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HomeMy Public PortalAbout20151216 - Agenda Packet - Board of Directors (BOD) - 15-32 SPECIAL MEETING BOARD OF DIRECTORS OF THE MIDPENINSULA REGIONAL OPEN SPACE DISTRICT SPECIAL MEETING MIDPENINSULA REGIONAL OPEN SPACE DISTRICT FINANCING AUTHORITY Administrative Office 330 Distel Circle Los Altos, CA 94022 Wednesday, December 16, 2015 7:00 PM A G E N D A 7:00 MEETING OF THE BOARD OF DIRECTORS OF THE MIDPENINSULA REGIONAL OPEN SPACE DISTRICT ROLL CALL ORAL COMMUNICATIONS The Board President will invite public comment on items not 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 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 Claims Report 2. Preserve Entry Sign Replacement Project and Award of Purchasing Contract (R-15-173) Staff Contact: Michael Newburn, Operations Manager General Manager’s Recommendation Meeting 15-32 : Authorize the General Manger to enter into contract with The Sign Shop for an amount not-to-exceed $100,000 to manufacture, store, and deliver twelve redwood sandblasted preserve entry signs to replace existing outdated signs. 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. 3. Revisions to Board Policy 3.03 - Public Contract Bidding, Vendor and Professional Consultant Selection, and Purchasing (R-15-172) Staff Contact: Kate Drayson, Administrative Services Manager General Manager’s Recommendation : Review and approve the proposed changes to Board Policy 3.03 - Public Contract Bidding, Vendor and Professional Consultant Selection, and Purchasing. 4. Fiscal Year 2015-16 Midyear Controller’s Report (R-15-171) Staff Contact: Michael Foster, Controller Controller’s Recommendation: Review and accept the attached Fiscal Year 2015-16 Midyear Controller’s Report. 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 factual information; request staff to report back 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. A. Committee Reports B. Staff Reports C. Director Reports ADJOURNMENT 8:00 MIDPENINSULA REGIONAL OPEN SPACE DISTRICT FINANCING AUTHORITY ROLL CALL 1. Acceptance of the Controller’s Annual Financial Report of the Midpeninsula Regional Open Space District Financing Authority (R-15-170) Staff Contact: Michael Foster, Controller Controller’s Recommendation : Accept the Annual Financial Report of the Midpeninsula Regional Open Space District Financing Authority. ADJOURNMENT 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 meeting of the MROSD Board of Directors was posted and available for review on December 11, 2015, 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, CMC District Clerk page 1 of 2 CLAIMS REPORT MEETING 15-32 DATE 12-16-2015 MIDPENINSULA REGIONAL OPEN SPACE DISTRICT Check Number Notes Vendor No. and Name Invoice Description Check Date Payment Amount Future wire CALIFORNIA CONDEMNATION DEPOSITS FUND Deposit for eminent domain acquisition - Board Resolutions 15-60 & 15-61 TBD 832,225.00$ Future check 10413 - DOWNTOWN FORD Purchase of 1 Ford F350 w/ Utility Body Purchase 2 Ford F350 Patrol Trucks TBD 91,295.58$ Future check 11293 - RANDAZZO ENTERPRISES, INC.Demolition Paulin/Houghton Structures (LHC)TBD 71,559.00$ Future check 10413 - DOWNTOWN FORD Purchase 2 Ford F350 Patrol Trucks Purchase of 1 Ford F350 w/ Utility Body TBD 50,276.19$ 70980 11539 - BELZ CONSTRUCTION Silva House Repairs to prepare for tenancy - RR 12/09/2015 50,825.00$ 71009 10094 - RESTORATION DESIGN GROUP Mt Um Summit Area Design Consulting - SAU 12/09/2015 32,541.04$ 71003 10665 - PAVEMENT ENGINEERING INC Mt Um Road Design Consulting - SAU 12/09/2015 18,270.00$ 71018 10230 - UNITED RENTALS NORTH AMERICA INC Steel Plates for the Harrington Bridge - LH 12/09/2015 14,527.54$ 70997 11462 - MANAGEMENT PARTNERS FOSM - Ops Transition, Project Delivery, Interviews CFO/Construct Mgr 12/09/2015 8,962.50$ 71019 *10216 - VALLEY OIL COMPANY Fuel for District vehicles 12/09/2015 7,359.69$ 70979 11460 - ASBESTOS MANAGEMENT GROUP OF CALIFORNIA Demolition Work at Mindego Ranch - RR 12/09/2015 6,428.00$ 70991 10223 - HEXAGON TRANSPORTATION CONSULTANTS, INC Traffic Counts for traffic analysis - BCR 12/09/2015 5,410.00$ 70998 10190 - METROMOBILE COMMUNICATIONS 1 portable radio/2 mobile vehicle radios/radio repair 12/09/2015 5,168.62$ 71005 11523 - PGA DESIGN, INC.Alma College Site Rehabilitation Planning - BCR 12/09/2015 5,159.50$ 70989 10509 - GEOCON CONSULTANTS INC Driscoll dump site soil removal - LHC / Mt Um Hydrogeologic Study - SAU 12/09/2015 5,150.95$ 70982 11161 - CARNEGHI BLUM AND PARTNERS Wilson / Cunha property appraisal - LHC 12/09/2015 5,000.00$ 71011 11303 - SANTA CLARA COUNTY FIRESAFE COUNCIL Page Mill Road Fire Break, partial funding with PG&E -- LT 12/09/2015 5,000.00$ 70995 11465 - JANA SOKALE ENVIRONMENTAL PLANNING Full day Planning Retreat preparation, facilitation, data collection 12/09/2015 4,320.00$ 70985 11557 - Denise Bradley Cultural Landscapes Water Systems Consulting - BCR 12/09/2015 4,015.56$ 70981 10840 - CALIFORNIA PENSION GROUP, LLC Pension Reform Consulting - August to November 2015 12/09/2015 4,000.00$ 71017 10112 - TIMOTHY C. BEST Engineering services for ECM Watershed Protection Program 12/09/2015 3,095.00$ 71001 10775 - NEW WORLD SYSTEMS New World HR Module Implementation Consulting/Travel Expenses 12/09/2015 3,017.79$ 71016 11055 - SYSTEMS FOR PUBLIC SAFETY Background Check - 1 Ranger Candidate 12/09/2015 2,263.50$ 71013 10585 - SOL'S MOBILE AUTO & TRUCK REPAIR, INC.Vehicle Inspection - P82/P85/P95/M35/P103/M66/M13/M72/P87/T06 12/09/2015 2,186.88$ 71010 11005 - SAN MATEO COUNTY PLANNING & BUILDING DEPT General Plan Conformity fee for Cunha Trust property 12/09/2015 1,744.50$ 70992 10123 - HOME DEPOT CREDIT SERVICES Field supplies/shop supplies 12/09/2015 1,616.57$ 71012 *10580 - SHARP BUSINESS SYSTEMS MROSD PRINT SERVICE 12/09/2015 1,536.89$ 70988 10187 - GARDENLAND POWER EQUIPMENT Field Equipment Repair 12/09/2015 1,421.69$ 70990 11489 - HARO KASUNICH & ASSOCIATES INC.Geotechnical consultant - Roads/Pond at LHC 12/09/2015 1,144.00$ 71002 10076 - OFFICE TEAM Skyline Field Office Temporary Admin Assistant (temp fill of vacancy)12/09/2015 1,120.00$ 71006 10195 - REDWOOD GENERAL TIRE CO INC New Tires for Trailers, M13, M16, & T31 12/09/2015 605.16$ 70984 10185 - COSTCO Office Supplies 12/09/2015 534.48$ 70994 10394 - INTERSTATE TRAFFIC CONTROL PRO Trail Posts (PR)12/09/2015 468.17$ 70986 10793 - FALL CREEK ENGINEERING Engineering services for Driscoll Ranch - LHC 12/09/2015 460.00$ 71004 10209 - PETTY CASH-MROSD AO Petty cash reimbursement 12/09/2015 453.68$ 71007 **10093 - RENE HARDOY 11/15 Gardening services 12/09/2015 325.00$ 71015 11232 - STEVENSON, HILARY Dell Ultrasharp U2415 24" LED Monitor-H Stevenson 12/09/2015 298.07$ 70978 11480 - ALAMEDA COUNTY SHERIFF Internal Affairs Training Class 12/09/2015 282.00$ 70983 *10850 - COMPLETE PEST CONTROL Pest Control Service at Hawthorn - WH 12/09/2015 200.00$ 71021 11388 - WAGNER & BONSIGNORE Water Rights Consulting - District Wide 12/09/2015 172.00$ 71014 10956 - SPECIALTY TRUCK PARTS, INC.M29 Truck Parts 12/09/2015 166.39$ 70999 11270 - MUNICIPAL MAINTENANCE EQUIPMENT, INC.Tractor mower parts 12/09/2015 160.87$ 70987 10168 - G & K SERVICES INC Shop Towel Service 12/09/2015 151.61$ 70996 10259 - LENINGTON, KIRK Reimburse Lunch for interview panelists 12/09/2015 127.81$ 71020 *10309 - VERIZON WIRELESS Cell Phone Service 12/09/2015 126.88$ 71008 11526 - REPUBLIC SERVICES Garbage services - ECM 12/09/2015 119.62$ 71000 11592 - NEIGHBORS, STEPHEN Mileage reimbursement -- Training 12/09/2015 113.85$ 70993 10421 - ID PLUS INC Name tags 12/09/2015 93.50$ page 2 of 2 CLAIMS REPORT MEETING 15-32 DATE 12-16-2015 MIDPENINSULA REGIONAL OPEN SPACE DISTRICT Check Number Notes Vendor No. and Name Invoice Description Check Date Payment Amount GRAND TOTAL 1,251,500.08$ *Annual Claims **Hawthorn Expenses 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 OSP = Open Space Preserve page 1 of 2 CLAIMS REPORT MEETING 15-32 DATE 12-16-2015 MIDPENINSULA REGIONAL OPEN SPACE DISTRICT Check Number Notes Vendor No. and Name Invoice Description Check Date Payment Amount Future wire CALIFORNIA CONDEMNATION DEPOSITS FUND Deposit for eminent domain acquisition - Board Resolutions 15-60 & 15-61 TBD 832,225.00$ Future check 10413 - DOWNTOWN FORD Purchase of 1 Ford F350 w/ Utility Body TBD 91,295.58$ Future check 11293 - RANDAZZO ENTERPRISES, INC.Demolition Paulin/Houghton Structures (LH)TBD 71,559.00$ Future check 10413 - DOWNTOWN FORD Purchase 2 Ford F350 Patrol Trucks TBD 50,276.19$ 70980 11539 - BELZ CONSTRUCTION Silva House Repairs to prepare for tenancy - RR 12/09/2015 50,825.00$ 71009 10094 - RESTORATION DESIGN GROUP Mt Um Summit Area Design Consulting - SAU 12/09/2015 32,541.04$ 71003 10665 - PAVEMENT ENGINEERING INC Mt Um Road Design Consulting - SAU 12/09/2015 18,270.00$ 71018 10230 - UNITED RENTALS NORTH AMERICA INC Steel Plates for the Harrington Bridge - LH 12/09/2015 14,527.54$ 70997 11462 - MANAGEMENT PARTNERS FOSM - Ops Transition, Project Delivery, Interviews CFO/Construct Mgr 12/09/2015 8,962.50$ 71019 *10216 - VALLEY OIL COMPANY Fuel for District vehicles 12/09/2015 7,359.69$ 70979 11460 - ASBESTOS MANAGEMENT GROUP OF CALIFORNIA Demolition Work at Mindego Ranch - RR 12/09/2015 6,428.00$ 70991 10223 - HEXAGON TRANSPORTATION CONSULTANTS, INC Traffic Counts for traffic analysis - BCR 12/09/2015 5,410.00$ 70998 10190 - METROMOBILE COMMUNICATIONS 1 portable radio/2 mobile vehicle radios/radio repair 12/09/2015 5,168.62$ 71005 11523 - PGA DESIGN, INC.Alma College Site Rehabilitation Planning - BCR 12/09/2015 5,159.50$ 70989 10509 - GEOCON CONSULTANTS INC Driscoll site dump removal - LHC / Mt Um Hydrogeologic Study - SAU 12/09/2015 5,150.95$ 70982 11161 - CARNEGHI BLUM AND PARTNERS Wilson / Cunha property appraisal - LHC 12/09/2015 5,000.00$ 71011 11303 - SANTA CLARA COUNTY FIRESAFE COUNCIL Page Mill Road Fire Break, partial funding with PG&E -- LT 12/09/2015 5,000.00$ 70995 11465 - JANA SOKALE ENVIRONMENTAL PLANNING Full day Planning Retreat preparation, facilitation, data collection 12/09/2015 4,320.00$ 70985 11557 - Denise Bradley Cultural Landscapes Water Systems Consulting - BCR 12/09/2015 4,015.56$ 70981 10840 - CALIFORNIA PENSION GROUP, LLC Pension Reform Consulting - August to November 2015 12/09/2015 4,000.00$ 71017 10112 - TIMOTHY C. BEST Engineering services for ECM Watershed Protection Program 12/09/2015 3,095.00$ 71001 10775 - NEW WORLD SYSTEMS New World HR Module Implementation Consulting/Travel Expenses 12/09/2015 3,017.79$ 71016 11055 - SYSTEMS FOR PUBLIC SAFETY Background Check - 1 Ranger Candidate 12/09/2015 2,263.50$ 71013 10585 - SOL'S MOBILE AUTO & TRUCK REPAIR, INC.Vehicle Inspection - P82/P85/P95/M35/P103/M66/M13/M72/P87/T06 12/09/2015 2,186.88$ 71010 11005 - SAN MATEO COUNTY PLANNING & BUILDING DEPT General Plan Conformity fee for Cunha Trust property 12/09/2015 1,744.50$ 70992 10123 - HOME DEPOT CREDIT SERVICES Field supplies/shop supplies 12/09/2015 1,616.57$ 71012 *10580 - SHARP BUSINESS SYSTEMS MROSD PRINT SERVICE 12/09/2015 1,536.89$ 70988 10187 - GARDENLAND POWER EQUIPMENT Field Equipment Repair 12/09/2015 1,421.69$ 70990 11489 - HARO KASUNICH & ASSOCIATES INC.Geotechnical consultant - Roads/Pond at LHC 12/09/2015 1,144.00$ 71002 10076 - OFFICE TEAM Skyline Field Office Temporary Admin Assistant (temp fill of vacancy)12/09/2015 1,120.00$ 71006 10195 - REDWOOD GENERAL TIRE CO INC New Tires for Trailers, M13, M16, & T31 12/09/2015 605.16$ 70984 10185 - COSTCO Office Supplies 12/09/2015 534.48$ 70994 10394 - INTERSTATE TRAFFIC CONTROL PRO Trail Posts (PR)12/09/2015 468.17$ 70986 10793 - FALL CREEK ENGINEERING Engineering services for Driscoll Ranch - LHC 12/09/2015 460.00$ 71004 10209 - PETTY CASH-MROSD AO Petty cash reimbursement 12/09/2015 453.68$ 71007 **10093 - RENE HARDOY 11/15 Gardening services 12/09/2015 325.00$ 71015 11232 - STEVENSON, HILARY Dell Ultrasharp U2415 24" LED Monitor-H Stevenson 12/09/2015 298.07$ 70978 11480 - ALAMEDA COUNTY SHERIFF Internal Affairs Training Class 12/09/2015 282.00$ 70983 *10850 - COMPLETE PEST CONTROL Pest Control Service at Hawthorn - WH 12/09/2015 200.00$ 71021 11388 - WAGNER & BONSIGNORE Water Rights Consulting - District Wide 12/09/2015 172.00$ 71014 10956 - SPECIALTY TRUCK PARTS, INC.M29 Truck Parts 12/09/2015 166.39$ 70999 11270 - MUNICIPAL MAINTENANCE EQUIPMENT, INC.Tractor mower parts 12/09/2015 160.87$ 70987 10168 - G & K SERVICES INC Shop Towel Service 12/09/2015 151.61$ 70996 10259 - LENINGTON, KIRK Reimburse Lunch for interview panelists 12/09/2015 127.81$ 71020 *10309 - VERIZON WIRELESS Cell Phone Service 12/09/2015 126.88$ 71008 11526 - REPUBLIC SERVICES Garbage services - ECM 12/09/2015 119.62$ 71000 11592 - NEIGHBORS, STEPHEN Mileage reimbursement -- Training 12/09/2015 113.85$ page 2 of 2 CLAIMS REPORT MEETING 15-32 DATE 12-16-2015 MIDPENINSULA REGIONAL OPEN SPACE DISTRICT Check Number Notes Vendor No. and Name Invoice Description Check Date Payment Amount 70993 10421 - ID PLUS INC Name tags 12/09/2015 93.50$ GRAND TOTAL 1,251,500.08$ *Annual Claims **Hawthorn Expenses BC = Bear Creek LH = La Honda Creek PR = Pulgas Ridge SG = Saratoga Gap TC = Tunitas