of Article XIII A defines “full cash value” to mean the county assessor’s valuation of real property as shown on the 1975-76 fiscal year (June 30) tax bill, or thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred. The full cash value may be adjusted annually to reflect inflation at a rate not to exceed 2% per year, or to reflect a reduction in the consumer price index or comparable data for the taxing jurisdiction, or may be reduced in the event of declining property value caused by substantial damage, destruction or other factors. Legislation implementing Article XIII A provides that, notwithstanding any other law, local agencies may not levy any ad valorem property tax except to pay debt service on indebtedness approved by the voters as described above. Such legislation further provides that each county will levy the maximum tax permitted by Article XIII A, which is $1.00 per $100 of assessed market value. Since its adoption, Article XIII A has been amended a number of times. These amendments have created a number of exceptions to the requirement that property be reassessed when it is purchased, newly constructed or undergoes a change in ownership. These exceptions include certain transfers of real property between family members, certain purchases of replacement dwellings for persons over age 55 and by property owners whose original property has been destroyed in a declared disaster, and certain improvements to accommodate disabled persons and for seismic upgrades to property. These amendments have resulted in marginal reductions in the property tax revenues attributable to the District. Both the State Supreme Court and the United States Supreme Court have upheld the validity of Article XIII A. Article XIII B of the State Constitution In addition to the limits Article XIII A imposes on property taxes that may be collected by local governments, certain other revenues of the State and most local governments are subject to an annual “appropriations limit” imposed by Article XIII B which effectively limits the amount of such revenues those entities are permitted to spend. Article XIII B, approved by the voters in July 1979, was modified substantially by Proposition 111 in 1990. The appropriations limit of each government entity applies to “proceeds of taxes,” which consist of tax revenues, State subventions and certain other funds, including Attachment 2 27 proceeds from regulatory licenses, user charges or other fees to the extent that such proceeds exceed “the cost reasonably borne by such entity in providing the regulation, product or service.” “Proceeds of taxes” excludes tax refunds and some benefit payments such as unemployment insurance. No limit is imposed on the appropriation of funds which are not “proceeds of taxes,” such as reasonable user charges or fees, and certain other non-tax funds. Article XIII B also does not limit appropriation of local revenues to pay debt service on bonds existing or authorized by January 1, 1979, or subsequently authorized by the voters, appropriations required to comply with mandates of courts or the federal government, appropriations for qualified capital outlay projects, and appropriation by the State of revenues derived from any increase in gasoline taxes and motor vehicle weight fees above January 1, 1990 levels. The appropriations limit may also be exceeded in case of emergency; however, the appropriations limit for the next three years following such emergency appropriation must be reduced to the extent by which it was exceeded, unless the emergency arises from civil disturbance or natural disaster declared by the Governor, and the expenditure is approved by two-thirds of the legislative body of the local government. Article XIII C and XIII D of the State Constitution General. On November 5, 1996, the voters of the State approved Proposition 218, known as the “Right to Vote on Taxes Act.” Proposition 218 added Articles XIII C and XIII D to the California Constitution and contained a number of interrelated provisions affecting the ability of the District and California local governments in general to levy and collect both existing and future taxes, assessments, fees and charges. Taxes. Article XIII C requires that all new local taxes be submitted to the electorate before they become effective. Taxes for general governmental purposes of the local government (“general taxes”) require a majority vote; taxes for specific purposes (“special taxes”), even if deposited in the general fund of the local government, require a two-thirds vote. The voter approval requirements of Proposition 218 reduce the flexibility of the District to raise revenues for the General Fund, and no assurance can be given that the District will be able to impose, extend or increase such taxes in the future to meet increased expenditure needs. Property-Related Fees, Charges and Assessments. Article XIII D added several provisions making it generally more difficult for local governments to levy and maintain property- related fees, charges, and assessments for municipal services and programs. These provisions include, among other things, (i) a prohibition against assessments which exceed the reasonable cost of the proportional special benefit conferred on a parcel, (ii) a requirement that assessments must confer a “special benefit,” as defined in Article XIII D, over and above any general benefits conferred, (iii) a majority protest procedure for assessments which involves the mailing of notice and a ballot to the record owner of each affected parcel, a public hearing and the tabulation of ballots weighted according to the proportional financial obligation of the affected party, and (iv) a prohibition against fees and charges which are used for general governmental services, including police, fire or library services, where the service is available to the public at large in substantially the same manner as it is to property owners. Reduction or Repeal of Taxes, Fees and Charges. Article XIII C also removed limitations on the initiative power in matters of reducing or repealing local taxes, assessments, fees or charges. No assurance can be given that the voters of the District will not, in the future, approve an initiative or initiatives which reduce or repeal local taxes, assessments, fees or charges. If such repeal or reduction occurs, the District’s ability to pay debt service on certain of its Long-Term Obligations could be adversely affected. Burden of Proof. Article XIII C provides that a local government “bears the burden of proving by a preponderance of the evidence that a levy, charge, or other exaction is not a tax, that the amount is no more than necessary to cover the reasonable costs of the governmental activity, and that the manner in Attachment 2 28 which those costs are allocated to a payor bear a fair or reasonable relationship to the payor’s burdens on, or benefits received from, the governmental activity.” Similarly, Article XIII D provides that in “any legal action contesting the validity of a fee or charge, the burden shall be on the agency to demonstrate compliance” with Article XIII D. Proposition 26. On November 2, 2010, California voters approved Proposition 26, entitled the “Supermajority Vote to Pass New Taxes and Fees Act.” Section 1 of Proposition 26 declares that Proposition 26 is intended to limit the ability of the State Legislature and local government to circumvent existing restrictions on increasing taxes by defining the new or expanded taxes as “fees.” Proposition 26 amended Articles XIII A and XIII C of the State Constitution. The amendments to Article XIII A limit the ability of the State Legislature to impose higher taxes (as defined in Proposition 26) without a two-thirds vote of the Legislature. The amendments to Article XIII C define “taxes” that are subject to voter approval as “any levy, charge, or exaction of any kind imposed by a local government,” with certain exceptions. Judicial Interpretation. The interpretation and application of Articles XIII C and XIII D will ultimately be determined by the courts with respect to a number of the matters discussed below, and it is not possible at this time to predict with certainty the outcome of such determination. Proposition 1A; Proposition 22 Proposition 1A of 2004. Proposition 1A of 2004, proposed by the Legislature in connection with the State’s fiscal year (ending June 30) 2004-05 Budget Act, and approved by the voters in November 2004, was generally effective in fiscal year (ending June 30) 2006-07. Proposition 1A of 2004 provides that the State may not reduce any local sales tax rate, limit existing local government authority to levy a sales tax rate or change the allocation of local sales tax revenues, subject to certain exceptions. Proposition 1A generally prohibits the State from shifting to schools or community colleges any share of property tax revenues allocated to local governments for any fiscal year, as set forth under the laws in effect as of November 3, 2004. Any change in the allocation of property tax revenues among local governments within a county must be approved by two-thirds of both houses of the Legislature. Proposition 1A of 2004 provided, however, that beginning in fiscal year (ending June 30) 2008-09, the State may shift to schools and community colleges up to 8% of local government property tax revenues, which amount must be repaid, with interest, within three years, if the Governor proclaimed that the shift is needed due to a severe state financial hardship, the shift was approved by two-thirds of both houses and certain other conditions were met. Such a shift may not occur more than twice in any 10-year period. The State could also approve voluntary exchanges of local sales tax and property tax revenues among local governments within a county. Proposition 22. On November 2, 2010, voters in the State approved Proposition 22 known as the “Local Taxpayer, Public Safety, and Transportation Protection Act.” Proposition 22 eliminates or reduces the State’s authority to (i) temporarily shift property taxes from cities, counties and special districts to schools, (ii) use vehicle license fee revenues to reimburse local governments for State-mandated costs (the State will have to use other revenues to reimburse local governments), (iii) redirect property tax increment from redevelopment agencies to any other local government, (iv) use State fuel tax revenues to pay debt service on State transportation bonds, or (v) borrow or change the distribution of State fuel tax revenues. Unitary Property AB 454 (Chapter 921, Statutes of 1986) provides that revenues derived from most utility property assessed by the State Board of Equalization (“Unitary Property”), commencing with the fiscal year 1988-89 (ending June 30), are allocated as follows: (i) each jurisdiction will receive up to 102% of its prior year Attachment 2 29 State-assessed revenue; and (ii) if county-wide revenues generated from Unitary Property are less than the previous year’s revenues or greater than 102% of the previous year’s revenues, each jurisdiction will share the burden of the shortfall or benefit of the excess revenues by a specified formula. This provision applies to all Unitary Property except railroads, whose valuation will continue to be allocated to individual tax rate areas. The provisions of AB 454 do not constitute an elimination of the assessment of any State-assessed properties nor a revision of the methods of assessing utilities by the State Board of Equalization. Generally, AB 454 allows valuation growth or decline of Unitary Property to be shared by all jurisdictions in a county. Future Initiatives Article XIII A, Article XIII B, Article XIII C, Article XIII D, and Propositions 1A of 2004, 22, 26 and 62 were each adopted as measures that qualified for the ballot through California’s initiative process. From time to time other initiative measures could be adopted, further affecting the District’s revenues. TAX MATTERS In the opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel (“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 2017 Series 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 2017 Series 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. As discussed further below, legislation has been introduced which, if enacted, would repeal the alternative minimum tax for tax years beginning after December 31, 2017. A complete copy of the proposed form of opinion of Bond Counsel is set forth in Appendix F hereto. To the extent the issue price of any maturity of 2017 Series Bonds is less than the amount to be paid at maturity of such 2017 Series Bonds (excluding amounts stated to be interest and payable at least annually over the term of such 2017 Series 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 2017 Series Bonds which is excluded from 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 2017 Series Bonds is the first price at which a substantial amount of such maturity of 2017 Series 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 2017 Series Bonds accrues daily over the term to maturity of such 2017 Series Bonds on the basis of a constant interest rate compounded semiannually (with straight-line interpolations between compounding dates). The accruing original issue discount is added to the adjusted basis of such 2017 Series Bonds to determine taxable gain or loss upon disposition (including sale, redemption, or payment on maturity) of such 2017 Series Bonds. Beneficial Owners of 2017 Series Bonds should consult their own tax advisors with respect to the tax consequences of ownership of Bonds with original issue discount, including the treatment of Beneficial Owners who do not purchase such 2017 Series Bonds in the original offering to the public at the first price at which a substantial amount of such 2017 Series Bonds is sold to the public. 2017 Series 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”) Attachment 2 30 will be treated as having amortizable bond premium. No deduction is allowable for the amortizable bond premium in the case of bonds, like the Premium Bonds, the interest on which is excluded from gross income 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 consult 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 federal income tax purposes of interest on obligations such as 2017 Series Bonds. The District has made certain representations and covenanted to comply with certain restrictions, conditions and requirements designed to ensure that interest on 2017 Series 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 2017 Series Bonds being included in gross income for federal income tax purposes, possibly from the date of original issuance of 2017 Series 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 2017 Series Bonds may adversely affect the value of, or the tax status of interest on, 2017 Series Bonds. Accordingly, the opinion of Bond 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 2017 Series 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, 2017 Series 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 2017 Series 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. Legislation has been introduced in Congress which, if enacted, would significantly change the income tax rates for individuals and corporations and would repeal the alternative minimum tax for tax years beginning after December 31, 2017. 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, 2017 Series Bonds. Prospective purchasers of 2017 Series 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 2017 Series 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 District, or about the effect of future changes in the Code, the applicable regulations, the interpretation thereof or the enforcement thereof by the IRS. The District has covenanted, however, to comply with the requirements of the Code. Bond Counsel’s engagement with respect to 2017 Series Bonds ends with the issuance of 2017 Series Bonds, and, unless separately engaged, Bond Counsel is not obligated to defend the District or the Attachment 2 31 Beneficial Owners regarding the tax-exempt status of 2017 Series Bonds in the event of an audit examination by the IRS. Under current procedures, parties other than the District and their appointed counsel, including the Beneficial Owners, would have little, if any, right to participate in the audit examination process. 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 District legitimately disagrees, may not be practicable. Any action of the IRS, including but not limited to selection of 2017 Series 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, 2017 Series Bonds, and may cause the District or the Beneficial Owners to incur significant expense. CONTINUING DISCLOSURE General The District has covenanted for the benefit of the owners and beneficial owners of the 2017 Series Bonds to provide certain financial information and operating data relating to the District by no later than 210 days after the end of the District’s fiscal year (ending June 30) being the current fiscal year-end) (the “Annual Report”), commencing with the report due January 26, 2019 for fiscal year ending June 30, 2018, and to provide notice of the occurrence of significant events either deemed to be material under federal regulations or deemed by the District to be material under the facts and circumstances. The Annual Report and the notices of significant events will be filed by the District or by a dissemination agent on behalf of the District with the Municipal Securities Rulemaking Board through its Electronic Municipal Market Access (EMMA) website. The specific nature of the information to be contained in the Annual Report or the notices of significant events is set forth in the form of Continuing Disclosure Certificate presented in APPENDIX E. Any failure by the District to comply with the provisions or the Continuing Disclosure Certificate is not an “Event of Default” as defined in the Indenture. The sole remedy upon any failure by the District to comply with the Disclosure Certificate will be an action to compel performance. See APPENDIX E– “FORM OF CONTINUING DISCLOSURE CERTIFICATE.” Past Instances of Non-Disclosure The District timely submitted its annual continuing disclosure information to its dissemination agent each year from 2009 through 2014. However, the District failed to fully link the continuing disclosure information to all of the applicable CUSIP numbers when it was posted on EMMA; certain of the annual reports were missing updates to certain financial data because those annual reports were not submitted in a format that could be uploaded, or did not include updates of some of the financial and operating data that was not available to the District and would have needed to be purchased from a third party provider; and the District did not file notices of certain rating changes; although such ratings were discussed in the management’s discussion section of the District’s annual audited financial report. The District made all remedial filings in September 2014 to address those instances of non- compliance, and in November 2014 the Board of Directors adopted policies and procedures to ensure compliance with its continuing disclosure undertakings. Those policies and procedures, became effective April 1, 2015, and include: identifying a disclosure coordinator within the organization to coordinate the preparation of annual reports by a dissemination agent on behalf of the District, file notices of listed events on EMMA and coordinate annual disclosure training sessions; and establishing a disclosure working group comprised of the General Manager, the Controller and the General Counsel to review and approve such Attachment 2 32 annual reports and notices of listed events. On June 25, 2015, the District engaged Goodwin Consulting Group to act as dissemination agent for its continuing disclosure reporting. UNDERWRITING The 2017 Series Bonds are being purchased by Morgan Stanley & Co. LLC (the “Underwriter”) pursuant to the terms and conditions of a bond purchase agreement between the District and the Underwriter, which provides that the Underwriter will purchase all of the 2017 Series Bonds if any are purchased, the obligation to make such purchase being subject to certain terms and conditions set forth in said agreement, the approval of certain legal matters by counsel and certain other conditions. The Underwriter has agreed to purchase the 2017 Series A Refunding Bonds at a price equal to $________, which equals the principal amount of the 2017 Series A Refunding Bonds ($________), plus a net original issue premium of $________, less an Underwriter’s discount of $________, and has agreed to purchase the 2017 Series B Parity Bonds at a price equal to $________, which equals the principal amount of the 2017 Series B Parity Bonds ($________), plus a net original issue premium of $________, less an Underwriter’s discount of $________. The Underwriter intends to offer the 2017 Series Bonds to the public initially at the prices set forth on the inside cover page of this Official Statement, which prices may subsequently change without any prior notice. The Underwriter reserves the right to join with dealers and other underwriters in offering the 2017 Series Bonds to the public. The Underwriter may offer and sell Bonds to certain dealers (including dealers depositing Bonds into investment trusts) at prices lower than the public offering prices, and such dealers may re-allow any such discounts on sales to other dealers. In reoffering Bonds to the public, the Underwriter may over-allocate or effect transactions that stabilize or maintain the market prices for Bonds at levels above those that might otherwise prevail. Such stabilization, if commenced, may be discontinued at any time. Morgan Stanley, parent company of Morgan Stanley & Co. LLC, one of the Underwriters, has entered into a retail distribution arrangement with its affiliate Morgan Stanley Smith Barney LLC. As part of the distribution arrangement, Morgan Stanley & Co. LLC may distribute municipal securities to retail investors through the financial advisor network of Morgan Stanley Smith Barney LLC. As part of this arrangement, Morgan Stanley & Co. LLC may compensate Morgan Stanley Smith Barney LLC for its selling efforts with respect to the 2017 Series Bonds. LEGAL MATTERS Orrick, Herrington & Sutcliffe LLP, San Francisco, California, Bond Counsel to the District, will render the opinion substantially in the form of APPENDIX F hereto with respect to the validity of the 2017 Series Bonds. Certain legal matters will be passed upon for the District by its General Counsel and by Schiff Hardin LLP, San Francisco, California, Disclosure Counsel. Certain legal matters will be passed upon for the Underwriter by Hawkins Delafield & Wood LLP, San Francisco, California. Fees payable to Bond Counsel, Disclosure Counsel, and Underwriter’s Counsel are contingent upon issuance of the 2017 Series Bonds. Attachment 2 33 FINANCIAL ADVISOR The District has retained Backstrom McCarley Berry & Co., LLC, as Financial Advisor (the “Financial Advisor”) for the sale of the “Bonds.” The Financial Advisor is not obligated to undertake, and has not undertaken to make, an independent verification, or to assume responsibility for the accuracy, completeness or fairness of the information contained in this Official Statement. NO MATERIAL LITIGATION The District is not aware of any pending or threatened litigation concerning the validity of the 2017 Series Bonds, or the District’s ability to receive ad valorem taxes and to collect other revenues, or contesting the District’s ability to issue the 2017 Series Bonds. Furthermore, the District is not aware of any pending or threatened litigation to restrain, enjoin, question or otherwise affect the political existence of the District or the validity of the Resolution, or in any way contesting or affecting the validity or enforceability of any of the foregoing or any proceedings of the District taken with respect to any of the foregoing. The District is routinely subject to lawsuits and claims. In the opinion of the District, the aggregate amount of the uninsured liabilities of the District under these lawsuits and claims will not materially affect the financial position or operations of the District. POST-ISSUANCE COMPLIANCE WITH FEDERAL TAX LAW The District follows certain post-issuance compliance procedures that are intended to ensure that proceeds of its tax-exempt bonds are invested and expended consistent with applicable federal tax law. In connection with the issuance of the 2016 Green Bonds, the District determined that a small portion of the proceeds of the Authority’s 2007 Series A Revenue Refunding Bonds (the “2007 Authority Bonds”) may have been applied for purposes that present a tax law compliance issue. The District redeemed the 2007 Authority Bonds and issued a portion of the 2016 Green Bonds as taxable bonds to address the situation. In addition, the District entered into a Closing Agreement on Final Determination Covering Specific Matters dated June 26, 2017 (the “Closing Agreement”) with the IRS under its Tax Exempt Bond Voluntary Closing Agreement Program (VCAP) with respect to the 2007 Authority Bonds to confirm their tax-exempt status. Pursuant to Closing Agreement, the District made a payment to the IRS in the amount of $79,545.40. RATINGS Fitch Ratings (“Fitch”) has assigned its municipal bond rating of “___” to the 2017 Series Bonds. S&P Global Ratings (“S&P”) has assigned its municipal bond rating of “___” to the 2017 Series Bonds. These ratings reflect only the views of the rating agencies, and explanations of the significance of these ratings, and any outlooks assigned to or associated with these ratings, should be obtained from the respective rating agencies. Generally, a rating agency bases its rating on the information and materials furnished to it and on investigations, studies and assumptions of its own. The District has provided certain additional information and materials to the rating agencies (some of which does not appear in this Official Statement). There is no assurance that these ratings will continue for any given period of time or that these ratings will not be revised downward or withdrawn entirely by the rating agencies, if in the judgment of the Attachment 2 34 rating agencies, circumstances so warrant. Any such downward revision or withdrawal of any rating on the 2017 Series Bonds may have an adverse effect on the market price or marketability of the 2017 Series Bonds. VERIFICATION OF MATHEMATICAL COMPUTATIONS Upon delivery of the 2017 Series A Refunding Bonds, Causey Demgen & Moore P.C., Denver, Colorado (the “Verification Agent”), will deliver a report stating that it has reviewed and confirmed the mathematical accuracy of certain computations relating to the adequacy of the funds and/or securities deposited in the 2012 Escrow Fund and the interest thereon, if any, to pay, when due, interest to accrue on and to, and the redemption price of, the 2012 Notes on the specified redemption date thereof. FINANCIAL REPORTS Chavan & Associates, LLP, Certified Public Accountants (the “Auditor”), audited the financial report of the District for the 12 months ended June 30, 2017. The Auditor’s examination was made in accordance with generally accepted auditing standards and Governmental Auditing Standards, issued by the Comptroller General of the United States. See APPENDIX B–“ANNUAL FINANCIAL REPORT FOR FISCAL YEAR ENDED JUNE 30, 2017.” The District has not requested, and the auditor has not performed, any update or review of such statements in connection with their presentation in this Official Statement. The Auditor has not performed any post-audit review of the financial condition or operations of the District. (Remainder of this Page Intentionally Left Blank) Attachment 2 35 MISCELLANEOUS All of the descriptions of applicable law, the Indenture, the District, and the agreements and other documents contained herein are made subject to the provisions of such documents respectively and do not purport to be complete statements of any or all of such provisions. Reference is hereby made to such documents on file with the District for further information in connection therewith. This Official Statement does not constitute a contract with the purchasers of the 2017 Series Bonds. Any statements made in this Official Statement involving matters of opinion or estimates, whether or not so expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates will be realized. The execution and delivery of this Official Statement has been duly authorized by the Board of Directors of the District. MIDPENINSULA REGIONAL OPEN SPACE DISTRICT By: General Manager Attachment 2 A-i APPENDIX A DISTRICT GENERAL, FINANCIAL, AND OPERATING INFORMATION; AND ECONOMIC AND DEMOGRAPHIC INFORMATION REGARDING SANTA CLARA AND SAN MATEO COUNTIES TABLE OF CONTENTS DISTRICT GENERAL INFORMATION ............................................................................................... A-1 Administration .................................................................................................................................... A-1 Operations and Planning..................................................................................................................... A-3 DISTRICT FINANCIAL INFORMATION ............................................................................................. A-5 General ............................................................................................................................................... A-5 Fiscal Management Policies ............................................................................................................... A-6 Financial Policies ............................................................................................................................... A-6 Summary of Financial Reports ........................................................................................................... A-9 Long-Term Debt of the District ........................................................................................................ A-11 District Organization and Employee Relations ................................................................................ A-13 Employee Retirement System .......................................................................................................... A-13 Other Post-Employment Retirement Benefits .................................................................................. A-17 Risk Management ............................................................................................................................. A-19 ECONOMIC AND DEMOGRAPHIC INFORMATION REGARDING SANTA CLARA AND SAN MATEO COUNTIES ..................................................................................................................... A-21 General ............................................................................................................................................. A-21 Population ......................................................................................................................................... A-22 Employment and Industry ................................................................................................................ A-23 Personal Income ............................................................................................................................... A-26 Construction Activity ....................................................................................................................... A-28 Commercial Activity ........................................................................................................................ A-29 Attachment 2 A-ii LIST OF TABLES Table A-1 - District General Fund, Measure AA and Debt Service Fund Statement of Revenues, Expenditures and Changes in Fund Balances ..................................... A-9 Table A-2 - District Statement of Net Position .......................................................................... A-10 Table A-3 - District Outstanding Debt ....................................................................................... A-11 Table A-4A - Population Estimates .............................................................................................. A-22 Table A-4B - Population Projections by Age ............................................................................... A-22 Table A-5 - County of Santa Clara Annual Average Civilian Labor Force, Employment and Unemployment by Industry ............................................................................. A-23 Table A-6 - County of San Mateo Civilian Labor Force, Employment and Unemployment by Industry .................................................................................... A-24 Table A-7 - County of Santa Clara Largest Employers ............................................................. A-25 Table A-8 - County of San Mateo Major Employers ................................................................ A-26 Table A-9 - County of Santa Clara and County of San Mateo, State of California and United States Personal Income ............................................................................... A-27 Table A-10 - County of Santa Clara Building Permit Valuation ................................................ A-28 Table A-11 - County of San Mateo Building Permit Valuation .................................................. A-28 Table A-12 - County of Santa Clara Taxable Retail Sales, Number of Permits and Valuation of Taxable Transactions ......................................................................... A-29 Table A-13 - County of San Mateo Taxable Retail Sales, Number of Permits and Valuation of Taxable Transactions ......................................................................... A-29 Attachment 2 A-1 APPENDIX A DISTRICT GENERAL, FINANCIAL, AND OPERATING INFORMATION; AND ECONOMIC AND DEMOGRAPHIC INFORMATION REGARDING SANTA CLARA AND SAN MATEO COUNTIES The 2017 Series Bonds are payable solely from Revenues consisting primarily of the District’s share of the general one percent ad valorem property tax levied on property within the District by the County of Santa Clara and the County of San Mateo and allocated to the District. See “SECURITY AND SOURCE OF PAYMENT FOR THE 2017 SERIES BONDS” and “AD VALOREM PROPERTY TAXATION WITHIN THE DISTRICT” in the Official Statement. DISTRICT GENERAL INFORMATION The Midpeninsula Regional Park District (the “District”) was established in 1972, by voters of northwestern Santa Clara County. In 1976, voters approved expansion of the District to include southeastern San Mateo County. Later, the District became the “Midpeninsula Regional Open Space District.” With the final approval of the Coastside Protection Program in 2004, the District’s boundary was extended to the Pacific Ocean in San Mateo County, from the southern borders of Pacifica to the San Mateo County/Santa Cruz County border. The boundaries of the District include approximately 200 square miles in Santa Clara County and 350 square miles in San Mateo County. Since 1992, the District has added 2.6 square miles in Santa Cruz County, but the 1% ad valorem property tax is not levied on this land for the benefit of the District. Ad valorem taxes will be levied on the Santa Cruz parcels for the payment of District general obligation bonds, but the amount is expected to be minimal and is not presented in the tables in the Official Statement. The District includes 17 cities (Atherton, Cupertino, East Palo Alto, Half Moon Bay, Los Altos, Los Altos Hills, Los Gatos, Menlo Park, Monte Sereno, Mountain View, Palo Alto, Portola Valley, Redwood City, San Carlos, Saratoga, Sunnyvale, and Woodside). For a map of the District see page ii. Administration The Board of Directors originates, guides, and enforces District policies. As of Fiscal Year 2017-18, a 174.45-person budgeted full-time equivalent permanent staff administers the policies, headed by the General Manager, who is appointed by the Board of Directors. The current General Manager is Stephen E. Abbors. Set forth below are the names and expirations of the current terms for the members of the Board of Directors. Name Office Year First Elected Expiration of Current Term Pete Siemens, Ward 1 Secretary 1992 December 2018 Yoriko Kishimoto, Ward 2 Member 2010 December 2018 Jed Cyr, Ward 3 Treasurer 1996 December 2020 Curt Riffle, Ward 4 Vice President 2008 December 2020 Nonette Hanko, Ward 5 Member 1972 December 2018 Larry Hassett, Ward 6 President 2000 December 2018 Cecily Harris, Ward 7 Member 2008 December 2020 The executive management staff consists of three positions appointed by the Board of Directors; the General Manager, Controller, and General Counsel. Three management staff positions are appointed by the General Manager; the Chief Financial Officer and two Assistant General Managers. Attachment 2 A-2 The General Manager and the General Counsel each announced their retirement from the District effective on December 29, 2017. In January 2018, the Board of Directors expects to initiate a recruitment process to fill the General Manager position and conclude these efforts in spring 2018. Following the recruitment of a General Manager, the Board of Directors expects to initiate the recruitment process to fill the position of General Counsel. Brief resumes for the District executive management staff are set forth below. Stephen E. Abbors, General Manager. Mr. Abbors joined the District in early 2008 after a 24-year career managing watersheds and recreation for the East Bay Municipal Utility District, headquartered in Oakland, California. Prior to that, he was employed for over a decade by the East Bay Regional Park District, also headquartered in Oakland and the largest regional park district in the United States. He holds Bachelors and Masters Degrees in Biological Sciences from California State University, East Bay. Mr. Abbors has announced that he will retire from the District effective on December 29, 2017. Ana Ruiz, Assistant General Manager. Ms. Ruiz will become the Acting General Manager of the District on December 30, 2017. Ms. Ruiz joined the District in June 1998 as a Planning Technician in the Planning Department, and progressed through the ranks to Planning Manager in charge of site plans/master plans and large capital projects. In 2013 she was promoted to Assistant General Manager to oversee the Planning and Project Delivery business line and lead the Real Property, Planning, and Engineering and Construction Departments. In 2017, Ms. Ruiz transitioned to the Visitor and Field Services, Land and Facilities, and Natural Resources Departments. Ms. Ruiz has over 19 years of planning, design, permitting, environmental review, public engagement, project/land management, and executive management experience in open space, recreation, and environmental restoration. She earned her bachelor’s degree in Geological and Environmental Sciences from Stanford University, a Masters in Urban and Regional Planning from San Jose State University, and recently completed the Stanford University Local Governance Summer Institute Program. She is a Certified Planner by the American Institute of Certified Planners (AICP), the professional institute of the American Planning Association. Michael L. Foster, District Controller. Mr. Foster has served as District Controller since 1978. Mr. Foster received an undergraduate degree in economics and a Master of Business Administration degree from Stanford University. Sheryl Schaffner, Esq., General Counsel. Ms. Schaffner became the District’s General Counsel in March 2012. Ms. Schaffner has over 20 years of experience representing public agencies, including cities, counties and state agencies, in both public and private sector capacities. Prior to joining the District, she served as City Attorney to the Cities of San Ramon and Eureka. She has experience in the private sector, specializing in CEQA with a leading environmental firm, served as staff counsel to the California Department of Conservation, senior staff counsel to the State Water Resources Control Board and functioned as lead attorney for the San Francisco Bay and North Coast Regional Water Quality Control Boards. She provided pro bono counsel to the Yolo Land Trust and Davis Agricultural Land Trust. Ms. Schaffner received her J.D. from the University of California at Davis. Ms. Schaffner has announced that she will retire from the District effective on December 29, 2017. Hilary W. Stevenson, Esq., Assistant General Counsel. Ms. Stevenson will become the Acting General Counsel of the District on December 30, 2017. She has served the District as Assistant General Counsel since 2013 and has more than 10 years of experience practicing municipal law in the public sector. Prior to joining the District, Ms. Stevenson served as Assistant City Attorney in the City of East Palo Alto, Deputy City Attorney in Redwood City, and Deputy County Counsel in Santa Clara County. Before beginning her legal career, Ms. Stevenson worked as a consultant to the U.S. Environmental Protection Agency overseeing Superfund site cleanups. She received her J.D. from Santa Clara University and her B.S. and M.S. in Biological Sciences at Stanford University. Attachment 2 A-3 Brief resumes for the District management staff are set forth below: Stefan Jaskulak, Chief Financial Officer/Administrative Services Manager. Mr. Jaskulak joined the District in January 2016 as the District’s first Chief Financial Officer/Director of Administrative Services, overseeing Finance, Budget & Analysis, Human Resources, Procurement, Information Technology, Geospatial Information Systems and Grants Management. Mr. Jaskulak has over 25 years of in-depth financial management experience in both the private and municipal sectors, including financial operations, treasury systems and operations, risk, accounting, financial systems, overseeing budgetary functions and operations, and structured finance including utilizing short and long term debt instruments as part of a comprehensive finance program. He served as a member of the Government Finance Officers Association’s (GFOA) Treasury & Investment Management Committee from 2012 to 2017. Mr. Jaskulak earned his bachelor's degree in Business Administration from Loyola Marymount University and his Master in Business Administration from Newport University. Christine Butterfield, Acting Assistant General Manager. Ms. Butterfield joined the District in July 2017 as the Public Affairs Manager. She was appointed to serve as the Acting Assistant General Manager in October 2017. In this capacity, Ms. Butterfield is responsible for the Planning and Project Delivery business unit that includes the Planning, Construction and Engineering and Real Property Departments. She has 25 years of public sector experience working for and providing consulting services to local units of government in Illinois, Minnesota, Iowa, and California. She has a wide range of experience, including: disaster response and recovery, community development and redevelopment, planning, fiscal impact analyses, economic development, housing policy and development, Housing Choice Voucher and Community Development Block Grant program administration, code enforcement and permitting, communications, information technology, human resources and labor negotiations. Ms. Butterfield earned Bachelor’s Degrees in History and Political Science from the University of Minnesota and holds a Master’s Degree in Public Policy and Administration from the Robert M. La Follette School of Public Affairs at the University of Wisconsin. Operations and Planning The District’s chief method for preserving open space is to buy land, using District revenues and debt financing as well as State and federal grants, receive gifts of open space land and undertake joint projects with other governmental agencies and private nonprofit corporations. The District also has the power of eminent domain except within the 220 square mile Coastside Protection Area in San Mateo County, but the District cannot regulate land it does not own. The District cannot adopt zoning or other land use restrictions; this power lies mainly with the local jurisdictions within the District’s territory. As part of the District’s 2011 Strategic Plan, the Board of Directors unanimously approved the District’s revised strategic direction for a more balanced implementation of its three-part mission statement to achieve beneficial impacts in (i) land preservation, (ii) resource restoration and (iii) public access and recreation. This strategic direction served as the policy foundation for the development of the District’s 2014 Vision Plan, a 40-year plan that identified 54 projects located across the District’s jurisdiction, aiming to expand public access to new areas, improve recreational facilities, protect important open space, support viable working and agricultural lands, restore sensitive natural habitats, and support cultural and scenic landscape. Of the projects identified in the 2014 Vision Plan, 25 highest priority projects were identified to be financed with proceeds of general obligation bonds issued by the District. Attachment 2 A- 4 Attachment 