Creek CC = Coal Creek LR = Long Ridge PC = Purisima Creek SA = Sierra Azul 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 OSP = Open Space Preserve R-15-173 Meeting 15-32 December 16, 2015 AGENDA ITEM 2 AGENDA ITEM Preserve Entry Sign Replacement Project and Award of Purchasing Contract GENERAL MANAGER’S RECOMMENDATION Authorize the General Manger to enter into contract with The Sign Shop for an amount not-to- exceed $100,000 to manufacture, store, and deliver twelve (12) redwood sandblasted preserve entry signs to replace existing outdated signs. SUMMARY The Public Affairs Department identified a need to replace aged preserve entry signs at the District’s most popular preserves. Public Affairs developed a recommended replacement list of 13 signs based on the condition of the existing signs (their weathered appearance) and whether there was an outdated or missing logo. One of the signs, located at upper Windy Hill, was purchased separately and installed in time for the Herb Grench dedication event earlier this fall. Staff is seeking authorization to procure signs for the remaining 12 replacement locations (Attachment 2). MEASURE AA This is not a Measure AA project. DISCUSSION As the District becomes a more visible agency, it is important for the public to be able to identify preserves owned and managed by the District. The replacement of existing outdated signs with new signs provides clear identification and name recognition to the public. Along with the name of the preserve, the new signs will display the updated logo with the District’s name, providing effective “branding” of the District. When possible, and where needed, the new signs will be placed in a more visible location to assist visitors with identifying preserve locations. Quotes from three sign vendors were requested on September 24, 2015 to manufacture the preserve entry signs. Vendor Unit Cost Per Sign The Sign Shop $8,156.25 Signs Unlimited, Inc. *did not meet spec $ 3,413.51 Sign Works $12,419.00 R-15-173 Page 2 The scope of work includes the production and delivery of 12 redwood preserve entry signs by June 30, 2016. The quote from Signs Unlimited, Inc. was disqualified because the proposal did not follow the specifications provided. The Sign Shop was deemed qualified and provided a fair and reasonable quote. Staff reviewed their quote to ensure they had fully complied with the schedule and specifications. FISCAL IMPACT If the Board approves the award of the purchasing contract, the $97,875.00 of costs would be covered under the $100,000 budgeted in the FY 2015-2016 Operations Department budget. BOARD COMMITTEE REVIEW This item was not previously reviewed by a committee. PUBLIC NOTICE Public notice was provided as required by the Brown Act. CEQA COMPLIANCE The procurement of the Preserve signs is not a project subject to the California Environmental Quality Act. NEXT STEPS If approved, staff will finalize negotiations with The Sign Shop to purchase the 12 preserve entry signs. Staff will coordinate with the vendor to ensure 12 signs are fabricated and delivered to the appropriate field offices prior to June 30, 2016. Field staff will install signs as time permits. Attachments 1. Photos of typical preserve entry signs 2. List of signs to be replaced Responsible Department Head: Michael Newburn, Operations Manager Prepared by: Bryan Apple, Acting Planner II Contact person: Michael Newburn, Operations Manager Attachment 1 – Photos of Existing Preserve Entry Signs Attachment 2 – List of preserve entry signs to be replaced 1. Picchetti Ranch 2. Pulgas Ridge 3. Fremont Older 4. St. Joseph’s Hill 5. Long Ridge 6. Russian Ridge (At Alpine) 7. Monte Bello 8. Purisima Creek 9. Sierra Azul 10. Los Trancos 11. Thornewood 12. Windy Hill (lower lot) *Signs are listed in no particular order R-15-172 Meeting 15-32 December 16, 2015 AGENDA ITEM 3 AGENDA ITEM Revisions to Board Policy 3.03 - Public Contract Bidding, Vendor and Professional Consultant Selection, and Purchasing GENERAL MANAGER’S RECOMMENDATION Review and approve the proposed changes to Board Policy 3.03 - Public Contract Bidding, Vendor and Professional Consultant Selection, and Purchasing. SUMMARY As a result of AB495, which amended the District’s governing legislation under Public Resources Code (PRC) sections 5500-5595, the Board of Directors (Board) may increase the General Manager’s expenditure authority from $25,000 to $50,000. To implement this expenditure authority change, the General Manager has made proposed revisions to Board Policy 3.03 - Public Contract Bidding, Vendor and Professional Consultant Selection, and Purchasing. In addition, other changes are proposed in the policy to streamline the purchasing and contracting processes to enhance staff productivity and overall project delivery. DISCUSSION On August 10, 2015, the Governor of the State of California approved AB 495 (Attachment 1) revising Section 5549 of the Public Resource Code. Effective January 1 of 2016, the statute allows for raising, with Board approval, the limit of signature authority of the General Manager for the payment of supplies, materials, labor, or other expense from the current limit of twenty- five thousand dollars ($25,000) to the revised limit of fifty thousand dollars ($50,000). In addition to aligning Board Policy 3.03 to AB 495, the General Manager proposes additional substantive revisions related to contracting thresholds and processes for contract bidding, material and supplies procurement, and consultant selection. These proposed revisions are intended to improve internal processes for added efficiencies while meeting District transparency and due diligence responsibilities. Other proposed policy revisions include some non- substantive revisions to clarify the intention of the policy language. A summary of the proposed changes is reflected in Attachment 2 and the detailed changes are included in the redline version of the policy in Attachment 3. Note that the only proposed change to the Board Policy that is related to and granted under AB 495 is the potential increase to the General Manager’s purchasing authority. Also, the only R-15-172 Page 2 bidding and purchasing requirements that are dictated by legislation pertain to the formal bidding process for expenditures greater than $50,000. The Board Policy is fully in compliance with these requirements. All other purchasing and bidding requirements for expenditures under $50,000 are at the Board of Director’s full discretion and thus the related policy language may be modified at any time with Board approval. Table 1 below summarizes the proposed changes to Board Policy 3.03, Section II - Solicitation of Bids, consistent with the purchasing authority limit allowed under AB 495. Table 1. Summary of Proposed Changes to Section II – Solicitation of Bids Current Policy Current Amount Proposed Policy Change Proposed Amount Formal bid; board approval required > $25,000 Minor language clarifications > $50,000 Solicit min. 3 written quotes; GM or designee approval Exceeds $10,000 but no more than $25,000 Minor language clarifications Exceeds $25,000 but no more than $50,000 Solicit min. 3 verbal quotes and document in writing; GM or designee approval Exceeds $5,000 but no more than $10,000 Solicit 3 quotes and document in writing Exceeds $5,000 but no more than $25,000 Solicit 2 verbal quotes and document in writing; GM or designee approval Exceeds $3,000 but no more than $5,000 Incorporate these amounts into the $5,001 - $25,000 category to improve efficiency N/A Obtain competitive cost info whenever reasonably feasible; GM or designee approval < $3,000 Minor language clarifications < $5,000 Table 2 below summarizes the proposed changes to Board Policy 3.03, Section III – Consultant Selection, consistent with the purchasing authority limit allowed under AB 495. Table 2. Summary of Proposed Changes to Section III – Consultant Selection Current Policy Current Amount Proposed Policy Change Proposed Amount Issue RFQ or RFP; invite min. 3 firms > $25,000 Minor language clarifications > $50,000 RFQ or RFP optional; Solicit min. 3 written proposals Exceeds $10,000 but no more than $25,000 Minor language clarifications Exceeds $10,000 but no more than $50,000 Min. 3 written or oral proposals Exceeds $3,000 but no more than $10,000 Minor language clarifications < $10,000 R-15-172 Page 3 ALTERNATIVES 1. The Board could consider different “Proposed Amounts” than those recommended in the above tables; 2. Should the Board request more time to review the proposed policy revisions, or further refine the policy, the Board may alternatively approve only the expenditure authority changes reflected in Attachment 4. This alternative would revise the current Policy only to the extent of matching the General Manager’s signature authority limit to the maximum allowed by AB 495 ($50,000). This alternative would allow the District to take full advantage of AB 495 while the Board revisits and refines other provisions of the Policy. BOARD COMMITTEE REVIEW This item was reviewed by the Action Plan and Budget Committee (ABC) on November 30. The Committee recommends the Board approve the General Manager’s recommendation. In addition, a member of the ABC expressed interest in expanding the solicitation of informal bids, quotes, and proposals particularly through web posting for expanded transparency and increased competitiveness. The General Manager will explore and test various options for the posting of informal bids between $25,000 and $50,000 on the District’s website and provide clear instructions to staff on these additional steps in the Administrative Procedures that accompany Board Policy 3.03 and forward these steps to the Board in an FYI to keep the full Board informed of these procedural requirements. FISCAL IMPACT There is no fiscal impact associated with this action. The policy changes discussed in this report would align the General Manager’s signature authority with that of the revised State statute, effective January 1, 2016. This alignment along with the proposed update to the purchasing policy would result in improved operational efficiencies. 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 Following Board approval, the revised policy will take effect on January 1, 2016. In addition, the General Manager will finalize the Administrative Procedures that direct the implementation of the Board Policy. Attachment: 1. AB 495 - Amendment to Section 5549 of the Public Resources Code, relating to open space districts. R-15-172 Page 4 2. Summary of Proposed Purchasing Policy Changes 3. Proposed Revisions to Board Policy 3.03 - Public Contract Bidding, Vendor and Professional Consultant Selection, and Purchasing 4. Alternative Revisions to Board Policy 3.03 - Public Contract Bidding, Vendor and Professional Consultant Selection, and Purchasing Prepared by: Fred Ho, Management Talent Exchange Program, Senior Civil Engineer, City of Campbell Kate Drayson, Administrative Services Manager Contact person: Kate Drayson, Administrative Services Manager Attachment 1 Attachment 1 Summary of Changes Board Policy 3.03 Public Contract Bidding, Vendor and Professional Consultant Selection, and Purchasing Policy 11/30/15 Previous Section No.Revised Section No.Section Title Compliant with AB 495 Format Clarification Efficiency Move to Admin Policy I.A I.A Board Approval for Purchases in Excess of $50,000 X I.A.1 I.A.1 Signature X I.B I.B General Manager Approval for Purchases Not Exceeding $50,000 X I.C -General Manager Delegated Approval for Purchases Not Exceeding $15,000 X X I.D I.C Contract Change Order X X X II.A II.A Solicitation of Formal Advertised Bids for Expenditures Exceeding $50,000 X X II.B II.B Solicitation of Three Written Bids for Expenditures Exceeding $25,000 but Not Exceeding $50,000 X X II.C II.C Solicitation of Three Quotes for Expenditures Exceeding $5,000 but Not Exceeding $25,000 X II.D - Solicitation of Two Verbal Quotes for Expenditures Exceeding $3,000 but Not Exceeding $5,000 X II.E II.D Expenditures Not Exceeding $5,000 X X III.D III Professional Services X X Attachment 2 Summary of Changes Board Policy 3.03 Public Contract Bidding, Vendor and Professional Consultant Selection, and Purchasing Policy 11/30/15 Previous Section No.Revised Section No.Section Title Compliant with AB 495 Format Clarification Efficiency Move to Admin Policy III.D.1 III.A Selection Procedures for Professional Services in Excess of $50,000 X X X III.D.2 III.B Selection Procedures for Professional Services in Excess of $10,000 but Not Exceeding $50,000 X X X III.D.3 III.C Selection Procedures for Professional Services Not Exceeding $10,000 X X III IV Exceptions to Standard Purchasing Procedures X X III.A IV.A Emergency Conditions X X III.B IV.B Limited Availability/Sole Source X X X III.C IV.C Cooperative Purchasing X X III.C.1 IV.C.1 Purchases Exceeding $50,000 X X III.C.2 IV.C.2 Purchases Not Exceeding $50,000 X X III.D.4 IV.D Renewal of Contracts with Professional Consultants X X X III.D.5 IV.E Conflict of Law X X Attachment 2 Summary of Changes Board Policy 3.03 Public Contract Bidding, Vendor and Professional Consultant Selection, and Purchasing Policy 11/30/15 Previous Section No.Revised Section No.Section Title Compliant with AB 495 Format Clarification Efficiency Move to Admin Policy III.D.6 IV.F Special Circumstances X X III.D.7 IV.G Prequalified Consultant File X X III.E IV.H Open Purchase Orders for Routine and Repetitive Supplies and Services X X IV V General Provisions X X IV.A V.A Conflict of Interest X X IV.B V.B Credit Cards X X IV.C V.C Purchase of Recycled Products X X Attachment 2 Midpeninsula Regional Open Space District Board Policy Manual Public Contract Bidding, Vendor and Professional Consultant Selection, and Purchasing Policy Policy 3.03 Chapter 3 – Fiscal Management Effective Date: 7/24/02 Revised Date: 9/23/15 Prior Versions: 12/16/09, 1/27/10 Board Policy 3.03 Page 1 of 9 Purpose The purpose of this policy is to ensure that the District obtains quality services, supplies, material and labor at the lowest possible cost, and to provide a uniform method for procurement of services and supplies. In addition, through proper documentation, conformance to this Policy will enable the District's constituents to know that their public funds are being spent responsibly, and potential vendors and contractors to know that they are being treated equitably. I. PURCHASING AUTHORITY There are three levels of authority for purchases: Board Approval, General Manager Approval and General Manager Delegated Approval. The maximum purchasing authority amounts refer to the total price of an order, including tax and/or shipping, which may include more than one item and also includes change orders and contract amendments. As used in this Policy, the term “purchasing” refers collectively to contracting or procurement of services, supplies, material or labor, including Capital Improvements. A. Board Approval for Purchases In Excess of $2550,000 If the cost for furnishing services, supplies, materials, labor, or other valuable consideration to the District will exceed Twenty-FiveFifty Thousand Dollars ($2550,000), approval from the Board of Directors is required prior to entering into the contract. The Board may reject all bids and re-advertise, or by a five-sevenths vote may elect to purchase the materials or supplies in the open market, or to construct a building, structure, or improvement using District personnel. 1. Signature Contracts which have been approved by the Board shall be signed by the General Manager, or in the General Manager’s absence, the Acting General Manager or designee, unless the Board Board Policy 3.03 Page 2 of 9 has directed that the President sign on behalf of the District. The District Clerk shall sign all such contracts and affix the seal of the District. B. General Manager Approval for Purchases Not Exceeding $2550,000 Pursuant to Public Resources Code 5549, the General Manager may obtain bids without advertisement or published notice inviting bids and may authorize and execute contracts for payment for services, supplies, material, labor, or other valuable consideration for any purpose, including the new construction of any building, structure, or improvement, in an amount not exceeding $2550,000. Such expenditures shall be reported to the Board of Directors at its next regular meeting, and may be reported on the Board’s Claims List. 1. Administrative Purchasing Policy/Procedure The General Manager shall issue an Administrative Purchasing Policy/Procedure, which provides appropriate guidance to staff to ensure that all District purchases are made in accordance with this Policy and required documentation procedures are followed. C. General Manager Delegated Approval for Purchases Not Exceeding $15,000 1. The Assistant General Manager may be authorized, in writing, by the General Manager to approve purchases not to exceed $15,000. When acting as the General Manager, in his/her absence, the Assistant General Manager and Department Managers may be delegated the General Manager’s authority of $25,000. 2. The Department Managers may be authorized, in writing, by the General Manager, to approve purchases relating to his/her area of responsibility not to exceed $10,000. 3. The General Counsel, Assistant General Counsel, and Area Superintendents may be authorized, in writing, by the General Manager to approve purchases not to exceed $5,000. The General Manager shall issue written delegation of purchasing authority to those job classifications whose duties include making purchases within his or her area of responsibility. Purchasing authority limits shall be consistent with this Policy. Such written delegation of purchasing authority shall include the authority to execute contracts, purchase orders, and other documents necessary to approve a purchase within the employee’s purchasing authority. D. ConstructionC. Contract Change Orders Staff may issue change orders to a construction contract, provided that the aggregate of all change orders to that contract does not exceed fifteen percent (15%) of the original contract price. A larger contingency may be authorized, based on unusual circumstances. Change orders shall not exceed the total contract amount approved by the Board, General Manager or other District employee as authorized by this Policy, including any contingency amount. Any Board Policy 3.03 Page 3 of 9 expenditure beyond the originally approved contract and contingency amount shall be approved by the party authorized at that expenditure level under this Policy. II. SOLICITATION OF BIDS A. Solicitation of Formal Advertised Bids for Expenditures Exceeding $2550,000 When any expenditure for projects, excluding Professional services, is expected to exceed $2550,000, the District shall publishconduct a notice inviting bids a minimum of one week priorformal bidding process pursuant to the time of receiving bids, in a general circulation newspaper published in the District. Public Resources Code section 5594. This type of formal bidding process typically includes the issuance of written plans or specifications describing the goods or services to be provided and the receipt of written bids from the vendorsbidders involved. Solicitation of Staff shall attempt to solicit formal bids from a minimum of three vendors is required.bidders. Following Board approval, the contract shall then be executed by the General Manager (or the Acting General Manager in his/her absence,),designee, unless the Board President’s signature is required. The Contract shall be awarded to the lowest responsible, responsive bidder, except as otherwise provided in this Policy. B. Solicitation of Three Written Bids for Expenditures Exceeding $1025,000 but Not Exceeding $25,000 $50,000 When any expenditure is expected to exceed $1025,000, but not exceed $2550,000, the District shall solicit written proposals from a minimum of three (3) vendorsbidders. The General Manager, Assistant General Manager, or Acting General Manager’s or designee’s approval of the contract or purchase order is required as applicable under this Policy. C. Solicitation of Three Verbal Quotes or Proposals for Expenditures Exceeding $5,000 but Not Exceeding $1025,000 When any expenditure is expected to exceed $5,000, but not exceed $1025,000, the staff member responsible for the purchase is to solicit a minimum of three (3) verbal quotes or proposals to provide the goods or services. Such quotes shall be documented in writing pursuant to the Administrative Purchasing Policy/Procedure. D. Solicitation of Two Verbal Quotes for Expenditures Exceeding $3,000, but Not Exceeding $5,000 When any expenditure is expected to exceed $3,000, but not exceed $5,000, the staff member responsible for the purchase is to solicit a minimum of two (2) verbal quotes to provide the goods or services. Such quotes shall be documented in writing pursuant to the Administrative Purchasing Policy/Procedure. Board Policy 3.03 Page 4 of 9 E. Expenditures Not Exceeding $3,000 Staff members shall obtain competitive cost information, whenever reasonably feasible, for any District purchase even though formal cost quotations are not required for goods or services costing $35,000 or less. III. Professional Services Professional consultant services are of a technical and professional nature, and, due to the nature of the services to be provided, do not readily fall within the “low bid” competitive bidding process. In addition, State law requires that selection of professional consultants in the categories of architects, landscape architects, engineers, surveyors, construction managers, and environmental consulting be made on the basis of demonstrated competence and the professional qualifications necessary for the satisfactory performance of the required services. Professional consultants should be individually selected for a specific project or problem with the objective of selecting the most qualified consultant at a price that is fair and reasonable. Professional services agreements shall include the full scope of anticipated services for the project, program or annual service agreements and shall not be split into smaller units, nor shall contract amendments be used, for the purpose of circumvention of this Policy and the required purchasing procedures. As used in this Policy, “professional service agreement” shall mean and include all professional service agreements, which are part of or related to the same project or program for which the consultant is being retained, and annual service agreements to provide services on an ongoing basis in any fiscal year. This policy shall include, but not be limited to, services in the following fields: Engineering (for example, civil, acoustical, mechanical, electrical, structural, and traffic) Architecture Landscape Architecture Construction Management City and Regional Planning Economic Analysis Property Appraisals/Analysis Property Acquisition Financial Services Data Processing Services Project Management Environmental Planning and Analysis Land Surveying Legal Services Personnel Consultants/Facilitators/Coaches Recruitment Services Safety Services Trainers Board Policy 3.03 Page 5 of 9 1.A. Selection Procedures for Professional Services in Excess of $2550,000 When the cost for professional services is expected to be in excess of $2550,000, the District shall prepare a Request for Qualifications (RFQ) outlining the professional’s qualifications, relevant experience, staffing and support and hourly rates as a. This information becomes the basis for negotiating a contract or a Request for Proposal (RFP) outlining the terms, conditions and specifications of the services required by the District. The District may also prepare, as an alternative, a Request for Qualifications and Proposal, combining the required elements of the RFQ and the RFP described above. A minimum of three (3) qualified firms or individuals shall be invited to submit qualifications and/or proposals. District staff will review the proposals received, will select the most qualified firms for interviews, and will rank the consultants based upon criteria including but not limited to the following criteria: i. Ability of the consultants to perform the specific tasks outlined in the RFP/RFQ. ii. Qualifications of the specific individuals who will work on the project. iii. Amount and quality of time key personnel will be involved in their respective portions of the project. iv. Reasonableness of the fee requested to do the work; comparability of fee to similar services offered by other qualified consultants. v. Demonstrated record of success by the consultant on work previously performed for the District or for other public agencies or enterprises. vi. The specific method and techniques to be employed by the consultant on the project or problem. vii. Ability of the consultant to provide appropriate insurance in adequate amounts, including errors and omissions if applicable. For the categories of architects, landscape architects, engineers, surveyors, construction managers, and environmental consultants, initial selection of the most qualified and competent consultants shall not include the cost criteria listed in Section III. D.1. ivA. of this Policy. After staff has determined the most qualified and competent consultants, this cost criteria shall be considered in negotiating a professional services agreement with and final selection of the selected consultant. B. 2. Selection Procedures for Professional Services in Excess of $10,000 but Not Exceeding $2550,000 District staff shall solicit written proposals from a minimum of three (3) qualified consultants. A formal RFP/ RFQ is not required. The selection shall be based upon the criteria noted in Section III. D.1.A.. The General Manager or his/her authorized designee may approve the selection and execute the agreement. C. 3. Selection Procedures for Professional Services in Excess of $3,000 but Not Exceeding $10,000 Board Policy 3.03 Page 6 of 9 District staff shall maintain current files on qualified consultants in appropriate categories. The department shall, by telephone, email, or letter, contact at least three (3) qualified consultants and request them to submit a proposal either orally or in writing. Oral