2 A-5 DISTRICT FINANCIAL INFORMATION General The District keeps its books using the California State Controller’s fund accounting principles for special districts, with a modified accrual basis of accounting in which the District generally recognizes revenues when they become both available and measurable and expenditures when it incurs the obligation (except for interest on long-term debt, which the District recognizes when it falls due). From 1989 through 2015, the District’s fiscal year was April 1 through March 31. On July 22, 2015, in order to improve transparency over reporting financial transactions and overall operations, the Board of Directors adopted Resolution No. 14-000 changing the fiscal year of the District to July 1 through June 30, and extending fiscal year 2015-16 by three months to conclude June 30, 2016. The District’s certified public accountants are currently Chavan & Associates, LLP. See APPENDIX B for the District’s audited financial report for the fiscal year ending June 30, 2017. Due to the change in fiscal year, financial information presented in Tables A-1, A-2 and A-3 is not comparable to financial information presented in the audited financial reports for the fiscal years ending prior to June 30, 2016. Over the last six fiscal years, property taxes comprised 90% to 94% of the District’s total general fund revenue, excluding land donations and land acquisition grants. The District’s primary expenditures are for debt service, capital expenditures for land and preserve improvements, and land management and administrative expenses. The capital expenditures are made at the District’s discretion and approximately 80% of such capital spending in Fiscal Year 2016-17 was funded from proceeds of the issuance of general obligation bonds approved by more than two-thirds of the qualified voters of the District on June 3, 2014 (“Measure AA”). Pursuant to Measure AA, the District may issue $300 million of general obligation bonds to fund 25 key projects. The first series of Measure AA general obligation bonds, in the principal amount of 45 million, was issued in August 2015. The District expects that the great majority of future capital expenditures for land acquisitions and preserve development will be funded from proceeds of future issuances of Measure AA bonds. The one significant planned capital project requiring funding from the general fund is the purchase and refurbishment of a new administrative office building and at least one new field office. The cost of this project is estimated at between $42 and $46 million, which will be funded from existing committed reserves and the proceeds of the 2017 Series B Parity Bonds, partially offset by proceeds from the future sale of the current District-owned administrative office building. Measure AA funds may be used to fund projects that improve access to hiking and biking opportunities, protect and preserve redwood forests, natural open spaces, the scenic beauty of the region, coastline, and critical wildlife habitat, restore creeks to protect water quality, and reduce forest fire risk, and estimates the levy of an annual tax in an amount not to exceed $3.18 per $100,000 of assessed value of property owned to pay debt service on Measure AA bonds. Measure AA funds are authorized to be used only to fund the 25 key capital projects identified in the 2014 Vision Plan of the District. Expenditures of Measure AA funds are required to be verified by an independent citizen oversight committee that consists of seven at-large members who reside within the District. The Oversight Committee, which is expected to convene at least once a year, reviews the Measure AA expenditures and the Annual Audit and Accountability report of the District, and presents its findings to the Board of Directors. Land management and administrative expenses increase subject to changing management policy and controls. Since the voter approval of Measure AA, the District has increased staff and outside resources in order to implement the 25 Measure AA funded projects. Operating expenses have since increased from the prior ratio of approximately 50% of general fund tax revenue to over 60% in Fiscal Year 2016-17. The Attachment 2 A-6 District anticipates that implementation and maintenance of these capital projects will necessitate a continuing increase in the ratio of operating expenses to general fund tax revenue to an estimated 65% in Fiscal Year 2017-18, to 70% by Fiscal Year 2023-24, and to approximately 80% by Fiscal Year 2031-32. Driven by the continued strong economy in Silicon Valley, District general fund tax revenue again increased above its long-term trend line in the 12 months ended June 30, 2017, growing by $4.1 million, or approximately 7.2% compared to the 12 months ended June 30, 2016. The District receives approximately 66% of its tax revenue from the County of Santa Clara and 34% from the County of San Mateo. The District purchased $4.2 million of land and associated structures in Fiscal Year 2016-17, all of which was funded from Measure AA bond proceeds. Total capital spending for 2016-17 was $21.3 million of which $16.9 million was funded by Measure AA bond proceeds, and $4.4 million was funded from the general fund. The District manages its expenditures within the annual budget. Excluding Measure AA capital projects, total District Fiscal Year 2016-17 spending of $37.9 million was $2.7 million, or 7%, under budget. Under California law, the District may acquire land or facilities by borrowing money or by purchasing on contract, subject to certain limits (based on tax revenues projected for the five years following the borrowing). The law limits the annual interest rate to 12%. For purchase money financings using District promissory notes, the borrowing term may not exceed 30 years. The District has never defaulted in the payment of any of its debt or other obligations. Fiscal Management Policies Fund Balance Policy. On November 25, 2014, the Board of directors adopted a Fund Balance Policy in Accordance with GASB Statement No. 54 (the “Fund Balance Policy”). The stated purpose of the Fund Balance Policy is to: (i) provide adequate funding to meet the District’s short-term and long-term plans, (ii) provide funds for unforeseen expenditures related to emergencies such as natural disasters, (iii) strengthen the financial stability of the District against present and future uncertainties such as economic downturns and revenue shortfalls, and (iv) maintain an investment-grade bond rating. The Fund Balance Policy identifies the required components of fund balance, the level of management authorized to approve or change target balances in each fund, the amounts that the District will strive to maintain in each fund, and the conditions under which fund balances may be spent, reimbursed and reviewed. The Reserve Policy was developed, with input from the District auditors, to meet the requirements of GASB Statement No. 54– “Fund Balance Reporting and Governmental Fund Type Definitions.” The components of the Fund Balance Policy of the District are summarized below: • Non-Spendable fund balance includes amounts that cannot be spent either because they are not in spendable form. • Restricted fund balance includes amounts that are constrained for specific purposes which are externally imposed by constitutional provisions, enabling legislation, creditors, or contracts. • Committed fund balance includes amounts that are constrained for specific purposes that are internally imposed by the District Board of Directors. • Assigned fund balance includes amounts that are intended to be used for specific purposes that are neither restricted nor committed. Attachment 2 A-7 • Unassigned fund balance includes amounts within the general fund which have not been classified within the above categories. The minimum amount of unassigned fund balance is calculated as 30% of the Budgeted General Fund Tax Revenue. Restricted Funds are comprised of the following: • Retiree Healthcare Plan Fund - Established in 2008 with a $1.9 million contribution to the California Employers’ Retiree Benefit Trust. See also “–Employee Retirement System.” • Hawthorns Fund - Established in 2011 with a $2.0 million endowment from the Woods Family Trust, to provide stewardship funding for the Hawthorns property in Portola Valley. Committed Funds are comprised of the following: • Infrastructure Fund – Established in fiscal year 2015-16 to expand field and office facilities to implement the 2011 Strategic Plan, 2014 Vision Plan, and Measure AA projects. • Equipment Replacement Fund – To replace field and office equipment and vehicles, over time, in connection with the implementation of the 2011 Strategic Plan, 2014 Vision Plan, and Measure AA projects. • Natural Disaster Fund – To permit the District to undertake emergency expenditures required to respond quickly to a major fire, earthquake or flood. Funding for such expenditures is not available from general obligation bonds under Measure AA. The Board of Directors most recently reviewed and updated the list of required reserves and reserve balances on October 26, 2016. The total amount reserved for committed funds was increased by $5 million to $35.4 million. Any spending from the unassigned fund requires approval of the Board of Directors and reimbursed from the general fund within two years. The general fund has a minimum balance requirement of 30% of budgeted general fund tax revenue, equal to $13.5 million for Fiscal Year 2017-18. The Fund Balance Policy may be changed by the District at any time. Investment Policy. The District annually adopts an investment policy (the “Investment Policy”) governing the investment of District funds. The primary goals of the Investment Policy are: Capital Preservation – safeguard the principal of invested funds; Liquidity – managing the fund so that normal operating cash needs and scheduled extraordinary cash needs of the District can be met on a same day basis; and Income – funds shall earn the highest rate of return that is consistent with capital preservation and liquidity goals and the California Government Code. Pursuant to the Investment Policy, investments and deposits of funds are limited to those allowed by and subject to the procedures of Government Code Section 53600 et seq. and 53635 et seq. In the event of any conflict between the terms of the Investment Policy, and the Government Code, the provisions of the Government Code prevail. The Investment Policy does not permit investments to be leveraged or investment in “derivatives” that offer opportunities for significant capital gains and losses. The Board of Directors is required annually to designate the minimum amount of unassigned fund balance to be held in reserve in consideration of unanticipated events that could adversely affect the financial condition of the District and jeopardize the continuation of necessary public services. Any Attachment 2 A-8 spending from the minimum general fund reserve requires the approval of the Board of Directors and is expected to be reimbursed within two years. The current Investment Policy, adopted by the Board of Directors on August 9, 2017 is attached as APPENDIX C. Debt Management Policy. On July 12, 2017, the Board of Directors adopted a debt management policy (the “Debt Management Policy”). The stated purpose of the Debt Management Policy is to: (i) establish the overall parameters for issuing, structuring, and administering the debt of the District in compliance with applicable federal and State securities laws. The Debt Management Policy was developed in conjunction with the procedures for Initial and Continuing Disclosure Relating to Bond Issuances summarized below. The Board of Directors is required to annually review and affirm the Debt Management Policy. Procedures for Initial and Continuing Disclosure Relating to Bond Issuances. On April 1, 2015, the District adopted procedures related to Initial and Continuing Disclosure Relating to Bond Issuances (the “Disclosure Procedures”) to ensure that statements or releases of information to the public that are reasonably expected to reach investors and the trading markets relating to the finances of the District are complete, true, and accurate in all material respects, and in compliance with applicable federal and State securities laws. The current Disclosure Procedures were adopted by the Board of Directors on March 22, 2017. (Remainder of this Page Intentionally Left Blank) Attachment 2 A-9 Summary of Financial Reports Table A-1 presents selected audited cash flow, balance sheet and budget information for the fiscal year ended March 31, 2013 through 2015 and for the fiscal years ended June 30, 2016 and 2017. On July 22, 2015, the Board of Directors adopted Resolution No. 14-000 changing the fiscal year of the District to July 1 through June 30, and extending fiscal year 2015-16 by three months to conclude June 30, 2016. Therefore, financial information for fiscal years ending on and after June 30, 2016 is not comparable to financial information prior to that date. Table A-2 presents the Statement of Net Position for the fiscal years ended June 30, 2016 and 2017. Table A-1 District General Fund, Measure AA and Debt Service Fund Statement of Revenues, Expenditures and Changes in Fund Balances Fiscal Years Ending March 31, 2013 through 2015 and June 30, 2016(1) and 2017 ($ in Thousands) As of March 31 As of June 30 General Fund Debt Service Fund 2013 2014 2015 2016(1)2017 2016(1) 2017 REVENUES: Property Taxes(2) $30,270 $32,433 $35,082 $43,204 $42,282 1,776 1,579 Development Grants 538 1,676 953 223 651 Property Management ___ ___ 1,437 1,636 1,479 Interest 288 150 175 454 313 27 3 Other(3) 1,527 1,567 1,678 644 609 TOTAL OPERATING REVENUES 32,623 35,826 37,887 46,160 45,334 1,803 1,582 EXPENDITURES: Salaries and Benefits 11,836 13,079 13,630 22,077 18,890 Services and other(4) 5,567 5,259 6,162 6,147 5,613 SUBTOTAL 17,403 18,337 19,791 28,224 24,503 DEBT SERVICE(5): Principal Repayment 2,843 2,999 3,145 4,367 5,193 Interest 6,034 5,859 5,749 6,478 6,404 Issuance Cost – – – – 786 SUBTOTAL DEBT SERVICE 8,877 8,858 8,894 10,845 12,383 SUBTOTAL EXPENDITURES 26,280 27,196 28,685 28,224 24,503 OPERATING CASH FLOW 6,343 8,630 9,202 17,936 20,831 (9,042) (10,801) OTHER NON-OPERATING ITEMS (NET) 2,520 (1,971) – STRUCTURES AND IMPROVEMENTS 2,206 3,561 2,209 PROPERTY ACQUISITION (NET)(6) 5,820 3,410 4,717 EXCESS OF REVENUES OVER EXPENDITURES (4,202) 3,630 2,276 17,936 PROCEEDS FROM NOTES PAYABLE 0 0 (1,620) 0 NET EXCESS (4,202) 3,630 656 17,936 STARTING FUND BALANCE 43,349 39,147 42,776 48,681 54,229 ENDING FUND BALANCE $39,147 $42,776 $43,432 $54,229 $61,299 _____________ (1) For the 15 months ending June 30, 2016. (2) Property taxes under the Debt Service Fund for the Fiscal Years ending June 30, 2015 and 2016 are exclusively the Measure AA tax increment. (3) Excludes donations of land. (4) Excludes Structures & Improvements. (5) Excludes Measure AA general obligation bonds. (6) Includes cost of land acquired net of associated grant and gift income. (7) As adjusted. Sources: District audited financial reports. Attachment 2 A-10 Table A-2 District Statement of Net Position As of June 30 2016† 2017 ASSETS Current Assets: Cash and investments $81,598,301 $77,020,898 Accounts receivable: Deposits 1,537,825 587,047 Rent 3,506 5,278 Interest 168,025 – Due from other governments: Taxes receivable 11,792 221 Other current assets 15,622 55,093 TOTAL CURRENT ASSETS $83,335,071 $77,668,537 Noncurrent Assets: Net OPEB asset 699,015 – Notes receivable 151,425 134,317 Unamortized issuance costs 1,006,500 772,042 Non-depreciable capital assets 410,996,958 427,006,396 Capital assets, net of depreciation 17,457,931 20,127,443 TOTAL NONCURRENT ASSETS 430,311,829 448,040,198 TOTAL ASSETS $513,646,900 $525,708,735 Deferred Outflows of Resources Pension change to adjustments $6,990,099 $8,659,986 Deferred loss on early retirement of long-term debt 2,284,028 6,976,997 TOTAL DEFERRED OUTFLOWS OF RESOURCES $9,274,127 $15,636,983 LIABILITIES Current Liabilities: Accounts payable $1,137,971 $5,220,064 Deposits payable 98,770 104,932 Payroll and other liabilities 975,391 1,506,227 Accrued interest 2,284,000 1,956,000 TOTAL CURRENT LIABILITIES 4,496,132 8,787,223 Noncurrent Liabilities: Due within one year 5,465,679 7,423,614 Due after one year 188,146,420 186,494,779 TOTAL NONCURRENT LIABILITIES 193,612,099 193,918,393 TOTAL LIABILITIES $198,108,231 $202,705,616 Deferred Inflows of Resources Pension adjustments $3,352,133 $2,071,424 NET POSITION Net investment in capital assets $276,394,511 $308,600,974 Restricted for: Debt service 3,116,266 2,193,934 Hawthorne maintenance 1,971,040 1,971,040 OPEB 699,015 806,023 TOTAL RESTRICTED $5,786,321 $4,970,997 UNRESTRICTED 39,279,831 23,830,941 TOTAL NET POSITION $321,460,663 $337,502,912 ____________ † For the 15 months ending June 30, 2016. Source: District audited financial reports. Attachment 2 A-11 See APPENDIX B for the District’s audited financial report for the period ended June 30, 2017. The District has not requested, and the auditor has not performed, any update or review of such statements in connection with their presentation in this Official Statement. Long-Term Debt of the District Set forth below is a table presenting the long-term obligations payable by the District (each, a “Long-Term Obligation”), outstanding at June 30, 2017. Table A-3 District Outstanding Debt ($ in Thousands) As of June 30, 2017 Obligation Original Outstanding 2017-18 Final Obligation Amount 6/30/2017 Debt Service Payment PAYABLE FROM THE GENERAL FUND Senior Obligations: 2011 Authority Bonds(1) $20,500 $1,080 $189 September 2022 2012 Refunding Notes(2) 31,265 34,700 1,035 September 2042 2015 Refunding Notes 23,630 22,550 1,822 September 2034 2016 Green Bonds, Series A 54,490 54,490 3,064 September 2038 2016 Green Bonds, Series B (Taxable) 2,920 2,920 2,931 September 2017 Subtotal Senior Obligations 132,805 115,740 9,041 Subordinate Obligations: Daloia Promissory Note (Sierra Azul) 240 11 11 October 2017 Hunt Promissory Note (Bear Creek) 1,500 1,500 75 April 2023 Subtotal Subordinate Obligations 1,740 1,511 86 SUBTOTAL GENERAL FUND 134,545 117,251 9,127 PAYABLE FROM MEASURE AA 2015 General Obligation Bonds, Series A 40,000 40,000 1,636 September 2045 2015 General Obligation Bonds, Series B (Taxable) 5,000 4,225 957 September 2021 SUBTOTAL MEASURE AA 45,000 44,225 2,593 TOTAL $179,545 $161,476 $11,720 ____________ (1) Payable from District Notes pledged to the Authority. (2) Outstanding balance for 2012 Refunding Notes includes accreted interest of $5,114,953 as of June 30, 2017. Source: District Controller. Promissory Notes Daloia Land Purchase Contract Promissory Note (Sierra Azul). During the fiscal year ending March 31, 2003, the District entered into a land purchase contract promissory note in the amount of $240,000. The promissory note bore interest at a fixed rate of 6.25% and matured October 10, 2017. At June 30, 2017, the outstanding balance on this note was $11,067. Attachment 2 A-12 Hunt Living Trust Promissory Note (Bear Creek). On April 1, 2003, the District entered into a $1,500,000 promissory note with the Hunt Living Trust as part of a lease and management agreement. The repayment of this note is junior and subordinate to all outstanding and subsequent notes, bonds, leases, or other obligations secured by property tax revenues of the District or subsequent pledges of revenues created by the District. The note is due in full on April 1, 2023, but the owner can demand repayment at any time, and bears interest at 5.0% per annum until the maturity or prior redemption of the note. At June 30, 2017, the outstanding balance on the note was $1,500,000. 2012 Refunding Promissory Notes. On January 19, 2012, the District advance refunded $34,652,643 in 1999 Lease Revenue Bonds by issuing $31,264,707 in promissory notes. The 2012 notes bear interest rates ranging from 2.00% to 6.04%. The notes are a blend of current interest and capital appreciation notes maturing through 2042. Net proceeds of $33,295,663 (after payment of $278,683 in underwriting fees, insurance, and other issuance costs, and a premium of $2,309,638) were used to purchase U.S. government securities. Those securities were deposited in an irrevocable trust with an escrow agent to provide for all future debt service payments on the 1999 Series bonds. As a result, the 1999 Series bonds are considered to be defeased and the liability for those bonds has been removed from the long-term debt in the financial reports. At June 30, 2017, the outstanding balance of the current interest bonds was $15,474,708, and the outstanding balance of the capital appreciation bonds was $15,474,708 2015 Refunding Promissory Notes (2004 Project Lease). On January 22, 2015, the District currently refunded $31,900,009.95 of the Authority’s 2004 Revenue Bonds by issuing $23,630,000 in promissory notes. The 2015 notes bear interest rates ranging from 2.00% to 5.00%. The final maturity of the notes is September 1, 2034. The net proceeds of $30,904,975.22 (after payment of $253,008.62 in underwriting fees, and other issuance costs and a premium of $4,948,499.70) together with $2,326,475.22 of funds related to the 2004 Revenue Bonds were used to purchase U.S. government securities. Those securities were deposited in an irrevocable trust with an escrow agent to redeem the 2004 Revenue Bonds in full on March 1, 2015. At June 30, 2017, the outstanding balance of these notes was $22,550,000. General Obligation and Revenue Bonds 2011 Authority Bonds. On May 19, 2011, the Authority, on behalf of the District, issued $20,500,000 of 2011 Revenue Bonds (the “2011 Authority Bonds”) for the purpose of acquiring land to preserve and use as open space and pay bond issue and related costs. The 2011 Authority Bonds are lease revenue bonds. Each year, the District appropriates revenues–mainly limited property tax collections that the County of Santa Clara and the County of San Mateo County allocate to the District–to pay its obligations under a Lease Agreement for use and occupancy of District land in addition to other District debt and lease obligations unrelated to this financing. The 2011 Authority Bonds bear interest at 2.0% to 6.0% and are due semi-annually on March 1 and September 1. Principal payments on the 2011 Authority Bonds are due annually September 1, and mature on September 1, 2021. At June 30, 2017, the outstanding balance of these bonds was $1,080,000. 2015 General Obligation Bonds. On July 29, 2015, the District, issued $40,000,000 of General Obligation Bonds, Series 2015A and $5,000,000 of General Obligation Bonds, Series 2015B (Federally Taxable) (together, the “2015 General Obligation Bonds”) to finance certain projects authorized by the voters of the District, and to pay bond issue and related costs. The 2015 General Obligation Bonds bear interest at 1.5% to 5.0% and are due semi-annually on March 1 and September 1. Principal payments on the 2015 General Obligation Bonds are due annually September 1. At June 30, 2017, the aggregate outstanding balance of these bonds was $44,225,000. Attachment 2 A-13 2016 Green Bonds. On September 8, 2016, the District, issued $54,490,000 of Green Bonds, 2016 Refunding Series A and $2,920,000 of Green Bonds, 2016 Refunding Series B (Federally Taxable) (together, the “2016 Green Bonds”) to refund its obligations under certain of the 2007 Notes that secured the 2007 Authority Bonds, prepay a portion of its obligations under the lease securing the 2011 Authority Bonds, and pay bond issue and related costs. The 2016 Green Bonds bear interest at 0.73% to 5.00% and are due semi-annually on March 1 and September 1. Principal payments on the 2016 Green Bonds are due annually September 1. At June 30, 2017, the aggregate outstanding balance of these bonds was $57,410,000. District Organization and Employee Relations As of June 30, 2017, the District had 135 permanent full-time equivalent employees who received benefits. Certain field employees are represented through a Memorandum of Understanding by and between the District and the Midpeninsula Regional Open Space District (“MROSD”) Field Employee Association. Negotiations with MROSD are expected to commence in early 2018, with a new MOU approved by the Board of Directors on or about July 1, 2018. Labor Organization Represented Employees Contract Expiration MROSD Employees Field Association 46 June 30, 2018 Employee Retirement System Plan Description. The District provides benefits to eligible employees through cost-sharing multiple employer defined benefit pension plans (the Plan(s)) administered by the California Public Employees’ Retirement System (CalPERS). Members of the Plan include all permanent employees working full-time. Benefit provisions under the Plans are established by State statute and District resolution. CalPERS issues publicly available reports that include a full description of the pension plans regarding benefit provisions, assumptions and membership information that can be found on the CalPERS website. Benefits Provided. CalPERS provides retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of full-time employment. Members with five years of total service are eligible to retire at age 55 with statutorily reduced benefits. All members are eligible for non-industrial disability benefits after 10 years of service. The death benefit is the Optional Settlement 2W Death Benefit. The cost of living adjustments for the Plan are applied as specified by the Public Employees’ Retirement Law. The Plan’s provisions and benefits in effect at June 30, 2017, are summarized as follows: Miscellaneous Tier 1 Tier 2 PEPRA Benefit formula 2% @ 55 2% @ 60 2% @ 62 Benefit vesting schedule 5 years of service 5 Years 5 Years Benefit payments Monthly for Life Monthly for Life Monthly for Life Retirement age 55 60 62 Monthly benefits, as a % of eligible compensation 2.0% to 2.5% 2.0% to 2.5% 2.00% Required employees contribution rates 7.944% 7.944% 6.313% Required employer contribution rates 10.069% 10.069% 6.555% At June 30, 2017, 306 employees were covered by the Plan, consisting of 134 active, 48 transferred, 62 separated, and 62 retired members. Attachment 2 A-14 Contributions. Section 20814(c) of the California Public Employees’ Retirement Law requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. Funding contributions for the Plan are determined annually on an actuarial basis as of June 30 by CalPERS. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The District is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. 2015 2016 2017 Contractually Required Contributions (Actuarially Determined) $1,461,069 $1,358,520 $1,514,352 Contributions in Relation to Actuarially Determined Contributions 1,461,069 1,350,520 1,514,352 Contribution Deficiency (Excess) –– – Covered Employee Payroll $8,994,979 $9,862,578 $11,834,150 Contributions as a Percentage of Covered Payroll 16.24% 13.77% 12.80% Notes to Schedule: Valuation Date: June 30, 2015 Assumptions Used: Entry Age Method used for Actuarial Cost Method Level Percentage of Payroll (Closed) Used Amortization Method 3.7 Years Remaining Amortization Period Inflation Assumed at 2.75% Investment Rate of Returns set at 7.5% CalPERS mortality table using 20 years of membership data for all funds _____________ ** Fiscal year 2015 was the first year of implementation, therefore only three years are shown. Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions. As of June 30, 2017, the District reported net pension liabilities for its proportionate shares of the net pension liability of the Plan as follows: Proportionate Share of Net Pension Liability Miscellaneous Plan $10,121,906 The District’s net pension liability for the Plan is measured as the proportionate share of the net pension liability. The net pension liability of the Plan is measured as of June 30, 2016, and the total pension liability for the Plan used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2015 using standard procedures. The District’s proportion of the net pension liability was based on a projection of the District’s long-term share of contributions in to the pension plan relative to the projected contributions of all participating employers, as actuarially determined. The District’s proportionate share of net pension liability for the Plan as of June 30, 2015, 2016, and 2017 was as follows: 2015 2016 2017 Proportion of Net Pension Liability 0.39847% 0.41627% 0.29137% Proportionate Share of Net Pension Liability $9,848,203 $11,420,126 $10,121,906 Covered Employee Payroll $8,994,979 $9,862,578 $11,834,150 Proportionate Share of NPL as a % of Covered Employee Payroll 109.49% 115.79% 85.53% Plan’s Fiduciary Net Pension as a % of the TPL 76.19% 73.93% 80.93% _____________ ** Fiscal year 2015 was the first year of implementation, therefore only three years are shown. Attachment 2 A-15 Actuarial Assumptions. The total pension liabilities in the June 30, 2016 actuarial evaluations were determined using the following actuarial assumptions: Valuation Date June 30, 2015 Measurement Date June 30, 2016 Actuarial Cost Method Entry-Age Normal Cost Method Actuarial Assumptions: Discount Rate 7.65% Inflation 2.75% Payroll Growth 3.00% Projected Salary Increase (1) Investment Rate of Return 7.5%(2) Mortality (3) ___________ (1) Varies by age and service. (2) Net of pension plan investments expenses, including inflation. (3) Derived using CalPERS’ membership data for all funds. Discount Rate. The discount rate used to measure the total pension liability was 7.65% for the Plan. To determine whether the municipal bond rate should be used in the calculation of a discount rate for the Plan, CalPERS stress tested plans that would most likely result in a discount rate that would be different from the actuarially assumed discount rate. Based on the testing, none of the tested plans run out of assets. Therefore, the current 7.65% discount rate is adequate and the use of the municipal bond rate calculation is not necessary. The long term expected discount rate of 7.65% 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. CalPERS was scheduled to review all actuarial assumptions as part of its regular Asset Liability Management (ALM) review cycle that was scheduled to be completed in February 2018. Any changes to the discount rate will require Board action and proper stakeholder outreach. For these reasons, CalPERS expects to continue using a discount rate net of administrative expenses for GASB 67 and 68 calculations through at least the 2017-18 Fiscal Year. CalPERS will continue to check the materiality of the difference in calculation until such time as they have changed their methodology. The long-term expected rate of return n pension plan investments was determined using a building-block method in which best-estimate ranges of expected future rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. For additional information regarding the major asset classes see APPENDIX B–“ANNUAL FINANCIAL REPORT FOR FISCAL YEAR ENDED JUNE 30, 2017–Note 8– EMPLOYEE RETIREMENT SYSTEMS–Discount Rate.” On December 21, 2016, the CalPERS Board lowered the discount rate from 7.50% to 7.00% using a three-year phase-in beginning with the June 30, 2016 actuarial valuations. The minimum employer contributions for Fiscal Year 2018-19 determined in this valuation were calculated using a discount rate of 7.375%. The projected employer contributions are calculated assuming that the discount rate will be lowered to 7.25% for Fiscal Year 2019-20 and to 7.00% for Fiscal Year 2020-21 as adopted by the CalPERS Board. The decision to reduce the discount rate was primarily based on reduced capital market assumptions provided by external investment consultants and CalPERS investment staff. The specific decision adopted by the CalPERS Board reflected recommendations from CalPERS staff and additional input from employer and employee stakeholder groups. Based on the investment allocation adopted by the CalPERS Board and capital market assumptions, the reduced discount rate assumption provides a more realistic assumption for the long term investment return of the fund. Attachment 2 A-16 Notwithstanding the decision of the CalPERS Board to phase into a 7.0% discount rate, subsequent analysis of the expected investment return of CalPERS assets or changes to the investment allocation may result in a change to this three year discount rate schedule. A comprehensive analysis of all actuarial assumptions and methods including the discount rate is being conducted. Sensitivity of Proportionate Share of Net Pension Liability to Changes in the Discount Rate. The following presents the District’s proportionate share of the net pension liability for the Plan, calculated using the discount rate for the Plan, as well as what the District’s proportionate share of net pension liability would be if it were calculated using a discount rate that is 1-percentage point lower or 1-percentage point higher than the current rate: Miscellaneous 1% Decrease 6.65% Net Pension Liability $17,266,599 Current Discount Rate 7.65% Net Pension Liability $10,121,906 1% Increase 8.65% Net Pension Liability $4,217,172 In June 2016, the District made a $3 million prepayment to CalPERS, to be applied to reduce its unfunded pension liability, and in June 2017, the District made an additional $1 million prepayment to CalPERS. Pension Reform Act of 2013 (Assembly Bill 340). On September 12, 2012, the Governor of the State signed AB 340, a bill that enacted the California Public Employees’ Pension Reform Act of 2013 (“PEPRA”) and that also amended various sections of the California Education and Government Codes, including the County Employees Retirement Law of 1937. AB 340 (i) increased the retirement age for new State, school, and city and local agency employees depending on job function, (ii) capped the annual CALPERS pension benefit payout, (iii) addressed numerous abuses of the system, and (iv) required State, school, and certain city and local agency employees to pay at least half of the costs of their CalPERS pension benefits. PEPRA applies to all public employers except the University of California, charter cities and charter counties (except to the extent they contract with CalPERS.) The provisions of AB 340 became effective on January 1, 2013 with respect to State employees hired on that date and after; local government employee associations, including employee associations of the District, have a five-year window to negotiate compliance with AB 340 through collective bargaining. If no deal is reached by January 1, 2018, a city, public agency or school district could force employees to pay their half of the costs of CalPERS pension benefits, up to 8% of pay for civil workers and 11% or 12% for public safety workers. CalPERS predicts that the impact of AB 340 on employers, including the District, and employees will vary, based on each employer’s current level of benefits. To the extent that the new formulas lower retirement benefits, employer contribution rates could decrease over time as current employees retire and employees subject to the new formulas make up a larger percentage of the workforce. This change would, in some circumstances, result in a lower retirement benefit for employees than they currently earn. Additionally, CalPERS notes that changes arising from AB 340 could ultimately have an adverse impact on public sector recruitment in areas that have historically experienced recruitment challenges due to higher pay for similar jobs in the private sector. Attachment 2 A-17 More information about AB 340 can be accessed through CalPERS’s website at www.calpers.ca.gov. The reference to this internet website is shown for reference and convenience only; the information contained within the website may not be current and has not been reviewed by the District and is not incorporated herein by reference. The District is unable to predict what the amount of CalPERS liabilities will be in the future or the amount of the CalPERS contributions which the District may be required to make, all as a result of the implementation of AB 340, and as a result of negotiations with its labor organization. Other Post-Employment Retirement Benefits The District joined the California Employers’ Retiree Benefit Trust (“CERBT”), an agent multiple- employer plan administered by CalPERS, consisting of an aggregation of single-employer plans. The Board of Directors authorized a deposit of $1,900,000 in CERBT on June 5, 2008, to begin funding its other post- employment benefits (“OPEB”) liability. By Board of Directors resolution and through agreements with its labor unit, the District provides certain health care benefits for retired employees (spouse and dependents are not included) under third- party insurance plans. A summary of eligibility and retiree contribution requirements are shown below: Eligibility Retire directly from the District under CalPERS (age 50 and 5 years of service) Continue participation in Public Employees Medical and Hospital Care Act (PEMHCA) Retiree Medical Benefit District pays retiree premiums up to: =>$300/month effective 1/1/07 =>$350/month effective 1/1/09 Must be at least equal to statutory PEMHCA minimum ($122 in 2015, $125 in 2016) PEMHCA Administrative Fee District pays CalPERS administrative fees (0.32% of premiums for Fiscal Year 2015-16) Surviving Spouse Continuation Retiree benefit continues to surviving spouse if retiree elects survivor annuity under CalPERS retirement plan Other OPEB None As of June 30, 2017, there were 134 active employees, 48 transferred employees, 62 separated employees, and 62 retirees, who are eligible to receive retirement health care benefits. Funding Policy. In accordance with the District’s budget, the Annual Required Contribution (“ARC”) is to be funded throughout the year as a percentage of payroll. Concurrent with implementing GASB Statement No. 45, the Board of Directors passed a resolution to participate in CERBT, an irrevocable trust established to fund OPEB. CERBT is managed by an appointed board not under the control of the District and is excluded from its financial statements. CERBT is not considered a component unit by the District. Separately issued financial statements for CERBT may be obtained from CalPERS at P.O. Box 942709, Sacramento, California 94229-2709. Annual OPEB Cost and Net OPEB Assets. The District’s annual OPEB cost is calculated based on the ARC, an amount actuarially determined in accordance with the parameters of GASB Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each period and amortize any unfunded actuarial liabilities (or funding excess) over a period not to Attachment 2 A-18 exceed 30 years. The following table shows the components of the District’s annual OPEB cost for the period, the amount actually contributed to the plan, and changes in the District’s net OPEB obligation: Description Balance Annual Required Contribution $572,000 Interest on net OPEB asset (43,000) Adjustment to Annual Required Contribution 62,000 Annual OPEB cost (expense) 591,000 Contributions made 298,008 Decrease in net OPEB asset 292,992 Net OPEB obligation (asset)–beginning (699,015) Net OPEB obligation (asset)–ending ($406,023) The District’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2017 was as follows: Annual OPEB Percentage Net Period Ended Cost Contributed OPEB Obligation (Asset) March 31, 2015 $298,000 53% (863,176) June 30, 2016 386,000 57 (699,015) June 30, 2017 591,000 50 (406,023) ______________ Sources: Midpeninsula Regional Open Space District Annual Financial Report for the year ended June 30, 2017. The District made its budgeted Fiscal Year 2016-17 OPEB contribution of $150,000 in June 2017. Funded Status and Funding Progress. The most recent actuarial valuation date was June 30, 2015. The following summarizes the funded status of the plan as of June 30, 2017: Description Balance Actuarial accrued liability (AAL) $5,119,000 Value of plan assets 3,262,927 Unfunded actuarial accrued liability (UAAL) $1,856,073 Funded ratio (actuarial value of plan assets/AAL) 64% Projected covered payroll (active Plan members) $9,789,000 UAAL as a percentage of covered payroll 19% The District has budgeted a $250,000 OPEB contribution for Fiscal Year 2017-18 to reduce the UAAL in addition to making all benefit payments from the general fund. Attachment 2 A-19 The table below is a summary schedule of the funding progress for the District’s OPEB plan as stated in each actuarial study. The actuarial studies are based on assumptions and data available at the time each study was completed. The actual funding progress of the plan as noted above may be different than the projections included in the actuarial studies. Actuarial Valuation Actuarial Value of Assets Actuarial Accrued Liability (AAL) Entry Age Unfunded AAL (UAAL) Funded Ratio Covered Payroll UAAL as a Percentage of Covered Payroll Date (a) (b) (b-a) (a/b) (c) ((b-a/c)) 6/30/2011 $2,058,000 $1,844,000 $214,000 111.61% $7,331,000 (2.92)% 6/30/2013 2,035,000 2,555,000 520,000 79.65 8,043,000 6.47 6/30/2015 2,520,000 4,612,000 2,092,000 54.64 9,182,000 22.78 Actuarial Methods and Assumptions. The ARC was determined as part of the actuarial valuation using the entry age normal actuarial cost method. This is a projected benefit cost method, which takes into account those benefits that are expected to be earned in the future as well as those already accrued. The actuarial assumptions included: (i) 6.04% to 7.25% investment rate of return, (ii) 3.25% projected annual salary increase, and (iii) health inflation increases of 0% for one year, 1.5% for the next five years, and 3% thereafter. The actuarial methods and assumptions used include techniques that smooth the effects of short- term volatility in actuarial accrued liabilities and the actuarial value of assets. Actuarial calculations reflect a long-term perspective and actuarial valuations involve estimates of the value of reported amounts and assumptions about the probability of events far into the future. Actuarially determined amounts are subject to revision at least bi-annually as results are compared to past expectations and new estimates are made about the future. The District’s OPEB unfunded actuarial accrued liability is being amortized as a level percentage of projected payroll using a 30 year open amortization period. Risk Management Self-Insurance Programs of the CAL JPIA. The District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; injuries to employees; and natural disasters. Prior to July 1, 2002, the District managed and financed these risks by purchasing commercial insurance. On July 1, 2002, the District joined the California Joint Powers Insurance Authority (“CAL JPIA”). CAL JPIA is composed of 119 California public entities and is organized under a joint powers agreement pursuant to California Government Code Section 6500 et seq. The purpose of CAL JPIA is to arrange and administer programs for the pooling of self-insurance losses, to purchase excess insurance or reinsurance, and to arrange for group-purchased insurance for property and other coverages. The CAL JPIA pool began covering claims of its members in 1978. Each member government has an elected official as its representative on the Board of Directors. The Board of Directors operates through a nine-member Executive Committee. During the past three fiscal periods, none of the programs of protection have had settlements or judgments that exceed pooled or insured coverage. There have been no significant reductions in pooled or insured liability coverage from coverage in the prior period. The District is a pool member of the following insurance programs: General and Automobile Liability. Each government member pays a primary deposit to cover estimated losses for a fiscal year (claims year). General liability (“GL”) coverage includes bodily injury, personal injury, or property damage to a third party resulting from a member activity. The GL program also Attachment 2 A-20 provides automobile liability coverage. Six months after the close of a fiscal period, outstanding claims are valued. A retrospective deposit computation is then made for each open claims year. Costs are spread to members as follows: the first $30,000 to $750,000 are pooled based on a member’s share of costs under $30,000; costs in excess of $750,000 are shared by the members based upon each member’s payroll. Costs of covered claims above $5,000,000 are currently paid by reinsurance. The protection for each member is $50,000,000 per occurrence, and $50,000,000 annual aggregate. Worker’s Compensation. The District also participates in the Workers’ Compensation program administered by CAL JPIA. Pool deposits and retrospective adjustments are valued in a manner similar to the GL pool. The District is charged for the first $50,000 of each claim. Costs from $50,000 to $100,000 per claim are pooled based on the member’s losses under its retention level. Costs between $100,000 and $2,000,000 per claim are pooled based on payroll. Costs from $2,000,000 to $5,000,000 are paid by excess insurance purchased by CAL JPIA. The excess insurance coverage provides coverage to statutory limits. Purchased Insurance Environmental. The District participates in the Pollution and Remediation Legal Liability Program, which is available through CAL JPIA. The policy