proposals shall be memorialized in writing, pursuant to the Administrative Purchasing Policy/Procedure. The selection shall be based upon the criteria noted in Section III. D.1.A. and per the Administrative Purchasing Policy/Procedure. The authorized Department Manager or other authorized District employee may approve the selection and execute the agreement. D. Renewal of Contracts with Professional Consultants The District may, at its sole discretion, and after following required consultant selection procedures, enter into consultant agreements which contain provisions authorizing their extension or renewal. However, recommendations to extend or renew an existing contract with a professional consultant should include an annual written evaluation of the work performed by the consultant as well as a determination that the fees being charged are comparable to similar services offered by other consultants at the time of renewal or extension. If the total amount of the original and renewed contract in any one fiscal year does not exceed $2550,000, the General Manager or his/her authorized designee may execute the agreement. If the total amount exceeds $2550,000, the request must be approved by the Board. E. 5. Conflict of Law These procedures are not applicable where superseded by local, state or federal law, where the terms of grant funding provide for the use of other consultant selection procedures, or where the District is obligated to select consultants through the use of different procedures, such as due to the requirements of an insurance or self-insurance program. F. 6. Special Circumstances These procedures are not applicable when three (3) qualified firmsbids or individualsproposals are unavailable, or if it is appropriate and in the best interest of the District under the specific circumstances of the project at issue, to limit the number of consultantsbids or proposals solicited. The basis for such action shall be documented in writing and approved by the General Manager, the Assistant General Manager, or the Acting General Managerdesignee in his/her absence. When Board approval is required, the documented basis for such action shall be included in the report to the Board. G. 7. Prequalified Consultant File When, after District staff has undertaken the selection procedures as set out in this Policy and determined that a consultant is qualified and competent in the performance of the professional services in the consultant’s category, District staff may maintain a current file of such consultants in their appropriate categories. For a period of four (4) years from determination of the qualification of such consultant, District staff may select such a prequalified consultant from the current file of prequalified consultants for the performance of professional services. Board Policy 3.03 Page 7 of 9 IV. EXCEPTIONS TO STANDARD PURCHASING PROCEDURES A. Emergency Conditions An emergency is defined as a breakdown in machinery or equipment or a natural disaster resulting in the inability of the District to provide services, or a threat to public health, safety, or welfare, including, but not limited to, threatened damage to natural resources. In the case of an emergency determined by the District, or federal, state, or other local jurisdictions requiring an immediate purchase, the General Manager may authorize the Assistant General Manager or Department Manager or his/her designee may authorize District staff to secure in the open market, at the lowest obtainable price, any services, supplies, material or labor required to respond to the emergency, regardless of the amount of the expenditure. The General Manager shall, as soon as possible, provide a full written explanation of the circumstances to the Board. In the case of a disaster or for civil defense, nothing contained in this Policy shall limit the authority of the General Manager to make purchases and take such other emergency steps as are, or may be, authorized by the Board. B. Limited Availability/Sole Source Occasionally, necessary supplies, materials, equipment, or services are of a unique type, are of a proprietary nature, or are otherwise of such a required and specific design or construction, or are specifically necessary for purposes of maintaining cost effective system consistency and operational efficiency, so as to be available from only one source. After reasonable efforts to find alternative suppliers, the District may dispense with the requirement of competitive bids and recommend negotiating and making the purchase from the sole source. The basis for the sole source recommendation shall be documented in writing and approved, in advance, by the Board for purchases exceeding $25,000 $50,000, and the General Manager or another other authorized District employee, as designated in this Policy, for purchases not exceeding $25,000 $50,000. C. Cooperative Purchasing The District shall have the authority to join in cooperative purchasing agreements with other public agencies, (e.g., the State of California, Santa Clara County or San Mateo County counties, cities, schools, or other special districts), to purchase goods or services at a price established by that agency through a competitive bidding process. The General Manager, or Assistant General Manager in his/her absencedesignee, may authorize and execute such cooperative purchasing agreements. 1. Purchases Exceeding $25,000 $50,000 Board Policy 3.03 Page 8 of 9 The formal competitive bidding procedures of Section II.A. for purchases exceeding $25,000 $50,000 are not required when the other public agency has secured a price through a formal, advertised competitive bidding process. Board approval is required prior to purchase. 2. Purchases Not Exceeding $25,000 $50,000 The bidding procedures of Section II. B. for purchases not exceeding $25,000 $50,000 are not required when the other public agency has secured a price through a competitive bidding process. Approval from the General Manager or his/her authorized designee is required prior to purchase. H. E. Open Purchase Orders for Routine and Repetitive Supplies and Services Open purchase orders may be entered into with vendors who are expected to supply routine services, supplies, materials or labor to the District on a regular basis throughout the fiscal year (such as gasoline, discing, road maintenance, vehicle maintenance, printing, office supplies and field hardware). Open purchase orders shall be closed at the conclusion of each fiscal year. Vendors of repetitive supplies and services shall be selected through the competitive bidding procedures set out in Section II, based upon the anticipated or budgeted cumulative cost of the supply or service. Where competitive bidding procedures cannot feasibly be doneused, a comparison of vendors’ prices on representative sample items will be made and staff will provide written documentation of the price quotations used to select the vendor with the lowest cost, pursuant to the Administrative Purchasing Policy/Procedure. Multi-year contracts can be letentered into only when appropriate and necessary to secure the best pricing or assure continuity of service. An annual review of the services and prices provided shall be documented by District staff to assure that the vendor is meeting the District’s needs and expectations and remains at a competitive price. Whenever feasible, multi-year contracts for service or supplies shall provide that the option to renew or extend the contract is at the District’s sole discretion. IV V GENERAL PROVISIONS A. Conflict of Interest No District employee or official shall be financially interested, directly or indirectly, in any purchase, contract, sale, or transaction to which the District is a party and which comes before said official or employee for recommendation or action. Any purchase, contract, sale, or transaction in which any employee or official is or becomes financially interested shall become void at the election of the District. No employee or official shall realize any personal gain from any purchase, contract, sale, or transaction involving the District. More information can be found in Board Policy 6.02 – Conflict of Interest Code. B. Credit Cards Board Policy 3.03 Page 9 of 9 The General Manager may approve the use of District credit cards for District purchases by authorized employees. The employeeEmployees utilizing a credit card cannotshall not exceed his/her purchasing authority, as authorized in this Policy and as delegated by the General Manager, andunless prior approval is given by a supervisor with the appropriate purchasing authority. All card holders must follow the credit card procedures outlined in the Administrative Purchasing Policy/Procedure. District credit cards shall not be issued to individual members of the District Board of Directors. C. Purchase of Recycled Products District staff shall purchase recycled products whenever such products are available at equal cost to non-recycled products and when fitness and quality are equal. When recycled products are used, the supplier shall label the products to indicate that they contain recycled materials, and specify the minimum percentage of recycled material in the products. D. Violations of This Policy Employees are subject to disciplinary action up to and including termination for violation of this Policy. Midpeninsula Regional Open Space District Board Policy Manual Public Contract Bidding, Vendor and Professional Consultant Selection, and Purchasing Policy Policy 3.03 Chapter 3 – Fiscal Management Effective Date: 7/24/02 Revised Date: 9/23/15 Prior Versions: 12/16/09, 1/27/10 Board Policy 3.03 Page 1 of 9 Purpose The purpose of this policy is to ensure that the District obtains quality services, supplies, material and labor at the lowest possible cost, and to provide a uniform method for procurement of services and supplies. In addition, through proper documentation, conformance to this Policy will enable the District's constituents to know that their public funds are being spent responsibly, and potential vendors and contractors to know that they are being treated equitably. I. PURCHASING AUTHORITY There are three levels of authority for purchases: Board Approval, General Manager Approval and General Manager Delegated Approval. The maximum purchasing authority amounts refer to the total price of an order, including tax and/or shipping, which may include more than one item and also includes change orders and contract amendments. As used in this Policy, the term “purchasing” refers collectively to contracting or procurement of services, supplies, material or labor, including Capital Improvements. A. Board Approval for Purchases In Excess of $5025,000 If the cost for furnishing services, supplies, materials, labor, or other valuable consideration to the District will exceed Fifty Twenty-Five Thousand Dollars ($5025,000), approval from the Board of Directors is required prior to entering into the contract. The Board may reject all bids and re-advertise, or by a five-sevenths vote may elect to purchase the materials or supplies in the open market, or to construct a building, structure, or improvement using District personnel. 1. Signature Contracts which have been approved by the Board shall be signed by the General Manager, or in the General Manager’s absence, the Acting General Manager, unless the Board has directed that the President sign on behalf of the District. The District Clerk shall sign all such contracts and affix the seal of the District. Attachment 4 Board Policy 3.03 Page 2 of 9 B. General Manager Approval for Purchases Not Exceeding $5025,000 Pursuant to Public Resources Code 5549, the General Manager may obtain bids without advertisement or published notice inviting bids and may authorize and execute contracts for payment for services, supplies, material, labor, or other valuable consideration for any purpose, including the new construction of any building, structure, or improvement, in an amount not exceeding $5025,000. Such expenditures shall be reported to the Board of Directors at its next regular meeting, and may be reported on the Board’s Claims List. 1. Administrative Purchasing Policy/Procedure The General Manager shall issue an Administrative Purchasing Policy/Procedure, which provides appropriate guidance to staff to ensure that all District purchases are made in accordance with this Policy and required documentation procedures are followed. C. General Manager Delegated Approval for Purchases Not Exceeding $15,000 1. The Assistant General Manager may be authorized, in writing, by the General Manager to approve purchases not to exceed $15,000. When acting as the General Manager, in his/her absence, the Assistant General Manager and Department Managers may be delegated the General Manager’s authority of $25,000. 2. The Department Managers may be authorized, in writing, by the General Manager, to approve purchases relating to his/her area of responsibility not to exceed $10,000. 3. The General Counsel, Assistant General Counsel, and Area Superintendents may be authorized, in writing, by the General Manager to approve purchases not to exceed $5,000. The General Manager shall issue written delegation of purchasing authority to those job classifications whose duties include making purchases within his or her area of responsibility. Purchasing authority limits shall be consistent with this Policy. Such written delegation of purchasing authority shall include the authority to execute contracts, purchase orders, and other documents necessary to approve a purchase within the employee’s purchasing authority. D. Construction Change Orders Staff may issue change orders to a construction contract, provided that the aggregate of all change orders to that contract does not exceed fifteen percent (15%) of the original contract price, and does not exceed the total contract amount approved by the Board, General Manager or other District employee as authorized by this Policy, including any contingency amount. Any expenditure beyond the originally approved contract and contingency amount shall be approved by the party authorized at that expenditure level under this Policy. Attachment 4 Board Policy 3.03 Page 3 of 9 II. SOLICITATION OF BIDS A. Solicitation of Formal Advertised Bids for Expenditures Exceeding $5025,000 When any expenditure is expected to exceed $5025,000, the District shall publish a notice inviting bids a minimum of one week prior to the time of receiving bids, in a general circulation newspaper published in the District. This type of formal bidding process typically includes the issuance of written plans or specifications describing the goods or services to be provided and the receipt of written bids from the vendors involved. Solicitation of formal bids from a minimum of three vendors is required. Following Board approval, the contract shall then be executed by the General Manager (or the Acting General Manager in his/her absence,), unless the Board President’s signature is required. The Contract shall be awarded to the lowest responsible, responsive bidder, except as otherwise provided in this Policy. B. Solicitation of Three Written Bids for Expenditures Exceeding $10,000 but Not Exceeding $25,000 When any expenditure is expected to exceed $10,000, but not exceed $25,000, the District shall solicit written proposals from a minimum of three (3) vendors. The General Manager, Assistant General Manager, or Acting General Manager’s approval of the contract or purchase order is required as applicable under this Policy. C. Solicitation of Three Verbal Quotes for Expenditures Exceeding $5,000 but Not Exceeding $10,000 When any expenditure is expected to exceed $5,000, but not exceed $10,000, the staff member responsible for the purchase is to solicit a minimum of three (3) verbal quotes to provide the goods or services. Such quotes shall be documented in writing pursuant to the Administrative Purchasing Policy/Procedure. D. Solicitation of Two Verbal Quotes for Expenditures Exceeding $3,000, but Not Exceeding $5,000 When any expenditure is expected to exceed $3,000, but not exceed $5,000, the staff member responsible for the purchase is to solicit a minimum of two (2) verbal quotes to provide the goods or services. Such quotes shall be documented in writing pursuant to the Administrative Purchasing Policy/Procedure. E. Expenditures Not Exceeding $3,000 Staff members shall obtain competitive cost information, whenever reasonably feasible, for any District purchase even though formal cost quotations are not required for goods or services costing $3,000 or less. Attachment 4 Board Policy 3.03 Page 4 of 9 III. EXCEPTIONS TO STANDARD PURCHASING PROCEDURES A. Emergency Conditions An emergency is defined as a breakdown in machinery or equipment resulting in the inability of the District to provide services, or a threat to public health, safety, or welfare, including, but not limited to, threatened damage to natural resources. In the case of an emergency requiring an immediate purchase, the General Manager may authorize the Assistant General Manager or Department Manager or his/her designee to secure in the open market, at the lowest obtainable price, any services, supplies, material or labor required to respond to the emergency, regardless of the amount of the expenditure. The General Manager shall, as soon as possible, provide a full written explanation of the circumstances to the Board. In the case of a disaster or for civil defense, nothing contained in this Policy shall limit the authority of the General Manager to make purchases and take such other emergency steps as are, or may be, authorized by the Board. B. Limited Availability/Sole Source Occasionally, necessary supplies, material, equipment, or services are of a unique type, are of a proprietary nature, or are otherwise of such a required and specific design or construction, or are specifically necessary for purposes of maintaining cost effective system consistency, so as to be available from only one source. After reasonable efforts to find alternative suppliers, the District may dispense with the requirement of competitive bids and recommend negotiating and making the purchase from the sole source. The basis for the sole source recommendation shall be documented in writing and approved, in advance, by the Board for purchases exceeding $25,000, and the General Manager or another authorized District employee, as designated in this Policy, for purchases not exceeding $25,000. C. Cooperative Purchasing The District shall have the authority to join in cooperative purchasing agreements with other public agencies, (e.g. the State of California, Santa Clara County or San Mateo County), to purchase goods or services at a price established by that agency through a competitive bidding process. The General Manager, or Assistant General Manager in his/her absence, may authorize and execute such cooperative purchasing agreements. 1. Purchases Exceeding $5025,000 The formal competitive bidding procedures of Section II.A. for purchases exceeding $5025,000 are not required when the other public agency has secured a price through a formal, advertised competitive bidding process. Board approval is required prior to purchase. Attachment 4 Board Policy 3.03 Page 5 of 9 2. Purchases Not Exceeding $5025,000 The bidding procedures of Section II. B. for purchases not exceeding $5025,000 are not required when the other public agency has secured a price through a competitive bidding process. Approval from the General Manager or his/her authorized designee is required prior to purchase. D. Professional Services Professional consultant services are of a technical and professional nature, and, due to the nature of the services to be provided, do not readily fall within the “low bid” competitive bidding process. In addition, State law requires that selection of professional consultants in the categories of architects, landscape architects, engineers, surveyors, construction managers, and environmental consulting be made on the basis of demonstrated competence and the professional qualifications necessary for the satisfactory performance of the required services. Professional consultants should be individually selected for a specific project or problem with the objective of selecting the most qualified consultant at a price that is fair and reasonable. Professional services agreements shall not be split into smaller units, nor shall contract amendments be used, for the purpose of circumvention of this Policy. As used in this Policy, “professional service agreement” shall mean and include all professional service agreements, which are part of or related to the same project or program for which the consultant is being retained, and annual service agreements to provide services on an ongoing basis in any fiscal year. This policy shall include, but not be limited to, services in the following fields: Engineering (for example, civil, acoustical, mechanical, electrical, structural, and traffic) Architecture Landscape Architecture Construction Management City and Regional Planning Economic Analysis Property Appraisals/Analysis Property Acquisition Financial Services Data Processing Services Project Management Environmental Planning and Analysis Land Surveying Legal Services Personnel Consultants/Facilitators/Coaches Recruitment Services Safety Services Trainers Attachment 4 Board Policy 3.03 Page 6 of 9 1. Selection Procedures for Professional Services in Excess of $5025,000 When the cost for professional services is expected to be in excess of $5025,000, the District shall prepare a Request for Qualifications (RFQ) outlining the professional’s qualifications, relevant experience, staffing and support and hourly rates as a basis for negotiating a contract or a Request for Proposal (RFP) outlining the terms, conditions and specifications of the services required by the District. A minimum of three (3) qualified firms or individuals shall be invited to submit proposals. District staff will review the proposals received, will select the most qualified firms for interviews, and will rank the consultants based upon the following criteria: i. Ability of the consultants to perform the specific tasks outlined in the RFP/RFQ. ii. Qualifications of the specific individuals who will work on the project. iii. Amount and quality of time key personnel will be involved in their respective portions of the project. iv. Reasonableness of the fee requested to do the work; comparability of fee to similar services offered by other qualified consultants. v. Demonstrated record of success by the consultant on work previously performed for the District or for other public agencies or enterprises. vi. The specific method and techniques to be employed by the consultant on the project or problem. vii. Ability of the consultant to provide appropriate insurance in adequate amounts, including errors and omissions if applicable. For the categories of architects, landscape architects, engineers, surveyors, construction managers, and environmental consultants, initial selection of the most qualified and competent consultants shall not include the cost criteria listed in Section III. D.1. iv of this Policy. After staff has determined the most qualified and competent consultants, this cost criteria shall be considered in negotiating a professional services agreement with and final selection of the consultant. 2. Selection Procedures for Professional Services in Excess of $10,000 but Not Exceeding $25,000 District staff shall solicit written proposals from a minimum of three (3) qualified consultants. A formal RFP/ RFQ is not required. The selection shall be based upon the criteria noted in Section III. D.1. The General Manager or his/her authorized designee may approve the selection and execute the agreement. 3. Selection Procedures for Professional Services in Excess of $3,000 but Not Exceeding $10,000 District staff shall maintain current files on qualified consultants in appropriate categories. The department shall, by telephone or letter, contact at least three (3) qualified consultants and Attachment 4 Board Policy 3.03 Page 7 of 9 request them to submit a proposal either orally or in writing. Oral proposals shall be memorialized in writing, pursuant to the Administrative Purchasing Policy/Procedure. The selection shall be based upon the criteria noted in Section III. D.1. The authorized Department Manager or other authorized District employee may approve the selection and execute the agreement. 4. Renewal of Contracts with Professional Consultants The District may, at its sole discretion, and after following required consultant selection procedures, enter into consultant agreements which contain provisions authorizing their extension or renewal. However, recommendations to extend or renew an existing contract with a professional consultant should include an annual written evaluation of the work performed by the consultant as well as a determination that the fees being charged are comparable to similar services offered by other consultants at the time of renewal or extension. If the total amount of the original and renewed contract in any one fiscal year does not exceed $5025,000, the General Manager or his/her authorized designee may execute the agreement. If the total amount exceeds $5025,000, the request must be approved by the Board. 5. Conflict of Law These procedures are not applicable where superseded by local, state or federal law, where the terms of grant funding provide for the use of other consultant selection procedures, or where the District is obligated to select consultants through the use of different procedures, such as due to the requirements of an insurance or self-insurance program. 6. Special Circumstances These procedures are not applicable when three (3) qualified firms or individuals are unavailable, or if it is appropriate and in the best interest of the District under the specific circumstances of the project at issue, to limit the number of consultants solicited. The basis for such action shall be documented in writing and approved by the General Manager, the Assistant General Manager, or the Acting General Manager in his/her absence. When Board approval is required, the documented basis for such action shall be included in the report to the Board. 