provides coverage for both first and third party damages, including certain types of cleanups; fuel spill or hazardous materials incidents; member listed non-owned disposal sites, above ground and underground storage tanks; and for sudden and gradual pollution at or from property, streets, sanitary sewer trunk lines and storm drain outfalls owned by the District. Coverage is on a claims-made basis. There is a $50,000 deductible. CAL JPIA has a limit of $50,000,000 for the three-year coverage period. The current coverage period is July 1, 2017 through June 30, 2020. Each member of CAL JPIA has a $10,000,000 aggregate limit during the three-year period. Property. The District participates in the All-Risk property program of CAL JPIA which includes all-risk coverage for real and personal property (such as scheduled buildings, office furniture, equipment, vehicles, etc.). This insurance is underwritten by several insurance companies. Property is currently insured according to a schedule of covered property submitted by the District to CAL JPIA. The All-Risk deductible is $5,000 per occurrence; $1,000 for non-emergency vehicles. Premiums for the coverage are paid annually and are not subject to retroactive adjustments. Boiler and Machinery. The District participates in the optional coverage for boiler and machinery, which is purchased separately under the property program. Coverage is for physical damage for sudden and accidental breakdown of boilers and machinery, and electrical injury. There is a $5,000 per accident or occurrence deductible. Crime Insurance. The District participates in the crime program through CAL JPIA in the amount of $1,000,000 per claim, with a $2,500 per occurrence deductible. Insurance provides coverage for employee dishonesty, failure to faithfully perform duties, forgery, counterfeiting, theft, robbery, burglary, and computer fraud. Premiums are paid annually and are not subject to retroactive adjustments. Special Event Tenant User Liability. The District participates in the special events program through CAL JPIA which provides liability insurance when District premises are used for special events. The insurance premium is paid by the tenant user to the District according to a schedule. The District then pays the insurance arranged through CAL JPIA. There is no deductible and the District is added as additional insured. Liability limits are purchased in $1 million per occurrence increments. Vendors/Contractors. General Liability coverage with or without professional liability is offered through CAL JPIA to vendors/contractors who otherwise could not meet the District’s minimum insurance requirement: $1 million per occurrence, $2 million in aggregate. Attachment 2 A-21 Cyber Liability Program. The cyber liability program is partially covered under the liability program, and partially held through a stand-alone coverage program. Cyber liability provides coverage for both first- and third-party claims. First party coverage includes privacy, regulatory claims, security breach response, business income loss, dependent business income loss, digital asset restoration costs, and cyber- extortion threats, while third-party coverage includes privacy liability, network security liability, and multimedia liability. Members work directly with the reinsurer to investigate and respond to claims. There is a $1 million per occurrence limit of coverage, $1 million aggregate limit per policy period per member, and a $10 million aggregate limit of coverage for all members per policy period. ECONOMIC AND DEMOGRAPHIC INFORMATION REGARDING SANTA CLARA AND SAN MATEO COUNTIES Following is economic and demographic information for Santa Clara and San Mateo Counties. While three District parcels are located in Santa Cruz County, these parcels represent an insignificant amount of assessed valuation, so economic and demographic information regarding Santa Cruz County is not included herein. General The Counties of Santa Clara and San Mateo are two of nine counties in the San Francisco- Oakland Bay Area. Santa Clara County. The County of Santa Clara covers an area of over 1,300 square miles and is located south of the San Francisco Bay in northern California. There are two distinct valleys in the County of Santa Clara, which are referred to as North County and South County. South County has more of an agricultural base and is comprised of only two cities, twenty miles apart from each other. As a contrast, North County is densely populated, heavily industrialized and extensively urbanized. This part of the County of Santa Clara is comprised of 13 cities, each adjacent to another. Due to its high concentration of high-technology industries, the northwestern portion of North County is commonly referred to as “Silicon Valley.” Several small lakes and reservoirs are scattered across the County and the highest peak can be found in San José at Mount Hamilton with an elevation of 4,213 feet. Several major highways serve the County of Santa Clara, including Highway 101 providing access to San Francisco and Los Angeles. San Mateo County. The County of San Mateo shares its borders with the City and County of San Francisco to the north, the County of Santa Clara to the south, the Pacific Ocean to the west and San Francisco Bay to the east. The County of San Mateo is a major employment base, accessible to downtown San Francisco approximately 15 miles north, and is also accessible to the San Jose and Silicon Valley areas approximately 30 miles south via Interstate 280 or U.S. Highway 101. The County of San Mateo has an approximate total area of 741 square miles, of which 448 square miles is land and 293 square miles is water. It is the third-smallest county in California by land area. Attachment 2 A-22 Population The tables below show population estimates and projections for the past five years for Santa Clara and San Mateo Counties, according to the State Department of Finance. Table A-4A SANTA CLARA COUNTY AND SAN MATEO COUNTY AND STATE OF CALIFORNIA Population Estimates Calendar Years 2013 Through 2017 as of January 1 Calendar Year Santa Clara County San Mateo County State of California 2013 1,856,416 745,639 38,238,492 2014 1,879,196 752,355 38,572,211 2015 1,903,209 759,609 38,915,880 2016 1,922,619 765,895 39,189,035 2017 1,938,180 770,203 39,523,613 _____________ Source: State Department of Finance, Table 2: E-4 Population Estimates for Cities, Counties, and State, 2011-2017 with 2010 Benchmark. Table A-4B SANTA CLARA COUNTY AND SAN MATEO COUNTY AND STATE OF CALIFORNIA Population Projections by Age Calendar Years 2017 Through 2021 as of January 1 2017 2018 2019 2020 2021 Santa Clara County Under 19 497,872 499,809 501,575 502,116 501,375 20-39 527,530 528,860 530,249 531,507 534,024 40-59 546,926 550,046 552,927 556,011 558,841 60 and over 379,958 395,625 411,511 428,623 445,421 San Mateo County Under 19 177,913 178,693 179,216 179,546 179,578 20-39 192,644 192,050 191,297 190,509 189,952 40-59 226,479 227,033 227,794 228,625 229,251 60 and over 177,938 183,844 189,14 195,665 201,530 State of California Under 19 10,443,769 10,449,286 10,455,219 10,452,951 10,451,946 20-39 10,987,459 11,037,555 11,082,256 11,101,466 11,122,378 40-59 10,303,852 10,297,733 10,300,211 10,315,689 10,340,695 60 and over 7,958,547 8,248,519 8,538,277 8,849,893 9,146,525 _____________ Source: State Department of Finance, Table P-2: County Population Projections by Age, 2010-2060. Attachment 2 A-23 Employment and Industry Santa Clara County. The preliminary unemployment rate (not seasonally adjusted) in the County of Santa Clara was 3.5% June 2017, compared to a revised rate of 4.1% for June 2016. This compares with preliminary unemployment rates for June 2017 of 4.9% for the State and 4.5% for the nation. The table below lists employment by industry group for the County of Santa Clara for the years 2012 through 2016. Table A-5 COUNTY OF SANTA CLARA Annual Average Civilian Labor Force, Employment and Unemployment, Employment by Industry (March 2016 Benchmark) 2012 2013 2014 2015 2016 Civil Labor Force(1) 958,300 971,800 991,800 1,009,800 1,026,500 Employment 883,000 909,100 940,700 967,800 987,900 Unemployment 75,300 62,700 51,100 41,900 38,600 Unemployment Rate(2) 7.9% 6.5% 5.2% 4.2% 3.8% Wage and Salary Employment:(3) Agriculture 3,300 3,300 3,500 3,700 3,900 Mining and Logging 200 300 300 200 300 Construction 34,100 36,700 38,800 42,900 47,600 Manufacturing 153,700 153,600 156,700 160,200 161,300 Wholesale Trade 34,600 36,000 36,900 36,800 37,400 Retail Trade 81,900 82,500 83,900 85,100 85,000 Transportation, Warehousing, Utilities 12,500 13,400 13,900 14,100 14,800 Information 54,100 58,600 65,600 74,400 74,500 Finance and Insurance 20,100 20,500 20,600 21,900 21,300 Real Estate, Rental, Leasing 12,800 12,800 13,200 13,400 13,800 Professional and Business Services 177,200 190,100 201,800 215,200 224,100 Educational and Health Services 135,700 142,600 148,700 155,900 160,600 Leisure and Hospitality 81,300 86,300 90,700 94,500 97,600 Other Services 24,400 25,000 26,000 26,500 27,000 Federal Government 9,700 9,800 9,800 9,800 9,900 State Government 6,200 6,100 6,200 6,500 6,500 Local Government 72,800 73,100 74,600 73,800 74,800 TOTAL ALL INDUSTRIES(4) 914,800 950,700 991,000 1,028,900 1,060,600 ____________ (1) Labor force data is by place of residence; includes self-employed individuals, unpaid family workers, household domestic workers, and workers on strike. (2) The unemployment rate is calculated using unrounded data. (3) Industry employment is by place of work; excludes self-employed individuals, unpaid family workers, household domestic workers, and workers on strike. (4) Data may not add due to rounding. Source: State of California Employment Development Department, Labor Market Division. Attachment 2 A-24 San Mateo County. The preliminary unemployment rate (not seasonally adjusted) in the County of San Mateo was 2.9% June 2017, compared to a revised rate of 3.3% in June 2016. This compares with preliminary unemployment rates for June 2017 of 4.9% for the State and 4.5% for the nation. The table below lists employment by industry group for the County of San Mateo for the calendar years 2012 through 2016. Table A-6 COUNTY OF SAN MATEO Annual Average Civilian Labor Force, Employment and Unemployment, Unemployment by Industry (March 2016 Benchmark) 2012 2013 2014 2015 2016 Civil Labor Force(1) 412,100 418,100 427,700 437,700 448,600 Employment 385,700 396,100 409,700 422,9/0 435,200 Unemployment 26,400 22,000 18,000 14,800 13,400 Unemployment Rate(2) 6.4% 5.3% 4.2% 3.4% 3.0% Wage and Salary Employment:(3) Agriculture 1,600 1,700 1,800 1,800 1,800 Mining, Logging, Construction 13,900 14,600 15,700 17,400 18,100 Manufacturing 24,400 25,500 25,500 25,400 25,400 Wholesale Trade 11,500 11,200 11,600 12,200 12,100 Retail Trade 33,200 34,100 34,900 33,700 33,900 Transportation, Warehousing, Utilities 25,600 27,100 27,800 28,200 30,500 Information 20,900 23,800 26,700 27,900 31,600 Finance and Insurance 13,900 14,300 15,400 14,800 15,400 Real Estate, Rental Leasing 6,200 6,300 6,300 6,800 7,100 Professional and Business Services 69,800 71,200 75,200 76,200 81,700 Educational and Health Services 38,100 40,500 43,000 44,100 45,000 Leisure and Hospitality 36,800 39,400 40,900 42,200 42,600 Other Services 12,900 13,400 13,900 14,000 13,900 Federal Government 3,700 3,600 3,700 3,800 3,800 State Government 600 600 600 600 600 Local Government 26,200 26,200 27,000 27,900 28,900 TOTAL ALL INDUSTRIES(4) 339,000 353,500 369,800 376,900 392,300 ____________ (1) Labor force data is by place of residence; includes self-employed individuals, unpaid family workers, household domestic workers, and workers on strike. (2) The unemployment rate is calculated using unrounded data. (3) Industry employment is by place of work; excludes self-employed individuals, unpaid family workers, household domestic workers, and workers on strike. (4) Data may not add due to rounding. Source: State of California Employment Development Department, Labor Market Division. Attachment 2 A-25 The following tables list the largest manufacturing and non-manufacturing employers within Santa Clara County and San Mateo County as of March 2016 (the most recent annual data available), in alphabetical order. Table A-7 COUNTY OF SANTA CLARA Largest Employers As of March 2016 Employer Name Location Industry Adobe Systems Inc. San Jose Publishers-Computer Software (Mfrs) Advanced Micro Devices Inc. Sunnyvale Semiconductor Devices (Mfrs) Apple Inc. Cupertino Computers-Electronic-Manufacturers Applied Materials Inc. Santa Clara Semiconductor Manufacturing Equipment (Mfrs) Bon Appetit-Cafe Adobe San Jose Restaurant Management California’s Great America Santa Clara Amusement & Theme Parks Christopher Ranch LLC Gilroy Garlic (Mfrs) Cisco Systems Inc. San Jose Computer Peripherals (Mfrs) E Bay Inc. San Jose Auctioneers Flextronics International Milpitas Semiconductor Devices (Mfrs) HP Inc. Palo Alto Computers-Electronic-Manufacturers Intel Corp. Santa Clara Semiconductor Devices (Mfrs) Kaiser Permanente Medical Ctr Sn San Jose Hospitals Kaiser Permanente Medical Ctr San Jose Hospitals Liberty Tax Svc. San Jose Tax Return Preparation and Filing Lockheed Martin Space Systems Sunnyvale Satellite Equipment & Systems-Mfrs Microsoft Corp. Mountain View Computer Software-Manufacturers NASA Mountain View Federal Offices-US Net App Inc. Sunnyvale Computer Storage Devices (Mfrs) Philips Lumileds Lighting Co San Jose Lighting Fixtures-Supplies & Parts-Mfrs Santa Clara Valley Medical Ctr San Jose Hospitals SAP Center San Jose Stadiums Arenas & Athletic Fields Stanford School of Medicine Stanford Schools-Medical Texas Instruments Inc. Santa Clara Semiconductor Devices (Mfrs) VA Medical Ctr-Palo Alto Palo Alto Hospitals _______________ Source: State of California Employment Development Department, extracted from The America’s Labor Market Information System (ALMIS) Employer Database, 2016 2nd Edition. Attachment 2 A-26 Table A-8 COUNTY OF SAN MATEO Major Employers As of March 2016 (Listed Alphabetically) Employer Name Location Industry A R Dental Care Daly City Dentists Electronic Charging Station Menlo Park Research Device Electronic Arts Inc. Redwood City Game Designers (Mfrs) Facebook Inc. Menlo Park Social Media Forced Dump Debris Box Svc Burlingame Garbage Collection Franklin Resources Inc. San Mateo Asset Management Franklin Templeton Investments San Mateo Investments Genentech Inc. South San Francisco Pharmaceutical Products-Wholesale Gilead Sciences Inc. Foster City Biological Products (Mfrs) Guckenheimer Inc. Foster City Marketing Programs & Services Hyatt Regency-San Francisco Burlingame Hotels and Motels Kaiser Permanente Medical Ctr Redwood City Hospitals Kaiser Permanente South Sn South San Francisco Hospitals Lpch Menlo Park Health Care Facilities Motif Inc. San Mateo Business Services NEC Oracle Corp. Redwood City Computer Software-Manufacturers San Francisco Intl Airport-SFO San Francisco Airports San Mateo County Behavior San Mateo Government Offices-County San Mateo Medical Ctr San Mateo Hospitals Sciex LLC Redwood City Scientific Apparatus and Instruments-Mfrs SRI International Inc. Menlo Park Research Service US Interior Dept. Menlo Park Government-Offices US Visa Inc. Foster City Credit Card and Other Credit Plans Visa International Svc Assn Foster City Associations Visa USA Inc. Foster City Credit Card and Other Credit Plans _______________ Source: State of California Employment Development Department, extracted from The America’s Labor Market Information System (ALMIS) Employer Database, 2016 2nd Edition. Personal Income The United States Department of Commerce, Bureau of Economic Analysis (the “BEA”) produces economic account statistics that enable government and business decision-makers, researchers, and the public to follow and understand the performance of the national economy. The BEA defines “personal income” as income received by persons from all sources, including income received from participation in production as well as from government and business transfer payments. Personal income represents the sum of compensation of employees (received), supplements to wages and salaries, proprietors’ income with inventory valuation adjustment and capital consumption adjustment (CCAdj), rental income of persons with CCAdj, personal income receipts on assets, and personal current transfer receipts, less contributions for government social insurance. Per capita personal income is calculated as the personal income divided by the resident population based upon the Census Bureau’s annual midyear population estimates. Attachment 2 A-27 The table below summarizes the total personal income and the per capital personal income for the County of Santa Clara, the County of San Mateo, the State and the United States from 2012 through 2016 (the most recent year for which county data is available. Table A-9 COUNTY OF SANTA CLARA AND COUNTY OF SAN MATEO, STATE OF CALIFORNIA AND UNITED STATES Personal Income (Not Adjusted for Inflation) For Calendar Years 2012 Through 2016 Year and Area Personal Income (millions of dollars) Per Capita Personal Income (dollars) 2016 Santa Clara County $170,673 $88,920 San Mateo County 80,855 105,721 State 2,212,691 56,374 United States 15,912,777 49,246 2015 Santa Clara County 158,729 82,756 San Mateo County 74,641 97,553 State 2,103,669 53,741 United States 15,463,981 48,112 2014 Santa Clara County 141,874 74,883 San Mateo County 68,015 89,659 State 1,939,528 49,985 United States 14,683,147 46,049 2013 Santa Clara County 133,655 71,431 San Mateo County 64,282 85,653 State 1,849,505 48,125 United States 14,064,468 44,438 2012 Santa Clara County 131,951 71,670 San Mateo County 63,951 85,798 State 1,812,315 47,614 United States 13,904,485 44,266 ____________________ Source: U.S. Department of Commerce, Bureau of Economic Analysis. Attachment 2 A-28 Construction Activity The following tables provide a summary of residential building permit valuations and nonresidential building permit valuations, and the total number of all building permit valuations in Santa Clara County and San Mateo County during the past five years. Table A-10 COUNTY OF SANTA CLARA Building Permit Valuation - For Calendar Years 2012 through 2016 (Dollars in Thousands)† 2012 2013 2014 2015 2016 New Single-Family $678,168.8 $694,884.6 $594,472.7 $653,970.2 $660,301.6 New Multi-Family 558,544.1 941,420.4 1,196,127.7 706,781.1 564,761.0 Res. Alterations/Additions 288,105.1 423,739.6 439,747.1 505,844.7 484,820.1 TOTAL RESIDENTIAL 1,524,818.0 2,060,044.6 2,230,347.5 1,866,595.9 1,709,882.8 New Commercial 745,468.8 1,217,647.4 898,270.7 1,428,420.1 2,120,530.9 New Industrial 22,481.5 72,222.0 10,172.2 100,301.2 44,268.9 New Other 19,197.3 1,749,161.2 1,534,213.1 1,697,046.2 2,072,862.8 Com Alterations/Additions 1,115,633.3 1,293,656.1 212,756.4 364,033.1 460,496.2 TOTAL NONRESIDENTIAL 1,902,780.9 4,332,686.7 2,655,412.5 3,589,800.5 4,698,158.9 New Dwelling Units Single Family 1,432 1,859 1,602 1,710 1,608 Multiple Family 4,245 6,009 8,310 3,906 3,297 TOTAL 5,677 7,868 9,912 5,616 4,905 ____________ † Columns may not total due to independent rounding. Source: Construction Industry Research Board, Building Permit Summary. Table A-11 COUNTY OF SAN MATEO Building Permit Valuation - For Calendar Years 2012 through 2016 (Valuation in Thousands of Dollars)† 2012 2013 2014 2015 2016 New Single-Family $245,163.9 $292,893.4 $289,903.2 $374,275.5 $660,301.6 New Multi-Family 171,390.4 151,019.5 168,859.4 259,181.0 564,761.0 Res. Alterations/Additions 201,543.1 299,830.5 348,231.1 408,011.2 484,820.1 TOTAL RESIDENTIAL 618,097.4 743,743.4 2,230,347.5 1,041,467.7 1,709,882.8 New Commercial 83,374.0 165,578.7 432,585.4 427,063.6 683,630.1 New Industrial 2,021.6 15,724.2 9,600.0 0 4,954.8 New Other 1,975.6 58,726.5 490,364.5 489,389.7 728,965.3 Com Alterations/Additions 167,438.8 263,460.8 84,241.0 94,031.8 195,895.4 TOTAL NONRESIDENTIAL $254,810.0 $503,490.2 $1,016,790.7 $228,961.0 $1,613,445.6 New Dwelling Units Single Family 264 350 315 521 458 Multiple Family 671 840 1,302 1,386 1,319 TOTAL 935 1,190 1,617 1,907 4,905 ____________ † Columns may not total due to independent rounding. Source: Construction Industry Research Board, Building Permit Summary. Attachment 2 A-29 Commercial Activity The following tables show historic taxable sales within Santa Clara County and San Mateo County for calendar years 2011 through 2015 (the most recent annual data available). Taxable sales for Santa Clara County were $30.676 billion for the first nine months of calendar year 2016 compared to taxable sales of $30.197 billion for the first nine months of calendar year 2015. Taxable sales for San Mateo County were $11.427 billion for the first nine months of calendar year 2016 compared to taxable sales of $11.306 billion for the first nine months of calendar year 2015. Table A-12 COUNTY OF SANTA CLARA Taxable Retail Sales Number of Permits and Valuation of Taxable Transactions (Dollars in Thousands) Calendar Years 2011 through 2015† Retail and Food Services Total All Outlets Number Taxable Number Taxable Year of Permits Transactions of Permits Transactions 2011 27,252 $19,419,542 43,390 $33,431,217 2012 28,109 21,116,708 43,980 36,220,445 2013 29,545 22,424,641 45,274 37,621,606 2014 30,058 23,271,753 45,852 39,628,655 2015† 30,516 23,700,907 50,573 41,231,759 _______________ † Most recent annual data available. Source: California State Board of Equalization, Taxable Sales in California (Sales & Use Tax). Table A-13 COUNTY OF SAN MATEO Taxable Retail Sales Number of Permits and Valuation of Taxable Transactions (Dollars in Thousands) Calendar Years 2011 through 2015† Retail and Food Services Total All Outlets Number Taxable Number Taxable Year of Permits Transactions of Permits Transactions 2011 11,470 $8,536,043 18,995 $13,020,643 2012 11,748 9,277,144 19,189 13,906,978 2013 12,438 9,935,641 19,808 14,611,618 2014 12,673 10,278,717 19,999 15,298,434 2015† 12,992 10,301,197 21,825 15,478,010 _______________ † Most recent data available. Source: California State Board of Equalization, Taxable Sales in California (Sales & Use Tax). Attachment 2 B-1 APPENDIX B ANNUAL FINANCIAL REPORT FOR FISCAL YEAR ENDED JUNE 30, 2017 Attachment 2 C-1 APPENDIX C DISTRICT INVESTMENT POLICY Attachment 2 D-1 APPENDIX D DEFINITIONS AND SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE Attachment 2 E-1 APPENDIX E FORM OF CONTINUING DISCLOSURE CERTIFICATE MIDPENINSULA REGIONAL OPEN SPACE DISTRICT (Counties of Santa Clara, San Mateo and Santa Cruz, California) $__,___,000 GREEN BONDS 2018 REFUNDING SERIES A $__,___,000 PARITY BONDS 2018 SERIES B CONTINUING DISCLOSURE CERTIFICATE This CONTINUING DISCLOSURE CERTIFICATE (this “Disclosure Certificate”) is executed and delivered by the MIDPENINSULA REGIONAL OPEN SPACE DISTRICT (the “District”) in connection with the issuance of the $__,___,000 principal amount of Midpeninsula Regional Open Space District Green Bonds, 2018 Refunding Series A, and the $__,___,000 Midpeninsula Regional Open Space District Parity Bonds, 2018 Series B (together, the “Bonds”). The Bonds are being issued pursuant to an Indenture, dated as of September 1, 2016 (the “Master Indenture”), as amended and supplemented by a First Supplemental dated as of February 1, 2018 (the “First Supplemental Indenture” and together with the Master Indenture, the “Indenture”), between the District and ZB, National Association dba Zions Bank, as Trustee (the “Trustee”). The District covenants and agrees as follows: Section 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the District for the benefit of the holders and beneficial owners of the Bonds and in order to assist the Participating Underwriter in complying with S.E.C. Rule 15c2-12(b)(5). Section 2. Definitions. In addition to the definitions set forth above and in the Indenture, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section 2, the following capitalized terms shall have the following meanings: “Annual Report” means any Annual Report provided by the District pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate. “Business Day” means any day (other than a Saturday or a Sunday) on which banks and the Trustee are open for business. “Annual Report Date” means 210 days after the end of each Fiscal Year. “Disclosure Coordinator” means the District Senior Accountant or other individual designated from time to time by the District Controller, as provided in the District Disclosure Policy. “Dissemination Agent” means, initially, Goodwin Consulting Group, or any successor Dissemination Agent designed in writing by the District and which has been filed with the then current Dissemination Agent a written acceptance of such designation. Attachment 2 E-2 “EMMA” means the Electronic Municipal Marketplace Access site maintained by the MSRB, currently located at http://emma.msrb.org. “Fiscal Year” means any twelve-month period beginning on July 1 in any year and extending to the next succeeding June 30, both dates inclusive, or any other 12-month period selected and designated by the District as its official Fiscal Year period under a Certificate of the District filed with the Trustee. “MSRB” means the Municipal Securities Rulemaking Board, which has been designated by the Securities and Exchange Commission as the sole repository of disclosure information for purposes of the Rule, or any other repository of disclosure information that may be designated by the Securities and Exchange Commission as such for purposes of the Rule in the future. “Official Statement” means the final official statement executed by the District in connection with the issuance of the Bonds. “Participating Underwriter” means Morgan Stanley & Co. LLC, the original underwriter of the Bonds required to comply with the Rule in connection with offering of the Bonds. “Rule” means Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as it may be amended from time to time. “Significant Events” means any of the events listed in Section 5(a) of this Disclosure Certificate. Section 3. Provision of Annual Reports. (a) The District shall, or shall cause the Dissemination Agent to, not later than the Annual Report Date, commencing January 26, 2019, provide to the MSRB, in an electronic format as prescribed by the MSRB, an Annual Report for the fiscal year ending June 30, 2018, that is consistent with the requirements of Section 4 of this Disclosure Certificate; provided that the first Annual Report shall consist solely of the Official Statement. Not later than 15 Business Days prior to the Annual Report Date, the District shall provide the Annual Report to the Dissemination Agent (if other than the District). If by 15 Business Days prior to the Annual Report Date the Dissemination Agent (if other than the District) has not received a copy of the Annual Report, the Dissemination Agent shall contact the District to determine if the District is in compliance with the previous sentence. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 4 of this Disclosure Certificate; provided that the audited financial report of the District may be submitted separately from the balance of the Annual Report, and later than the Annual Report Date, if not available by that date. If the District’s Fiscal Year changes, it shall give notice of such change in the same manner as for a Significant Event under Section 5(c). The District shall provide a written certification with each Annual Report furnished to the Dissemination Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished by the District hereunder. (b) If the District does not provide (or cause the Dissemination Agent to provide) an Annual Report by the Annual Report Date, the District shall provide (or cause the Dissemination Agent to provide) to the MSRB, in an electronic format as prescribed by the MSRB, a notice in substantially the form attached as Exhibit A. Attachment 2 E-3 (c) With respect to each Annual Report, the Dissemination Agent shall: (i) determine each year prior to the Annual Report Date the then-applicable rules and electronic format prescribed by the MSRB for the filing of annual continuing disclosure reports; and (ii) if the Dissemination Agent is other than the District, file a report with the District certifying that the Annual Report has been provided pursuant to this Disclosure Certificate, and stating the date it was provided. Section 4. Content of Annual Reports. The District’s Annual Report shall contain or incorporate by reference the following: (a) The District’s audited financial report prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the District’s audited financial report is not available by the Annual Report Date, the Annual Report shall contain unaudited financial report in a format similar to the financial report contained in the final Official Statement, and the audited financial report shall be filed in the same manner as the Annual Report when they become available. (b) Unless otherwise provided in the audited financial report filed on or before the Annual Report Date, financial information and operating data with respect to the District for the preceding Fiscal Year, substantially similar to that provided in the corresponding tables in the Official Statement: (i) A maturity schedule for the outstanding Bonds, and a listing of Bonds redeemed prior to maturity; (ii) Information for the preceding Fiscal Year to update the following tables in the Official Statement: (A) Table 2B–Aggregate General Fund Senior Obligations Debt Service Schedule; (B) Table 3–District General Fund Tax Receipts; (C) Table 4–Historical Annual General Fund Debt Service; and (D) Table 6–Summary of Assessed Valuation. (iii) Changes, if any, in the operation of the Teeter Plan of the County of Santa Clara or the County of San Mateo, and if either County discontinues the Teeter Plan, to the extent available, tax collection delinquencies for such County. (c) In addition to any of the information expressly required to be provided under this Disclosure Certificate, the District shall provide such further material information, if any, as may be necessary to make the specifically required statements, in the light of the circumstances under which they are made, not misleading. (d) Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the District or related public entities, which are Attachment 2 E-4 available to the public on EMMA or filed with the Securities and Exchange Commission. The District shall clearly identify each such other document so included by reference. Section 5. Reporting of Significant Events. (a) Pursuant to the provisions of this Disclosure Certificate, the District shall give, or cause to be given, notice of the occurrence of any of the following Significant Events with respect to the Bonds, no later than ten (10) Business Days after the occurrence of such event: (i) Principal and interest payment delinquencies; (ii) Unscheduled draws on debt service reserves reflecting financial difficulties; (iii) Unscheduled draws on credit enhancements reflecting financial difficulties; (iv) Substitution of credit or liquidity providers, or their failure to perform; (v) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security; (vi) Tender offer; (vii) Defeasances; (viii) Rating Changes; or (ix) Bankruptcy, insolvency, receivership or similar event of the District or other obligated person. Note: This event is considered to occur upon the happening of any of the following: 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 District, 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 plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the District. (b) The District shall give, or cause to be given, notice of the occurrence of any of the following events described in this Section 5(b) with respect to the Bonds, if material, not later than ten (10) business days after the occurrence of the event: (i) Unless described in Section 5(a)(v), adverse tax opinions or 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; (ii) Modifications to rights of security holders, if material; (iii) Bond calls; Attachment 2 E-5 (iv) Release, substitution, or sale of property securing repayment of the Bonds; (v) Non-payment related defaults; (vi) 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 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 (vii) Appointment of a successor or additional trustee or the change of name of a trustee. (c) The District acknowledges that it is required to make a determination whether a Significant Event described in Section 5(b) is material under applicable federal securities laws in order to determine if a filing with EMMA is required. If the District determines that the occurrence of an event listed in Section 5(b) would be material under applicable federal securities laws, or if the District changes its Fiscal Year, the District shall file, or shall cause the Dissemination Agent to file, within ten (10) business days of occurrence, a notice of such event on EMMA. (d) Notwithstanding the foregoing, notice of Significant Events described in Section 5(a)(vii) and Section 5(b)(iii) above need not be given any earlier than the notice (if any) of the underlying event is given to Owners of affected Bonds pursuant to the Indenture. Section 6. Identifying Information for Filings with EMMA. All documents provided to the MSRB under the Disclosure Certificate shall be accompanied by identifying information as prescribed by the MSRB. Section 7. Termination of Reporting Obligation. The obligations of the District under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption, or payment in full of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the District shall give notice of such termination in the same manner as for a Significant Event under Section 5(c). Section 8. Dissemination Agent. The District may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any Dissemination Agent, with or without appointing a successor Dissemination Agent. Any Dissemination Agent may resign by providing thirty (30) days written notice to the District. The initial dissemination agent shall be Goodwin Consulting Group. Section 9. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the District may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may 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), it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature, or status of an obligated person with respect to the Bonds, or type of business conducted; (b) The undertakings herein, as proposed to be amended or waived, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the Attachment 2 E-6 primary offering of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and (c) The proposed amendment or waiver either (i) is approved by holders of the Bonds in the manner provided in the Indenture for amendments to the Indenture with the consent of holders, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the holders or beneficial owners of the Bonds. If the annual financial information or operating data to be provided in the Annual Report is amended pursuant to the provisions hereof, the first annual financial information filed pursuant hereto containing the amended operating data or financial information shall explain, in narrative form, the reasons for the amendment and the impact of the change in the type of operating data or financial information being provided. If an amendment is made to the undertaking specifying the accounting principles to be followed in preparing financial reports, the annual financial information for the year in which the change is made shall present a comparison between the financial reports or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. The comparison shall include a qualitative discussion of the differences in the accounting principles and the impact of the change in the accounting principles on the presentation of the financial information, in order to provide information to investors to enable them to evaluate the ability of the District to meet its obligations. To the extent reasonably feasible, the comparison shall be quantitative. A notice of any amendment made pursuant to this Section 9 shall be filed in the same manner as for a Significant Event under Section 5(c). Section 10. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the District from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Significant Event, in addition to that which is required by this Disclosure Certificate. If the District chooses to include any information in any Annual Report or notice of occurrence of a Significant Event in addition to that which is specifically required by this Disclosure Certificate, the District shall have no obligation under this Disclosure Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Significant Event. Section 11. Default. If the District fails to comply with any provision of this Disclosure Certificate, the Trustee may, and at the request of the Owners of at least twenty-five percent (25%) in aggregate principal amount of Outstanding Bonds whose Owners are beneficiaries of the Continuing Disclosure Certificate, the Trustee shall (but only to the extent it is indemnified to its satisfaction, including indemnification from and against attorneys’ fees), or any Owner or Beneficial Owner (as that term is defined in the Indenture) may, take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the District to comply with its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an “Event of Default” under the Indenture, and the sole remedy under this Disclosure Certificate in the event of any failure of the District to comply with this Disclosure Certificate shall be an action to compel performance. Section 12. Duties, Immunities and Liabilities of Dissemination Agent. (a) The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and the District agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which they may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorney’s Attachment 2 E-7 fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent’s negligence or willful misconduct. The Dissemination Agent shall have no duty or obligation to review any information provided to it by the District hereunder, and shall not be deemed to be acting in any fiduciary capacity for the District, the Bond Owners or any other party. The obligations of the District under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. (b) The Dissemination Agent shall be paid compensation by the District for its services provided hereunder in accordance with its schedule of fees as amended from time to time, and shall be reimbursed for all expenses, legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder. Section 13. Notices. Any notices or communications to or among any of the parties to this Disclosure Certificate may be given as follows: To the District: Midpeninsula Regional Open Space District 330 Distel Circle Los Altos, CA 94022 Attention: Disclosure Coordinator Telephone: 650-691-1200 To the Dissemination Agent: Goodwin Consulting Group 555 University Avenue, Suite 280 Sacramento, CA 95825 Attention: Victor Irzyk Telephone: 916-561-0890 Email victor@goodwinconsultinggroup.net Section 14. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the District, the Dissemination Agent, the Participating Underwriter and the holders and beneficial owners from time to time of the Bonds, and shall create no rights in any other person or entity. Attachment 2 E-8 Section 15. Counterparts. This Disclosure Certificate may be executed in several counterparts, each of which shall be regarded as an original, and all of which shall constitute one and the same instrument. Date: __________, 2017 MIDPENINSULA REGIONAL OPEN SPACE DISTRICT By General Manager AGREED AND ACCEPTED GOODWIN CONSULTING GROUP, as Dissemination Agent By: Authorized Officer Attachment 2 E-9 EXHIBIT A NOTICE OF FAILURE TO FILE ANNUAL REPORT Name of Issuer: Midpeninsula Regional Open Space District Name of Issue: $__,___,000 Midpeninsula Regional Open Space District Green Bonds, 2017 Refunding Series A $__,___,000 Midpeninsula Regional Open Space District Parity Bonds, 2017 Series B Date of Issuance: _______, 2017 NOTICE IS HEREBY GIVEN that the District has not provided an Annual Report with respect to the above-named Bonds as required by the Continuing Disclosure Certificate dated _______, 2017. The District anticipates that the Annual Report will be filed by _______________. Dated: _____________ DISSEMINATION AGENT: By: Its: Attachment 2 F-1 APPENDIX F FORM OF OPINION OF BOND COUNSEL Attachment 2 G-1 APPENDIX G DTC AND THE BOOK-ENTRY ONLY SYSTEM The following description of the Depository Trust Company (“DTC”), the procedures and record keeping with respect to beneficial ownership interests in the 2017 Series Bonds, payment of principal, interest and other payments on the 2017 Series Bonds to DTC Participants or Beneficial Owners, confirmation and transfer of beneficial ownership interest in the 2017 Series Bonds and other related transactions between DTC, the DTC Participants and the Beneficial Owners is based solely on information provided by DTC. Accordingly, no representations can be made concerning these matters and neither the DTC Participants nor the Beneficial Owners should rely on the foregoing information with respect to such matters, but should instead confirm the same with DTC or the DTC Participants, as the case may be. Neither the District (the “Issuer”) nor the Trustee appointed with respect to the 2017 Series Bonds (the “Trustee”) takes any responsibility for the information contained in this Appendix. No assurances can be given that DTC, DTC Participants or Indirect Participants will distribute to the Beneficial Owners (a) payments of interest, principal or premium, if any, with respect to the 2017 Series Bonds, (b) certificates representing ownership interest in or other confirmation or ownership interest in the 2017 Series Bonds, or (c) redemption or other notices sent to DTC or Cede & Co., its nominee, as the registered owner of the 2017 Series Bonds, or that they will so do on a timely basis, or that DTC, DTC Participants or DTC Indirect Participants will act in the manner described in this Appendix. The current “Rules” applicable to DTC are on file with the Securities and Exchange Commission and the current “Procedures” of DTC to be followed in dealing with DTC Participants are on file with DTC. 1. The Depository Trust Company (“DTC”), New York, NY, will act as securities depository for the 2017 Series Bonds. The 2017 Series 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 certificate will be issued for the 2017 Series Bonds, in the aggregate principal amount of such issue, and will be deposited with DTC. 2. DTC, the world’s largest 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, corporate and municipal debt issues, and money market instrument from over 100 countries that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC, in turn, is owned by a number of Direct Participants of DTC and Members of the National Securities Clearing Corporation, Fixed Income Clearing Corporation, and Emerging Markets Clearing Corporation (NSCC, FICC, and EMCC, also subsidiaries of DTCC), as well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National Association of Securities Dealers, Inc. 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 Attachment 2 G-2 Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com. 3. Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the 2017 Series Bonds on DTC’s records. The ownership interest of each actual purchaser of each 2017 Series 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 2017 Series 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 2017 Series Bonds is discontinued. 4. To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co. or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the 2017 Series Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. 5. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain steps to augment transmission to them of notices of significant events with respect to the 2017 Series Bonds, such as redemptions, tenders, defaults, and proposed amendments to the security documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the 2017 Series Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners, in the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of the notices be provided directly to them. 6. Redemption notices shall be sent to DTC. If less than all of the 2017 Series Bonds within an issue are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. 7. Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or vote with respect to the 2017 Series Bonds unless authorized by a Direct Participant in accordance with DTC’s Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to Issuer 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 2017 Series Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). 8. Principal and interest payments on the 2017 Series Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC, 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 Issuer or Agent on payable date in accordance with their respective holdings shown on DTC’s records. Payments by Attachment 2 G-3 Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC nor its nominee, Agent, or Issuer, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of Issuer or Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. 