7. Prequalified Consultant File When, after District staff has undertaken the selection procedures as set out in this Policy and determined that a consultant is qualified and competent in the performance of the professional services in the consultant’s category, District staff may maintain a current file of such consultants in their appropriate categories. For a period of four (4) years from determination of the qualification of such consultant, District staff may select such a prequalified consultant from the current file of prequalified consultants for the performance of professional services. E. Open Purchase Orders for Routine and Repetitive Supplies and Services Attachment 4 Board Policy 3.03 Page 8 of 9 Open purchase orders may be entered into with vendors who are expected to supply routine services, supplies, materials or labor to the District on a regular basis throughout the fiscal year (such as gasoline, discing, road maintenance, vehicle maintenance, printing, office supplies and field hardware). Open purchase orders shall be closed at the conclusion of each fiscal year. Vendors of repetitive supplies and services shall be selected through the competitive bidding procedures set out in Section II, based upon the anticipated or budgeted cumulative cost of the supply or service. Where competitive bidding procedures cannot feasibly be done, a comparison of vendors’ prices on representative sample items will be made and staff will provide written documentation of the price quotations used to select the vendor with the lowest cost, pursuant to the Administrative Purchasing Policy/Procedure. Multi-year contracts can be let only when appropriate and necessary to secure the best pricing or assure continuity of service. An annual review of the services and prices provided shall be documented by District staff to assure that the vendor is meeting the District’s needs and expectations and remains at a competitive price. Whenever feasible, multi-year contracts for service or supplies shall provide that the option to renew or extend the contract is at the District’s sole discretion. IV GENERAL PROVISIONS A. Conflict of Interest No District employee or official shall be financially interested, directly or indirectly, in any purchase, contract, sale, or transaction to which the District is a party and which comes before said official or employee for recommendation or action. Any purchase, contract, sale, or transaction in which any employee or official is or becomes financially interested shall become void at the election of the District. No employee or official shall realize any personal gain from any purchase, contract, sale, or transaction involving the District. B. Credit Cards The General Manager may approve the use of District credit cards for District purchases by authorized employees. The employee utilizing a credit card cannot exceed his/her purchasing authority, as authorized in this Policy and as delegated by the General Manager, and must follow the credit card procedures outlined in the Administrative Purchasing Policy/Procedure. District credit cards shall not be issued to individual members of the District Board of Directors. C. Purchase of Recycled Products District staff shall purchase recycled products whenever such products are available at equal cost to non-recycled products and when fitness and quality are equal. When recycled products are used, the supplier shall label the products to indicate that they contain recycled materials, and specify the minimum percentage of recycled material in the products. D. Violations of This Policy Attachment 4 Board Policy 3.03 Page 9 of 9 Employees are subject to disciplinary action up to and including termination for violation of this Policy. Attachment 4 R-15-171 Meeting 15-32 December 16, 2015 AGENDA ITEM 4 AGENDA ITEM Fiscal Year 2015-16 Midyear Controller’s Report CONTROLLER’S RECOMMENDATION Review and accept the attached Fiscal Year 2015-16 Midyear Controller’s Report. SUMMARY The Controller’s Midyear Financial Review Report concludes that the Midyear revenues and expenditures are on track and consistent with the District’s long-term financial plans. DISCUSSION As part of the Midyear Action Plan and Budget Review process, the Controller prepares a Midyear Financial Report that presents the District’s balance sheet and year-to-date revenues and expenditures as of September 30. For FY2015-16, the financial results of the first six months indicate that revenues and expenditures are consistent with the District’s long-term financial plans. Staff is currently preparing proposed FY2015-16 Action Plan and Budget adjustments to account for the fiscal year three-month extension to June 30, 2016. These revisions will be presented to the Board for approval in February 2016. BOARD COMMITTEE REVIEW The Action Plan and Budget Committee reviewed the proposed FY2015-16 Midyear Controller’s report on November 30, 2015. FISCAL IMPACT Acceptance of this report has no fiscal impact. PUBLIC NOTICE Public notice was provided as required by the Brown Act. No additional notice is required. R-15-171 Page 2 CEQA COMPLIANCE This proposed action is not a project under the California Environmental Quality Act (CEQA) and no environmental review is required. NEXT STEPS The Controller will continue to monitor property tax revenues and District expenditures. Attachments: 1. Midyear Financial Review Report Prepared by: Mike Foster, Controller September 30, 2015 March 31, 2015 (Thousands)(Unaudited)(Audited)Increase Cash/Investments-Gen Fund $37,147 $33,871 $3,275 Cash/Investments-MAA $31,371 $0 $31,371 Cash/Investments-Hawthorn $1,683 $1,691 ($7) Total Cash & Investments $70,201 $35,562 $34,639 Receivables & Prepaids $1,930 $10,588 ($8,658) Deferred Charges $3,495 $3,698 ($203) Net OPEB Asset $863 $863 $0 Land $400,065 $390,691 $9,374 Structures & Improvements $19,843 $18,140 $1,703 Equipment $2,586 $2,647 ($61) TOTAL ASSETS $498,983 $462,188 $36,795 Accounts Payable $358 $1,624 ($1,266) Accrued Liabilities $640 $1,338 ($698) Compensated Absences $1,673 $1,537 $136 Land Contract Debt $2,402 $2,412 ($10) GO Bonds Payable $47,282 $0 $47,282 Public Notes Payable $131,001 $134,152 ($3,151) TOTAL LIABILITIES $183,355 $141,063 $42,292 TOTAL EQUITY (*)$315,628 $321,125 ($5,498) (*) Includes $20.4 million of committed reserves and $2.5 million of restricted reserves Exhibit A Balance Sheet MIDPENINSULA REGIONAL OPEN SPACE DISTRICT (Thousands, Unaudited)Six Months Ended September 30 Percent 2015 2014 Increase Property Taxes $5,213 $4,800 9% Acquisition Grants $740 $0 na Development Grants $202 $59 243% Rental Income $462 $469 -2% SCC Parks Income $351 $314 12% Interest Income $73 $96 -24% Other $366 $97 278% TOTAL REVENUE $7,406 $5,834 27% (Thousands, Unaudited)Six Months Annual (*)Percent Actual Budget Received Property Taxes $5,213 $36,305 14% Acquisition Grants $740 $740 100% Development Grants $202 $451 45% Gifts of Land $0 $550 0% Rental Income $462 $1,261 37% SCC Parks Income $351 $326 108% Interest Income $73 $145 50% Other $366 $175 209% TOTAL REVENUE $7,406 $39,953 19% (*) excluding GO bond-related property tax and interest income Six Month Revenue vs. Prior Year Six Month Revenue vs. Annual Budget Exhibit B MIDPENINSULA REGIONAL OPEN SPACE DISTRICT (Thousands, Unaudited)Six Months Ended September 30 Percent 2015 2014 Increase Salaries & Benefits $7,169 $6,350 13% Services & Supplies $2,076 $1,561 33% Operating Expense $9,244 $7,912 17% Strategic/Vision Plan $0 $775 -100% Property Management $166 $159 5% Land Acquisition Expense $104 $105 -1% Capital Spending $2,169 $854 154% Land Acquired $9,270 $10 92600% Debt Service $6,363 $6,043 5% TOTAL SPENDING $27,316 $15,857 72% (Thousands, Unaudited)Six Months Annual Percent Actual Budget Spent Salaries & Benefits $7,169 $15,394 47% Services & Supplies $2,076 $5,789 36% Operating Expense $9,244 $21,183 44% Property Management $166 $795 21% Land Acquisition Expense $104 $1,309 8% Capital Spending $2,169 $10,414 21% NON-LAND SPENDING $11,683 $33,701 35% Debt Service $6,363 $11,063 58% Land Acquired $9,270 $11,000 84% TOTAL SPENDING $27,316 $55,764 49% Hawthorn Endowment $16 $380 4% Six Month Spending vs. Prior Year Six Month Spending vs. Annual Budget Exhibit C MIDPENINSULA REGIONAL OPEN SPACE DISTRICT (Thousands)Six Months Annual Percent General Fund Actual Budget Done Property Taxes $5,213 $36,305 14% Other Income $1,252 $1,907 66% GEN FUND REVENUE $6,465 $38,212 17% Opex $9,244 $21,183 44% Non-Opex Expense $166 $715 23% Capital Spending $646 $3,777 17% Land Acquisition $0 $1,003 0% Debt Service $6,363 $9,883 64% GEN FUND SPENDING $16,419 $36,561 45% MAA REIMBURSMENT $5,310 $5,310 100% General Fund Net Position ($4,644)$6,961 MAA Program MAA BOND PROCEEDS $47,559 $44,830 106% Property Taxes $0 $1,183 0% Acquisition Grants/Gifts $740 $1,290 57% Development Grants $202 $451 45% Interest Income $0 $100 0% MAA REVENUE $942 $3,024 31% MAA Debt Service $0 $1,183 0% MAA Capex Labor $254 $1,299 20% MAA Non-Labor Capex $1,269 $5,418 23% MAA Land Acquisition $9,374 $11,306 83% MAA SPENDING $10,897 $19,206 57% MAA Spent To-Date (net)$15,265 $45,000 34% (May 2014-Sep 2015) Exhibit D MIDPENINSULA REGIONAL OPEN SPACE DISTRICT Six Month Activity vs. Annual Budget FINANCING AUTHORITY MEETING R-15-170 Meeting 15-32 December 16, 2015 AGENDA ITEM 1 AGENDA ITEM Acceptance of the Controller’s Annual Financial Report of the Midpeninsula Regional Open Space District Financing Authority CONTROLLER’S RECOMMENDATION Accept the Annual Financial Report of the Midpeninsula Regional Open Space District Financing Authority (Financing Authority). DISCUSSION In May 1996, the District and Santa Clara County established the Financing Authority with the purpose of providing financing assistance to the District to fund the acquisition of land to preserve and use as open space and to finance public capital improvements. Accordingly, the District and the Financing Authority are accounted as one blended unit for financial statement purposes. On June 25, 2015, the District’s independent auditors, Chavan & Associates, LLP., issued its report on the District’s financial statements for the fiscal year ending March 31, 2015 (Attachment 1). Through March 2015, the District has sold six series of Financing Authority bonds, with a total par value of $199.6 million. A summary of the six financings is shown in Table 1 below. Excluding the 2007 Bonds, which raised no new money and only refinanced existing Financing Authority bonds, the District has issued $140.5 million (net) of Financing Authority bonds, funding $77 million of new land acquisitions and repaying $60 million of prior public and private debt, which had been issued at higher interest rates and for shorter maturities. Table 1: District Financings Issuance Par Amount TIC* Purpose 1996 Bonds $29.9 M 6.25% $11M Land + pay-off 1988 Notes 1999-1 Bonds $29.7 M 5.26% $21M Land + pay-off 1992 Notes 1999-2 Bonds $28.4 M 5.93% $15M Land + pay-off 1990 Notes 2004 Bonds $31.9 M 4.99% $10M Land + pay-off 1993 COPs 2007 Bonds $59.2 M 4.57% Pay-off 1996 & 1999-2 Notes 2011 Bonds $20.5 M 5.60% Purchase $20M of Land * TIC = Total Interest Cost, including all costs of issuance In January 2015, the District advance refunded all of the outstanding 2004 Revenue Bonds, $29,986,962 by issuing $28,578,500 of 2015 Refunding Promissory Notes. This transaction resulted in a net present value savings of $7.3 million. R-15-170 Page 2 Two Financing Authority bond issues remained outstanding on March 31, 2015, with a total outstanding balance of $70.32 million. This represented 52% of the District’s total outstanding debt balance. The average total interest cost of these outstanding Financing Authority bonds was 4.87%. A summary of the activity on the Financing Authority bonds in fiscal 2015 is shown below. During the 2015 fiscal year, $31.25 million of principal was refunded or repaid, $4.92 million of interest was paid, and all accretion was eliminated. Accretion arises from the portion of debt sold as capital appreciation bonds (CABs). The remaining Financing Authority bonds include no CABs. Table 2: FY2014-15 Financing Authority Activity ($ millions) Balance March 2014 Principal Paid/Refunded Accretion Balance March 2015 Interest Paid FY2014-15 2004 Bonds $30.57 $30.45 -$0.12 $0 $1.34 2007 Bonds $50.66 $0.73 $0.00 $49.94 $2.49 2011 Bonds $20.46 $0.07 $0.00 $20.38 $1.08 $101.69 $31.25 -$0.12 $70.32 $4.92 It is currently anticipated that the District will refund the 2007 Bonds, in their entirety, between June and September 2016, from the proceeds of an issuance of District promissory notes. Depending on the movement of interest rates between now and then, present value savings of $4 to $6 million are anticipated. FISCAL IMPACT There are no unbudgeted fiscal impacts associated with the recommended action. BOARD COMMITTEE REVIEW Board Committee review is not required for this agenda item. 