9. DTC may discontinue providing its services as securities depository with respect to the 2017 Series Bonds at any time by giving reasonable notice to Issuer or Agent. Under such circumstances, in the event that a successor securities depository is not obtained, security certificates are required to be printed and delivered. 10. The Issuer may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, security certificates will be printed and delivered to DTC. 11. The information in this section concerning DTC and DTC’s book-entry system has been obtained from sources that Issuer believes to be reliable, but Issuer takes no responsibility for the accuracy thereof. SF\322023740.1 Attachment 2 Resolutions/2017/R-17-___2018Bonds-ApprovePOS 1 RESOLUTION NO. 17-____ A RESOLUTION OF THE MIDPENINSULA REGIONAL OPEN SPACE DISTRICT APPROVING THE FORM OF AND AUTHORIZING THE EXECUTION AND DELIVERY OF AN OFFICIAL STATEMENT IN CONNECTION WITH THE ISSUANCE OF THE GENERAL OBLIGATION BONDS (GREEN BONDS), SERIES 2018 WHEREAS, pursuant to resolution adopted on November 8, 2017 (the “Authorizing Resolution”), this Board of Directors (the “Board”) of the Midpeninsula Regional Open Space District (the “District”), authorized the issuance and sale of its “Midpeninsula Regional Open Space District (Counties of Santa Clara, San Mateo and Santa Cruz, California) General Obligation Bonds (Green Bonds), Series 2018” (the “Bonds”); WHEREAS, there has been submitted, and is on file with the District Clerk, a proposed form of Official Statement (the “Official Statement”), in preliminary form, and the Board hereby desires to authorize the completion, execution and distribution of such document in connection with the sale of the Bonds; NOW, THEREFORE, BE IT RESOLVED by the Midpeninsula Regional Open Space District, as follows: Section 1. Recitals. The District hereby specifically finds and declares that the actions authorized hereby constitute and are with respect to public affairs of the District and that the statements, findings and determinations of the District set forth above are true and correct. Section 2. Official Statement. The Official Statement relating to the Bonds, in substantially the form on file with the District Clerk, is hereby approved with such changes, additions and corrections as any of General Manager or his written designee, the Controller, or the Chief Financial Officer / Director of Administrative Services, (each an “Authorized Officer”) may hereafter approve, and the underwriter of the Bonds is hereby authorized to distribute copies of such Official Statement in its preliminary form to persons who may be interested in purchasing the Bonds. Any Authorized Officer is hereby authorized to certify to the underwriters, on behalf of the District, that the preliminary form of the Official Statement is deemed final as of its date within the meaning of Rule 15c2-12 promulgated under the Securities Exchange Act of 1934 (the “Rule”) (except for the omission of certain final pricing, rating and related information as permitted by said Rule). Any Authorized Officer is hereby authorized and directed to sign said Official Statement in its final form, including the final pricing information, and such execution and delivery shall constitute conclusive evidence of the approval by the District of any changes or revisions to the Official Statement from the form submitted herewith. The underwriter is hereby authorized and directed to deliver copies of such Official Statement in final form to the purchasers of the Bonds. Section 3. Approval of Further Actions. Any Authorized Officer is hereby authorized and directed, jointly and severally, to execute and deliver any and all certificates and representations concerning the contents of the Official Statement, which any of them deem necessary or desirable. Attachment 3 Resolutions/2017/R-17-___2018Bonds-ApprovePOS 2 Section 4. Effective Date: This Resolution shall take effect from and after its date of adoption. * * * * * * * * * * * * * * * * * * * * PASSED AND ADOPTED by the Board of Directors of the Midpeninsula Regional Open Space District on _____, 2017, at a regular meeting thereof, by the following vote: AYES: NOES: ABSTAIN: ABSENT: ATTEST: APPROVED: Secretary Board of Directors President Board of Directors APPROVED AS TO FORM: General Counsel I, the District Clerk of the Midpeninsula Regional Open Space District, hereby certify that the above is a true and correct copy of a resolution duly adopted by the Board of Directors of the Midpeninsula Regional Open Space District by the above vote at a meeting thereof duly held and called on the above day. District Clerk Attachment 3 Resolutions/2017/R-17-___2018Bonds-ApprovePOS 3 CLERK’S CERTIFICATE I, Jennifer Woodworth, District Clerk of the Board of the Midpeninsula Regional Open Space District, hereby certify as follows: The foregoing is a full, true and correct copy of a resolution duly adopted at a regular meeting of the Board of Directors of said District duly and regularly held at the regular meeting place thereof on the 6th day of December, 2017, of which meeting all of the members of said Board had due notice and at which a majority thereof were present; and at said meeting said resolution was adopted by the following vote: AYES: NOES: ABSTAIN: ABSENT: An agenda of said meeting was posted at least 72 hours before said meeting at 330 Distel Circle, Los Altos, California, a location freely accessible to members of the public, and a brief general description of said resolution appeared on said agenda. I have carefully compared the same with the original minutes of said meeting on file and of record in my office; the foregoing resolution is a full, true and correct copy of the original resolution adopted at said meeting and entered in said minutes; and 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. WITNESS my hand and the seal of the Midpeninsula Regional Open Space District this day of December, 2017. ________________________________________ District Clerk Attachment 3 SH DRAFT #3 11/30/2017 PRELIMINARY OFFICIAL STATEMENT DATED _____________, 2017 NEW ISSUE — BOOK-ENTRY ONLY RATINGS: Fitch: “___” S&P: “___” (See “RATINGS”) In the opinion of Orrick, Herrington & 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 2018 Green Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 and is exempt from State of California personal income taxes. In the further opinion of Bond Counsel, interest on the 2018 Green 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 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 2018 Green Bonds. See “TAX MATTERS.” [District Logo] $__,___,000* MIDPENINSULA REGIONAL OPEN SPACE DISTRICT (Counties of Santa Clara, San Mateo and Santa Cruz, California) GENERAL OBLIGATION BONDS (GREEN BONDS), SERIES 2018 Dated: Date of Delivery Due: September 1, see inside cover Authorization; Purpose. The Midpeninsula Regional Open Space District (the “District”) is issuing $__,___,000* principal amount of its General Obligation Bonds (Green Bonds), Series 2018 (the “2018 Green Bonds”). The 2018 Green Bonds were approved by more than two-thirds of the qualified voters of the District at a special bond election duly and regularly held on June 3, 2014, which authorized the issuance of up to $300,000,000 principal amount of general obligation bonds to finance 25 key projects authorized by the voters (“Measure AA”); and by Resolution No. ______ adopted by a majority of the Board of Directors on _______, 2017. The 2018 Green Bonds are issued pursuant to: (i) the Constitution and laws of the State of California (the “State”), including the provisions of Article 3 (commencing with Section 5500) of Chapter 3 of Division 5 of the Public Resources Code and Article 4.5, commencing with Section 53506, of Chapter 3 of Part 1 of Division 2 of Title 5 of the Government Code of the State (the “Act”); and (ii) a Fiscal Agent Agreement, dated as of _______ 1, 2018 (the “Fiscal Agent Agreement”), between the District and ZB, National Association dba Zions Bank, as fiscal agent (the “Fiscal Agent”). The 2018 Green Bonds are being issued by the District to: (i) further finance the 25 key projects specified in Measure AA; and (ii) pay certain costs associated with the issuance of the 2018 Green Bonds. See “THE 2018 GREEN BONDS–Authority for Issuance; Purpose.” Security and Source of Payment. The 2018 Green Bonds are general obligations of the District, payable solely from ad valorem property taxes levied in the District and collected in the County of Santa Clara, the County of San Mateo, and the County of Santa Cruz (collectively, the “Counties”) upon all property subject to taxation and allocated to the District. The Board of Supervisors within each County is Attachment 4 empowered and obligated to annually levy ad valorem taxes for the payment of interest on, and principal of, the 2018 Green Bonds upon all property subject to taxation by the District, without limitation of rate or amount (except certain personal property which is taxable at limited rates). The District has [$44,225,000] aggregate principal amount of General Obligation Bonds, Series 2015 (the “2015 Bonds”) outstanding under Measure AA. The 2018 Green Bonds, the 2015 Bonds, and all future series of general obligation bonds under Measure AA are payable from ad valorem taxes levied on parcels in the District. See “SECURITY AND SOURCE OF PAYMENT FOR THE 2018 GREEN BONDS” and “AD VALOREM PROPERTY TAXATION WITHIN THE DISTRICT.” No Reserve Fund will be established for the 2108 Green Bonds. Book-Entry Only. The 2018 Green Bonds will be issued in book-entry only form, initially registered in the name of Cede & Co., as nominee of The Depository Trust Company (“DTC”), New York, New York. Individual purchases of the 2018 Green Bonds will be made in principal amounts of $5,000 and integral multiples thereof under the book-entry only system maintained by DTC. Purchasers of the 2018 Green Bonds will not receive physical certificates representing their interests in the 2018 Green Bonds. So long as DTC, or its nominee for disbursement to DTC Participants, is the registered owner of the 2018 Green Bonds, payments of principal of and interest on the 2018 Green Bonds will be made by the Trustee directly to DTC or its nominee, which will in turn remit such payments to the DTC participants for disbursement to the beneficial owners of the 2018 Green Bonds. See APPENDIX G–“DTC AND THE BOOK- ENTRY ONLY SYSTEM.” Payments. Interest on the 2018 Green Bonds is payable on March 1 and September 1, of each year, commencing _______ 1, 2018. Principal on the 2018 Green Bonds is payable on September 1 in the amounts and in the years set forth on the inside cover. Payments of principal and interest on the 2018 Green Bonds will be paid by the Trustee to DTC for subsequent disbursement to DTC Participants, which will remit such payments to the Beneficial Owners of the 2018 Green Bonds. See “THE 2018 GREEN BONDS– Payment of Principal and Interest” and APPENDIX G–“DTC AND THE BOOK-ENTRY ONLY SYSTEM.” Redemption. The 2018 Green Bonds are subject to redemption prior to their stated maturities. See “THE 2018 GREEN BONDS–Redemption Provisions.” Maturity Schedule. See inside cover. Investor Considerations. This cover page contains information for general reference only. It is not a summary of the security or terms of this issue. Investors must read the entire Official Statement for a discussion of special factors which should be considered, in addition to the other matters set forth in this Official Statement, in considering the investment quality of the 2018 Green Bonds. Legal Matters. The 2018 Green Bonds are offered when, as and if sold and issued, and accepted by the Underwriter, subject to the approval as to their validity by Orrick, Herrington & Sutcliffe LLP, San Francisco, California, Bond Counsel to the District. Certain legal matters will be passed upon for the District by its General Counsel and by Schiff Hardin LLP, San Francisco, California, Disclosure Counsel. Hawkins Delafield & Wood LLP, San Francisco, California is serving as counsel to the Underwriter. Attachment 4 Delivery. It is anticipated that the 2017 Green Bonds in book-entry form, will be available for delivery through the facilities of DTC in New York, New York, on or about January __, 2018. Morgan Stanley Dated: _______, 2018. ______________ * Preliminary, subject to change. Attachment 4 MATURITY SCHEDULE (Base CUSIP†: ________) $__,__,000* MIDPENINSULA REGIONAL OPEN SPACE DISTRICT (Counties of Santa Clara, San Mateo and Santa Cruz, California) GENERAL OBLIGATION BONDS (GREEN BONDS), SERIES 2018 Maturity Date Principal Interest (September 1) Amount Rate Yield Price CUSIP No.† _____________ * Preliminary, subject to change. † Copyright © 2018 CUSIP Global Services. CUSIP is a registered trademark of the American Bankers Association. CUSIP data are provided by CUSIP Global Services, managed on behalf of the American Bankers Association by S&P Global Market Intelligence, and are provided for convenience of reference only. Neither the District nor the Underwriter assumes any responsibility for the accuracy of these CUSIP data. This data is not intended to create a database and does not serve in any way as a substitute for the CUSIP Service. The CUSIP number for a specific maturity is subject to being changed after the issuance of the 2018 Green Bonds as a result of various subsequent actions including, but not limited to, a refunding in whole or in part of such maturity. Attachment 4 i GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT No Offering May Be Made Except by this Official Statement. No broker, dealer, salesperson or other person has been authorized to give any information or to make any representations with respect to the 2018 Green Bonds other than as contained in this Official Statement, and if given or made, such other information or representation must not be relied upon as having been authorized. 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. No Unlawful Offers or Solicitations. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy in any state in which such offer or solicitation is not authorized or in which the person making such offer or solicitation is not qualified to do so or to any person to whom it is unlawful to make such offer or solicitation. Effective Date. This Official Statement speaks only as of its date, and the information and expressions of opinion contained in this Official Statement are subject to change without notice. Neither the delivery of this Official Statement nor any sale of the 2018 Green Bonds will, under any circumstances, create any implication that there has been no change in the affairs of the District or any other parties described in this Official Statement. Use of this Official Statement. This Official Statement is submitted in connection with the sale of the 2018 Green Bonds referred to herein and may not be reproduced or used, in whole or in part, for any other purpose. This Official Statement is not a contract with the purchasers of the 2018 Green Bonds. Preparation of this Official Statement. The information contained in this Official Statement has been obtained from sources that are believed to be reliable, but this information is not guaranteed as to accuracy or completeness. Document References and Summaries. All references to and summaries of the Fiscal Agent Agreement or other documents contained in this Official Statement are subject to the provisions of those documents and do not purport to be complete statements of those documents. Bonds are Exempt from Securities Laws Registration. The issuance and sale of the 2018 Green Bonds have not been registered under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, in reliance upon exemptions for the issuance and sale of municipal securities provided under Section 3(a)(2) of the Securities Act of 1933 and Section 3(a)(12) of the Securities Exchange Act of 1934. Stabilization of Prices. In connection with this offering, the Underwriter may overallot or effect transactions which stabilize or maintain the market price of the 2018 Green 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 Underwriter may offer and sell the 2018 Green Bonds to certain dealers and others at prices lower than the public offering prices set forth on the cover page hereof and said public offering prices may be changed from time to time by the Underwriter. Forward-Looking Statements. Certain statements contained in this Official Statement reflect not historical facts but forecasts and “forward-looking statements.” In this respect, the words “estimate,” “project,” “anticipate,” expect,” “intend,” “believe,” “plan,” “budget,” and similar expressions are intended to identify forward-looking statements. Projections, forecasts, assumptions, expressions of opinions, estimates and other forward statements are not to be construed as representations of fact and are qualified in their entirety by the cautionary statements set forth in this Official Statement. The achievement of certain results or other expectations contained in such forward-looking statements involve known and unknown risks, uncertainties and other factors that 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. The District does not plan to issue any updates or revisions to those forward-looking statements if or when events, conditions or circumstances on which such statements are based occur or do not occur. District Website. The District maintains a website. References to website addresses presented in this Official Statement are for information purposes only and are solely for the convenience of the reader. The information presented on any website is not a part of this Official Statement are not incorporated into, and are not a part of, this Official Statement, and should not be relied upon in making an investment decision with respect to the 2018 Green Bonds. Attachment 4 ii Regional Map [To Come] Attachment 4 iii Regional Map [To Come] Attachment 4 iv MIDPENINSULA REGIONAL OPEN SPACE DISTRICT DISTRICT BOARD OF DIRECTORS Pete Siemens, Ward 1, Board Secretary Yoriko Kishimoto, Ward 2, Board Member Jed Cyr, Ward 3, Board Treasurer Curt Riffle, Ward 4, Board Vice President Nonette Hanko, Ward 5, Board Member Larry Hassett, Ward 6, Board President Cecily Harris, Ward 7, Board Member DISTRICT STAFF Stephen E. Abbors, General Manager(1) Ana Ruiz, Assistant General Manager(2) Michael L. Foster, Controller Sheryl Schaffner, Esq., General Counsel(1) Hilary W. Stevenson, Esq., Assistant General Counsel(3) Stefan Jaskulak, Chief Financial Officer/Director of Administrative Services Christine Butterfield, Acting Assistant General Manager PROFESSIONAL SERVICES Orrick, Herrington & Sutcliffe LLP San Francisco, California Bond Counsel Schiff Hardin LLP San Francisco, California Disclosure Counsel Backstrom McCarley Berry & Co., LLC San Francisco, California Financial Advisor ZB, National Association dba Zions Bank Los Angeles, California Fiscal Agent _____________ (1) This member of the District staff will retire effective December 29, 2017. See APPENDIX A–“DISTRICT GENERAL, FINANCIAL, AND OPERATING INFORMATION; AND ECONOMIC AND DEMOGRAPHIC INFORMATION REGARDING SANTA CLARA AND SAN MATEO COUNTIES–DISTRICT GENERAL INFORMATION–Administration.” (2) On December 30, 2017, Ms. Ruiz will be the Acting General Manager of the District. (3) On December 30, 2017, Ms. Stevenson will be the Acting General Counsel of the District. Attachment 4 v TABLE OF CONTENTS Page Page INTRODUCTION ............................................. 1 General ........................................................ 1 The District .................................................. 1 Authority for Issuance; Purpose .................. 2 Security for the Green Bonds ...................... 2 Redemption ................................................. 2 Other Outstanding Debt ............................... 3 Continuing Disclosure ................................. 3 Summaries Not Definitive ........................... 3 THE DISTRICT ................................................. 3 ESTIMATED SOURCES AND USES OF FUNDS.............................................. 4 THE 2018 GREEN BONDS .............................. 4 Authority for Issuance; Purpose .................. 4 Designation of 2018 Green Bonds as Green Bonds ............................................. 4 Payment of Principal and Interest ................ 5 Redemption of 2018 Green Bonds .............. 6 Redemption Procedures ............................... 7 Defeasance ................................................... 8 Investment of Bond Proceeds ...................... 8 DEBT SERVICE SCHEDULES ....................... 8 SECURITY AND SOURCE OF PAYMENT FOR THE 2018 GREEN BONDS .............................................. 11 General ...................................................... 11 Debt Service Fund and Bond Service Fund ....................................................... 11 No Debt Service Reserve Fund ................. 12 Ad Valorem Property Taxation Within The District ............................................ 12 Allocation of Property Taxes ..................... 12 Dissolution of Redevelopment Agencies .. 12 Assessed Valuations .................................. 13 Taxation of State-Assessed Utility Property .................................................. 14 Assessed Valuation by Land Use .............. 15 Assessed Valuation of Single-Family Residential Properties ............................ 16 Largest Secured Property Taxpayers in District ................................................... 17 Tax Rate Areas .......................................... 18 Appeals of Assessed Value ....................... 19 Property Tax Collections ........................... 20 Direct and Overlapping Debt Obligations ............................................. 21 CONSTITUTIONAL AND STATUTORY LIMITATIONS ON DISTRICT TAX REVENUES AND APPROPRIATIONS ....................................... 23 Article XIII A of the State Constitution .... 23 Article XIII B of the State Constitution .... 23 Article XIII C and XIII D of the State Constitution ............................................ 24 Proposition 1A; Proposition 22 ................. 25 Unitary Property ........................................ 25 Future Initiatives ....................................... 26 TAX MATTERS ............................................. 26 CONTINUING DISCLOSURE ....................... 28 General ...................................................... 28 Past Instances of Non-Disclosure .............. 28 UNDERWRITING .......................................... 29 LEGAL MATTERS ........................................ 29 FINANCIAL ADVISOR ................................. 30 NO MATERIAL LITIGATION ...................... 30 POST-ISSUANCE COMPLIANCE WITH FEDERAL TAX LAW .................................... 30 RATINGS ........................................................ 30 FINANCIAL REPORTS ................................. 31 MISCELLANEOUS ........................................ 32 Attachment 4 vi MAPS AND TABLES Regional Map .............................................................................................................................................. ii Table 1 - Estimated Sources and Uses of Funds .................................................................................. 4 Table 2A - Bonds Debt Service Schedule .............................................................................................. 9 Table 2B - Aggregate General Obligation Bonds Debt Service Schedule ........................................... 10 Table 3 - Summary of Assessed Valuation ........................................................................................ 14 Table 4 - 2015-16 Assessed Valuation and Parcels by Land Use ...................................................... 15 Table 5 - Per Parcel 2015-16 Assessed Valuation of Single Family Homes ..................................... 16 Table 6 - Largest Local Secured Taxpayers ....................................................................................... 17 Table 7 - Typical Total Tax Rates per $100 of Assessed Valuation .................................................. 18 Table 8 - Statement of Direct and Overlapping Bonded Debt ........................................................... 21 APPENDICES Appendix A - District General, Financial, and Operating Information; and Economic and Demographic Information Regarding Santa Clara and San Mateo Counties ....... A-1 Appendix B - Annual Financial Report for Fiscal Year Ended June 30, 2017 .................................. B-1 Appendix C - District Investment Policy ........................................................................................... C-1 Appendix D - Definitions and Summary of Certain Provisions of the Fiscal Agent Agreement ....... D-1 Appendix E - Form of Continuing Disclosure Certificate ................................................................. E-1 Appendix F - Form of Opinion of Bond Counsel ............................................................................... F-1 Appendix G - DTC and the Book-Entry Only System ....................................................................... G-1 Attachment 4 1 $__,___,000* MIDPENINSULA REGIONAL OPEN SPACE DISTRICT (Counties of Santa Clara, San Mateo and Santa Cruz, California) GENERAL OBLIGATION BONDS (GREEN BONDS), SERIES 2018 INTRODUCTION This introduction contains only a brief summary of certain of the terms of the 2018 Green Bonds being offered, and a brief description of the Official Statement. All statements contained in this introduction are qualified in their entirety by reference to the entire Official Statement. Capitalized terms used in this Official Statement and not otherwise defined shall have the meanings given to such terms as set forth in the Fiscal Agent Agreement. See APPENDIX D–“DEFINITIONS AND SUMMARY OF CERTAIN PROVISIONS OF THE FISCAL AGENT AGREEMENT–Definitions.” General The purpose of this Official Statement (which includes the cover page, inside cover page and the Appendices) is to provide information concerning the issuance of the $__,___,000* principal amount of Midpeninsula Regional Open Space District General Obligation Bonds (Green Bonds), Series 2018 (the “2018 Green Bonds”). The District General. The Midpeninsula Regional Open Space District (the “District”) was formed in 1972 to acquire and preserve public open space land in northern and western portions of the County of Santa Clara. In June 1976, the southern and eastern portions of the County of San Mateo were annexed to the District. The District annexed three parcels located in the northern tip of Santa Cruz County in 1992, but the 1% ad valorem property tax is not levied on this land for the benefit of the District. In September 2004, the District completed the Coastside Protection Program, which extended the District boundaries to the Pacific Ocean in the County of San Mateo County, from the southern borders of Pacifica to the San Mateo/Santa Cruz County line. The District encompasses over 550 square miles of land located in the County of Santa Clara (approximately 200 square miles), the County of San Mateo (approximately 350 square miles) and the County of Santa Cruz County (approximately 2.6 square miles). The Counties of Santa Clara, San Mateo, and Santa Cruz are referred to together as the “Counties.” As of the 2010 decennial census, approximately 720,000 people lived within the boundaries of the District. Governing Board and Management. A seven-member Board of Directors, elected by ward (the “Board of Directors”), establishes policies for the District. Specifically, the Board sets general operating objectives for the District, monitors financial and long-range planning, establishes policies governing conditions of employment, and sets policies to protect and enhance the natural and cultural resources of the District. Members of the Board of Directors are elected for staggered four-year terms. For additional information about the operations and finances of the District, see APPENDIX A– “DISTRICT GENERAL, FINANCIAL, AND OPERATING INFORMATION; AND ECONOMIC AND DEMOGRAPHIC INFORMATION REGARDING SANTA CLARA AND SAN MATEO COUNTIES.” ___________ * Preliminary, subject to change. Attachment 4 2 Authority for Issuance; Purpose The 2018 Green Bonds were approved by more than two-thirds of the qualified voters of the District at a special bond election duly and regularly held on June 3, 2014, which authorized the issuance of up to $300,000,000 principal amount of general obligation bonds, at a tax rate not to exceed $3.18 per $100,000 of assessed value owned, to finance 25 key projects authorized by the voters (“Measure AA”); and by Resolution No. ______ adopted by a majority of the Board of Directors on _______, 2017. The 2018 Green Bonds are issued pursuant to: (i) the Constitution and laws of the State of California (the “State”), including the provisions of Article 3 (commencing with Section 5500) of Chapter 3 of Division 5 of the Public Resources Code and Article 4.5, commencing with Section 53506, of Chapter 3 of Part 1 of Division 2 of Title 5 of the Government Code of the State (the “Act”); and (ii) a Fiscal Agent Agreement, dated as of _______ 1, 2018 (the “Fiscal Agent Agreement”), between the District and ZB, National Association dba Zions Bank, as fiscal agent (the “Fiscal Agent”). The 2018 Green Bonds are being issued by the District to: (i) further finance the 25 key projects specified in Measure AA; and (ii) pay certain costs associated with the issuance of the 2018 Green Bonds. See “THE 2018 GREEN BONDS–Authority for Issuance; Purpose.” Security for the Green Bonds General. The 2018 Green Bonds are general obligations of the District payable from separate ad valorem property taxes assessed within the District pursuant to Measure AA. The Boards of Supervisors of the Counties are empowered and are obligated to levy ad valorem taxes upon all property subject to taxation by the District in each year that the 2018 Green Bonds or other general obligation debt are outstanding, without limitation as to rate or amount (except as to certain personal property which is taxable at limited rates), in order to receive amounts sufficient to pay debt service on the 2018 Green Bonds and other general obligation bonds of the District. Such taxes are in addition to other taxes levied upon property within the District. For a description of Measure AA, see APPENDIX A–“DISTRICT GENERAL, FINANCIAL, AND OPERATING INFORMATION; AND ECONOMIC AND DEMOGRAPHIC INFORMATION REGARDING SANTA CLARA AND SAN MATEO COUNTIES–DISTRICT FINANCIAL INFORMATION–General.” Outstanding Parity Obligations. The 2018 Green Bonds are the third series of general obligation bonds to be issued under Measure AA and are payable on a parity with the District’s outstanding $40,000,000 principal amount of General Obligation Bonds, Series 2015A and the outstanding $3,350,000 principal amount of General Obligation Bonds, Series 2015B (Federally Taxable) (together, the “2015 Bonds”). See “SECURITY AND SOURCE OF PAYMENT FOR THE 2018 GREEN BONDS–Additional Bonds and Parity Obligations,” and “Ad Valorem Property Taxation Within the District–Direct and Overlapping Debt Obligations.” No Reserve Fund. No reserve fund will be established as security for the 2018 Green Bonds. See “SECURITY AND SOURCE OF PAYMENT FOR THE 2018 GREEN BONDS.” Redemption The 2018 Green Bonds are subject to optional redemption prior to their stated maturities. See “THE 2018 GREEN BONDS–Redemption Provisions.” Attachment 4 3 Other Outstanding Debt The District also has outstanding $105.8 million of general fund obligations consisting of Green Bonds, 2017 Refunding Series A, Parity Bonds, 2017 Series B, Green Bonds, 2016 Refunding Series (the “2016 Green Bonds”), notes (the “Promissory Notes”), and lease obligations securing payment of the Midpeninsula Regional Open Space District Financing Authority (the “Authority”) lease revenue bonds (collectively, the “Authority Bonds”) payable from a 1% ad valorem property tax within County of Santa Clara and the County of San Mateo. See APPENDIX A–“DISTRICT GENERAL, FINANCIAL, AND OPERATING INFORMATION; AND ECONOMIC AND DEMOGRAPHIC INFORMATION REGARDING SANTA CLARA AND SAN MATEO COUNTIES–DISTRICT FINANCIAL INFORMATION–General.” Continuing Disclosure The District has covenanted for the benefit of Owners and Beneficial Owners of the 2018 Green Bonds to provide certain financial information and operating data relating to the District not later than 210 days after the end of the fiscal year (ending June 30) of the District, commencing with report due January 26, 2019 (the “Annual Report”), and to provide notices of the occurrence of certain significant events. The Annual Report and the notices of significant events will be filed with the Municipal Securities Rulemaking Board (the “MSRB”) through its Electronic Municipal Market Access site. The specific nature of the information to be contained in the Annual Report and the notices of significant events is set forth in APPENDIX E–“FORM OF CONTINUING DISCLOSURE CERTIFICATE.” These covenants have been made in order to assist the Underwriter in complying with S.E.C. Rule 15c2-12(b)(5). Summaries Not Definitive The summaries and references of documents, statutes, reports and other instruments referred to in this Official Statement do not purport to be complete, comprehensive or definitive, and each such summary and reference is qualified in its entirety by reference to each document, statute, report, or instrument. Copies of the documents described in this Official Statement will be available at the General Manager’s office, Midpeninsula Regional Open Space District, 330 Distel Circle, Los Altos, California 94022, telephone: 650-691-1200. The District may impose a charge for copying and mailing.] THE DISTRICT The District, a special district created by the Act and voter approval, is located in the San Francisco Bay Area and has boundaries that encompass over 550 square miles of land in the Counties. The District operates 26 open space preserves, which comprise more than 63,000 acres, providing a regional greenbelt preserve system of diverse and natural beauty in one of the largest metropolitan areas in the country. The preserves, ranging from 55 to 1,800 acres, are open to the public, all year, free of charge. The mission of the District is to acquire and preserve, or return to its natural state, open space land in perpetuity for scenic beauty and enjoyment, for the protection of natural vegetation, wildlife and agriculture, to establish boundaries for urban growth, and enhance quality of life, for recreation in nature, and for educational opportunities through the creation of a regional greenbelt. For additional information on the District see APPENDIX A–“DISTRICT GENERAL, FINANCIAL, AND OPERATING INFORMATION; AND ECONOMIC AND DEMOGRAPHIC INFORMATION REGARDING SANTA CLARA AND SAN MATEO COUNTIES.” Attachment 4 4 ESTIMATED SOURCES AND USES OF FUNDS The estimated sources and uses of funds received from the sale of the 2018 Green Bonds are set forth below: Table 1 Estimated Sources and Uses of Funds 2018 Green Bonds SOURCES OF FUNDS: Principal Amount of Bonds Original Issue Premium TOTAL SOURCES USES OF FUNDS: Deposit into Project Account Costs of Issuance† Underwriter’s Discount TOTAL USES _____________ † Includes legal fees, financial advisory fees, Trustee’s fees, printing expenses, rating agency fees and other costs associated with the issuance of the 2018 Green Bonds. THE 2018 GREEN BONDS Authority for Issuance; Purpose The 2018 Green Bonds are issued pursuant to the Constitution and laws of the State, including the Act, and the Fiscal Agent Agreement. The 2018 Green Bonds are authorized to be issued pursuant to Measure AA. For additional information about the provisions of the Fiscal Agent Agreement, see APPENDIX D–“DEFINITIONS AND SUMMARY OF CERTAIN PROVISIONS OF THE FISCAL AGENT AGREEMENT.” The District will use the proceeds of 2018 Green Bonds to further finance the 25 key projects authorized by the voters under Measure AA. The projects expected to be financed from proceeds of the 2018 Green Bonds include acquisitions of property to protect and preserve natural open space lands, construction of public access improvements such as new trails and parking/staging areas to open public access and recreation and capital enhancements to open space lands to restore disturbed natural areas back to their original condition and function, including forests, streams, watersheds and coastal grassland areas. Designation of 2018 Green Bonds as Green Bonds The mission of the District is to acquire and preserve a regional greenbelt of open space land in perpetuity; protect and restore the natural environment; and provide opportunities for ecologically sensitive public employment and education. The District is issuing the 2018 Green Bonds as “Green Bonds,” to allow investors to invest directly in bonds which finance such environmentally beneficial projects. The owners of the 2018 Green Bonds do not assume any specific project risk or economic benefit related to the projects as a result of the Green Bonds designation. Attachment 4 5 Use of Proceeds. The proceeds from the 2018 Green Bonds will be used to finance certain improvements authorized by the voters under Measure AA. See “–Authority for Issuance; Purpose.”, The District acquires and preserves, or returns to its natural state, land, for scenic beauty and enjoyment, to protect natural vegetation, wildlife and agriculture, to establish boundaries for urban growth, enhance quality of life, and to provide opportunities for education and recreation in nature through the creation of a regional greenbelt. Project Evaluation and Selection. Expansion of open space preserves by the District is based on location and the opportunity to acquire properties to support the creation of a regional greenbelt. The District prioritizes acquisitions based on an evaluation of opportunities to link preserves with federal, State, county, and city parklands, potential public trail uses, and protect wildlife, watersheds, and other natural resources. Management of Proceeds and Reporting. [The District currently prepares reports providing information on the expenditures and status of the Measure AA projects. Commencing with the report due _____, 201_, and each ____ thereafter, the District will also include in the report expenditures of the proceeds from the 2018 Green Bonds.] Information on the Measure AA projects is available on the District website (http://www.openspace.org/). Payment of Principal and Interest The 2018 Green Bonds will mature on September 1 in the principal amounts and in the years indicated on the inside cover page hereof and will bear interest at the rates set forth on the inside cover page hereof payable on March 1 and September 1 of each year, commencing on ________ 1, 2018 (each, an “Interest Payment Date”), computed using a year of 360 days comprising twelve 30-day months. Payment of Interest. Payment of interest on any Bond on each Interest Payment Date (or on the following business day, if the Interest Payment Date does not fall on a business day) will be made to the person appearing on the registration books of the Trustee as the registered owner thereof (the “Owner”) on each Record Date, such interest to be paid by check or draft mailed to such Owner at such Owner’s address as it appears on such registration books or at such other address as the Owner may have filed with the Trustee for that purpose on or before the Record Date. The Owner of an aggregate principal amount of $1,000,000 or more of Bonds may request in writing to the Trustee that such Owner be paid interest by wire transfer to the bank and account number on file with the Trustee as of the applicable Record Date. So long as the 2018 Green Bonds are held by Cede & Co., as nominee of DTC, payment will be made by wire transfer to DTC in accordance with its procedures. See APPENDIX G–“DTC AND THE BOOK-ENTRY ONLY SYSTEM.” Payment of Principal. Principal will be payable at maturity, or upon redemption prior to maturity, upon surrender of Bonds by the registered owner thereof at the principal office of the Trustee. The interest, principal and premiums, if any, on the 2018 Green Bonds will be payable in lawful money of the United States of America from moneys deposited by the District with the Trustee under the Fiscal Agent Agreement. So long as all outstanding Bonds are held in book-entry form and registered in the name of a securities depository or its nominee, all payments of principal of, premium, if any, and interest on the 2018 Green Bonds and all notices with respect to such Bonds will be made and given, respectively, to such securities depository or its nominee and not to Beneficial Owners. See APPENDIX G–“DTC AND THE BOOK- ENTRY ONLY SYSTEM.” Attachment 4 6 Redemption of 2018 Green Bonds Optional Redemption. The 2018 Green Bonds maturing on or before September 1, 20__ are not subject to optional redemption prior to their respective maturity dates. The 2018 Green Bonds maturing on or after September 1, 20__ are subject to redemption prior to their respective maturity dates as a whole, or in part, on any date, from any moneys provided at the option of the District in whole or in part on any date on or after September 1, 20__ from such maturities as are selected by the District at a redemption price equal to the principal amount of 2018 Green Bonds to be redeemed, plus accrued but unpaid interest to the redemption date, without premium. Notice of Optional Redemption. The District is required to provide notice to the Fiscal Agent of any optional redemption of the 2018 Green Bonds at least 45 days prior to the date set for redemption (or such lesser number of days acceptable to the Fiscal Agent, in the sole discretion of the Fiscal Agent) and, in the case of partial redemption of 2018 Green Bonds, a District Officer is required to designate in writing to the Fiscal Agent those maturities to be redeemed in whole or in part (including as a maturity, for such purposes, principal due on 2018 Green Bonds on a particular September 1 as a result of a scheduled mandatory sinking fund redemption). In the event a District Officer does not designate the maturities of 2018 Green Bonds to be redeemed, the Fiscal Agent shall select Bonds for redemption on a proportionate basis among maturities. In the event a particular maturity of Bonds is to be redeemed in part only, the Fiscal Agent is required to select 2018 Green Bonds of such maturity to be redeemed by lot. Mandatory Sinking Fund Redemption. The 2018 Green Bonds maturing on September 1, 20__ and September 1, 20__ (the “Term Bonds”) are subject to redemption prior to their stated maturity dates, without a redemption premium, in part by lot, from mandatory sinking fund payments on each September 1, on and after September 1, 20__ and on and after September 1, 20__, respectively, in the principal amounts as set forth below, provided in the event that a Term Bond is redeemed in part, the total amount of all future sinking fund payments shall be reduced by the aggregate principal amount of Term Bonds redeemed, to be allocated among the sinking fund payments in integral multiples of $5,000 as determined by the District (notice of which determination is required to be given by the District to the Trustee) or, absent such direction from the District, pro rata among the sinking fund payments in integral multiples of $5,000. Term Bond Due September 1, 20__ Payment Date (September 1) Payment Amount Term Bond Due Term Bond Due September 1, 20__ Payment Date (September 1) Payment Amount Attachment 4 7 Redemption Procedures Selection of Bonds for Redemption. Whenever less than all of the outstanding Bonds of any one maturity are to be redeemed, the Fiscal Agent shall determine by lot by such method as the Fiscal Agent shall deem fair and appropriate, 2018 Green Bonds or portions thereof to be redeemed, and shall notify the District thereof. For purposes of such selection, Bonds shall be deemed to be composed of $5,000 multiples and any such multiple may be separately redeemed. All Bonds redeemed pursuant to the Fiscal Agent Agreement shall be canceled and shall, upon Written Request of the District, thereupon be delivered to the District. In the event only a portion of any Bond is called for redemption, then upon surrender of such Bond the District shall execute and the Fiscal Agent shall authenticate and deliver to the Owner thereof, at the expense of the District, a new Bond or Bonds of the same series and maturity of authorized denominations in aggregate principal amount equal to the unredeemed portion of the Bond to be redeemed. So long as 2018 Green Bonds are registered in book-entry-only form and so long as DTC or a successor securities depository is the sole registered Owner of 2018 Green Bonds, partial redemptions will be done in accordance with DTC procedures. It is the District’s intent that redemption allocations made by DTC be made in accordance with the provisions described herein. However, neither the District nor the Fiscal Agent has a duty to assure, and can provide no assurance, that DTC will allocate redemptions among