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 the California Environmental Quality Act. NEXT STEPS None. Attachment 1. District’s Financial Statements for the Fiscal Year ended March 31, 2015. Prepared by: Michael Foster, Controller MIDPENINSULA REGIONAL OPEN SPACE DISTRICT ANNUAL FINANCIAL AUDIT REPORT MARCH 31, 2015 CHAVAN & ASSOCIATES, LLP CERTIFIED PUBLIC ACCOUNTANTS 1475 SARATOGA AVE., SUITE 180 SAN JOSE, CA 95129 TITLE PAGE Midpeninsula Regional Open Space District Santa Clara County Table of Contents FINANCIAL SECTION: Independent Auditor’s Report ..................................................................................................... 1 - 2 Management’s Discussion and Analysis ..................................................................................... 3 - 8 Basic Financial Statements: Government-Wide Financial Statements: Statement of Net Position .............................................................................................. 9 Statement of Activities .................................................................................................. 10 Fund Financial Statements: Balance Sheet – Governmental Funds ........................................................................... 11 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position ....................................................................................... 12 Statement of Revenues, Expenditures, and Changes in Fund Balance – Governmental Funds ................................................................. 13 Reconciliation of Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balance to the Statement of Activities ................................. 14 Notes to the Basic Financial Statements ............................................................................... 15 - 36 REQUIRED SUPPLEMENTARY INFORMATION: Schedule of Revenue, Expenditures and Changes in Fund Balance – Budget and Actual (GAAP) General Fund ........................................................................... 37 Schedule of Funding Progress – Other Postemployment Benefits .............................................. 38 OTHER INDEPENDENT AUDITOR’S REPORTS: Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ......................................... 39 - 40 FINANCIAL SECTION Page | 1 1475 Saratoga Ave, Suite 180, San Jose, CA 95129 Tel: 408-217-8749 • E-Fax: 408-872-4159 info@cnallp.com • www.cnallp.com INDEPENDENT AUDITOR’S REPORT Board of Directors Midpeninsula Regional Open Space District Los Altos, California Report on the Financial Statements We have audited the accompanying financial statements of the Midpeninsula Regional Open Space District (the District), as of and for the year ended March 31, 2015, and the related notes to the financial statements, which collectively comprise the District’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements The District’s management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the District’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the District, as of March 31, 2015, and the respective changes in financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America. Page | 2 1475 Saratoga Ave, Suite 180, San Jose, CA 95129 Tel: 408-217-8749 • E-Fax: 408-872-4159 info@cnallp.com • www.cnallp.com Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, budgetary comparison information and other postemployment benefit information on pages 3 through 8, 37, and 38 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated June 25, 2015 on our consideration of the District’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the District’s internal control over financial reporting and compliance. June 25, 2015 San Jose, California Management’s Discussion and Analysis Basic Financial Statements Governmental Activities Assets Current assets: Cash and investments 35,562,081$ Accounts Receivable: Deposits 1,093,909 Interest 43,323 Due from other governments: Taxes receivable 9,218,572 Due from grantor government 31,708 Other current assets 30,723 Total current assets 45,980,316 Noncurrent assets: Net OPEB asset 863,176 Notes receivable 169,368 Unamortized issuance costs 1,074,740 Non-depreciable capital assets 393,941,289 Capital assets, net of depreciation 17,535,536 Total noncurrent assets 413,584,109 Total Assets 459,564,425$ Deferred Outflows of Resources Deferred loss on early retirement of long-term debt 2,623,220$ Liabilities Current liabilities: Accounts payable 1,623,917$ Deposits payable 118,266 Payroll and other liabilities 805,972 Accrued interest 414,000 Total current liabilities 2,962,155 Noncurrent liabilities: Due within one year 4,350,491 Due after one year 133,749,935 Total noncurrent liabilities 138,100,426 Total Liabilities 141,062,581$ Net Position Net Investment in Capital Assets 278,611,038$ Restricted for: Debt service - Hawthorne maintenance 1,702,556 OPEB 863,176 Total restricted 2,565,732 Unrestricted 39,948,294 Total Net Position 321,125,064$ Midpeninsula Regional Open Space District Statement of Net Position March 31, 2015 The notes to the financial statements are an integral part of this statement. 9 Net (Expense) Capital Revenue and Charges for Grants and Changes in Expenses Services Contributions Net Position Governmental activities: Land preservation 19,477,519$ 1,436,680$ 952,925$ (17,087,914)$ Interest 7,202,178 - - (7,202,178) Depreciation 1,231,881 - - (1,231,881) Total governmental activities 27,911,578$ 1,436,680$ 952,925$ (25,521,973) General revenues: Property taxes 35,081,540 Investment earnings 201,813 Other revenues 284,525 Special items - loss on disposal of capital assets (68,306) Total general revenues and special items 35,499,572 Change in net position 9,977,599 Net position beginning 311,147,465 Net position ending 321,125,064$ Midpeninsula Regional Open Space District Statement of Activities For the Fiscal Year Ended March 31, 2015 Program Revenues The notes to the financial statements are an integral part of this statement. 10 Debt Total General Service Governmental Fund Fund Funds ASSETS Cash and investments 35,562,081$ -$ 35,562,081$ Receivables: Deposits 1,093,909 - 1,093,909 Interest 43,323 - 43,323 Due from other governments: Taxes receivable 9,218,572 - 9,218,572 Due from grantor government 31,708 - 31,708 Other current assets 30,723 - 30,723 Notes receivable 169,368 - 169,368 Total Assets 46,149,684$ -$ 46,149,684$ LIABILITIES Liabilities: Accounts payable 1,623,917$ -$ 1,623,917$ Deposits payable 118,266 - 118,266 Payroll and other liabilities 805,972 - 805,972 Total Liabilities 2,548,155 - 2,548,155 DEFERRED INFLOWS OF RESOURCES Unearned revenue 169,368 - 169,368 FUND BALANCE Restricted for: Hawthorne maintenance 1,702,556 - 1,702,556 Assigned for: Economic contingencies 5,000,000 - 5,000,000 Unassigned 36,729,605 - 36,729,605 Total Fund Balance 43,432,161 - 43,432,161 Total Liabilities and Fund Balance 46,149,684$ -$ 46,149,684$ Balance Sheet Midpeninsula Regional Open Space District March 31, 2015 Governmental Funds The notes to the financial statements are an integral part of this statement. 11 Total fund balance - governmental funds 43,432,161$ Amounts reported in the Statement of Net Position are different because: Capital assets used in governmental activities are not financial resources and therefore are not reported as assets in governmental funds. Capital assets at cost 424,235,416$ Accumulated depreciation (12,758,591) 411,476,825 Principal on notes receivables are recorded as unearned revenue in the funds, which upon collection is a current financial resource. In the government-wide financial statements, repayment of the principal amount does not generate revenue in the statement of activities; therefore unearned revenue is not recorded.169,368 Net OPEB assets are not available to pay for current period expenditures and, therefore, are not recognized in the governmental funds statements.863,176 Interest payable on long-term debt does not require the use of current financial resources and, therefore, is not reported in the governmental funds.(414,000) Issuance costs, discounts and premiums related to bond issues are recorded as other financing sources and uses in the fund financial statements but are recorded as assets or liabilities and amortized over the life of the bond in the statement of net position:(5,898,397) Deferred loss on early retirement of long-term debt is recorded in the Statement of Net Position as a deferred outflow of resources and amortized on a straight line basis over the original life of the defeased bond.2,623,220 Long-term liabilities are not due and payable in the current period and therefore are not reported as liabilities in the funds. Long-term liabilities at year-end consists of: Revenue bonds 70,320,000$ Promissory notes 59,270,610 Compensated absences 1,536,679 (131,127,289) Total net position - governmental activities 321,125,064$ Midpeninsula Regional Open Space District Balance Sheet to the Statement of Net Position March 31, 2015 Reconciliation of the Governmental Funds The notes to the financial statements are an integral part of this statement. 12 Debt Total General Service Governmental Fund Fund Funds Revenues: Property taxes 35,081,540$ -$ 35,081,540$ Grant income 952,925 - 952,925 Property management 1,436,680 - 1,436,680 Investment earnings 174,654 40,956 215,610 Other revenues 241,335 - 241,335 Total revenues 37,887,134 40,956 37,928,090 Expenditures: Current: Salaries and employee benefits 13,629,502 - 13,629,502 Services and supplies 4,642,351 - 4,642,351 Capital outlay 8,445,355 - 8,445,355 Debt service: Principal - 3,145,096 3,145,096 Interest - 5,748,505 5,748,505 Total expenditures 26,717,208 8,893,601 35,610,809 Excess (deficiency) of revenues over (under) expenditures 11,169,926 (8,852,645) 2,317,281 Other financing sources (uses): Proceeds from the issuance of refunding notes 28,325,491 - 28,325,491 Advance refunding of revenue bonds (28,325,491) (1,661,471) (29,986,962) Transfers in - 8,893,601 8,893,601 Transfers out (8,893,601) - (8,893,601) Total other financing sources (uses)(8,893,601) 7,232,130 (1,661,471) Net changes in fund balance 2,276,325 (1,620,515) 655,810 Fund balance beginning 41,155,836 1,620,515 42,776,351 Fund balance ending 43,432,161$ -$ 43,432,161$ Midpeninsula Regional Open Space District Statement of Revenues, Expenditures and Changes in Fund Balance Governmental Funds For the Fiscal Year Ended March 31, 2015 The notes to the financial statements are an integral part of this statement. 13 Total net change in fund balance - governmental funds 655,810$ Capital outlays are reported in governmental funds as expenditures. However, in the Statement of Activities, the cost of those assets is allocated over their estimated useful lives as depreciation expense. Expenditures capitalized as capital assets 7,906,213$ Depreciation expense (1,231,881) 6,674,332 Governmental funds do not report loss on disposal of capital assets. However, in the government-wide statement of activities and changes in net position, the cost to dispose of capital assets, net any proceeds, is accounted for as a special item. (120,448) Repayment of notes receivable is reported as revenue in the Governmental funds because financial resources were received and available during the fiscal year. In the statement of net position, the payment reduces the principal balance of notes receivable and does not generate revenue in the statement of activities.(13,797) Accreted interest on capital appreciation bonds is not recorded in the governmental funds but is required to be recorded under the accrual basis of accounting in the government wide financial statements.(1,121,982) The governmental funds report debt proceeds as an other financing source, while repayment of debt principal is reported as an expenditure. Interest is recognized as an expenditure in the governmental funds when it is due. The net effect of these differences in the treatment of long-term debt and related items is as follows: Proceeds from the issuance of refunding notes (28,578,500) Advance refunding of revenue bonds 29,986,962 Repayment of bond principal 1,495,000$ Repayment of promissory notes princpal 1,650,096 4,553,558 Deferred loss on early retirement of long-term debt is amortized over the life of the debt in the statement of activities. Amortization expense is not reported in the governmental funds.(339,194) Prepaid issuance costs, discounts and premiums related to bond issues are recorded as other financing sources and uses in the fund financial statements but are recorded as assets or liabilities and amortized over the life of the bond in the statement of net position: Amortization of issuance costs and premiums - net 95,332 In the Statement of Activities, compensated absences are measured by the amount earned during the year. In governmental funds, however, expenditures for those items are measured by the amount of financial resources used (essentially the amounts paid). This year, vacation earned exceeded the amounts used.