Beneficial Owners on such a proportional basis, and neither the District nor the Fiscal Agent shall have any liability whatsoever to Beneficial Owners in the event redemptions are not done on a proportionate basis for any reason. The portion of any registered Bonds of a denomination of more than $5,000 to be redeemed will be in the principal amount of $5,000 or any integral multiple thereof. See APPENDIX G–“DTC AND THE BOOK ENTRY ONLY SYSTEM.” Notice of Redemption. Regardless of whether the District has deposited funds sufficient for any redemption with the Fiscal Agent, the Fiscal Agent on behalf of and at the expense of the District shall mail (by first class mail) notice of any redemption at least 30 days but not more than 60 days prior to the redemption date, to the respective Owners of any 2018 Green Bonds designated for redemption at their addresses appearing on the registration books maintained by the Fiscal Agent, to the Securities Depositories, and to the Municipal Securities Rulemaking Board as provided in the Continuing Disclosure Certificate; but such mailing is not a condition precedent to such redemption and failure to failure to mail or to receive any such notice will not affect the validity of the proceedings for the redemption of such 2018 Green Bonds. Each notice relating to an optional redemption is further required to state that such optional redemption may be rescinded by the District on or prior to the date set for redemption. The Fiscal Agent is required to send any notice of cancellation of an optional redemption in the same manner as it sent the related notice of redemption. Such notice is also required to state the redemption date, the redemption price and the CUSIP numbers of 2018 Green Bonds to be redeemed, and, if less than all of the then Outstanding 2018 Green Bonds are to be called for redemption, is required to designate the serial numbers of the 2018 Green Bonds to be redeemed by giving the individual number of each 2018 Green Bond or by stating that all 2018 Green Bonds between two stated numbers, both inclusive, or by stating that all of the 2018 Green Bonds of one or more maturities have been called for redemption, and require that such 2018 Green Bonds be then surrendered at the Office of the Fiscal Agent for redemption at the said redemption price, giving notice also that further interest on such 2018 Green Bonds will not accrue from and after the redemption date. Any notice of optional redemption is also required to state that it is subject to cancellation on or prior to the date set for redemption. Effect of Redemption. From and after the date fixed for redemption, if notice of such redemption is duly given and funds available for the payment of the principal of and interest (and premium, if any) on the 2018 Green Bonds so called for redemption has been duly provided, such 2018 Green Bonds so called Attachment 4 8 will cease to be entitled to any benefit under the Fiscal Agent Agreement other than the right to receive payment of the redemption price, and no interest shall accrue thereon on or after the redemption date specified in such notice. Defeasance All or a portion of 2018 Green Bonds may be paid by the District in any of the following ways, provided that the District also pays or causes to be paid any other sums payable under the Fiscal Agent Agreement by the District by: (i) paying or causing to be paid the principal of and interest on Bonds Outstanding, as and when the same become due and payable; (ii) depositing, at or before maturity, money or securities in the necessary amount to pay Bonds Outstanding; or (iii) delivering to the Fiscal Agent, for cancellation by it, Bonds Outstanding. If the District pays all Bonds Outstanding and also pays or causes to be paid all other sums payable by the District pursuant to the Fiscal Agent Agreement, then and in that case, at the election of the District, and notwithstanding that any 2018 Green Bonds shall not have been surrendered for payment, the Fiscal Agent Agreement will cease, terminate, become void and be completely discharged and satisfied. See APPENDIX D–“DEFINITIONS AND SUMMARY OF CERTAIN PROVISIONS OF THE FISCAL AGENT AGREEMENT.” Investment of Bond Proceeds Moneys in the Project Account, the Series B Project Account, the Bond Service Fund, the Capitalized Interest Account, the Costs of Issuance Account and the Rebate Fund (as such are established by and defined in the Fiscal Agent Agreement) will be invested by the Fiscal Agent, at the written direction of the Controller or Chief Financial Officer of the District, in Permitted Investments (as such are established by and defined in the Fiscal Agent Agreement) maturing prior to the date on which such moneys are required to be paid out under the Fiscal Agent Agreement. Moneys in the Debt Service Fund will be invested by the Chief Financial Officer in Permitted Investments that by their terms mature prior to the date on which such moneys are required to be paid out hereunder. Obligations purchased as an investment of moneys in any of such funds and accounts will at all times be deemed to be part of each such respective fund and account so invested, and all interest, gain or loss on the investment of moneys in such respective fund and accounts will be credited or charged thereto. DEBT SERVICE SCHEDULES Table 2A shows the debt service schedule with respect to the 2018 Green Bonds (assuming no optional redemptions). Table 2B shows the aggregate debt service schedule for all obligations of the District payable directly or indirectly from ad valorem property taxes . For a summary of outstanding long-term debt of the District see Table A-3–“District Outstanding Debt” in APPENDIX A–“DISTRICT GENERAL, FINANCIAL, AND OPERATING INFORMATION; AND ECONOMIC AND DEMOGRAPHIC INFORMATION REGARDING SANTA CLARA AND SAN MATEO COUNTIES.” Attachment 4 9 Table 2A Bonds Debt Service Schedule Fiscal Year Ending Total (June 30) Principal Interest Debt Service Attachment 4 10 Table 2B Aggregate General Obligation Bonds Debt Service Schedule† Fiscal Year Ending (June 30) 2015 General Obligation Bonds 2018 General Obligation Green Bonds Total 2018 $5,995,108.00 $_________ 2019 5,771,850.00 _________ 2020 5,275,200.00 _________ 2021 5,497,200.00 _________ 2022 5,509,200.00 _________ 2023 5,818,575.00 _________ 2024 5,852,325.00 _________ 2025 5,893,575.00 _________ 2026 5,678,075.00 _________ 2027 5,457,200.00 _________ 2028 5,211,700.00 _________ 2029 1,510,825.00 _________ 2030 1,537,200.00 _________ 2031 1,569,575.00 _________ 2032 1,613,400.00 _________ 2033 1,644,200.00 _________ 2034 1,671,800.00 _________ 2035 1,706,000.00 _________ 2036 1,751,300.00 _________ 2037 1,777,700.00 _________ 2038 1,815,200.00 _________ 2039 1,030,200.00 _________ 2040 – _________ 2041 – _________ 2042 – _________ TOTAL $79,587,408.00 $___,___,000* _____________ † For a summary of outstanding long-term general fund debt obligations, including subordinate obligations, see Table A-3 in APPENDIX A–“DISTRICT GENERAL, FINANCIAL, AND OPERATING INFORMATION; AND ECONOMIC AND DEMOGRAPHIC INFORMATION REGARDING SANTA CLARA AND SAN MATEO COUNTIES–DISTRICT FINANCIAL INFORMATION–Long Term Debt of the District.” * Preliminary, subject to change. Attachment 4 11 SECURITY AND SOURCE OF PAYMENT FOR THE 2018 GREEN BONDS General Pursuant to Measure AA, in order to provide sufficient funds for repayment of principal and interest when due on the 2018 Green Bonds, the 2015 Bonds, and other outstanding general obligation bonds of the District, the Boards of Supervisors of the Counties of Santa Clara, San Mateo and Santa Cruz are empowered and are obligated to levy ad valorem taxes upon all property subject to taxation by the District in each year that the 2018 Green Bonds, the 2015 Bonds, or other general obligation debt are outstanding, without limitation as to rate or amount (except as to certain personal property which is taxable at limited rates). Such taxes are in addition to other taxes levied upon property within the District. All of the proceeds of such Measure AA taxes are deposited in the District’s Debt Service Fund under the Fiscal Agent Agreement, for the 2018 Green Bonds, or as set forth in the applicable governing agreements for other general obligation debt, which taxes are to be used solely for the payment of the 2018 Green Bonds, the 2015 Bonds, and such other general obligation debt. Debt Service Fund and Bond Service Fund Debt Service Fund. Pursuant to the Fiscal Agent Agreement, the District deposit the proceeds of the ad valorem tax levied pursuant to Measure AA in the debt service fund (the “Debt Service Fund”) established pursuant to the Fiscal Agent Agreement at the times and in the amounts sufficient to pay debt service on the 2018 Green Bonds. The Debt Service Fund will be maintained by the Chief Financial Officer/Administrative Service Manager of the District as a separate fund, distinct from all other funds and accounts of the District. All moneys in the Debt Service Fund are required to be used and withdrawn by the Chief Financial Officer/Administrative Service Manager solely for the purpose of paying the principal of and interest on the 2018 Green Bonds as the same shall become due and payable. Bond Service Fund. Pursuant to the Fiscal Agent Agreement, on the last day of February and August in each year commencing [February 28, 2018], the Chief Financial Officer/Administrative Service Manager is required to transfer to the Fiscal Agent for deposit in the Bond Service Fund moneys on deposit in the Debt Service Fund for application by the Fiscal Agent on the next succeeding Interest Payment Date to the payment of principal of and interest on the 2018 Green Bonds. The Bond Service Fund is a separate fund held by the Fiscal Agent into which all moneys received by the Fiscal Agent from the District will be deposited and which Bond Service Fund is required to be used solely to pay principal and interest on the 2018 Green Bonds when due. [Within the Bond Service Fund there is established a Capitalized Interest Account which is required to pay a portion of the interest on the 2017 Green Bonds through [March 1, 2021], as directed by the District.] In the event that the amount in the Bond Service Fund is not sufficient for the Fiscal Agent to pay the full aggregate amount of principal of and interest due and payable on all bonds issued pursuant to Measure AA on the next succeeding Interest Payment Date, the Fiscal Agent is required to apply such amount to all bonds issued pursuant to Measure AA on a pro rata basis based on the principal amount of the outstanding bonds of each such series. Attachment 4 12 No Debt Service Reserve Fund The 2018 Green Bonds are secured by and payable from ad valorem property taxes levied on all taxable property in the District. Therefore, the Fiscal Agent Agreement does not require the District to establish a reserve fund for the 2018 Green Bonds. Ad Valorem Property Taxation Within The District Taxes are levied by the Counties for each fiscal year (ending June 30) on taxable real and personal property which is situated in the District as of the preceding January 1. For assessment and collection purposes, property is classified either as “secured” or “unsecured” and is listed accordingly on separate parts of the assessment roll. The “secured roll” is that part of the assessment roll containing State-assessed public utilities property and real property having a tax lien which is sufficient, in the opinion of the County Assessors of the Counties, to secure payment of the taxes. Other property is assessed on the “unsecured roll.” Property taxes on the secured roll are due in two installments, on November 1 and February 1 of each fiscal year (ending June 30). If unpaid, such taxes become delinquent on December 10 and April 10, respectively, and a 10% penalty attaches to any delinquent payment. Property on the secured roll with respect to which taxes are delinquent becomes tax defaulted on or about June 30 of the fiscal year. Such property may thereafter be redeemed by payment of a penalty of 1.5% per month to the time of redemption, plus costs and a redemption fee. If taxes are unpaid for a period of five years or more, the property is subject to sale. Property taxes on the unsecured roll are due as of the January 1 lien date and become delinquent, if unpaid, on August 31. A 10% penalty attaches to delinquent unsecured taxes. If unsecured taxes are unpaid by 5:00 p.m. on October 31, an additional penalty of 1.5% attaches to them on the first day of each month until paid. The taxing authority has four ways of collecting delinquent unsecured personal property taxes: (i) bringing a civil action against the taxpayer; (ii) filing a certificate in the office of the County Clerk of a County specifying certain facts in order to obtain a lien on certain property of the taxpayer; (iii) filing a certificate of delinquency for record in the County Clerk and County Recorder’s office of the applicable County in order to obtain a lien on certain property of the taxpayer; and (iv) seizing and selling personal property, improvements, or possessory interests belonging or assessed to the assessee. Allocation of Property Taxes The allocation of ad valorem property taxes to local governments and, accordingly, the District, is subject to certain State statutes, which may change from time to time. However, the District believes that any such change will not adversely affect its ability to pay debt service on the 2018 Green Bonds. See also “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON DISTRICT TAX REVENUES AND APPROPRIATIONS– Proposition 1A; Proposition 22.” Dissolution of Redevelopment Agencies The California Legislature adopted a bill, “ABX1 26,” during the fiscal year (ending June 30) 2011-12 State budget process that amended the California Community Redevelopment Law to dissolve redevelopment agencies on a State-wide basis. On December 29, 2011, the California Supreme Court upheld ABX1 26 in the face of an expedited legal challenge. As a result, all California redevelopment agencies, including redevelopment agencies of cities located within the District, were dissolved as of February 1, 2012, and such redevelopment agencies were to cease operations and dismantle, and to transfer assets and responsibilities to a successor entity as of the same date. Attachment 4 13 According to additional “trailer bill” legislation (AB 1484) effective on July 1, 2012, which further amended the Community Redevelopment Law, each County Auditor-Controller, the State Department of Finance and the State Controller may require the return of funds improperly spent or transferred to a public entity in conflict with the provisions of ABx1 26 and AB 1484 (together, the “Dissolution Law”) and, if funds are not returned within 60 days, the funds may be recovered through an offset of sales and use tax or property tax allocations to the local agency. As a consequence of the operation of the Dissolution Law, the District, as well as counties, school districts and other special districts, may receive higher amounts of ad valorem property tax allocations, due to future receipt of property tax increment amounts that had previously funded redevelopment agencies. However, such tax increment amounts in some cases is currently pledged to secure redevelopment agency bonds or otherwise contractually encumbered, resulting in the District experienced modest increases in tax revenues as a consequence of the Dissolution Law. Assessed Valuations The assessed valuation of property in the District is established by the respective County Assessor of the Counties, except for public utility property, which is assessed by the State Board of Equalization (“SBE”). Assessed valuations are reported at 100% of the “full value” of the property, as defined in Article XIII A of the California Constitution. The full value may be adjusted annually to reflect inflation at a rate not to exceed 2% per year, or to reflect a reduction in the consumer price index or comparable data for the area, or to reflect declines in property value caused by substantial damage, destruction or other factors, including assessment appeals filed by property owners. For a discussion of how properties currently are assessed, see “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON DISTRICT TAX REVENUES AND APPROPRIATIONS.” Certain classes of property such as churches, colleges, not-for-profit hospitals, and charitable institutions, are exempt from property taxation and do not appear on the tax rolls. No reimbursement is made by the State for such exemptions. The fiscal year ending June 30, 2017-18 assessed valuation of the District in County of Santa Clara increased approximately 8.3% compared to the assessed valuation for fiscal year 2016-17. The fiscal year 2017-18 assessed valuation in the County of San Mateo increased approximately 7.6% compared to the assessed valuation for fiscal year 2016-17. Ad valorem taxes levied on the three parcels located in the County of Santa Cruz portion of the District do not benefit the District. Attachment 4 14 Table 3 MIDPENINSULA REGIONAL OPEN SPACE DISTRICT Summary of Assessed Valuation Fiscal Years 2013-14 Through 2017-18 County of Santa Clara Portion Only Fiscal Year Total Before Total After (June 30) Local Secured Utility Unsecured Rdv. Increment Rdv. Increment 2013-14 $125,816,313,137 $5,192,456 $8,032,679,682 $133,854,185,275 $128,261,359,652 2014-15 134,293,818,913 3,616,356 8,134,278,301 142,431,713,570 136,364,265,861 2015-16 148,710,117,100 3,616,356 8,236,860,519 156,950,593,975 151,221,560,473 2016-17 161,457,836,934 3,616,356 8,664,926,704 170,126,379,994 163,586,434,289 2017-18 174,219,310,470 3,616,356 9,773,726,170 183,996,652,996 177,153,794,696 County of San Mateo Portion Only Fiscal Year Total Before Total After (June 30) Local Secured Utility Unsecured Rdv. Increment Rdv. Increment 2013-14 $57,513,572,325 $2,335,966 $2,180,554,159 $59,696,462,450 $55,714,674,355 2014-15 60,798,836,807 2,343,298 2,087,352,630 62,888,532,735 58,641,317,894 2015-16 66,177,632,738 3,085,789 2,363,781,063 68,544,499,590 63,519,108,202 2016-17 72,017,697,589 3,085,096 2,640,434,445 74,661,217,130 68,354,024,615 2017-18 78,506,564,096 3,084,835 2,996,701,078 81,506,350,009 73,565,159,409 Total District Fiscal Year Total Before Total After (June 30) Local Secured Utility Unsecured Rdv. Increment Rdv. Increment 2013-14 $183,329,885,462 $7,528,422 $10,213,233,841 $193,550,647,725 $183,976,034,007 2014-15 195,092,655,720 5,959,654 10,221,630,931 205,320,246,305 195,005,583,755 2015-16 214,887,749,838 6,702,145 10,600,641,582 225,495,093,565 214,740,668,675 2016-17 233,475,534,523 6,701,452 11,305,361,149 244,787,597,124 231,940,458,904 2017-18 252,725,874,566 6,701,191 12,770,427,248 265,503,003,005 250,718,954,105 _______________ Source: California Municipal Statistics, Inc. Taxation of State-Assessed Utility Property Less than 1% of property tax revenue of the District is derived from utility property subject to assessment by the SBE. Property valued by the SBE as an operating unit in a primary function of the utility taxpayer is known as “unitary property,” a concept designed to permit assessment of the utility as a going concern rather than assessment of each individual element of real and personal property owned by the utility taxpayer. State-assessed unitary and “operating nonunitary” property (which excludes nonunitary property of regulated railways) is allocated to the counties based on the situs of the various components of the unitary property. Except for unitary property of regulated railways and certain other excepted property, all unitary and operating nonunitary property is taxed at special county-wide rates and tax proceeds are distributed to taxing jurisdictions according to statutory formulae generally based on the distribution of taxes in the prior year. Attachment 4 15 Assessed Valuation by Land Use The following table describes a distribution of taxable real property located in the District by principal purpose for which the land is used, and the assessed valuation and number of parcels for each use. Table 4 MIDPENINSULA REGIONAL OPEN SPACE DISTRICT 2017-18 Assessed Valuation and Parcels by Land Use 2017-18 % of No. of % of Assessed Valuation† Total Parcels Total Non-Residential: Agricultural/Rural $507,783,912 0.20% 629 0.32% Commercial/Office 38,533,674,656 15.25 6,212 3.13 Industrial 20,970,238,185 8.30 2,414 1.21 Recreational 453,955,556 0.18 123 0.06 Government/Social/Institutional 1,267,705,301 0.50 1,214 0.61 Miscellaneous 506,279,860 0.20 859 0.43 SUBTOTAL NON-RESIDENTIAL $62,239,637,470 24.63% 11,451 5.76% Residential: Single Family Residence $152,340,808,457 60.28% 139,979 70.44% Condominium/Townhouse 18,541,431,741 7.34 30,123 15.16 Mobile Home 231,807,132 0.09 3,769 1.90 2-4 Residential Units 3,950,588,463 1.56 5,974 3.01 5+ Residential Units/Apartments 12,610,299,866 4.99 2,769 1.39 Miscellaneous Residential 29,777,674 0.01 95 0.05 SUBTOTAL RESIDENTIAL $187,704,713,333 74.27% 182,709 91.95% Vacant Parcels 2,781,523,763 1.10% 4,555 2.29% TOTAL $252,725,874,566 100.00% 198,715 100.00% ____________ † Local Secured Assessed Valuation; excluding tax-exempt property. Source: California Municipal Statistics, Inc. (Remainder of this Page Intentionally Left Blank) Attachment 4 16 Assessed Valuation of Single-Family Residential Properties The following table focuses on single-family residential properties only, which comprise approximately 60% of the assessed value of taxable property in the District. The table provides a distribution of single-family residences in the District by assessed value. The average assessed value is $1,088,312, and the median assessed value is $784,679. Table 5 MIDPENINSULA REGIONAL OPEN SPACE DISTRICT Per Parcel 2017-18 Assessed Valuation of Single Family Homes (Ending June 30) 2017-18 Average Median No. of Assessed Assessed Assessed Parcels Valuation Valuation Valuation Single Family Residential 139,979 $152,340,808,457 $1,088,312 $784,679 2017-18 No. of % of Cumulative Total % of Cumulative Assessed Valuation Parcels† Total % of Total Valuation Total % of Total $0 - $99,999 9,335 6.669% 6.669% $703,268,205 0.462% 0.462% $100,000 - $199,999 14,638 10.457 17.126 2,090,680,803 1.372 1.834 $200,000 - $299,999 8,929 6.379 23.505 2,229,020,414 1.463 3.297 $300,000 - $399,999 7,870 5.622 29.127 2,742,754,679 1.800 5.098 $400,000 - $499,999 7,761 5.544 34.672 3,495,805,982 2.295 7.392 $500,000 - $599,999 7,886 5.634 40.305 4,336,677,190 2.847 10.239 $600,000 - $699,999 7,438 5.314 45.619 4,822,463,257 3.166 13.405 $700,000 - $799,999 7,217 5.156 50.775 5,412,243,747 3.553 16.957 $800,000 - $899,999 7,061 5.044 55.819 6,000,872,184 3.939 20.896 $900,000 - $999,999 7,014 5.011 60.830 6,653,309,208 4.367 25.264 $1,000,000 - $1,099,999 6,064 4.332 65.162 6,358,216,832 4.174 29.437 $1,100,000 - $1,199,999 5,024 3.589 68.751 5,769,941,044 3.788 33.225 $1,200,000 - $1,299,999 4,257 3.041 71.792 5,317,183,239 3.490 36.715 $1,300,000 - $1,399,999 3,934 2.810 74.603 5,308,192,675 3.484 40.200 $1,400,000 - $1,499,999 3,733 2.667 77.269 5,408,906,697 3.551 43.750 $1,500,000 - $1,599,999 3,365 2.404 79.673 5,210,200,030 3.420 47.170 $1,600,000 - $1,699,999 3,135 2.240 81.913 5,170,715,908 3.394 50.565 $1,700,000 - $1,799,999 2,648 1.892 83.805 4,632,101,078 3.041 53.605 $1,800,000 - $1,899,999 2,447 1.748 85.553 4,524,218,539 2.970 56.575 $1,900,000 - $1,999,999 2,072 1.480 87.033 4,034,514,729 2.648 59.223 $2,000,000 and greater 18,151 12.967 100.000 62,119,522,017 40.777 100.000 TOTAL 139,979 100.000% $152,340,808,457 100.000% _____________ † Improved single family residential parcels. Excludes condominiums and parcels with multiple family units. Source: California Municipal Statistics, Inc. Attachment 4 17 Largest Secured Property Taxpayers in District The 20 taxpayers in the District with the greatest combined secured assessed valuation of taxable property on the 2017-18 tax roll, and the assessed valuations thereof, are shown below. Table 6 MIDPENINSULA REGIONAL OPEN SPACE DISTRICT Largest Local Secured Taxpayers Fiscal Year 2017-18 (Ending June 30) 2017-18 Assessed % of Property Owner Primary Land Use Valuation Total 1. Board of Trustees, Leland Stanford Jr. University Various Property Holdings $6,263,480,917 2.48% 2. Google Inc. Office Building 3,490,159,677 1.38 3. Campus Holdings Inc. Office Building 3,076,341,978 1.22 4. Apple Computer Inc. Office Building 1,232,161,815 0.49 5. Lockheed Missiles and Space Co. Inc. Manufacturing 996,509,985 0.39 6. Sobrato Interests Office Building 784,903,661 0.31 7. Oracle Corp. Office Building 627,216,312 0.25 8. Menlo & Juniper Networks LLC Office Building 603,926,273 0.24 9. Network Appliance Inc. Office Building 504,704,678 0.20 10. Applied Materials Inc. Research and Development 491,685,941 0.19 11. Intuitive Surgical Inc. Office Building 417,657,237 0.17 12. Yahoo Inc. Office Building 413,254,823 0.16 13. Giant Properties LLC Office Building 386,735,241 0.15 14. Essex Portfolio LP Apartments 362,000,089 0.14 15. HCP Life Science REIT Inc. Research and Development 360,169,692 0.14 16. Americana I LLC Apartments 357,169,319 0.14 17. KR 555 Mathilda LLC Office Building 356,444,517 0.14 18. MP 521 LLC Office Building 352,097,380 0.14 19. Wells REIT II-University Circle LP Office Building 345,007,058 0.14 20. LinkedIn Corporation Office Building 343,702,251 0.14 SUBTOTAL $21,765,328,844 8.61% All Others Various 230,960,545,722 91.39 TOTAL $252,725,874,566 100.00% ____________ Source: California Municipal Statistics, Inc. Attachment 4 18 Tax Rate Areas Contained within the District’s boundaries are numerous overlapping local agencies. The following tables show ad valorem property tax rates for the last five tax years in the largest Tax Rate Area of the District in the County of Santa Clara and the County of San Mateo. Table 7 MIDPENINSULA REGIONAL OPEN SPACE DISTRICT Typical Total Tax Rates per $100 of Assessed Valuation(1) County of Santa Clara (Tax Rate Area 6-001)(2) 2013-14 2014-15 2015-16(3) 2016-17 2017-18 General $1.00000 $1.00000 $1.00000 $1.00000 1.00000 County Retirement Levy .03880 .03880 .03880 .03880 .03880 County Hospital Bond .00350 .00910 .00880 .00860 .00820 County Housing Bond – – – – .01266 City of Palo Alto .01770 .01594 .01477 .01290 .01177 Palo Alto Unified School District .09140 .08510 .08600 .07930 .07930 Foothill-De Anza Community College District .02900 .02760 .02400 .02340 .02200 Midpeninsula Regional Open Space District – – .00080 .00060 .00090 TOTAL ALL PROPERTY $1.18040 $1.17654 $1.17317 $1.16360 $1.17363 Santa Clara Valley Water District – State Water Project .00700 .00650 .00570 .00860 .00860 TOTAL LAND AND IMPROVEMENT .00700 .00650 .00570 .00860 .00860 County of Santa Mateo (Tax Rate Area 9-001)(4) 2013-14 2014-15 2015-16 2016-17 2017-18 General $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 Redwood City School District .0240 .0230 .0158 .0461 .0412 Sequoia Union High School District .0313 .0433 .0434 .0391 .0383 San Mateo Community College District .0194 .0190 .0250 .0247 .0235 Midpeninsula Regional Open Space District – – .0008 .0006 .0009 TOTAL $1.0747 $1.0853 $1.0850 $1.1105 $1.1039 _______________ (1) Due to the District’s size and that it is located in two counties (County of Santa Cruz excluded), there is no tax rate area that represents the typical total tax rate for the District. The above tax rate areas are the largest in terms of assessed valuation for each County’s portion of the District. (2) The 2017-18 assessed valuation of Tax Rate Area (TRA) 6-001 is $28,291,652,893, which is 10.66% of the District’s total assessed valuation. (3) Fiscal Year 2015-16 was the first year in which ad valorem property taxes authorized by Measure AA were levied. For a description of Measure AA, see APPENDIX A–“DISTRICT GENERAL, FINANCIAL, AND OPERATING INFORMATION; AND ECONOMIC AND DEMOGRAPHIC INFORMATION REGARDING SANTA CLARA AND SAN MATEO COUNTIES–DISTRICT FINANCIAL INFORMATION- General.” (4) The 2017-18 assessed valuation of TRA 9-001 is $9,444,516,021, which is 3.56% of the District’s total assessed valuation. Source: California Municipal Statistics, Inc. Attachment 4 19 Appeals of Assessed Value General. There are two types of appeals of assessed values that could adversely impact property tax revenues within the District. Appeals may be based on Proposition 8, a constitutional amendment approved by voters in November 1978, which requires that for each January 1 lien date, the taxable value of real property must be the lesser of its base year value, annually adjusted by the inflation factor pursuant to Article XIII A of the State Constitution, or its full cash value, taking into account reductions in value due to damage, destruction, depreciation, obsolescence, removal of property or other factors causing a decline in value. See “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON DISTRICT TAX REVENUES AND APPROPRIATIONS.” Under California law, property owners may apply for a reduction of their property tax assessment by filing a written application, in form prescribed by the State Board of Equalization, with the applicable County board of equalization or assessment appeals board. In most cases, the appeal is filed because the applicant believes that present market conditions (such as residential home prices) cause the property to be worth less than its current assessed value. Proposition 8 reductions may also be unilaterally applied by the applicable County Assessor. In 2008-09, the Assessor of the County of Santa Clara reduced the assessed values of 90,836 properties in such County as of January 1, 2009, for a reduction in assessed valuation totaling $17.4 billion. In 2010-11, the Assessor of the County of Santa Clara unilaterally reduced the assessed values of 118,690 properties in such County, for a reduction in assessed valuation of $14.3 billion. In the County of San Mateo, 16% of residential properties had declines in assessed valuations for fiscal year (ending June 30) 2010-11. By fiscal year (ending June 30) 2012-13, assessed valuation in the County of Santa Clara had rebounded to a level above that for fiscal year 2009-10, which had been the highest valuation in the history of the County of Santa Clara. For the County of San Mateo, assessed valuation in fiscal year (ending June 30) 2011-12 recovered to a level above that for fiscal year (ending June 30) 2009-10, which had been the highest valuation in the history of the County of San Mateo. No assurance can be given that property tax appeals in the future will not significantly reduce the assessed valuation of property within the District. Any reduction in the assessment ultimately granted as a result of such appeal applies to the year for which application is made and during which the written application was filed. These reductions are subject to yearly reappraisals and are adjusted back to their original values when market conditions improve. Once the property has regained its prior value, adjusted for inflation, it once again is subject to the annual inflationary factor growth rate allowed under Article XIII A. See “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON DISTRICT TAX REVENUES AND APPROPRIATIONS.” A second type of assessment appeal involves a challenge to the base year value of an assessed property. Appeals for reduction in the base year value of an assessment, if successful, reduce the assessment for the year in which the appeal is taken and prospectively thereafter. The base year is determined by the completion date of new construction or the date of change of ownership. Any base year appeal must be made within four years of the change of ownership or new construction date. Attachment 4 20 Property Tax Collections The District’s total secured tax collections and delinquencies are apportioned within each County on a County-wide basis, according to the District’s designated tax rate amount. Therefore, the total secured tax levies, as well as collections and delinquencies reported, do not represent the actual secured tax levies, collections and delinquencies of taxpayers within the tax areas of the District. In addition, the District’s total secured tax levy does not include special assessments, supplemental taxes or other charges that have been assessed on property within the District or other tax rate areas of the Counties. Each of the County of Santa Clara and the County of San Mateo has adopted the Alternative Method of Distribution of Tax Levies and Collections and of Tax Sale Proceeds (the “Teeter Plan”) as provided for in Sections 4701 through 4717 of the State Revenue and Taxation Code. The Teeter Plan requires that a county pay 100% of ad valorem secured property taxes due to local agencies in the fiscal year such taxes are due regardless of the actual payments and delinquencies. Under these provisions, each county operating under the Teeter Plan establishes a delinquency reserve and assumes responsibility for all secured delinquencies, assuming that certain conditions are met. The District is a participant in the Teeter Plan of each County. Because of this method of tax collection, districts located in counties operating under the Teeter Plan and participating in the Teeter Plan are assured of 100% collection of their secured tax levies if the conditions established under the applicable county’s Teeter Plan are met. However, such districts are no longer entitled to share in any penalties due on delinquent payments or in the interest that accrues on delinquent payments. The Teeter Plan, as applicable to the District, remains in effect unless the Board of Supervisors of either County orders its discontinuance or unless, prior to the commencement of any fiscal year (which commences on July 1), the Board of Supervisors of such County has received a petition for its discontinuance joined in by resolutions adopted by two thirds of the participating revenue districts in such County, in which event the Board of Supervisors is required to order discontinuance of the Teeter Plan effective at the commencement of the subsequent fiscal year. The Board of Supervisors of either County may, by resolution adopted not later than July 15 of the fiscal year for which it is to apply after holding a public hearing on the matter, discontinue the procedures under the Teeter Plan with respect to any tax levying agency or assessment levying agency in the County if the rate of secured tax delinquency in that agency in any year exceeds 3% of the total of all taxes and assessments levied on the secured rolls for that agency. In the event that the Teeter Plan is terminated, the amount of the levy of ad valorem taxes in the District would depend upon the collections of the ad valorem property taxes and delinquency rates experienced with respect to the parcels within the District. So long as the Teeter Plan remains in effect with respect to each County, the receipt of revenues by the District with respect to the levy of ad valorem property taxes in the Counties will not be dependent upon actual collections of the ad valorem property taxes by the Counties. See APPENDIX A–“DISTRICT GENERAL, FINANCIAL, AND OPERATING INFORMATION; AND ECONOMIC AND DEMOGRAPHIC INFORMATION REGARDING SAN MATEO AND SANTA CLARA COUNTIES– DISTRICT FINANCIAL INFORMATION–Long-Term Obligations” for a description of long-term debt payable from the District’s General Fund. Attachment 4 21 Direct and Overlapping Debt Obligations Set forth in Table 11 is a direct and overlapping debt report (the “Debt Report”) prepared by California Municipal Statistics, Inc. for debt issued as of _________, 2018. The Debt Report is included for general information purposes only. The District has not reviewed the Debt Report for completeness or accuracy and makes no representation in connection therewith. The Debt Report generally includes long-term obligations sold in the public credit markets by public agencies whose boundaries overlap the boundaries of the District in whole or in part. Such long-term obligations generally are not payable from revenues of the District (except as indicated) nor are they necessarily obligations secured by land within the District. In many cases, long-term obligations issued by the specified public agency are payable only from the general fund or other revenues of such public agency. The contents of the Debt Report are as follows: (i) the first column indicates the public agencies which have outstanding debt as of the date of the Debt Report and whose territory overlaps the District; (ii) the second column shows the percentage of the assessed valuation of the overlapping public agency identified in column one which is represented by property located within the District; and (iii) the third column is an apportionment of the dollar amount of each public agency’s outstanding debt (which amount is not shown in the table) to property in the District, as determined by multiplying the total outstanding debt of each agency by the percentage of the District’s assessed valuation represented in column two. (Remainder of this Page Intentionally Left Blank) Attachment 4 22 Table 8 MIDPENINSULA REGIONAL OPEN SPACE DISTRICT Statement of Direct and Overlapping Bonded Debt (November 1, 2017) [To be Updated] 2017-18 Assessed Valuation: $265,503,003,005 DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable Debt 11/1/17 Santa Clara County 40.909% $ 317,408,840 Foothill-De Anza Community College District 93.713 594,138,525 San Mateo Community College District 39.390 227,053,441 West Valley-Mission Community College District 29.259 144,863,950 Palo Alto Unified School District 100. 258,433,689 Fremont Union High School District 85.932 372,326,245 Sequoia Union High School District 91.518 461,763,221 Other High School Districts Various 188,201,849 Belmont-Redwood Shores School District and School Facilities Improvement Districts Nos. 1 and 2 7.975-93.305 53,439,524 Cupertino Union School District 75.622 204,579,204 Los Altos School District 100. 62,145,000 Los Gatos Union School District 98.049 83,513,236 Menlo Park City School District 100. 115,934,473 San Carlos School District 96.542 114,306,807 Mountain View-Whisman School District 100. 213,473,173 Sunnyvale School District 100. 193,580,820 Other Unified and Elementary School Districts Various 364,462,221 Cities 0.018-100. 92,419,067 El Camino Hospital District 98.872 216,935,055 Midpeninsula Regional Open Space District 100. 43,350,000 Community Facilities Districts 100. 27,550,000 Santa Clara Valley Water District Benefit Assessment District 40.909 37,204,690 1915 Act Bonds (Estimate) 100. 30,602,521 TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT $4,417,685,551 DIRECT AND OVERLAPPING GENERAL FUND DEBT: Santa Clara County General Fund Obligations 40.909% $259,972,469 Santa Clara County Pension Obligation Bonds 40.909 146,268,974 San Mateo County General Fund Obligations 39.390 151,352,954 County Board of Education Certificates of Participation 39.390-40.909 6,002,809 Foothill Community College District Certificates of Participation 93.713 28,382,923 West Valley-Mission Community College District General Fund Obligations 29.259 18,450,689 Union High School District General Fund Obligations Various 8,602,703 Mountain View-Whisman School District Certificates of Participation 100. 34,020,000 Other Unified and Elementary School District General Fund Obligations Various 8,262,824 City of Cupertino General Fund Obligations 93.368 31,465,016 City of Los Altos General Fund Obligations 100. 1,355,000 City of Palo Alto General Fund Obligations 100. 1,400,852 City of Redwood City General Fund Obligations 100. 692,368 City of Sunnyvale General Fund Obligations 99.995 17,094,145 Other City General Fund Obligations Various 184,232 Fire Protection Districts Certificates of Participation 100. 13,436,159 Santa Clara County Vector Control District Certificates of Participation 40.909 1,098,407 Midpeninsula Regional Open Space District General Fund Obligations 100. 107,294,707 (1) TOTAL GROSS DIRECT AND OVERLAPPING GENERAL FUND DEBT $835,337,231 Less: Santa Clara County supported obligations 178,379,022 TOTAL NET DIRECT AND OVERLAPPING GENERAL FUND DEBT $656,958,209 OVERLAPPING TAX INCREMENT DEBT (Successor Agencies): 100. % $142,738,002 GROSS COMBINED TOTAL DEBT $5,395,760,784 (2) NET COMBINED TOTAL DEBT $5,217,381,762 (1) Excludes accreted value of capital appreciation bonds. (2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded capital lease obligations. Ratios to 2017-18 Assessed Valuation: Direct Debt ($43,350,000) ............................................................................. 0.02% Total Direct and Overlapping Tax and Assessment Debt ............................... 1.66% Combined Direct Debt ($150,644,707) ......................................................... 0.06% Gross Combined Total Debt ............................................................................ 2.03% Net Combined Total Debt ................................................................................ 1.97% Ratios to Redevelopment Incremental Valuation ($14,784,048,900): Total Overlapping Tax Increment Debt ........................................................... 0.97% ____________ Source: California Municipal Statistics, Inc. Attachment 4 23 CONSTITUTIONAL AND STATUTORY LIMITATIONS ON DISTRICT TAX REVENUES AND APPROPRIATIONS Article XIII A of the State Constitution Article XIII A of the State Constitution, known as Proposition 13, was approved by the voters in June 1978 and has been amended on occasions, including on November 7, 2000 to reduce the voting percentage required for the passage of school bonds. Section l(a) of Article XIII A limits the maximum ad valorem tax on real property to 1% of “full cash value,” and provides that such tax shall be collected by the counties and apportioned according to State statutes. Section l(b) of Article XIII A provides that the 1% limitation does not apply to ad valorem taxes levied to pay interest or redemption charges on any (1) indebtedness approved by the voters prior to July 1, 1978, (2) bonded indebtedness for the acquisition or improvement of real property approved on or after July 1, 1978, by two-thirds of the votes cast by the voters voting on the proposition and (3) bonded indebtedness incurred by a school district, community college district or county office of education for the construction, reconstruction, rehabilitation or replacement of school facilities, including the furnishing and equipping of school facilities or the acquisition or lease of real property for school facilities, approved by 55% of the voters voting on the proposition. Under current law, local agencies are no longer permitted to levy directly any ad valorem property tax (except to pay voter-approved indebtedness). Section 2 of Article XIII A defines “full cash value” to mean the county assessor’s valuation of real property as shown on the 1975-76 fiscal year (June 30) tax bill, or thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred. The full cash value may be adjusted annually to reflect inflation at a rate not to exceed 2% per year, or to reflect a reduction in the consumer price index or comparable data for the taxing jurisdiction, or may be reduced in the event of declining property value caused by substantial damage, destruction or other factors. Legislation implementing Article XIII A provides that, notwithstanding any other law, local agencies may not levy any ad valorem property tax except to pay debt service on indebtedness approved by the voters as described above. Such legislation further provides that each county will levy the maximum tax permitted by Article XIII A, which is $1.00 per $100 of assessed market value. Since its adoption, Article XIII A has been amended a number of times. These amendments have created a number of exceptions to the requirement that property be reassessed when it is purchased, newly constructed or undergoes a change in ownership. These exceptions include certain transfers of real property between family members, certain purchases of replacement dwellings for persons over age 55 and by property owners whose original property has been destroyed in a declared disaster, and certain improvements to accommodate disabled persons and for seismic upgrades to property. These amendments have resulted in marginal reductions in the property tax revenues attributable to the District. Both the State Supreme Court and the United States Supreme Court have upheld the validity of Article XIII A. Article XIII B of the State Constitution In addition to the limits Article XIII A imposes on property taxes that may be collected by local governments, certain other revenues of the State and most local governments are subject to an annual “appropriations limit” imposed by Article XIII B which effectively limits the amount of such revenues those entities are permitted to spend. Article XIII B, approved by the voters in July 1979, was modified substantially by Proposition 111 in 1990. The appropriations limit of each government entity applies to “proceeds of taxes,” which consist of tax revenues, State subventions and certain other funds, including Attachment 4 24 proceeds from regulatory licenses, user charges or other fees to the extent that such proceeds exceed “the cost reasonably borne by such entity in providing the regulation, product or service.” “Proceeds of taxes” excludes tax refunds and some benefit payments such as unemployment insurance. No limit is imposed on the appropriation of funds which are not “proceeds of taxes,” such as reasonable user charges or fees, and certain other non-tax funds. Article XIII B also does not limit appropriation of local revenues to pay debt service on bonds existing or authorized by January 1, 1979, or subsequently authorized by the voters, appropriations required to comply with mandates of courts or the federal government, appropriations for qualified capital outlay projects, and appropriation by the State of revenues derived from any increase in gasoline taxes and motor vehicle weight fees above January 1, 1990 levels. The appropriations limit may also be exceeded in case of emergency; however, the appropriations limit for the next three years following such emergency appropriation must be reduced to the extent by which it was exceeded, unless the emergency arises from civil disturbance or natural disaster declared by the Governor, and the expenditure is approved by two-thirds of the legislative body of the local government. Article XIII C and XIII D of the State Constitution General. On November 5, 1996, the voters of the State approved Proposition 218, known as the “Right to Vote on Taxes Act.” Proposition 218 added Articles XIII C and XIII D to the California Constitution and contained a number of interrelated provisions affecting the ability of the District and California local governments in general to levy and collect both existing and future taxes, assessments, fees and charges. Taxes. Article XIII C requires that all new local taxes be submitted to the electorate before they become effective. Taxes for general governmental purposes of the local government (“general taxes”) require a majority vote; taxes for specific purposes (“special taxes”), even if deposited in the general fund of the local government, require a two-thirds vote. The voter approval requirements of Proposition 218 reduce the flexibility of the District to raise revenues for the General Fund, and no assurance can be given that the District will be able to impose, extend or increase such taxes in the future to meet increased expenditure needs. Property-Related Fees, Charges and Assessments. Article XIII D added several provisions making it generally more difficult for local governments to levy and maintain property- related fees, charges, and assessments for municipal services and programs. These provisions include, among other things, (i) a prohibition against assessments which exceed the reasonable cost of the proportional special benefit conferred on a parcel, (ii) a requirement that assessments must confer a “special benefit,” as defined in Article XIII D, over and above any general benefits conferred, (iii) a majority protest procedure for assessments which involves the mailing of notice and a ballot to the record owner of each affected parcel, a public hearing and the tabulation of ballots weighted according to the proportional financial obligation of the affected party, and (iv) a prohibition against fees and charges which are used for general governmental services, including police, fire or library services, where the service is available to the public at large in substantially the same manner as it is to property owners. Reduction or Repeal of Taxes, Fees and Charges. Article XIII C also removed limitations on the initiative power in matters of reducing or repealing local taxes, assessments, fees or charges. No assurance can be given that the voters of the District will not, in the future, approve an initiative or initiatives which reduce or repeal local taxes, assessments, fees or charges. If such repeal or reduction occurs, the District’s ability to pay debt service on certain of its Long-Term Obligations could be adversely affected. Burden of Proof. Article XIII C provides that a local government “bears the burden of proving by a preponderance of the evidence that a levy, charge, or other exaction is not a tax, that the amount is no more than necessary to cover the reasonable costs of the governmental activity, and that the manner in Attachment 4 25 which those costs are allocated to a payor bear a fair or reasonable relationship to the payor’s burdens on, or benefits received from, the governmental activity.” Similarly, Article XIII D provides that in “any legal action contesting the validity of a fee or charge, the burden shall be on the agency to demonstrate compliance” with Article XIII D. Proposition 26. On November 2, 2010, California voters approved Proposition 26, entitled the “Supermajority Vote to Pass New Taxes and Fees Act.” Section 1 of Proposition 26 declares that Proposition 26 is intended to limit the ability of the State Legislature and local government to circumvent existing restrictions on increasing taxes by defining the new or expanded taxes as “fees.” Proposition 26 amended Articles XIII A and XIII C of the State Constitution. The amendments to Article XIII A limit the ability of the State Legislature to impose higher taxes (as defined in Proposition 26) without a two-thirds vote of the Legislature. The amendments to Article XIII C define “taxes” that are subject to voter approval as “any levy, charge, or exaction of any kind imposed by a local government,” with certain exceptions. Judicial Interpretation. The interpretation and application of Articles XIII C and XIII D will ultimately be determined by the courts with respect to a number of the matters discussed below, and it is not possible at this time to predict with certainty the outcome of such determination. Proposition 1A; Proposition 22 Proposition 1A of 2004. Proposition 1A of 2004, proposed by the Legislature in connection with the State’s fiscal year (ending June 30) 2004-05 Budget Act, and approved by the voters in November 2004, was generally effective in fiscal year (ending June 30) 2006-07. Proposition 1A of 2004 provides that the State may not reduce any local sales tax rate, limit existing local government authority to levy a sales tax rate or change the allocation of local sales tax revenues, subject to certain exceptions. Proposition 1A generally prohibits the State from shifting to schools or community colleges any share of property tax revenues allocated to local governments for any fiscal year, as set forth under the laws in effect as of November 3, 2004. Any change in the allocation of property tax revenues among local governments within a county must be approved by two-thirds of both houses of the Legislature. Proposition 1A of 2004 provided, however, that beginning in fiscal year (ending June 30) 2008-09, the State may shift to schools and community colleges up to 8% of local government property tax revenues, which amount must be repaid, with interest, within three years, if the Governor proclaimed that the shift is needed due to a severe state financial hardship, the shift was approved by two-thirds of both houses and certain other conditions were met. Such a shift may not occur more than twice in any 10-year period. The State could also approve voluntary exchanges of local sales tax and property tax revenues among local governments within a county. Proposition 22. On November 2, 2010, voters in the State approved Proposition 22 known as the “Local Taxpayer, Public Safety, and Transportation Protection Act.” Proposition 22 eliminates or reduces the State’s authority to (i) temporarily shift property taxes from cities, counties and special districts to schools, (ii) use vehicle license fee revenues to reimburse local governments for State-mandated costs (the State will have to use other revenues to reimburse local governments), (iii) redirect property tax increment from redevelopment agencies to any other local government, (iv) use State fuel tax revenues to pay debt service on State transportation bonds, or (v) borrow or change the distribution of State fuel tax revenues. Unitary Property AB 454 (Chapter 921, Statutes of 1986) provides that revenues derived from most utility property assessed by the State Board of Equalization (“Unitary Property”), commencing with the 1988-89 fiscal year (ending June 30), are allocated as follows: (i) each jurisdiction will receive up to 102% of its prior year Attachment 4 26 State-assessed revenue; and (ii) if county-wide revenues generated from Unitary Property are less than the previous year’s revenues or greater than 102% of the previous year’s revenues, each jurisdiction will share the burden of the shortfall or benefit of the excess revenues by a specified formula. This provision applies to all Unitary Property except railroads, whose valuation will continue to be allocated to individual tax rate areas. The provisions of AB 454 do not constitute an elimination of the assessment of any State-assessed properties nor a revision of the methods of assessing utilities by the State Board of Equalization. Generally, AB 454 allows valuation growth or decline of Unitary Property to be shared by all jurisdictions in a county. Future Initiatives Article XIII A, Article XIII B, Article XIII C, Article XIII D, and Propositions 1A of 2004, 22, 26 and 62 were each adopted as measures that qualified for the ballot through California’s initiative process. From time to time other initiative measures could be adopted, further affecting the District’s revenues. TAX MATTERS In the opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel (“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 2018 Green 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 2018 Green 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. As discussed further below, legislation has been introduced which, if enacted, would repeal the alternative minimum tax for tax years beginning after December 31, 2017. A complete copy of the proposed form of opinion of Bond Counsel is set forth in Appendix F hereto. To the extent the issue price of any maturity of the 2018 Green 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 of 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 2018 Green Bonds which is excluded from 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 2018 Green Bonds is the first price at which a substantial amount of such maturity of the 2018 Green 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 2018 Green Bonds accrues daily over the term to maturity of such Bonds on the basis of a constant interest rate compounded semiannually (with straight-line interpolations 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, redemption, or payment on maturity) of such Bonds. Beneficial Owners of the 2018 Green Bonds should consult their own tax advisors with respect to the tax consequences of ownership of 2018 Green Bonds with original issue discount, including the treatment of Beneficial Owners who do not purchase such 2018 Green Bonds in the original offering to the public at the first price at which a substantial amount of such 2018 Green Bonds is sold to the public. 2018 Green 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”) Attachment 4 27 will be treated as having amortizable bond premium. No deduction is allowable for the amortizable bond premium in the case of bonds, like the Premium Bonds, the interest on which is excluded from gross income 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 consult 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 federal income tax purposes of interest on obligations such as the 2018 Green Bonds. The District has made certain representations and covenanted to comply with certain restrictions, conditions and requirements designed to ensure that interest on the 2018 Green 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 2018 Green Bonds being included in gross income for federal income tax purposes, possibly from the date of original issuance of the 2018 Green 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 2018 Green Bonds may adversely affect the value of, or the tax status of interest on, the 2018 Green Bonds. Accordingly, the opinion of Bond 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 2018 Green 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 2018 Green 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 2018 Green 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. Legislation has been introduced in Congress which, if enacted, would significantly change the income tax rates for individuals and corporations and would repeal the alternative minimum tax for tax years beginning after December 31, 2017. 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 2018 Green Bonds. Prospective purchasers of the 2018 Green 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 2018 Green 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 District, or about the effect of future changes in the Code, the applicable regulations, the interpretation thereof or the enforcement thereof by the IRS. The District has covenanted, however, to comply with the requirements of the Code. Bond Counsel’s engagement with respect to the 2018 Green Bonds ends with the issuance of the 2018 Green Bonds, and, unless separately engaged, Bond Counsel is not obligated to defend the District or Attachment 4 28 the Beneficial Owners regarding the tax-exempt status of the 2018 Green Bonds in the event of an audit examination by the IRS. Under current procedures, parties other than the District and their appointed counsel, including the Beneficial Owners, would have little, if any, right to participate in the audit examination process. 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 District legitimately disagrees, may not be practicable. Any action of the IRS, including but not limited to selection of the 2018 Green 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 2018 Green Bonds, and may cause the District or the Beneficial Owners to incur significant expense. CONTINUING DISCLOSURE General The District has covenanted for the benefit of the owners and beneficial owners of the 2018 Green Bonds to provide certain financial information and operating data relating to the District by no later than 210 days after the end of the District’s fiscal year (ending June 30) being the current fiscal year-end) (the “Annual Report”), commencing with the report due January 26, 2019 for fiscal year ending June 30, 2018, and to provide notice of the occurrence of significant events either deemed to be material under federal regulations or deemed by the District to be material under the facts and circumstances. The Annual Report and the notices of significant events will be filed by the District or by a dissemination agent on behalf of the District with the Municipal Securities Rulemaking Board through its Electronic Municipal Market Access (EMMA) website. The specific nature of the information to be contained in the Annual Report or the notices of significant events is set forth in the form of Continuing Disclosure Certificate presented in APPENDIX E. Any failure by the District to comply with the provisions or the Continuing Disclosure Certificate is not an “Event of Default” as defined in the Fiscal Agent Agreement. The sole remedy upon any failure by the District to comply with the Disclosure Certificate will be an action to compel performance. See APPENDIX E–“FORM OF CONTINUING DISCLOSURE CERTIFICATE.” Past Instances of Non-Disclosure The District timely submitted its annual continuing disclosure information to its dissemination agent each year from 2009 through 2014. However, the District failed to fully link the continuing disclosure information to all of the applicable CUSIP numbers when it was posted on EMMA; certain of the annual reports were missing updates to certain financial data because those annual reports were not submitted in a format that could be uploaded, or did not include updates of some of the financial and operating data that was not available to the District and would have needed to be purchased from a third party provider; and the District did not file notices of certain rating changes; although such ratings were discussed in the management’s discussion section of the District’s annual audited financial report. The District made all remedial filings in September 2014 to address those instances of non- compliance, and in November 2014 the Board of Directors adopted policies and procedures to ensure compliance with its continuing disclosure undertakings. Those policies and procedures, became effective April 1, 2015, and include: identifying a disclosure coordinator within the organization to coordinate the preparation of annual reports by a dissemination agent on behalf of the District, file notices of listed events on EMMA and coordinate annual disclosure training sessions; and establishing a disclosure working group comprised of the General Manager, the Controller and the General Counsel to review and approve such Attachment 4 29 annual reports and notices of listed events. On June 25, 2015, the District engaged Goodwin Consulting Group to act as dissemination agent for its continuing disclosure reporting. UNDERWRITING The 2018 Green Bonds are being purchased by Morgan Stanley & Co. LLC (the “Underwriter”) pursuant to the terms and conditions of a bond purchase agreement between the District and the Underwriter, which provides that the Underwriter will purchase all of the 2018 Green Bonds if any are purchased, the obligation to make such purchase being subject to certain terms and conditions set forth in said agreement, the approval of certain legal matters by counsel and certain other conditions. The Underwriter has agreed to purchase the 2018 Green Bonds at a price equal to $________, which equals the principal amount of the 2018 Green Bonds ($________), plus original issue premium of $________, less an Underwriter’s discount of $________. The Underwriter intends to offer the 2018 Green Bonds to the public initially at the prices set forth on the inside cover page of this Official Statement, which prices may subsequently change without any prior notice. The Underwriter reserves the right to join with dealers and other underwriters in offering the 2018 Green Bonds to the public. The Underwriter may offer and sell Bonds to certain dealers (including dealers depositing Bonds into investment trusts) at prices lower than the public offering prices, and such dealers may re-allow any such discounts on sales to other dealers. In reoffering Bonds to the public, the Underwriter may over-allocate or effect transactions that stabilize or maintain the market prices for Bonds at levels above those that might otherwise prevail. Such stabilization, if commenced, may be discontinued at any time. Morgan Stanley, parent company of Morgan Stanley & Co. LLC, one of the Underwriters, has entered into a retail distribution arrangement with its affiliate Morgan Stanley Smith Barney LLC. As part of the distribution arrangement, Morgan Stanley & Co. LLC may distribute municipal securities to retail investors through the financial advisor network of Morgan Stanley Smith Barney LLC. As part of this arrangement, Morgan Stanley & Co. LLC may compensate Morgan Stanley Smith Barney LLC for its selling efforts with respect to the 2018 Green Bonds. LEGAL MATTERS Orrick, Herrington & Sutcliffe LLP, San Francisco, California, Bond Counsel to the District, will render the opinion substantially in the form of APPENDIX F hereto with respect to the validity of the 2018 Green Bonds. Certain legal matters will be passed upon for the District by its General Counsel and by Schiff Hardin LLP, San Francisco, California, Disclosure Counsel. Certain legal matters will be passed upon for the Underwriter by Hawkins Delafield & Wood LLP, San Francisco, California. Fees payable to Bond Counsel, Disclosure Counsel, and Underwriter’s Counsel are contingent upon issuance of the 2018 Green Bonds. Attachment 4 30 FINANCIAL ADVISOR The District has retained Backstrom McCarley Berry & Co., LLC, as Financial Advisor (the “Financial Advisor”) for the sale of the “2018 Green Bonds.” The Financial Advisor is not obligated to undertake, and has not undertaken to make, an independent verification, or to assume responsibility for the accuracy, completeness or fairness of the information contained in this Official Statement. NO MATERIAL LITIGATION The District is not aware of any pending or threatened litigation concerning the validity of the 2018 Green Bonds, or the District’s ability to receive ad valorem taxes and to collect other revenues, or contesting the District’s ability to issue the 2018 Green Bonds. Furthermore, the District is not aware of any pending or threatened litigation to restrain, enjoin, question or otherwise affect the political existence of the District or the validity of the Resolution, or in any way contesting or affecting the validity or enforceability of any of the foregoing or any proceedings of the District taken with respect to any of the foregoing. The District is routinely subject to lawsuits and claims. In the opinion of the District, the aggregate amount of the uninsured liabilities of the District under these lawsuits and claims will not materially affect the financial position or operations of the District. POST-ISSUANCE COMPLIANCE WITH FEDERAL TAX LAW The District follows certain post-issuance compliance procedures that are intended to ensure that proceeds of its tax-exempt bonds are invested and expended consistent with applicable federal tax law. In connection with the issuance of the 2016 Green Bonds, the District determined that a small portion of the proceeds of the Authority’s 2007 Series A Revenue Refunding Bonds (the “2007 Authority Bonds”) may have been applied for purposes that present a tax law compliance issue. The District redeemed the 2007 Authority Bonds and issued a portion of the 2016 Green Bonds as taxable bonds to address the situation. In addition, the District entered into a Closing Agreement on Final Determination Covering Specific Matters dated June 26, 2017 (the “Closing Agreement”) with the IRS under its Tax Exempt Bond Voluntary Closing Agreement Program (VCAP) with respect to the 2007 Authority Bonds to confirm their tax-exempt status. Pursuant to the Closing Agreement, the District made a payment to the IRS in the amount of $79,545.40. RATINGS Fitch Ratings (“Fitch”) has assigned its municipal bond rating of “___” to the 2018 Green Bonds. S&P Global Ratings (“S&P”) has assigned its municipal bond rating of “___” to the 2018 Green Bonds. These ratings reflect only the views of the rating agencies, and explanations of the significance of these ratings, and any outlooks assigned to or associated with these ratings, should be obtained from the respective rating agencies. Generally, a rating agency bases its rating on the information and materials furnished to it and on investigations, studies and assumptions of its own. The District has provided certain additional information and materials to the rating agencies (some of which does not appear in this Official Statement). Attachment 4 31 There is no assurance that these ratings will continue for any given period of time or that these ratings will not be revised downward or withdrawn entirely by the rating agencies, if in the judgment of the rating agencies, circumstances so warrant. Any such downward revision or withdrawal of any rating on the 2018 Green Bonds may have an adverse effect on the market price or marketability of the 2018 Green Bonds. FINANCIAL REPORTS Chavan & Associates, LLP, Certified Public Accountants (the “Auditor”), audited the financial report of the District for the 12 months ended June 30, 2017. The Auditor’s examination was made in accordance with generally accepted auditing standards and Governmental Auditing Standards, issued by the Comptroller General of the United States. See APPENDIX B–“ANNUAL FINANCIAL REPORT FOR FISCAL YEAR ENDED JUNE 30, 2017.” The District has not requested, and the auditor has not performed, any update or review of such statements in connection with their presentation in this Official Statement. The Auditor has not performed any post-audit review of the financial condition or operations of the District. (Remainder of this Page Intentionally Left Blank) Attachment 4 32 MISCELLANEOUS All of the descriptions of applicable law, the Fiscal Agent Agreement, the District, and the agreements and other documents contained herein are made subject to the provisions of such documents respectively and do not purport to be complete statements of any or all of such provisions. Reference is hereby made to such documents on file with the District for further information in connection therewith. This Official Statement does not constitute a contract with the purchasers of the 2018 Green Bonds. Any statements made in this Official Statement involving matters of opinion or estimates, whether or not so expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates will be realized. The execution and delivery of this Official Statement has been duly authorized by the Board of Directors of the District. MIDPENINSULA REGIONAL OPEN SPACE DISTRICT By: General Manager Attachment 4 A-i APPENDIX A DISTRICT GENERAL, FINANCIAL, AND OPERATING INFORMATION; AND ECONOMIC AND DEMOGRAPHIC INFORMATION REGARDING SANTA CLARA AND SAN MATEO COUNTIES TABLE OF CONTENTS DISTRICT GENERAL INFORMATION ............................................................................................... A-1 Administration .................................................................................................................................... A-1 Operations and Planning..................................................................................................................... A-3 DISTRICT FINANCIAL INFORMATION ............................................................................................. A-5 General ............................................................................................................................................... A-5 Fiscal Management Policies ............................................................................................................... A-6 Financial Policies ............................................................................................................................... A-6 Summary of Financial Reports ........................................................................................................... A-9 Long-Term Debt of the District ........................................................................................................ A-11 District Organization and Employee Relations ................................................................................ A-13 Employee Retirement System .......................................................................................................... A-13 Other Post-Employment Retirement Benefits .................................................................................. A-17 Risk Management ............................................................................................................................. A-19 ECONOMIC AND DEMOGRAPHIC INFORMATION REGARDING SANTA CLARA AND SAN MATEO COUNTIES ..................................................................................................................... A-21 General ............................................................................................................................................. A-21 Population ......................................................................................................................................... A-22 Employment and Industry ................................................................................................................ A-23 Personal Income ............................................................................................................................... A-26 Construction Activity ....................................................................................................................... A-28 Commercial Activity ........................................................................................................................ A-29 Attachment 4 A-ii LIST OF TABLES Table A-1 - District General Fund, Measure AA and Debt Service Fund Statement of Revenues, Expenditures and Changes in Fund Balances ..................................... A-9 Table A-2 - District Statement of Net Position .......................................................................... A-10 Table A-3 - District Outstanding Debt ....................................................................................... A-11 Table A-4A - Population Estimates .............................................................................................. A-22 Table A-4B - Population Projections by Age ............................................................................... A-22 Table A-5 - County of Santa Clara Annual Average Civilian Labor Force, Employment and Unemployment by Industry ............................................................................. A-23 Table A-6 - County of San Mateo Civilian Labor Force, Employment and Unemployment by Industry .................................................................................... A-24 Table A-7 - County of Santa Clara Largest Employers ............................................................. A-25 Table A-8 - County of San Mateo Major Employers ................................................................ A-26 Table A-9 - County of Santa Clara and County of San Mateo, State of California and United States Personal Income ............................................................................... A-27 Table A-10 - County of Santa Clara Building Permit Valuation ................................................ A-28 Table A-11 - County of San Mateo Building Permit Valuation .................................................. A-28 Table A-12 - County of Santa Clara Taxable Retail Sales, Number of Permits and Valuation of Taxable Transactions ......................................................................... A-29 Table A-13 - County of San Mateo Taxable Retail Sales, Number of Permits and Valuation of Taxable Transactions ......................................................................... A-29 Attachment 4 A-1 APPENDIX A DISTRICT GENERAL, FINANCIAL, AND OPERATING INFORMATION; AND ECONOMIC AND DEMOGRAPHIC INFORMATION REGARDING SANTA CLARA AND SAN MATEO COUNTIES The 2018 Green Bonds are payable solely from Revenues consisting primarily of the District’s share of the general one percent ad valorem property tax levied on property within the District by the County of Santa Clara and the County of San Mateo and allocated to the District. See “SECURITY AND SOURCE OF PAYMENT FOR THE 2017 SERIES BONDS” and “AD VALOREM PROPERTY TAXATION WITHIN THE DISTRICT” in the Official Statement. DISTRICT GENERAL INFORMATION The Midpeninsula Regional Park District (the “District”) was established in 1972, by voters of northwestern Santa Clara County. In 1976, voters approved expansion of the District to include southeastern San Mateo County. Later, the District became the “Midpeninsula Regional Open Space District.” With the final approval of the Coastside Protection Program in 2004, the District’s boundary was extended to the Pacific Ocean in San Mateo County, from the southern borders of Pacifica to the San Mateo County/Santa Cruz County border. The boundaries of the District include approximately 200 square miles in Santa Clara County and 350 square miles in San Mateo County. Since 1992, the District has added 2.6 square miles in Santa Cruz County, but the 1% ad valorem property tax is not levied on this land for the benefit of the District. Ad valorem taxes will be levied on the Santa Cruz parcels for the payment of District general obligation bonds, but the amount is expected to be minimal and is not presented in the tables in the Official Statement. The District includes 17 cities (Atherton, Cupertino, East Palo Alto, Half Moon Bay, Los Altos, Los Altos Hills, Los Gatos, Menlo Park, Monte Sereno, Mountain View, Palo Alto, Portola Valley, Redwood City, San Carlos, Saratoga, Sunnyvale, and Woodside). For a map of the District see page ii. Administration The Board of Directors originates, guides, and enforces District policies. As of Fiscal Year 2017-18, a 174.45-person budgeted full-time equivalent permanent staff administers the policies, headed by the General Manager, who is appointed by the Board of Directors. The current General Manager is Stephen E. Abbors. Set forth below are the names and expirations of the current terms for the members of the Board of Directors. Name Office Year First Elected Expiration of Current Term Pete Siemens, Ward 1 Secretary 1992 December 2018 Yoriko Kishimoto, Ward 2 Member 2010 December 2018 Jed Cyr, Ward 3 Treasurer 1996 December 2020 Curt Riffle, Ward 4 Vice President 2008 December 2020 Nonette Hanko, Ward 5 Member 1972 December 2018 Larry Hassett, Ward 6 President 2000 December 2018 Cecily Harris, Ward 7 Member 2008 December 2020 The executive management staff consists of three positions appointed by the Board of Directors; the General Manager, Controller, and General Counsel. Three management staff positions are appointed by the General Manager; the Chief Financial Officer and two Assistant General Managers. Attachment 4 A-2 The General Manager and the General Counsel each announced their retirement from the District effective on December 29, 2017. In January 2018, the Board of Directors expects to initiate a recruitment process to fill the General Manager position and conclude these efforts in spring 2018. Following the recruitment of a General Manager, the Board of Directors expects to initiate the recruitment process to fill the position of General Counsel. Brief resumes for the District executive management staff are set forth below. Stephen E. Abbors, General Manager. Mr. Abbors joined the District in early 2008 after a 24-year career managing watersheds and recreation for the East Bay Municipal Utility District, headquartered in Oakland, California. Prior to that, he was employed for over a decade by the East Bay Regional Park District, also headquartered in Oakland and the largest regional park district in the United States. He holds Bachelors and Masters Degrees in Biological Sciences from California State University, East Bay. Mr. Abbors has announced that he will retire from the District effective on December 29, 2017. Ana Ruiz, Assistant General Manager. Ms. Ruiz will become the Acting General Manager of the District on December 30, 2017. Ms. Ruiz joined the District in June 1998 as a Planning Technician in the Planning Department, and progressed through the ranks to Planning Manager in charge of site plans/master plans and large capital projects. In 2013 she was promoted to Assistant General Manager to oversee the Planning and Project Delivery business line and lead the Real Property, Planning, and Engineering and Construction Departments. In 2017, Ms. Ruiz transitioned to the Visitor and Field Services, Land and Facilities, and Natural Resources Departments. Ms. Ruiz has over 19 years of planning, design, permitting, environmental review, public engagement, project/land management, and executive management experience in open space, recreation, and environmental restoration. She earned her bachelor’s degree in Geological and Environmental Sciences from Stanford University, a Masters in Urban and Regional Planning from San Jose State University, and recently completed the Stanford University Local Governance Summer Institute Program. She is a Certified Planner by the American Institute of Certified Planners (AICP), the professional institute of the American Planning Association. Michael L. Foster, District Controller. Mr. Foster has served as District Controller since 1978. Mr. Foster received an undergraduate degree in economics and a Master of Business Administration degree from Stanford University. Sheryl Schaffner, Esq., General Counsel. Ms. Schaffner became the District’s General Counsel in March 2012. Ms. Schaffner has over 20 years of experience representing public agencies, including cities, counties and state agencies, in both public and private sector capacities. Prior to joining the District, she served as City Attorney to the Cities of San Ramon and Eureka. She has experience in the private sector, specializing in CEQA with a leading environmental firm, served as staff counsel to the California Department of Conservation, senior staff counsel to the State Water Resources Control Board and functioned as lead attorney for the San Francisco Bay and North Coast Regional Water Quality Control Boards. She provided pro bono counsel to the Yolo Land Trust and Davis Agricultural Land Trust. Ms. Schaffner received her J.D. from the University of California at Davis. Ms. Schaffner has announced that she will retire from the District effective on December 29, 2017. Hilary W. Stevenson, Esq., Assistant General Counsel. Ms. Stevenson will become the Acting General Counsel of the District on December 30, 2017. She has served the District as Assistant General Counsel since 2013 and has more than 10 years of experience practicing municipal law in the public sector. Prior to joining the District, Ms. Stevenson served as Assistant City Attorney in the City of East Palo Alto, Deputy City Attorney in Redwood City, and Deputy County Counsel in Santa Clara County. Before beginning her legal career, Ms. Stevenson worked as a consultant to the U.S. Environmental Protection Agency overseeing Superfund site cleanups. She received her J.D. from Santa Clara University and her B.S. and M.S. in Biological Sciences at Stanford University. Attachment 4 A-3 Brief resumes for the District management staff are set forth below: Stefan Jaskulak, Chief Financial Officer/Administrative Services Manager. Mr. Jaskulak joined the District in January 2016 as the District’s first Chief Financial Officer/Director of Administrative Services, overseeing Finance, Budget & Analysis, Human Resources, Procurement, Information Technology, Geospatial Information Systems and Grants Management. Mr. Jaskulak has over 25 years of in-depth financial management experience in both the private and municipal sectors, including financial operations, treasury systems and operations, risk, accounting, financial systems, overseeing budgetary functions and operations, and structured finance including utilizing short and long term debt instruments as part of a comprehensive finance program. He served as a member of the Government Finance Officers Association’s (GFOA) Treasury & Investment Management Committee from 2012 to 2017. Mr. Jaskulak earned his bachelor's degree in Business Administration from Loyola Marymount University and his Master in Business Administration from Newport University. Christine Butterfield, Acting Assistant General Manager. Ms. Butterfield joined the District in July 2017 as the Public Affairs Manager. She was appointed to serve as the Acting Assistant General Manager in October 2017. In this capacity, Ms. Butterfield is responsible for the Planning and Project Delivery business unit that includes the Planning, Construction and Engineering and Real Property Departments. She has 25 years of public sector experience working for and providing consulting services to local units of government in Illinois, Minnesota, Iowa, and California. She has a wide range of experience, including: disaster response and recovery, community development and redevelopment, planning, fiscal impact analyses, economic development, housing policy and development, Housing Choice Voucher and Community Development Block Grant program administration, code enforcement and permitting, communications, information technology, human resources and labor negotiations. Ms. Butterfield earned Bachelor’s Degrees in History and Political Science from the University of Minnesota and holds a Master’s Degree in Public Policy and Administration from the Robert M. La Follette School of Public Affairs at the University of Wisconsin. Operations and Planning The District’s chief method for preserving open space is to buy land, using District revenues and debt financing as well as State and federal grants, receive gifts of open space land and undertake joint projects with other governmental agencies and private nonprofit corporations. The District also has the power of eminent domain except within the 220 square mile Coastside Protection Area in San Mateo County, but the District cannot regulate land it does not own. The District cannot adopt zoning or other land use restrictions; this power lies mainly with the local jurisdictions within the District’s territory. As part of the District’s 2011 Strategic Plan, the Board of Directors unanimously approved the District’s revised strategic direction for a more balanced implementation of its three-part mission statement to achieve beneficial impacts in (i) land preservation, (ii) resource restoration and (iii) public access and recreation. This strategic direction served as the policy foundation for the development of the District’s 2014 Vision Plan, a 40-year plan that identified 54 projects located across the District’s jurisdiction, aiming to expand public access to new areas, improve recreational facilities, protect important open space, support viable working and agricultural lands, restore sensitive natural habitats, and support cultural and scenic landscape. Of the projects identified in the 2014 Vision Plan, 25 highest priority projects were identified to be financed with proceeds of general obligation bonds issued by the District. Attachment 4 A- 4 Attachment 4 A-5 DISTRICT FINANCIAL INFORMATION General The District keeps its books using the California State Controller’s fund accounting principles for special districts, with a modified accrual basis of accounting in which the District generally recognizes revenues when they become both available and measurable and expenditures when it incurs the obligation (except for interest on long-term debt, which the District recognizes when it falls due). From 1989 through 2015, the District’s fiscal year was April 1 through March 31. On July 22, 2015, in order to improve transparency over reporting financial transactions and overall operations, the Board of Directors adopted Resolution No. 14-000 changing the fiscal year of the District to July 1 through June 30, and extending fiscal year 2015-16 by three months to conclude June 30, 2016. The District’s certified public accountants are currently Chavan & Associates, LLP. See APPENDIX B for the District’s audited financial report for the fiscal year ending June 30, 2017. Due to the change in fiscal year, financial information presented in Tables A-1, A-2 and A-3 is not comparable to financial information presented in the audited financial reports for the fiscal years ending prior to June 30, 2016. Over the last six fiscal years, property taxes comprised 90% to 94% of the District’s total general fund revenue, excluding land donations and land acquisition grants. The District’s primary expenditures are for debt service, capital expenditures for land and preserve improvements, and land management and administrative expenses. The capital expenditures are made at the District’s discretion and approximately 80% of such capital spending in Fiscal Year 2016-17 was funded from proceeds of the issuance of general obligation bonds approved by more than two-thirds of the qualified voters of the District on June 3, 2014 (“Measure AA”). Pursuant to Measure AA, the District may issue $300 million of general obligation bonds to fund 25 key projects. The first series of Measure AA general obligation bonds, in the principal amount of 45 million, was issued in August 2015. The District expects that the great majority of future capital expenditures for land acquisitions and preserve development will be funded from proceeds of future issuances of Measure AA bonds. The one significant planned capital project requiring funding from the general fund is the purchase and refurbishment of a new administrative office building and at least one new field office. The cost of this project is estimated at between $42 and $46 million, which will be funded from existing committed reserves and the proceeds of the 2017 Series B Parity Bonds, partially offset by proceeds from the future sale of the current District-owned administrative office building. Measure AA funds may be used to fund projects that improve access to hiking and biking opportunities, protect and preserve redwood forests, natural open spaces, the scenic beauty of the region, coastline, and critical wildlife habitat, restore creeks to protect water quality, and reduce forest fire risk, and estimates the levy of an annual tax in an amount not to exceed $3.18 per $100,000 of assessed value of property owned to pay debt service on Measure AA bonds. Measure AA funds are authorized to be used only to fund the 25 key capital projects identified in the 2014 Vision Plan of the District. Expenditures of Measure AA funds are required to be verified by an independent citizen oversight committee that consists of seven at-large members who reside within the District. The Oversight Committee, which is expected to convene at least once a year, reviews the Measure AA expenditures and the Annual Audit and Accountability report of the District, and presents its findings to the Board of Directors. Land management and administrative expenses increase subject to changing management policy and controls. Since the voter approval of Measure AA, the District has increased staff and outside resources in order to implement the 25 Measure AA funded projects. Operating expenses have since increased from the prior ratio of approximately 50% of general fund tax revenue to over 60% in Fiscal Year 2016-17. The Attachment 4 A-6 District anticipates that implementation and maintenance of these capital projects will necessitate a continuing increase in the ratio of operating expenses to general fund tax revenue to an estimated 65% in Fiscal Year 2017-18, to 70% by Fiscal Year 2023-24, and to approximately 80% by Fiscal Year 2031-32. Driven by the continued strong economy in Silicon Valley, District general fund tax revenue again increased above its long-term trend line in the 12 months ended June 30, 2017, growing by $4.1 million, or approximately 7.2% compared to the 12 months ended June 30, 2016. The District receives approximately 66% of its tax revenue from the County of Santa Clara and 34% from the County of San Mateo. The District purchased $4.2 million of land and associated structures in Fiscal Year 2016-17, all of which was funded from Measure AA bond proceeds. Total capital spending for 2016-17 was $21.3 million of which $16.9 million was funded by Measure AA bond proceeds, and $4.4 million was funded from the general fund. The District manages its expenditures within the annual budget. Excluding Measure AA capital projects, total District Fiscal Year 2016-17 spending of $37.9 million was $2.7 million, or 7%, under budget. Under California law, the District may acquire land or facilities by borrowing money or by purchasing on contract, subject to certain limits (based on tax revenues projected for the five years following the borrowing). The law limits the annual interest rate to 12%. For purchase money financings using District promissory notes, the borrowing term may not exceed 30 years. The District has never defaulted in the payment of any of its debt or other obligations. Fiscal Management Policies Fund Balance Policy. On November 25, 2014, the Board of directors adopted a Fund Balance Policy in Accordance with GASB Statement No. 54 (the “Fund Balance Policy”). The stated purpose of the Fund Balance Policy is to: (i) provide adequate funding to meet the District’s short-term and long-term plans, (ii) provide funds for unforeseen expenditures related to emergencies such as natural disasters, (iii) strengthen the financial stability of the District against present and future uncertainties such as economic downturns and revenue shortfalls, and (iv) maintain an investment-grade bond rating. The Fund Balance Policy identifies the required components of fund balance, the level of management authorized to approve or change target balances in each fund, the amounts that the District will strive to maintain in each fund, and the conditions under which fund balances may be spent, reimbursed and reviewed. The Reserve Policy was developed, with input from the District auditors, to meet the requirements of GASB Statement No. 54– “Fund Balance Reporting and Governmental Fund Type Definitions.” The components of the Fund Balance Policy of the District are summarized below: • Non-Spendable fund balance includes amounts that cannot be spent either because they are not in spendable form. • Restricted fund balance includes amounts that are constrained for specific purposes which are externally imposed by constitutional provisions, enabling legislation, creditors, or contracts. • Committed fund balance includes amounts that are constrained for specific purposes that are internally imposed by the District Board of Directors. • Assigned fund balance includes amounts that are intended to be used for specific purposes that are neither restricted nor committed. Attachment 4 A-7 • Unassigned fund balance includes amounts within the general fund which have not been classified within the above categories. The minimum amount of unassigned fund balance is calculated as 30% of the Budgeted General Fund Tax Revenue. Restricted Funds are comprised of the following: • Retiree Healthcare Plan Fund - Established in 2008 with a $1.9 million contribution to the California Employers’ Retiree Benefit Trust. See also “–Employee Retirement System.” • Hawthorns Fund - Established in 2011 with a $2.0 million endowment from the Woods Family Trust, to provide stewardship funding for the Hawthorns property in Portola Valley. Committed Funds are comprised of the following: • Infrastructure Fund – Established in fiscal year 2015-16 to expand field and office facilities to implement the 2011 Strategic Plan, 2014 Vision Plan, and Measure AA projects. • Equipment Replacement Fund – To replace field and office equipment and vehicles, over time, in connection with the implementation of the 2011 Strategic Plan, 2014 Vision Plan, and Measure AA projects. • Natural Disaster Fund – To permit the District to undertake emergency expenditures required to respond quickly to a major fire, earthquake or flood. Funding for such expenditures is not available from general obligation bonds under Measure AA. The Board of Directors most recently reviewed and updated the list of required reserves and reserve balances on October 26, 2016. The total amount reserved for committed funds was increased by $5 million to $35.4 million. Any spending from the unassigned fund requires approval of the Board of Directors and reimbursed from the general fund within two years. The general fund has a minimum balance requirement of 30% of budgeted general fund tax revenue, equal to $13.5 million for Fiscal Year 2017-18. The Fund Balance Policy may be changed by the District at any time. Investment Policy. The District annually adopts an investment policy (the “Investment Policy”) governing the investment of District funds. The primary goals of the Investment Policy are: Capital Preservation – safeguard the principal of invested funds; Liquidity – managing the fund so that normal operating cash needs and scheduled extraordinary cash needs of the District can be met on a same day basis; and Income – funds shall earn the highest rate of return that is consistent with capital preservation and liquidity goals and the California Government Code. Pursuant to the Investment Policy, investments and deposits of funds are limited to those allowed by and subject to the procedures of Government Code Section 53600 et seq. and 53635 et seq. In the event of any conflict between the terms of the Investment Policy, and the Government Code, the provisions of the Government Code prevail. The Investment Policy does not permit investments to be leveraged or investment in “derivatives” that offer opportunities for significant capital gains and losses. The Board of Directors is required annually to designate the minimum amount of unassigned fund balance to be held in reserve in consideration of unanticipated events that could adversely affect the financial condition of the District and jeopardize the continuation of necessary public services. Any Attachment 4 A-8 spending from the minimum general fund reserve requires the approval of the Board of Directors and is expected to be reimbursed within two years. The current Investment Policy, adopted by the Board of Directors on August 9, 2017 is attached as APPENDIX C. Debt Management Policy. On July 12, 2017, the Board of Directors adopted a debt management policy (the “Debt Management Policy”). The stated purpose of the Debt Management Policy is to: (i) establish the overall parameters for issuing, structuring, and administering the debt of the District in compliance with applicable federal and State securities laws. The Debt Management Policy was developed in conjunction with the procedures for Initial and Continuing Disclosure Relating to Bond Issuances summarized below. The Board of Directors is required to annually review and affirm the Debt Management Policy. Procedures for Initial and Continuing Disclosure Relating to Bond Issuances. On April 1, 2015, the District adopted procedures related to Initial and Continuing Disclosure Relating to Bond Issuances (the “Disclosure Procedures”) to ensure that statements or releases of information to the public that are reasonably expected to reach investors and the trading markets relating to the finances of the District are complete, true, and accurate in all material respects, and in compliance with applicable federal and State securities laws. The current Disclosure Procedures were adopted by the Board of Directors on March 22, 2017. (Remainder of this Page Intentionally Left Blank) Attachment 4 A-9 Summary of Financial Reports Table A-1 presents selected audited cash flow, balance sheet and budget information for the fiscal year ended March 31, 2013 through 2015 and for the fiscal years ended June 30, 2016 and 2017. On July 22, 2015, the Board of Directors adopted Resolution No. 14-000 changing the fiscal year of the District to July 1 through June 30, and extending fiscal year 2015-16 by three months to conclude June 30, 2016. Therefore, financial information for fiscal years ending on and after June 30, 2016 is not comparable to financial information prior to that date. Table A-2 presents the Statement of Net Position for the fiscal years ended June 30, 2016 and 2017. Table A-1 District General Fund, Measure AA and Debt Service Fund Statement of Revenues, Expenditures and Changes in Fund Balances Fiscal Years Ending March 31, 2013 through 2015 and June 30, 2016(1) and 2017 ($ in Thousands) As of March 31 As of June 30 General Fund Debt Service Fund 2013 2014 2015 2016(1)2017 2016(1) 2017 REVENUES: Property Taxes(2) $30,270 $32,433 $35,082 $43,204 $42,282 1,776 1,579 Development Grants 538 1,676 953 223 651 Property Management ___ ___ 1,437 1,636 1,479 Interest 288 150 175 454 313 27 3 Other(3) 1,527 1,567 1,678 644 609 TOTAL OPERATING REVENUES 32,623 35,826 37,887 46,160 45,334 1,803 1,582 EXPENDITURES: Salaries and Benefits 11,836 13,079 13,630 22,077 18,890 Services and other(4) 5,567 5,259 6,162 6,147 5,613 SUBTOTAL 17,403 18,337 19,791 28,224 24,503 DEBT SERVICE(5): Principal Repayment 2,843 2,999 3,145 4,367 5,193 Interest 6,034 5,859 5,749 6,478 6,404 Issuance Cost – – – – 786 SUBTOTAL DEBT SERVICE 8,877 8,858 8,894 10,845 12,383 SUBTOTAL EXPENDITURES 26,280 27,196 28,685 28,224 24,503 OPERATING CASH FLOW 6,343 8,630 9,202 17,936 20,831 (9,042) (10,801) OTHER NON-OPERATING ITEMS (NET) 2,520 (1,971) – STRUCTURES AND IMPROVEMENTS 2,206 3,561 2,209 PROPERTY ACQUISITION (NET)(6) 5,820 3,410 4,717 EXCESS OF REVENUES OVER EXPENDITURES (4,202) 3,630 2,276 17,936 PROCEEDS FROM NOTES PAYABLE 0 0 (1,620) 0 NET EXCESS (4,202) 3,630 656 17,936 STARTING FUND BALANCE 43,349 39,147 42,776 48,681 54,229 ENDING FUND BALANCE $39,147 $42,776 $43,432 $54,229 $61,299 _____________ (1) For the 15 months ending June 30, 2016. (2) Property taxes under the Debt Service Fund for the Fiscal Years ending June 30, 2015 and 2016 are exclusively the Measure AA tax increment. (3) Excludes donations of land. (4) Excludes Structures & Improvements. (5) Excludes Measure AA general obligation bonds. (6) Includes cost of land acquired net of associated grant and gift income. (7) As adjusted. Sources: District audited financial reports. Attachment 4 A-10 Table A-2 District Statement of Net Position As of June 30 2016† 2017 ASSETS Current Assets: Cash and investments $81,598,301 $77,020,898 Accounts receivable: Deposits 1,537,825 587,047 Rent 3,506 5,278 Interest 168,025 – Due from other governments: Taxes receivable 11,792 221 Other current assets 15,622 55,093 TOTAL CURRENT ASSETS $83,335,071 $77,668,537 Noncurrent Assets: Net OPEB asset 699,015 – Notes receivable 151,425 134,317 Unamortized issuance costs 1,006,500 772,042 Non-depreciable capital assets 410,996,958 427,006,396 Capital assets, net of depreciation 17,457,931 20,127,443 TOTAL NONCURRENT ASSETS 430,311,829 448,040,198 TOTAL ASSETS $513,646,900 $525,708,735 Deferred Outflows of Resources Pension change to adjustments $6,990,099 $8,659,986 Deferred loss on early retirement of long-term debt 2,284,028 6,976,997 TOTAL DEFERRED OUTFLOWS OF RESOURCES $9,274,127 $15,636,983 LIABILITIES Current Liabilities: Accounts payable $1,137,971 $5,220,064 Deposits payable 98,770 104,932 Payroll and other liabilities 975,391 1,506,227 Accrued interest 2,284,000 1,956,000 TOTAL CURRENT LIABILITIES 4,496,132 8,787,223 Noncurrent Liabilities: Due within one year 5,465,679 7,423,614 Due after one year 188,146,420 186,494,779 TOTAL NONCURRENT LIABILITIES 193,612,099 193,918,393 TOTAL LIABILITIES $198,108,231 $202,705,616 Deferred Inflows of Resources Pension adjustments $3,352,133 $2,071,424 NET POSITION Net investment in capital assets $276,394,511 $308,600,974 Restricted for: Debt service 3,116,266 2,193,934 Hawthorne maintenance 1,971,040 1,971,040 OPEB 699,015 806,023 TOTAL RESTRICTED $5,786,321 $4,970,997 UNRESTRICTED 39,279,831 23,830,941 TOTAL NET POSITION $321,460,663 $337,502,912 ____________ † For the 15 months ending June 30, 2016. Source: District audited financial reports. Attachment 4 A-11 See APPENDIX B for the District’s audited financial report for the period ended June 30, 2017. The District has not requested, and the auditor has not performed, any update or review of such statements in connection with their presentation in this Official Statement. Long-Term Debt of the District Set forth below is a table presenting the long-term obligations payable by the District (each, a “Long-Term Obligation”), outstanding at June 30, 2017. Table A-3 District Outstanding Debt ($ in Thousands) As of June 30, 2017 Obligation Original Outstanding 2017-18 Final Obligation Amount 6/30/2017 Debt Service Payment PAYABLE FROM THE GENERAL FUND Senior Obligations: 2011 Authority Bonds(1) $20,500 $1,080 $189 September 2022 2012 Refunding Notes(2) 31,265 34,700 1,035 September 2042 2015 Refunding Notes 23,630 22,550 1,822 September 2034 2016 Green Bonds, Series A 54,490 54,490 3,064 September 2038 2016 Green Bonds, Series B (Taxable) 2,920 2,920 2,931 September 2017 Subtotal Senior Obligations 132,805 115,740 9,041 Subordinate Obligations: Daloia Promissory Note (Sierra Azul) 240 11 11 October 2017 Hunt Promissory Note (Bear Creek) 1,500 1,500 75 April 2023 Subtotal Subordinate Obligations 1,740 1,511 86 SUBTOTAL GENERAL FUND 134,545 117,251 9,127 PAYABLE FROM MEASURE AA 2015 General Obligation Bonds, Series A 40,000 40,000 1,636 September 2045 2015 General Obligation Bonds, Series B (Taxable) 5,000 4,225 957 September 2021 SUBTOTAL MEASURE AA 45,000 44,225 2,593 TOTAL $179,545 $161,476 $11,720 ____________ (1) Payable from District Notes pledged to the Authority. (2) Outstanding balance for 2012 Refunding Notes includes accreted interest of $5,114,953 as of June 30, 2017. Source: District Controller. Promissory Notes Daloia Land Purchase Contract Promissory Note (Sierra Azul). During the fiscal year ending March 31, 2003, the District entered into a land purchase contract promissory note in the amount of $240,000. The promissory note bore interest at a fixed rate of 6.25% and matured October 10, 2017. At June 30, 2017, the outstanding balance on this note was $11,067. Attachment 4 A-12 Hunt Living Trust Promissory Note (Bear Creek). On April 1, 2003, the District entered into a $1,500,000 promissory note with the Hunt Living Trust as part of a lease and management agreement. The repayment of this note is junior and subordinate to all outstanding and subsequent notes, bonds, leases, or other obligations secured by property tax revenues of the District or subsequent pledges of revenues created by the District. The note is due in full on April 1, 2023, but the owner can demand repayment at any time, and bears interest at 5.0% per annum until the maturity or prior redemption of the note. At June 30, 2017, the outstanding balance on the note was $1,500,000. 2012 Refunding Promissory Notes. On January 19, 2012, the District advance refunded $34,652,643 in 1999 Lease Revenue Bonds by issuing $31,264,707 in promissory notes. The 2012 notes bear interest rates ranging from 2.00% to 6.04%. The notes are a blend of current interest and capital appreciation notes maturing through 2042. Net proceeds of $33,295,663 (after payment of $278,683 in underwriting fees, insurance, and other issuance costs, and a premium of $2,309,638) were used to purchase U.S. government securities. Those securities were deposited in an irrevocable trust with an escrow agent to provide for all future debt service payments on the 1999 Series bonds. As a result, the 1999 Series bonds are considered to be defeased and the liability for those bonds has been removed from the long-term debt in the financial reports. At June 30, 2017, the outstanding balance of the current interest bonds was $15,474,708, and the outstanding balance of the capital appreciation bonds was $15,474,708 2015 Refunding Promissory Notes (2004 Project Lease). On January 22, 2015, the District currently refunded $31,900,009.95 of the Authority’s 2004 Revenue Bonds by issuing $23,630,000 in promissory notes. The 2015 notes bear interest rates ranging from 2.00% to 5.00%. The final maturity of the notes is September 1, 2034. The net proceeds of $30,904,975.22 (after payment of $253,008.62 in underwriting fees, and other issuance costs and a premium of $4,948,499.70) together with $2,326,475.22 of funds related to the 2004 Revenue Bonds were used to purchase U.S. government securities. Those securities were deposited in an irrevocable trust with an escrow agent to redeem the 2004 Revenue Bonds in full on March 1, 2015. At June 30, 2017, the outstanding balance of these notes was $22,550,000. General Obligation and Revenue Bonds 2011 Authority Bonds. On May 19, 2011, the Authority, on behalf of the District, issued $20,500,000 of 2011 Revenue Bonds (the “2011 Authority Bonds”) for the purpose of acquiring land to preserve and use as open space and pay bond issue and related costs. The 2011 Authority Bonds are lease revenue bonds. Each year, the District appropriates revenues–mainly limited property tax collections that the County of Santa Clara and the County of San Mateo County allocate to the District–to pay its obligations under a Lease Agreement for use and occupancy of District land in addition to other District debt and lease obligations unrelated to this financing. The 2011 Authority Bonds bear interest at 2.0% to 6.0% and are due semi-annually on March 1 and September 1. Principal payments on the 2011 Authority Bonds are due annually September 1, and mature on September 1, 2021. At June 30, 2017, the outstanding balance of these bonds was $1,080,000. 2015 General Obligation Bonds. On July 29, 2015, the District, issued $40,000,000 of General Obligation Bonds, Series 2015A and $5,000,000 of General Obligation Bonds, Series 2015B (Federally Taxable) (together, the “2015 General Obligation Bonds”) to finance certain projects authorized by the voters of the District, and to pay bond issue and related costs. The 2015 General Obligation Bonds bear interest at 1.5% to 5.0% and are due semi-annually on March 1 and September 1. Principal payments on the 2015 General Obligation Bonds are due annually September 1. At June 30, 2017, the aggregate outstanding balance of these bonds was $44,225,000. Attachment 4 A-13 2016 Green Bonds. On September 8, 2016, the District, issued $54,490,000 of Green Bonds, 2016 Refunding Series A and $2,920,000 of Green Bonds, 2016 Refunding Series B (Federally Taxable) (together, the “2016 Green Bonds”) to refund its obligations under certain of the 2007 Notes that secured the 2007 Authority Bonds, prepay a portion of its obligations under the lease securing the 2011 Authority Bonds, and pay bond issue and related costs. The 2016 Green Bonds bear interest at 0.73% to 5.00% and are due semi-annually on March 1 and September 1. Principal payments on the 2016 Green Bonds are due annually September 1. At June 30, 2017, the aggregate outstanding balance of these bonds was $57,410,000. District Organization and Employee Relations As of June 30, 2017, the District had 135 permanent full-time equivalent employees who received benefits. Certain field employees are represented through a Memorandum of Understanding by and between the District and the Midpeninsula Regional Open Space District (“MROSD”) Field Employee Association. Negotiations with MROSD are expected to commence in early 2018, with a new MOU approved by the Board of Directors on or about July 1, 2018. Labor Organization Represented Employees Contract Expiration MROSD Employees Field Association 46 June 30, 2018 Employee Retirement System Plan Description. The District provides benefits to eligible employees through cost-sharing multiple employer defined benefit pension plans (the Plan(s)) administered by the California Public Employees’ Retirement System (CalPERS). Members of the Plan include all permanent employees working full-time. Benefit provisions under the Plans are established by State statute and District resolution. CalPERS issues publicly available reports that include a full description of the pension plans regarding benefit provisions, assumptions and membership information that can be found on the CalPERS website. Benefits Provided. CalPERS provides retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of full-time employment. Members with five years of total service are eligible to retire at age 55 with statutorily reduced benefits. All members are eligible for non-industrial disability benefits after 10 years of service. The death benefit is the Optional Settlement 2W Death Benefit. The cost of living adjustments for the Plan are applied as specified by the Public Employees’ Retirement Law. The Plan’s provisions and benefits in effect at June 30, 2017, are summarized as follows: Miscellaneous Tier 1 Tier 2 PEPRA Benefit formula 2% @ 55 2% @ 60 2% @ 62 Benefit vesting schedule 5 years of service 5 Years 5 Years Benefit payments Monthly for Life Monthly for Life Monthly for Life Retirement age 55 60 62 Monthly benefits, as a % of eligible compensation 2.0% to 2.5% 2.0% to 2.5% 2.00% Required employees contribution rates 7.944% 7.944% 6.313% Required employer contribution rates 10.069% 10.069% 6.555% At June 30, 2017, 306 employees were covered by the Plan, consisting of 134 active, 48 transferred, 62 separated, and 62 retired members. Attachment 4 A-14 Contributions. Section 20814(c) of the California Public Employees’ Retirement Law requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. Funding contributions for the Plan are determined annually on an actuarial basis as of June 30 by CalPERS. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The District is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. 2015 2016 2017 Contractually Required Contributions (Actuarially Determined) $1,461,069 $1,358,520 $1,514,352 Contributions in Relation to Actuarially Determined Contributions 1,461,069 1,350,520 1,514,352 Contribution Deficiency (Excess) –– – Covered Employee Payroll $8,994,979 $9,862,578 $11,834,150 Contributions as a Percentage of Covered Payroll 16.24% 13.77% 12.80% Notes to Schedule: Valuation Date: June 30, 2015 Assumptions Used: Entry Age Method used for Actuarial Cost Method Level Percentage of Payroll (Closed) Used Amortization Method 3.7 Years Remaining Amortization Period Inflation Assumed at 2.75% Investment Rate of Returns set at 7.5% CalPERS mortality table using 20 years of membership data for all funds _____________ ** Fiscal year 2015 was the first year of implementation, therefore only three years are shown. Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions. As of June 30, 2017, the District reported net pension liabilities for its proportionate shares of the net pension liability of the Plan as follows: Proportionate Share of Net Pension Liability Miscellaneous Plan $10,121,906 The District’s net pension liability for the Plan is measured as the proportionate share of the net pension liability. The net pension liability of the Plan is measured as of June 30, 2016, and the total pension liability for the Plan used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2015 using standard procedures. The District’s proportion of the net pension liability was based on a projection of the District’s long-term share of contributions in to the pension plan relative to the projected contributions of all participating employers, as actuarially determined. The District’s proportionate share of net pension liability for the Plan as of June 30, 2015, 2016, and 2017 was as follows: 2015 2016 2017 Proportion of Net Pension Liability 0.39847% 0.41627% 0.29137% Proportionate Share of Net Pension Liability $9,848,203 $11,420,126 $10,121,906 Covered Employee Payroll $8,994,979 $9,862,578 $11,834,150 Proportionate Share of NPL as a % of Covered Employee Payroll 109.49% 115.79% 85.53% Plan’s Fiduciary Net Pension as a % of the TPL 76.19% 73.93% 80.93% _____________ ** Fiscal year 2015 was the first year of implementation, therefore only three years are shown. Attachment 4 A-15 Actuarial Assumptions. The total pension liabilities in the June 30, 2016 actuarial evaluations were determined using the following actuarial assumptions: Valuation Date June 30, 2015 Measurement Date June 30, 2016 Actuarial Cost Method Entry-Age Normal Cost Method Actuarial Assumptions: Discount Rate 7.65% Inflation 2.75% Payroll Growth 3.00% Projected Salary Increase (1) Investment Rate of Return 7.5%(2) Mortality (3) ___________ (1) Varies by age and service. (2) Net of pension plan investments expenses, including inflation. (3) Derived using CalPERS’ membership data for all funds. Discount Rate. The discount rate used to measure the total pension liability was 7.65% for the Plan. To determine whether the municipal bond rate should be used in the calculation of a discount rate for the Plan, CalPERS stress tested plans that would most likely result in a discount rate that would be different from the actuarially assumed discount rate. Based on the testing, none of the tested plans run out of assets. Therefore, the current 7.65% discount rate is adequate and the use of the municipal bond rate calculation is not necessary. The long term expected discount rate of 7.65% 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. CalPERS was scheduled to review all actuarial assumptions as part of its regular Asset Liability Management (ALM) review cycle that was scheduled to be completed in February 2018. Any changes to the discount rate will require Board action and proper stakeholder outreach. For these reasons, CalPERS expects to continue using a discount rate net of administrative expenses for GASB 67 and 68 calculations through at least the 2017-18 Fiscal Year. CalPERS will continue to check the materiality of the difference in calculation until such time as they have changed their methodology. The long-term expected rate of return n pension plan investments was determined using a building-block method in which best-estimate ranges of expected future rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. For additional information regarding the major asset classes see APPENDIX B–“ANNUAL FINANCIAL REPORT FOR FISCAL YEAR ENDED JUNE 30, 2017–Note 8– EMPLOYEE RETIREMENT SYSTEMS–Discount Rate.” On December 21, 2016, the CalPERS Board lowered the discount rate from 7.50% to 7.00% using a three-year phase-in beginning with the June 30, 2016 actuarial valuations. The minimum employer contributions for Fiscal Year 2018-19 determined in this valuation were calculated using a discount rate of 7.375%. The projected employer contributions are calculated assuming that the discount rate will be lowered to 7.25% for Fiscal Year 2019-20 and to 7.00% for Fiscal Year 2020-21 as adopted by the CalPERS Board. The decision to reduce the discount rate was primarily based on reduced capital market assumptions provided by external investment consultants and CalPERS investment staff. The specific decision adopted by the CalPERS Board reflected recommendations from CalPERS staff and additional input from employer and employee stakeholder groups. Based on the investment allocation adopted by the CalPERS Board and capital market assumptions, the reduced discount rate assumption provides a more realistic assumption for the long term investment return of the fund. Attachment 4 A-16 Notwithstanding the decision of the CalPERS Board to phase into a 7.0% discount rate, subsequent analysis of the expected investment return of CalPERS assets or changes to the investment allocation may result in a change to this three year discount rate schedule. A comprehensive analysis of all actuarial assumptions and methods including the discount rate is being conducted. Sensitivity of Proportionate Share of Net Pension Liability to Changes in the Discount Rate. The following presents the District’s proportionate share of the net pension liability for the Plan, calculated using the discount rate for the Plan, as well as what the District’s proportionate share of net pension liability would be if it were calculated using a discount rate that is 1-percentage point lower or 1-percentage point higher than the current rate: Miscellaneous 1% Decrease 6.65% Net Pension Liability $17,266,599 Current Discount Rate 7.65% Net Pension Liability $10,121,906 1% Increase 8.65% Net Pension Liability $4,217,172 In June 2016, the District made a $3 million prepayment to CalPERS, to be applied to reduce its unfunded pension liability, and in June 2017, the District made an additional $1 million prepayment to CalPERS. Pension Reform Act of 2013 (Assembly Bill 340). On September 12, 2012, the Governor of the State signed AB 340, a bill that enacted the California Public Employees’ Pension Reform Act of 2013 (“PEPRA”) and that also amended various sections of the California Education and Government Codes, including the County Employees Retirement Law of 1937. AB 340 (i) increased the retirement age for new State, school, and city and local agency employees depending on job function, (ii) capped the annual CALPERS pension benefit payout, (iii) addressed numerous abuses of the system, and (iv) required State, school, and certain city and local agency employees to pay at least half of the costs of their CalPERS pension benefits. PEPRA applies to all public employers except the University of California, charter cities and charter counties (except to the extent they contract with CalPERS.) The provisions of AB 340 became effective on January 1, 2013 with respect to State employees hired on that date and after; local government employee associations, including employee associations of the District, have a five-year window to negotiate compliance with AB 340 through collective bargaining. If no deal is reached by January 1, 2018, a city, public agency or school district could force employees to pay their half of the costs of CalPERS pension benefits, up to 8% of pay for civil workers and 11% or 12% for public safety workers. CalPERS predicts that the impact of AB 340 on employers, including the District, and employees will vary, based on each employer’s current level of benefits. To the extent that the new formulas lower retirement benefits, employer contribution rates could decrease over time as current employees retire and employees subject to the new formulas make up a larger percentage of the workforce. This change would, in some circumstances, result in a lower retirement benefit for employees than they currently earn. Additionally, CalPERS notes that changes arising from AB 340 could ultimately have an adverse impact on public sector recruitment in areas that have historically experienced recruitment challenges due to higher pay for similar jobs in the private sector. Attachment 4 A-17 More information about AB 340 can be accessed through CalPERS’s website at www.calpers.ca.gov. The reference to this internet website is shown for reference and convenience only; the information contained within the website may not be current and has not been reviewed by the District and is not incorporated herein by reference. The District is unable to predict what the amount of CalPERS liabilities will be in the future or the amount of the CalPERS contributions which the District may be required to make, all as a result of the implementation of AB 340, and as a result of negotiations with its labor organization. Other Post-Employment Retirement Benefits The District joined the California Employers’ Retiree Benefit Trust (“CERBT”), an agent multiple- employer plan administered by CalPERS, consisting of an aggregation of single-employer plans. The Board of Directors authorized a deposit of $1,900,000 in CERBT on June 5, 2008, to begin funding its other post- employment benefits (“OPEB”) liability. By Board of Directors resolution and through agreements with its labor unit, the District provides certain health care benefits for retired employees (spouse and dependents are not included) under third- party insurance plans. A summary of eligibility and retiree contribution requirements are shown below: Eligibility Retire directly from the District under CalPERS (age 50 and 5 years of service) Continue participation in Public Employees Medical and Hospital Care Act (PEMHCA) Retiree Medical Benefit District pays retiree premiums up to: =>$300/month effective 1/1/07 =>$350/month effective 1/1/09 Must be at least equal to statutory PEMHCA minimum ($122 in 2015, $125 in 2016) PEMHCA Administrative Fee District pays CalPERS administrative fees (0.32% of premiums for Fiscal Year 2015-16) Surviving Spouse Continuation Retiree benefit continues to surviving spouse if retiree elects survivor annuity under CalPERS retirement plan Other OPEB None As of June 30, 2017, there were 134 active employees, 48 transferred employees, 62 separated employees, and 62 retirees, who are eligible to receive retirement health care benefits. Funding Policy. In accordance with the District’s budget, the Annual Required Contribution (“ARC”) is to be funded throughout the year as a percentage of payroll. Concurrent with implementing GASB Statement No. 45, the Board of Directors passed a resolution to participate in CERBT, an irrevocable trust established to fund OPEB. CERBT is managed by an appointed board not under the control of the District and is excluded from its financial statements. CERBT is not considered a component unit by the District. Separately issued financial statements for CERBT may be obtained from CalPERS at P.O. Box 942709, Sacramento, California 94229-2709. Annual OPEB Cost and Net OPEB Assets. The District’s annual OPEB cost is calculated based on the ARC, an amount actuarially determined in accordance with the parameters of GASB Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each period and amortize any unfunded actuarial liabilities (or funding excess) over a period not to Attachment 4 A-18 exceed 30 years. The following table shows the components of the District’s annual OPEB cost for the period, the amount actually contributed to the plan, and changes in the District’s net OPEB obligation: Description Balance Annual Required Contribution $572,000 Interest on net OPEB asset (43,000) Adjustment to Annual Required Contribution 62,000 Annual OPEB cost (expense) 591,000 Contributions made 298,008 Decrease in net OPEB asset 292,992 Net OPEB obligation (asset)–beginning (699,015) Net OPEB obligation (asset)–ending ($406,023) The District’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2017 was as follows: Annual OPEB Percentage Net Period Ended Cost Contributed OPEB Obligation (Asset) March 31, 2015 $298,000 53% (863,176) June 30, 2016 386,000 57 (699,015) June 30, 2017 591,000 50 (406,023) ______________ Sources: Midpeninsula Regional Open Space District Annual Financial Report for the year ended June 30, 2017. The District made its budgeted Fiscal Year 2016-17 OPEB contribution of $150,000 in June 2017. Funded Status and Funding Progress. The most recent actuarial valuation date was June 30, 2015. The following summarizes the funded status of the plan as of June 30, 2017: Description Balance Actuarial accrued liability (AAL) $5,119,000 Value of plan assets 3,262,927 Unfunded actuarial accrued liability (UAAL) $1,856,073 Funded ratio (actuarial value of plan assets/AAL) 64% Projected covered payroll (active Plan members) $9,789,000 UAAL as a percentage of covered payroll 19% The District has budgeted a $250,000 OPEB contribution for Fiscal Year 2017-18 to reduce the UAAL in addition to making all benefit payments from the general fund. Attachment 4 A-19 The table below is a summary schedule of the funding progress for the District’s OPEB plan as stated in each actuarial study. The actuarial studies are based on assumptions and data available at the time each study was completed. The actual funding progress of the plan as noted above may be different than the projections included in the actuarial studies. Actuarial Valuation Actuarial Value of Assets Actuarial Accrued Liability (AAL) Entry Age Unfunded AAL (UAAL) Funded Ratio Covered Payroll UAAL as a Percentage of Covered Payroll Date (a) (b) (b-a) (a/b) (c) ((b-a/c)) 6/30/2011 $2,058,000 $1,844,000 $214,000 111.61% $7,331,000 (2.92)% 6/30/2013 2,035,000 2,555,000 520,000 79.65 8,043,000 6.47 6/30/2015 2,520,000 4,612,000 2,092,000 54.64 9,182,000 22.78 Actuarial Methods and Assumptions. The ARC was determined as part of the actuarial valuation using the entry age normal actuarial cost method. This is a projected benefit cost method, which takes into account those benefits that are expected to be earned in the future as well as those already accrued. The actuarial assumptions included: (i) 6.04% to 7.25% investment rate of return, (ii) 3.25% projected annual salary increase, and (iii) health inflation increases of 0% for one year, 1.5% for the next five years, and 3% thereafter. The actuarial methods and assumptions used include techniques that smooth the effects of short- term volatility in actuarial accrued liabilities and the actuarial value of assets. Actuarial calculations reflect a long-term perspective and actuarial valuations involve estimates of the value of reported amounts and assumptions about the probability of events far into the future. Actuarially determined amounts are subject to revision at least bi-annually as results are compared to past expectations and new estimates are made about the future. The District’s OPEB unfunded actuarial accrued liability is being amortized as a level percentage of projected payroll using a 30 year open amortization period. Risk Management Self-Insurance Programs of the CAL JPIA. The District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; injuries to employees; and natural disasters. Prior to July 1, 2002, the District managed and financed these risks by purchasing commercial insurance. On July 1, 2002, the District joined the California Joint Powers Insurance Authority (“CAL JPIA”). CAL JPIA is composed of 119 California public entities and is organized under a joint powers agreement pursuant to California Government Code Section 6500 et seq. The purpose of CAL JPIA is to arrange and administer programs for the pooling of self-insurance losses, to purchase excess insurance or reinsurance, and to arrange for group-purchased insurance for property and other coverages. The CAL JPIA pool began covering claims of its members in 1978. Each member government has an elected official as its representative on the Board of Directors. The Board of Directors operates through a nine-member Executive Committee. During the past three fiscal periods, none of the programs of protection have had settlements or judgments that exceed pooled or insured coverage. There have been no significant reductions in pooled or insured liability coverage from coverage in the prior period. The District is a pool member of the following insurance programs: General and Automobile Liability. Each government member pays a primary deposit to cover estimated losses for a fiscal year (claims year). General liability (“GL”) coverage includes bodily injury, personal injury, or property damage to a third party resulting from a member activity. The GL program also Attachment 4 A-20 provides automobile liability coverage. Six months after the close of a fiscal period, outstanding claims are valued. A retrospective deposit computation is then made for each open claims year. Costs are spread to members as follows: the first $30,000 to $750,000 are pooled based on a member’s share of costs under $30,000; costs in excess of $750,000 are shared by the members based upon each member’s payroll. Costs of covered claims above $5,000,000 are currently paid by reinsurance. The protection for each member is $50,000,000 per occurrence, and $50,000,000 annual aggregate. Worker’s Compensation. The District also participates in the Workers’ Compensation program administered by CAL JPIA. Pool deposits and retrospective adjustments are valued in a manner similar to the GL pool. The District is charged for the first $50,000 of each claim. Costs from $50,000 to $100,000 per claim are pooled based on the member’s losses under its retention level. Costs between $100,000 and $2,000,000 per claim are pooled based on payroll. Costs from $2,000,000 to $5,000,000 are paid by excess insurance purchased by CAL JPIA. The excess insurance coverage provides coverage to statutory limits. Purchased Insurance Environmental. The District participates in the Pollution and Remediation Legal Liability Program, which is available through CAL JPIA. The policy provides coverage for both first and third party damages, including certain types of cleanups; fuel spill or hazardous materials incidents; member listed non-owned disposal sites, above ground and underground storage tanks; and for sudden and gradual pollution at or from property, streets, sanitary sewer trunk lines and storm drain outfalls owned by the District. Coverage is on a claims-made basis. There is a $50,000 deductible. CAL JPIA has a limit of $50,000,000 for the three-year coverage period. The current coverage period is July 1, 2017 through June 30, 2020. Each member of CAL JPIA has a $10,000,000 aggregate limit during the three-year period. Property. The District participates in the All-Risk property program of CAL JPIA which includes all-risk coverage for real and personal property (such as scheduled buildings, office furniture, equipment, vehicles, etc.). This insurance is underwritten by several insurance companies. Property is currently insured according to a schedule of covered property submitted by the District to CAL JPIA. The All-Risk deductible is $5,000 per occurrence; $1,000 for non-emergency vehicles. Premiums for the coverage are paid annually and are not subject to retroactive adjustments. Boiler and Machinery. The District participates in the optional coverage for boiler and machinery, which is purchased separately under the property program. Coverage is for physical damage for sudden and accidental breakdown of boilers and machinery, and electrical injury. There is a $5,000 per accident or occurrence deductible. Crime Insurance. The District participates in the crime program through CAL JPIA in the amount of $1,000,000 per claim, with a $2,500 per occurrence deductible. Insurance provides coverage for employee dishonesty, failure to faithfully perform duties, forgery, counterfeiting, theft, robbery, burglary, and computer fraud. Premiums are paid annually and are not subject to retroactive adjustments. Special Event Tenant User Liability. The District participates in the special events program through CAL JPIA which provides liability insurance when District premises are used for special events. The insurance premium is paid by the tenant user to the District according to a schedule. The District then pays the insurance arranged through CAL JPIA. There is no deductible and the District is added as additional insured. Liability limits are purchased in $1 million per occurrence increments. Vendors/Contractors. General Liability coverage with or without professional liability is offered through CAL JPIA to vendors/contractors who otherwise could not meet the District’s minimum insurance requirement: $1 million per occurrence, $2 million in aggregate. Attachment 4 A-21 Cyber Liability Program. The cyber liability program is partially covered under the liability program, and partially held through a stand-alone coverage program. Cyber liability provides coverage for both first- and third-party claims. First party coverage includes privacy, regulatory claims, security breach response, business income loss, dependent business income loss, digital asset restoration costs, and cyber- extortion threats, while third-party coverage includes privacy liability, network security liability, and multimedia liability. Members work directly with the reinsurer to investigate and respond to claims. There is a $1 million per occurrence limit of coverage, $1 million aggregate limit per policy period per member, and a $10 million aggregate limit of coverage for all members per policy period. ECONOMIC AND DEMOGRAPHIC INFORMATION REGARDING SANTA CLARA AND SAN MATEO COUNTIES Following is economic and demographic information for Santa Clara and San Mateo Counties. While three District parcels are located in Santa Cruz County, these parcels represent an insignificant amount of assessed valuation, so economic and demographic information regarding Santa Cruz County is not included herein. General The Counties of Santa Clara and San Mateo are two of nine counties in the San Francisco- Oakland Bay Area. Santa Clara County. The County of Santa Clara covers an area of over 1,300 square miles and is located south of the San Francisco Bay in northern California. There are two distinct valleys in the County of Santa Clara, which are referred to as North County and South County. South County has more of an agricultural base and is comprised of only two cities, twenty miles apart from each other. As a contrast, North County is densely populated, heavily industrialized and extensively urbanized. This part of the County of Santa Clara is comprised of 13 cities, each adjacent to another. Due to its high concentration of high-technology industries, the northwestern portion of North County is commonly referred to as “Silicon Valley.” Several small lakes and reservoirs are scattered across the County and the highest peak can be found in San José at Mount Hamilton with an elevation of 4,213 feet. Several major highways serve the County of Santa Clara, including Highway 101 providing access to San Francisco and Los Angeles. San Mateo County. The County of San Mateo shares its borders with the City and County of San Francisco to the north, the County of Santa Clara to the south, the Pacific Ocean to the west and San Francisco Bay to the east. The County of San Mateo is a major employment base, accessible to downtown San Francisco approximately 15 miles north, and is also accessible to the San Jose and Silicon Valley areas approximately 30 miles south via Interstate 280 or U.S. Highway 101. The County of San Mateo has an approximate total area of 741 square miles, of which 448 square miles is land and 293 square miles is water. It is the third-smallest county in California by land area. Attachment 4 A-22 Population The tables below show population estimates and projections for the past five years for Santa Clara and San Mateo Counties, according to the State Department of Finance. Table A-4A SANTA CLARA COUNTY AND SAN MATEO COUNTY AND STATE OF CALIFORNIA Population Estimates Calendar Years 2013 Through 2017 as of January 1 Calendar Year Santa Clara County San Mateo County State of California 2013 1,856,416 745,639 38,238,492 2014 1,879,196 752,355 38,572,211 2015 1,903,209 759,609 38,915,880 2016 1,922,619 765,895 39,189,035 2017 1,938,180 770,203 39,523,613 _____________ Source: State Department of Finance, Table 2: E-4 Population Estimates for Cities, Counties, and State, 2011-2017 with 2010 Benchmark. Table A-4B SANTA CLARA COUNTY AND SAN MATEO COUNTY AND STATE OF CALIFORNIA Population Projections by Age Calendar Years 2017 Through 2021 as of January 1 2017 2018 2019 2020 2021 Santa Clara County Under 19 497,872 499,809 501,575 502,116 501,375 20-39 527,530 528,860 530,249 531,507 534,024 40-59 546,926 550,046 552,927 556,011 558,841 60 and over 379,958 395,625 411,511 428,623 445,421 San Mateo County Under 19 177,913 178,693 179,216 179,546 179,578 20-39 192,644 192,050 191,297 190,509 189,952 40-59 226,479 227,033 227,794 228,625 229,251 60 and over 177,938 183,844 189,14 195,665 201,530 State of California Under 19 10,443,769 10,449,286 10,455,219 10,452,951 10,451,946 20-39 10,987,459 11,037,555 11,082,256 11,101,466 11,122,378 40-59 10,303,852 10,297,733 10,300,211 10,315,689 10,340,695 60 and over 7,958,547 8,248,519 8,538,277 8,849,893 9,146,525 _____________ Source: State Department of Finance, Table P-2: County Population Projections by Age, 2010-2060. Attachment 4 A-23 Employment and Industry Santa Clara County. The preliminary unemployment rate (not seasonally adjusted) in the County of Santa Clara was 3.5% June 2017, compared to a revised rate of 4.1% for June 2016. This compares with preliminary unemployment rates for June 2017 of 4.9% for the State and 4.5% for the nation. The table below lists employment by industry group for the County of Santa Clara for the years 2012 through 2016. Table A-5 COUNTY OF SANTA CLARA Annual Average Civilian Labor Force, Employment and Unemployment, Employment by Industry (March 2016 Benchmark) 2012 2013 2014 2015 2016 Civil Labor Force(1) 958,300 971,800 991,800 1,009,800 1,026,500 Employment 883,000 909,100 940,700 967,800 987,900 Unemployment 75,300 62,700 51,100 41,900 38,600 Unemployment Rate(2) 7.9% 6.5% 5.2% 4.2% 3.8% Wage and Salary Employment:(3) Agriculture 3,300 3,300 3,500 3,700 3,900 Mining and Logging 200 300 300 200 300 Construction 34,100 36,700 38,800 42,900 47,600 Manufacturing 153,700 153,600 156,700 160,200 161,300 Wholesale Trade 34,600 36,000 36,900 36,800 37,400 Retail Trade 81,900 82,500 83,900 85,100 85,000 Transportation, Warehousing, Utilities 12,500 13,400 13,900 14,100 14,800 Information 54,100 58,600 65,600 74,400 74,500 Finance and Insurance 20,100 20,500 20,600 21,900 21,300 Real Estate, Rental, Leasing 12,800 12,800 13,200 13,400 13,800 Professional and Business Services 177,200 190,100 201,800 215,200 224,100 Educational and Health Services 135,700 142,600 148,700 155,900 160,600 Leisure and Hospitality 81,300 86,300 90,700 94,500 97,600 Other Services 24,400 25,000 26,000 26,500 27,000 Federal Government 9,700 9,800 9,800 9,800 9,900 State Government 6,200 6,100 6,200 6,500 6,500 Local Government 72,800 73,100 74,600 73,800 74,800 TOTAL ALL INDUSTRIES(4) 914,800 950,700 991,000 1,028,900 1,060,600 ____________ (1) Labor force data is by place of residence; includes self-employed individuals, unpaid family workers, household domestic workers, and workers on strike. (2) The unemployment rate is calculated using unrounded data. (3) Industry employment is by place of work; excludes self-employed individuals, unpaid family workers, household domestic workers, and workers on strike. (4) Data may not add due to rounding. Source: State of California Employment Development Department, Labor Market Division. Attachment 4 A-24 San Mateo County. The preliminary unemployment rate (not seasonally adjusted) in the County of San Mateo was 2.9% June 2017, compared to a revised rate of 3.3% in June 2016. This compares with preliminary unemployment rates for June 2017 of 4.9% for the State and 4.5% for the nation. The table below lists employment by industry group for the County of San Mateo for the calendar years 2012 through 2016. Table A-6 COUNTY OF SAN MATEO Annual Average Civilian Labor Force, Employment and Unemployment, Unemployment by Industry (March 2016 Benchmark) 2012 2013 2014 2015 2016 Civil Labor Force(1) 412,100 418,100 427,700 437,700 448,600 Employment 385,700 396,100 409,700 422,9/0 435,200 Unemployment 26,400 22,000 18,000 14,800 13,400 Unemployment Rate(2) 6.4% 5.3% 4.2% 3.4% 3.0% Wage and Salary Employment:(3) Agriculture 1,600 1,700 1,800 1,800 1,800 Mining, Logging, Construction 13,900 14,600 15,700 17,400 18,100 Manufacturing 24,400 25,500 25,500 25,400 25,400 Wholesale Trade 11,500 11,200 11,600 12,200 12,100 Retail Trade 33,200 34,100 34,900 33,700 33,900 Transportation, Warehousing, Utilities 25,600 27,100 27,800 28,200 30,500 Information 20,900 23,800 26,700 27,900 31,600 Finance and Insurance 13,900 14,300 15,400 14,800 15,400 Real Estate, Rental Leasing 6,200 6,300 6,300 6,800 7,100 Professional and Business Services 69,800 71,200 75,200 76,200 81,700 Educational and Health Services 38,100 40,500 43,000 44,100 45,000 Leisure and Hospitality 36,800 39,400 40,900 42,200 42,600 Other Services 12,900 13,400 13,900 14,000 13,900 Federal Government 3,700 3,600 3,700 3,800 3,800 State Government 600 600 600 600 600 Local Government 26,200 26,200 27,000 27,900 28,900 TOTAL ALL INDUSTRIES(4) 339,000 353,500 369,800 376,900 392,300 ____________ (1) Labor force data is by place of residence; includes self-employed individuals, unpaid family workers, household domestic workers, and workers on strike. (2) The unemployment rate is calculated using unrounded data. (3) Industry employment is by place of work; excludes self-employed individuals, unpaid family workers, household domestic workers, and workers on strike. (4) Data may not add due to rounding. Source: State of California Employment Development Department, Labor Market Division. Attachment 4 A-25 The following tables list the largest manufacturing and non-manufacturing employers within Santa Clara County and San Mateo County as of March 2016 (the most recent annual data available), in alphabetical order. Table A-7 COUNTY OF SANTA CLARA Largest Employers As of March 2016 Employer Name Location Industry Adobe Systems Inc. San Jose Publishers-Computer Software (Mfrs) Advanced Micro Devices Inc. Sunnyvale Semiconductor Devices (Mfrs) Apple Inc. Cupertino Computers-Electronic-Manufacturers Applied Materials Inc. Santa Clara Semiconductor Manufacturing Equipment (Mfrs) Bon Appetit-Cafe Adobe San Jose Restaurant Management California’s Great America Santa Clara Amusement & Theme Parks Christopher Ranch LLC Gilroy Garlic (Mfrs) Cisco Systems Inc. San Jose Computer Peripherals (Mfrs) E Bay Inc. San Jose Auctioneers Flextronics International Milpitas Semiconductor Devices (Mfrs) HP Inc. Palo Alto Computers-Electronic-Manufacturers Intel Corp. Santa Clara Semiconductor Devices (Mfrs) Kaiser Permanente Medical Ctr Sn San Jose Hospitals Kaiser Permanente Medical Ctr San Jose Hospitals Liberty Tax Svc. San Jose Tax Return Preparation and Filing Lockheed Martin Space Systems Sunnyvale Satellite Equipment & Systems-Mfrs Microsoft Corp. Mountain View Computer Software-Manufacturers NASA Mountain View Federal Offices-US Net App Inc. Sunnyvale Computer Storage Devices (Mfrs) Philips Lumileds Lighting Co San Jose Lighting Fixtures-Supplies & Parts-Mfrs Santa Clara Valley Medical Ctr San Jose Hospitals SAP Center San Jose Stadiums Arenas & Athletic Fields Stanford School of Medicine Stanford Schools-Medical Texas Instruments Inc. Santa Clara Semiconductor Devices (Mfrs) VA Medical Ctr-Palo Alto Palo Alto Hospitals _______________ Source: State of California Employment Development Department, extracted from The America’s Labor Market Information System (ALMIS) Employer Database, 2016 2nd Edition. Attachment 4 A-26 Table A-8 COUNTY OF SAN MATEO Major Employers As of March 2016 (Listed Alphabetically) Employer Name Location Industry A R Dental Care Daly City Dentists Electronic Charging Station Menlo Park Research Device Electronic Arts Inc. Redwood City Game Designers (Mfrs) Facebook Inc. Menlo Park Social Media Forced Dump Debris Box Svc Burlingame Garbage Collection Franklin Resources Inc. San Mateo Asset Management Franklin Templeton Investments San Mateo Investments Genentech Inc. South San Francisco Pharmaceutical Products-Wholesale Gilead Sciences Inc. Foster City Biological Products (Mfrs) Guckenheimer Inc. Foster City Marketing Programs & Services Hyatt Regency-San Francisco Burlingame Hotels and Motels Kaiser Permanente Medical Ctr Redwood City Hospitals Kaiser Permanente South Sn South San Francisco Hospitals Lpch Menlo Park Health Care Facilities Motif Inc. San Mateo Business Services NEC Oracle Corp. Redwood City Computer Software-Manufacturers San Francisco Intl Airport-SFO San Francisco Airports San Mateo County Behavior San Mateo Government Offices-County San Mateo Medical Ctr San Mateo Hospitals Sciex LLC Redwood City Scientific Apparatus and Instruments-Mfrs SRI International Inc. Menlo Park Research Service US Interior Dept. Menlo Park Government-Offices US Visa Inc. Foster City Credit Card and Other Credit Plans Visa International Svc Assn Foster City Associations Visa USA Inc. Foster City Credit Card and Other Credit Plans _______________ Source: State of California Employment Development Department, extracted from The America’s Labor Market Information System (ALMIS) Employer Database, 2016 2nd Edition. Personal Income The United States Department of Commerce, Bureau of Economic Analysis (the “BEA”) produces economic account statistics that enable government and business decision-makers, researchers, and the public to follow and understand the performance of the national economy. The BEA defines “personal income” as income received by persons from all sources, including income received from participation in production as well as from government and business transfer payments. Personal income represents the sum of compensation of employees (received), supplements to wages and salaries, proprietors’ income with inventory valuation adjustment and capital consumption adjustment (CCAdj), rental income of persons with CCAdj, personal income receipts on assets, and personal current transfer receipts, less contributions for government social insurance. Per capita personal income is calculated as the personal income divided by the resident population based upon the Census Bureau’s annual midyear population estimates. Attachment 4 A-27 The table below summarizes the total personal income and the per capital personal income for the County of Santa Clara, the County of San Mateo, the State and the United States from 2012 through 2016 (the most recent year for which county data is available. Table A-9 COUNTY OF SANTA CLARA AND COUNTY OF SAN MATEO, STATE OF CALIFORNIA AND UNITED STATES Personal Income (Not Adjusted for Inflation) For Calendar Years 2012 Through 2016 Year and Area Personal Income (millions of dollars) Per Capita Personal Income (dollars) 2016 Santa Clara County $170,673 $88,920 San Mateo County 80,855 105,721 State 2,212,691 56,374 United States 15,912,777 49,246 2015 Santa Clara County 158,729 82,756 San Mateo County 74,641 97,553 State 2,103,669 53,741 United States 15,463,981 48,112 2014 Santa Clara County 141,874 74,883 San Mateo County 68,015 89,659 State 1,939,528 49,985 United States 14,683,147 46,049 2013 Santa Clara County 133,655 71,431 San Mateo County 64,282 85,653 State 1,849,505 48,125 United States 14,064,468 44,438 2012 Santa Clara County 131,951 71,670 San Mateo County 63,951 85,798 State 1,812,315 47,614 United States 13,904,485 44,266 ____________________ Source: U.S. Department of Commerce, Bureau of Economic Analysis. Attachment 4 A-28 Construction Activity The following tables provide a summary of residential building permit valuations and nonresidential building permit valuations, and the total number of all building permit valuations in Santa Clara County and San Mateo County during the past five years. Table A-10 COUNTY OF SANTA CLARA Building Permit Valuation - For Calendar Years 2012 through 2016 (Dollars in Thousands)† 2012 2013 2014 2015 2016 New Single-Family $678,168.8 $694,884.6 $594,472.7 $653,970.2 $660,301.6 New Multi-Family 558,544.1 941,420.4 1,196,127.7 706,781.1 564,761.0 Res. Alterations/Additions 288,105.1 423,739.6 439,747.1 505,844.7 484,820.1 TOTAL RESIDENTIAL 1,524,818.0 2,060,044.6 2,230,347.5 1,866,595.9 1,709,882.8 New Commercial 745,468.8 1,217,647.4 898,270.7 1,428,420.1 2,120,530.9 New Industrial 22,481.5 72,222.0 10,172.2 100,301.2 44,268.9 New Other 19,197.3 1,749,161.2 1,534,213.1 1,697,046.2 2,072,862.8 Com Alterations/Additions 1,115,633.3 1,293,656.1 212,756.4 364,033.1 460,496.2 TOTAL NONRESIDENTIAL 1,902,780.9 4,332,686.7 2,655,412.5 3,589,800.5 4,698,158.9 New Dwelling Units Single Family 1,432 1,859 1,602 1,710 1,608 Multiple Family 4,245 6,009 8,310 3,906 3,297 TOTAL 5,677 7,868 9,912 5,616 4,905 ____________ † Columns may not total due to independent rounding. Source: Construction Industry Research Board, Building Permit Summary. Table A-11 COUNTY OF SAN MATEO Building Permit Valuation - For Calendar Years 2012 through 2016 (Valuation in Thousands of Dollars)† 2012 2013 2014 2015 2016 New Single-Family $245,163.9 $292,893.4 $289,903.2 $374,275.5 $660,301.6 New Multi-Family 171,390.4 151,019.5 168,859.4 259,181.0 564,761.0 Res. Alterations/Additions 201,543.1 299,830.5 348,231.1 408,011.2 484,820.1 TOTAL RESIDENTIAL 618,097.4 743,743.4 2,230,347.5 1,041,467.7 1,709,882.8 New Commercial 83,374.0 165,578.7 432,585.4 427,063.6 683,630.1 New Industrial 2,021.6 15,724.2 9,600.0 0 4,954.8 New Other 1,975.6 58,726.5 490,364.5 489,389.7 728,965.3 Com Alterations/Additions 167,438.8 263,460.8 84,241.0 94,031.8 195,895.4 TOTAL NONRESIDENTIAL $254,810.0 $503,490.2 $1,016,790.7 $228,961.0 $1,613,445.6 New Dwelling Units Single Family 264 350 315 521 458 Multiple Family 671 840 1,302 1,386 1,319 TOTAL 935 1,190 1,617 1,907 4,905 ____________ † Columns may not total due to independent rounding. Source: Construction Industry Research Board, Building Permit Summary. Attachment 4 A-29 Commercial Activity The following tables show historic taxable sales within Santa Clara County and San Mateo County for calendar years 2011 through 2015 (the most recent annual data available). Taxable sales for Santa Clara County were $30.676 billion for the first nine months of calendar year 2016 compared to taxable sales of $30.197 billion for the first nine months of calendar year 2015. Taxable sales for San Mateo County were $11.427 billion for the first nine months of calendar year 2016 compared to taxable sales of $11.306 billion for the first nine months of calendar year 2015. Table A-12 COUNTY OF SANTA CLARA Taxable Retail Sales Number of Permits and Valuation of Taxable Transactions (Dollars in Thousands) Calendar Years 2011 through 2015† Retail and Food Services Total All Outlets Number Taxable Number Taxable Year of Permits Transactions of Permits Transactions 2011 27,252 $19,419,542 43,390 $33,431,217 2012 28,109 21,116,708 43,980 36,220,445 2013 29,545 22,424,641 45,274 37,621,606 2014 30,058 23,271,753 45,852 39,628,655 2015† 30,516 23,700,907 50,573 41,231,759 _______________ † Most recent annual data available. Source: California State Board of Equalization, Taxable Sales in California (Sales & Use Tax). Table A-13 COUNTY OF SAN MATEO Taxable Retail Sales Number of Permits and Valuation of Taxable Transactions (Dollars in Thousands) Calendar Years 2011 through 2015† Retail and Food Services Total All Outlets Number Taxable Number Taxable Year of Permits Transactions of Permits Transactions 2011 11,470 $8,536,043 18,995 $13,020,643 2012 11,748 9,277,144 19,189 13,906,978 2013 12,438 9,935,641 19,808 14,611,618 2014 12,673 10,278,717 19,999 15,298,434 2015† 12,992 10,301,197 21,825 15,478,010 _______________ † Most recent data available. Source: California State Board of Equalization, Taxable Sales in California (Sales & Use Tax). Attachment 4 B-1 APPENDIX B ANNUAL FINANCIAL REPORT FOR FISCAL YEAR ENDED JUNE 30, 2017 Attachment 4 C-1 APPENDIX C DISTRICT INVESTMENT POLICY Attachment 4 D-1 APPENDIX D DEFINITIONS AND SUMMARY OF CERTAIN PROVISIONS OF THE FISCAL AGENT AGREEMENT Attachment 4 E-1 APPENDIX E FORM OF CONTINUING DISCLOSURE CERTIFICATE $__,___,000* MIDPENINSULA REGIONAL OPEN SPACE DISTRICT (Counties of Santa Clara, San Mateo and Santa Cruz, California) GENERAL OBLIGATION BONDS (GREEN BONDS), SERIES 2017A CONTINUING DISCLOSURE CERTIFICATE This CONTINUING DISCLOSURE CERTIFICATE (this “Disclosure Certificate”) is executed and delivered by the MIDPENINSULA REGIONAL OPEN SPACE DISTRICT (the “District”) in connection with the issuance of the $__,___,000 principal amount of Midpeninsula Regional Open Space District General Obligation Bonds (Green Bonds), Series 2018 (the “Bonds”). The Bonds are being issued pursuant to a Fiscal Agent Agreement, dated as of _______ 1, 2018 (the “Fiscal Agent Agreement”), between the District and ZB, National Association dba Zions Bank, as fiscal agent (the “Fiscal Agent”). The District covenants and agrees as follows: Section 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the District for the benefit of the holders and beneficial owners of the Bonds and in order to assist the Participating Underwriter in complying with S.E.C. Rule 15c2-12(b)(5). Section 2. Definitions. In addition to the definitions set forth above and in the Fiscal Agent Agreement, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section 2, the following capitalized terms shall have the following meanings: “Annual Report” means any Annual Report provided by the District pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate. “Business Day” means any day (other than a Saturday or a Sunday) on which banks and the Trustee are open for business. “Annual Report Date” means 210 days after the end of each Fiscal Year. “Disclosure Coordinator” means the District Senior Accountant or other individual designated from time to time by the District Controller, as provided in the District Disclosure Policy. “Dissemination Agent” means, initially, Goodwin Consulting Group, or any successor Dissemination Agent designed in writing by the District and which has been filed with the then current Dissemination Agent a written acceptance of such designation. “EMMA” means the Electronic Municipal Marketplace Access site maintained by the MSRB, currently located at http://emma.msrb.org. “Fiscal Year” means any twelve-month period beginning on July 1 in any year and extending to the next succeeding June 30, both dates inclusive, or any other 12-month period selected and designated by the District as its official Fiscal Year period under a Certificate of the District filed with the Trustee. Attachment 4 E-2 “MSRB” means the Municipal Securities Rulemaking Board, which has been designated by the Securities and Exchange Commission as the sole repository of disclosure information for purposes of the Rule, or any other repository of disclosure information that may be designated by the Securities and Exchange Commission as such for purposes of the Rule in the future. “Official Statement” means the final official statement executed by the District in connection with the issuance of the Bonds. “Participating Underwriter” means Morgan Stanley & Co. LLC, the original underwriter of the Bonds required to comply with the Rule in connection with offering of the Bonds. “Rule” means Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as it may be amended from time to time. “Significant Events” means any of the events listed in Section 5(a) of this Disclosure Certificate. Section 3. Provision of Annual Reports. (a) The District shall, or shall cause the Dissemination Agent to, not later than the Annual Report Date, commencing January 26, 2019, provide to the MSRB, in an electronic format as prescribed by the MSRB, an Annual Report for the fiscal year ending June 30, 2018, that is consistent with the requirements of Section 4 of this Disclosure Certificate; provided that the first Annual Report shall consist solely of the Official Statement. Not later than 15 Business Days prior to the Annual Report Date, the District shall provide the Annual Report to the Dissemination Agent (if other than the District). If by 15 Business Days prior to the Annual Report Date the Dissemination Agent (if other than the District) has not received a copy of the Annual Report, the Dissemination Agent shall contact the District to determine if the District is in compliance with the previous sentence. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 4 of this Disclosure Certificate; provided that the audited financial report of the District may be submitted separately from the balance of the Annual Report, and later than the Annual Report Date, if not available by that date. If the District’s Fiscal Year changes, it shall give notice of such change in the same manner as for a Significant Event under Section 5(c). The District shall provide a written certification with each Annual Report furnished to the Dissemination Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished by the District hereunder. (b) If the District does not provide (or cause the Dissemination Agent to provide) an Annual Report by the Annual Report Date, the District shall provide (or cause the Dissemination Agent to provide) to the MSRB, in an electronic format as prescribed by the MSRB, a notice in substantially the form attached as Exhibit A. (c) With respect to each Annual Report, the Dissemination Agent shall: (i) determine each year prior to the Annual Report Date the then-applicable rules and electronic format prescribed by the MSRB for the filing of annual continuing disclosure reports; and (ii) if the Dissemination Agent is other than the District, file a report with the District certifying that the Annual Report has been provided pursuant to this Disclosure Certificate, and stating the date it was provided. Attachment 4 E-3 Section 4. Content of Annual Reports. The District’s Annual Report shall contain or incorporate by reference the following: (a) The District’s audited financial report prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the District’s audited financial report is not available by the Annual Report Date, the Annual Report shall contain unaudited financial report in a format similar to the financial report contained in the final Official Statement, and the audited financial report shall be filed in the same manner as the Annual Report when they become available. (b) Unless otherwise provided in the audited financial report filed on or before the Annual Report Date, financial information and operating data with respect to the District for the preceding Fiscal Year, substantially similar to that provided in the corresponding tables in the Official Statement: (i) A maturity schedule for the outstanding Bonds, and a listing of Bonds redeemed prior to maturity; (ii) Information for the preceding Fiscal Year to update the following tables in the Official Statement: (A) Table 2B–Aggregate General Obligation Bond Debt Service Schedule; (B) Table 3–Summary of Assessed Valuation. (c) Changes, if any, in the operation of the Teeter Plan of the County of Santa Clara or the County of San Mateo, and if either County discontinues the Teeter Plan, to the extent available, tax collection delinquencies for such County. (d) Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the District or related public entities, which are available to the public on EMMA or filed with the Securities and Exchange Commission. The District shall clearly identify each such other document so included by reference. Section 5. Reporting of Significant Events. (a) Pursuant to the provisions of this Disclosure Certificate, the District shall give, or cause to be given, notice of the occurrence of any of the following Significant Events with respect to the Bonds, no later than ten (10) Business Days after the occurrence of such event: (i) Principal and interest payment delinquencies; (ii) Unscheduled draws on debt service reserves reflecting financial difficulties; (iii) Unscheduled draws on credit enhancements reflecting financial difficulties; (iv) Substitution of credit or liquidity providers, or their failure to perform; (v) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security; Attachment 4 E-4 (vi) Tender offer; (vii) Defeasances; (viii) Rating Changes; or (ix) Bankruptcy, insolvency, receivership or similar event of the District or other obligated person. Note: This event is considered to occur upon the happening of any of the following: 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 District, 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 plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the District. (b) The District shall give, or cause to be given, notice of the occurrence of any of the following events described in this Section 5(b) with respect to the Bonds, if material, not later than ten (10) business days after the occurrence of the event: (i) Unless described in Section 5(a)(v), adverse tax opinions or 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; (ii) Modifications to rights of security holders, if material; (iii) Bond calls; (iv) Release, substitution, or sale of property securing repayment of the Bonds; (v) Non-payment related defaults; (vi) 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 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 (vii) Appointment of a successor or additional trustee or the change of name of a trustee. (c) The District acknowledges that it is required to make a determination whether a Significant Event described in Section 5(b) is material under applicable federal securities laws in order to determine if a filing with EMMA is required. If the District determines that the occurrence of an event listed in Section 5(b) would be material under applicable federal securities laws, or if the District changes its Fiscal Year, the District shall file, or shall cause the Dissemination Agent to file, within ten (10) business days of occurrence, a notice of such event on EMMA. Attachment 4 E-5 (d) Notwithstanding the foregoing, notice of Significant Events described in Section 5(a)(vii) and Section 5(b)(iii) above need not be given any earlier than the notice (if any) of the underlying event is given to Owners of affected Bonds pursuant to the Fiscal Agent Agreement. Section 6. Identifying Information for Filings with EMMA. All documents provided to the MSRB under the Disclosure Certificate shall be accompanied by identifying information as prescribed by the MSRB. Section 7. Termination of Reporting Obligation. The obligations of the District under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption, or payment in full of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the District shall give notice of such termination in the same manner as for a Significant Event under Section 5(c). Section 8. Dissemination Agent. The District may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any Dissemination Agent, with or without appointing a successor Dissemination Agent. Any Dissemination Agent may resign by providing thirty (30) days written notice to the District. The initial dissemination agent shall be Goodwin Consulting Group. Section 9. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the District may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may 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), it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature, or status of an obligated person with respect to the Bonds, or type of business conducted; (b) The undertakings herein, as proposed to be amended or waived, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the primary offering of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and (c) The proposed amendment or waiver either (i) is approved by holders of the Bonds in the manner provided in the Fiscal Agent Agreement for amendments to the Fiscal Agent Agreement with the consent of holders, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the holders or beneficial owners of the Bonds. If the annual financial information or operating data to be provided in the Annual Report is amended pursuant to the provisions hereof, the first annual financial information filed pursuant hereto containing the amended operating data or financial information shall explain, in narrative form, the reasons for the amendment and the impact of the change in the type of operating data or financial information being provided. If an amendment is made to the undertaking specifying the accounting principles to be followed in preparing financial reports, the annual financial information for the year in which the change is made shall present a comparison between the financial reports or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. The comparison shall include a qualitative discussion of the differences in the accounting principles and the impact of the change in the accounting principles on the presentation of the financial information, in order to provide Attachment 4 E-6 information to investors to enable them to evaluate the ability of the District to meet its obligations. To the extent reasonably feasible, the comparison shall be quantitative. A notice of any amendment made pursuant to this Section 9 shall be filed in the same manner as for a Significant Event under Section 5(c). Section 10. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the District from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Significant Event, in addition to that which is required by this Disclosure Certificate. If the District chooses to include any information in any Annual Report or notice of occurrence of a Significant Event in addition to that which is specifically required by this Disclosure Certificate, the District shall have no obligation under this Disclosure Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Significant Event. Section 11. Default. If the District fails to comply with any provision of this Disclosure Certificate, the Trustee may, and at the request of the Owners of at least twenty-five percent (25%) in aggregate principal amount of Outstanding Bonds whose Owners are beneficiaries of the Continuing Disclosure Certificate, the Trustee shall (but only to the extent it is indemnified to its satisfaction, including indemnification from and against attorneys’ fees), or any Owner or Beneficial Owner (as that term is defined in the Fiscal Agent Agreement) may, take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the District to comply with its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an “Event of Default” under the Fiscal Agent Agreement, and the sole remedy under this Disclosure Certificate in the event of any failure of the District to comply with this Disclosure Certificate shall be an action to compel performance. Section 12. Duties, Immunities and Liabilities of Dissemination Agent. (a) The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and the District agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which they may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorney’s fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent’s negligence or willful misconduct. The Dissemination Agent shall have no duty or obligation to review any information provided to it by the District hereunder, and shall not be deemed to be acting in any fiduciary capacity for the District, the Bond Owners or any other party. The obligations of the District under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. (b) The Dissemination Agent shall be paid compensation by the District for its services provided hereunder in accordance with its schedule of fees as amended from time to time, and shall be reimbursed for all expenses, legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder. Attachment 4 E-7 Section 13. Notices. Any notices or communications to or among any of the parties to this Disclosure Certificate may be given as follows: To the District: Midpeninsula Regional Open Space District 330 Distel Circle Los Altos, CA 94022 Attention: Disclosure Coordinator Telephone: 650-691-1200 To the Dissemination Agent: Goodwin Consulting Group 555 University Avenue, Suite 280 Sacramento, CA 95825 Attention: Victor Irzyk Telephone: 916-561-0890 Email victor@goodwinconsultinggroup.net Section 14. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the District, the Dissemination Agent, the Participating Underwriter and the holders and beneficial owners from time to time of the Bonds, and shall create no rights in any other person or entity. Section 15. Counterparts. This Disclosure Certificate may be executed in several counterparts, each of which shall be regarded as an original, and all of which shall constitute one and the same instrument. Date: __________, 2018 MIDPENINSULA REGIONAL OPEN SPACE DISTRICT By General Manager AGREED AND ACCEPTED GOODWIN CONSULTING GROUP, as Dissemination Agent By: Authorized Officer Attachment 4 E-8 EXHIBIT A NOTICE OF FAILURE TO FILE ANNUAL REPORT Name of Issuer: Midpeninsula Regional Open Space District Name of Issue: $__,___,000 Midpeninsula Regional Open Space District General Obligation Bonds (Green Bonds), Series 2018 Date of Issuance: _______, 2018 NOTICE IS HEREBY GIVEN that the District has not provided an Annual Report with respect to the above-named Bonds as required by the Continuing Disclosure Certificate dated _______, 2018. The District anticipates that the Annual Report will be filed by _______________. Dated: _____________ DISSEMINATION AGENT: By: Its: Attachment 4 F-1 APPENDIX F FORM OF OPINION OF BOND COUNSEL Attachment 4 G-2 APPENDIX G DTC AND THE BOOK-ENTRY ONLY SYSTEM The following description of the Depository Trust Company (“DTC”), the procedures and record keeping with respect to beneficial ownership interests in the 2018 Green Bonds, payment of principal, interest and other payments on the 2018 Green Bonds to DTC Participants or Beneficial Owners, confirmation and transfer of beneficial ownership interest in the 2018 Green Bonds and other related transactions between DTC, the DTC Participants and the Beneficial Owners is based solely on information provided by DTC. Accordingly, no representations can be made concerning these matters and neither the DTC Participants nor the Beneficial Owners should rely on the foregoing information with respect to such matters, but should instead confirm the same with DTC or the DTC Participants, as the case may be. Neither the District (the “Issuer”) nor the Trustee appointed with respect to the 2018 Green Bonds (the “Trustee”) takes any responsibility for the information contained in this Appendix. No assurances can be given that DTC, DTC Participants or Indirect Participants will distribute to the Beneficial Owners (a) payments of interest, principal or premium, if any, with respect to the 2018 Green Bonds, (b) certificates representing ownership interest in or other confirmation or ownership interest in the 2018 Green Bonds, or (c) redemption or other notices sent to DTC or Cede & Co., its nominee, as the registered owner of the 2018 Green Bonds, or that they will so do on a timely basis, or that DTC, DTC Participants or DTC Indirect Participants will act in the manner described in this Appendix. The current “Rules” applicable to DTC are on file with the Securities and Exchange Commission and the current “Procedures” of DTC to be followed in dealing with DTC Participants are on file with DTC. 1. The Depository Trust Company (“DTC”), New York, NY, will act as securities depository for the 2018 Green Bonds. The 2018 Green 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 certificate will be issued for the 2018 Green Bonds, in the aggregate principal amount of such issue, and will be deposited with DTC. 2. DTC, the world’s largest 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, corporate and municipal debt issues, and money market instrument from over 100 countries that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC, in turn, is owned by a number of Direct Participants of DTC and Members of the National Securities Clearing Corporation, Fixed Income Clearing Corporation, and Emerging Markets Clearing Corporation (NSCC, FICC, and EMCC, also subsidiaries of DTCC), as well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National Association of Securities Dealers, Inc. 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 Attachment 4 G-3 Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com. 3. Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the 2018 Green Bonds on DTC’s records. The ownership interest of each actual purchaser of each 2018 Green 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 2018 Green 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 2018 Green Bonds is discontinued. 4. To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co. or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the 2018 Green Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. 5. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain steps to augment transmission to them of notices of significant events with respect to the 2018 Green Bonds, such as redemptions, tenders, defaults, and proposed amendments to the security documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the 2018 Green Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners, in the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of the notices be provided directly to them. 6. Redemption notices shall be sent to DTC. If less than all of the 2018 Green Bonds within an issue are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. 7. Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or vote with respect to the 2018 Green Bonds unless authorized by a Direct Participant in accordance with DTC’s Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to Issuer 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 2018 Green Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). 8. Principal and interest payments on the 2018 Green Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC, 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 Issuer or Agent on payable date in accordance with their respective holdings shown on DTC’s records. Payments by Attachment 4 G-4 Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC nor its nominee, Agent, or Issuer, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of Issuer or Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. 9. DTC may discontinue providing its services as securities depository with respect to the 2018 Green Bonds at any time by giving reasonable notice to Issuer or Agent. Under such circumstances, in the event that a successor securities depository is not obtained, security certificates are required to be printed and delivered. 10. The Issuer may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, security certificates will be printed and delivered to DTC. 11. The information in this section concerning DTC and DTC’s book-entry system has been obtained from sources that Issuer believes to be reliable, but Issuer takes no responsibility for the accuracy thereof. SF\322023739.1 Attachment 4 Resolutions/2017/17-__FY17-18Budget Adjustment-2012BondRefunding 1 RESOLUTION NO. 17-___ RESOLUTION OF THE BOARD OF DIRECTORS OF THE MIDPENINSULA REGIONAL OPEN SPACE DISTRICT AMENDING THE BUDGET FOR FISCAL YEAR 2017-18 TO AUTHORIZE THE CONTRIBUTION OF UP TO $715,000 TO THE REFUNDING ESCROW ACCOUNT WHEREAS, on June 14, 2017 the Board of Directors of the Midpeninsula Regional Open Space District adopted the Fiscal Year 2017-18 Budget and Action Plan; and WHEREAS, the General Manager recommends amending the FY 2017-18 Budget to reflect requests for budget increases to contribute into the refunding escrow for the refunding of the 2012 Refunding Promissory Notes, resulting in a net increase not to exceed $715,000; NOW, THEREFORE, the Board of Directors of the Midpeninsula Regional Open Space District does resolve as follows: SECTION ONE. Approve the proposed revenue amendments to the FY2017-18 Budget for the Midpeninsula Regional Open Space District by an amount not to exceed $715,000 as follows: DISTRICT REVENUE BY FUNDING SOURCE Fund 10 General Fund Fund 20 Hawthorn Fund 30 Measure AA Capital Fund 40 General Fund Capital Fund 50 Debt Service Adopted Total Fund 50 General Fund Unassigned Reserve Adjustment Amended Total Revenue Property Tax $45,365,502 $1,960,000 $46,990,000 $47,325,502 Grants $581,060 $236,000 $817,060 $817,060 Interest Income $621,000 $15,000 $472,000 $1,108,000 $1,108,000 Rental Income $1,197,092 $1,197,092 $1,197,092 Rancho San Antonio Agreement $364,501 $364,501 $364,501 Miscellaneous $100,000 $100,000 $100,000 Transfer from General Fund Committed Infrastructure Reserve $3,151,731 $3,151,731 Transfer from General Fund Unassigned Reserve $715,000 $715,000 Total Revenues $47,648,095 $15,000 $581,060 $236,000 $3,146,000 $54,063,886 $715,000 $54,778,886 SECTION TWO. Approve the recommended budget amendments to the FY2017-18 Budget for the Midpeninsula Regional Open Space District by an amount not to exceed $715,000 as follows: Attachment 5 Resolutions/2017/17-__FY17-18Budget Adjustment-2012BondRefunding 2 DISTRICT BUDGET BY FUNDING SOURCE FY2017-18 Adopted Budget YTD Approved Budget Amendments Amended Budget (as of 11/27/17) Proposed Budget Amendments FY2017-18 Proposed Amended Budget General Fund Operating (Fund 10) $30,344,413 $267,000 $30,611,413 $0 $30,611,413 Hawthorns (Fund 20) $166,500 $0 $166,500 $0 $166,500 Measure AA Land/Capital (Fund 30) $12,637,845 ($28,800) $12,609,045 $0 $12,609,045 General Fund Land/Capital (Fund 40) $6,533,040 $3,101,731 $9,634,771 $0 $9,634,771 Debt Service Fund (Fund 50) $11,721,637 $0 $11,721,637 $715,000 $12,436,637 TOTAL DISTRICT BUDGET $61,403,435 $3,339,931 $64,743,366 $715,000 $65,458,366 SECTION THREE. Monies are hereby appropriated in accordance with said budget by fund. SECTION FOUR. Except as herein modified, the FY 2017-18 Budget and Action Plan, Resolution No. 17-89 as amended, shall remain in full force and effect. * * * * * * * * * * * * * * * * * * * * PASSED AND ADOPTED by the Board of Directors of the Midpeninsula Regional Open Space District on _____, 2017, at a regular meeting thereof, by the following vote: AYES: NOES: ABSTAIN: ABSENT: ATTEST: APPROVED: Secretary Board of Directors President Board of Directors APPROVED AS TO FORM: General Counsel I, the District Clerk of the Midpeninsula Regional Open Space District, hereby certify that the above is a true and correct copy of a resolution duly adopted by the Board of Directors of the Midpeninsula Regional Open Space District by the above vote at a meeting thereof duly held and called on the above day. District Clerk Attachment 5