(272,766) In the Statement of Activities, the net postemployment benefit asset is the amount by which the contributions toward the OPEB plan were more than the annual required contribution as actuarially determined. The net postemployment benefit is not recorded in the governmental fund statements. The change in the net OPEB was recorded in the Statement of Activities in the amount of:(140,749) Interest on long-term debt in the Statement of Activities differs from the amount reported in the governmental funds because interest is recognized as an expenditure in the funds when it is due and thus requires the use of current financial resources. In the Statement of Activities, however, interest expense is recognized as the interest accrues, regardless of when it is due.7,503 Change in net position of governmental activities 9,977,599$ Midpeninsula Regional Open Space District Statement of Revenues, Expenditures and Changes in Fund Balance For the Fiscal Year Ended March 31, 2015 Reconciliation of the Governmental Funds to the Statement of Activities The notes to the financial statements are an integral part of this statement. 14 Midpeninsula Regional Open Space District Notes to the Basic Financial Statements For the Fiscal Year Ended March 31, 2015 15 NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES A. 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 Santa Clara County. In June 1976, the southern and eastern portions of San Mateo County were annexed to the District. The District annexed a small portion of the northern tip of Santa Cruz County in 1992. In September 2004, the District completed the Coastside Protection Program, which extended the District boundaries to the Pacific Ocean in San Mateo County, from the southern borders of Pacifica to the San Mateo/Santa Cruz County line. B. Accounting Principles The accounting policies of the District conform to generally accepted accounting principles as prescribed by the Governmental Accounting Standards Board (GASB) and the American Institute of Certified Public Accountants (AICPA). C. Reporting Entity As required by generally accepted accounting principles, these basic financial statements present the Midpeninsula Regional Open Space District and its component unit. The component unit discussed in the following paragraph is included in the District's reporting entity because of the significance of their operational or financial relationships with the District. Blended Component Unit. The District and the County of Santa Clara entered into a joint exercise of powers agreement dated May 1, 1996, creating the Midpeninsula Regional Open Space District Financing Authority (the Authority), pursuant to the California Government Code. The District is financially accountable for the Authority, as it appoints a voting majority of the governing board; is able to impose its will in the Authority; and the Authority provides specific financial benefits to, and imposes specific financial burdens on, the District. The Authority was formed for the sole purpose of providing financing assistance to the District to fund the acquisition of land to preserve and use as open space. As such, the Authority is an integral part of the District, and accordingly, all of the Authority's activity is blended within the accompanying debt service fund. D. Basis of Presentation Government-wide Financial Statements: The government-wide financial statements (i.e., the Statement of Net Position and the Statement of Activities) report information on all of the activities of the District. The Statement of Net Position reports all assets, deferred outflows of resources, liabilities, deferred inflows of resources, and net position. The government-wide statements are prepared using the economic resources measurement focus. This approach differs from the manner in which governmental fund financial statements are Midpeninsula Regional Open Space District Notes to the Basic Financial Statements For the Fiscal Year Ended March 31, 2015 16 prepared. Governmental fund financial statements, therefore, include the reconciliation with brief explanations to better identify the relationship between the government wide statements and the statements for the governmental funds. The government-wide statement of activities presents a comparison between direct expenses and program revenues for each function or program of the District’s governmental activities. Direct expenses are those that are specifically associated with a service, program, or department and are therefore clearly identifiable to a particular function. The District does not allocate indirect expenses to functions in the statement of activities. Program revenues include charges paid by the recipients of goods or services offered by a program, as well as grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues are presented as general revenues of the District, with certain exceptions. The comparison of direct expenses with program revenues identifies the extent to which each governmental function is self-financing or draws from the general revenues of the District. Fund Financial Statements: Fund financial statements report detailed information about the District. The accounting and financial treatment applied to a fund is determined by its measurement focus. All governmental funds are accounted for using a flow of current financial resources measurement focus. With this measurement focus, only current assets, deferred outflows, current liabilities and deferred inflows are generally included on the balance sheet. The Statement of Revenues, Expenditures, and Changes in Fund Balance for these funds present increases (i.e., revenues and other financing sources) and decreases (i.e., expenditures and other financing uses) in net current assets. E. Basis of Accounting Basis of accounting refers to when revenues and expenditures are recognized in the accounts and reported in the financial statements. Government-wide financial statements are prepared using the accrual basis of accounting. Governmental funds use the modified accrual basis of accounting. Revenues - Exchange and Non-exchange Transactions: Revenue resulting from exchange transactions, in which each party gives and receives essentially equal value, is recorded under the accrual basis when the exchange takes place. On a modified accrual basis, revenue is recorded in the fiscal year in which the resources are measurable and become available. “Available” means the resources will be collected within the current fiscal year or are expected to be collected soon enough thereafter to be used to pay liabilities of the current fiscal year. For the District, “available” means collectible within the current period or within 90 days after year-end. Non-exchange transactions, in which the District receives value without directly giving equal value in return, include property taxes, grants, and entitlements. Under the accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from grants and entitlements is recognized in the fiscal year in which all eligibility requirements have been satisfied. Eligibility requirements include timing requirements, which specify the year when the resources are to be used or the fiscal year when use is first permitted; matching requirements, Midpeninsula Regional Open Space District Notes to the Basic Financial Statements For the Fiscal Year Ended March 31, 2015 17 in which the District must provide local resources to be used for a specific purpose; and expenditure requirements, in which the resources are provided to the District on a reimbursement basis. Under the modified accrual basis, revenue from non-exchange transactions must also be available before it can be recognized. Deferred Outflows/Deferred Inflows: A deferred outflow of resources is a consumption of net assets by the government that is applicable to a future reporting period, for example; prepaid items and deferred charges. A deferred inflow of resources is an acquisition of net assets by the government that is applicable to a future reporting period, for example; unearned revenue and advance collections. Unearned Revenue: Unearned revenue arises when assets are received before revenue recognition criteria have been satisfied. Grants and entitlements received before eligibility requirements are met are recorded as deferred inflows from unearned revenue. In the governmental fund financial statements, receivables associated with non-exchange transactions that will not be collected within the availability period have been recorded as deferred inflows from unearned revenue. Expenses/Expenditures: On the accrual basis of accounting, expenses are recognized at the time a liability is incurred. On the modified accrual basis of accounting, expenditures are generally recognized in the accounting period in which the related fund liability is incurred, as under the accrual basis of accounting. However, under the modified accrual basis of accounting, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Allocations of cost, such as depreciation and amortization, are not recognized in the governmental funds. When both restricted and unrestricted resources are available for use, it is the District’s policy to use restricted resources first, then unrestricted resources as they are needed. F. Fund Accounting The accounts of the District are organized into two funds with a separate set of self-balancing accounts that comprise of the District’s assets, deferred outflows, liabilities, deferred inflows, fund balance, revenues, and expenditures. Major funds are defined as funds that have either assets, liabilities, revenues or expenditures/expenses equal to ten percent of their fund-type total and five percent of the grand total. The General Fund is always a major fund. The District may also select other funds it believes should be presented as major funds. The District reported all of its funds as major governmental funds in the accompanying financial statements: General Fund. The General Fund is the general operating fund of the District. It is used to account for all financial resources. The major revenue sources for this fund are property taxes, Midpeninsula Regional Open Space District Notes to the Basic Financial Statements For the Fiscal Year Ended March 31, 2015 18 grant revenues and interest income. Expenditures are made for land preservation and other operating expenditures. Debt Service Fund. The Debt Service Fund is used to account for accumulation of resources for, and the payment of long-term debt principal, interest and related costs. Resources are provided by General Fund transfers and interest income on unspent funds. G. Budgets and Budgetary Accounting The District's Board of Directors adopts an annual operating budget for the District as a whole, which includes both its General and Debt Service Funds on or before March 31, for the ensuing fiscal year. The Board of Directors may amend the budget by resolution during the fiscal year. The legal level of control, the level at which expenditures may not legally exceed the budget, is at the category level. H. Assets, Liabilities, and Equity 1. Cash and Cash Equivalents Cash and cash equivalents include all cash and temporary investments with original maturities of three months or less from the date of acquisition. 2. Prepaid Expenditures The District has the option of reporting expenditures in governmental funds for prepaid items either when purchased or during the benefiting period. The District has chosen to report the expenditure during the benefiting period. 3. Capital Assets Capital assets, which include land, buildings and improvements, furniture, equipment, and construction in progress, are reported in the government-wide financial statements. Such assets are valued at historical cost or estimated historical cost unless obtained by annexation or donation, in which case they are recorded at estimated market value at the date of receipt. The District utilizes a capitalization threshold of $10,000. Projects under construction are recorded at cost as construction in progress and transferred to the appropriate asset account when substantially complete. Costs of major improvements and rehabilitation of buildings are capitalized. Repair and maintenance costs are charged to expense when incurred. Equipment disposed of, or no longer required for its existing use, is removed from the records at actual or estimated historical cost, net of accumulated depreciation. Midpeninsula Regional Open Space District Notes to the Basic Financial Statements For the Fiscal Year Ended March 31, 2015 19 All capital assets, except land and construction in progress, are depreciated using the straight- line method over the following estimated useful lives: Assets Years Buildings and improvements 10 - 30 Infrastructure 30 - 40 Equipment 5 - 20 Vehicles 10 - 20 4. Compensated Absences In accordance with the District's memorandum of understanding with various employee groups, employees accrue fifteen days of vacation during the first nine years of service, twenty days between service years 10 and fourteen, twenty-one days between service years fifteen and nineteen, twenty-three days between service years twenty and twenty-four, and twenty-five days after twenty-five years of service. An employee may accumulate vacation time earned to a maximum of two times the amount of his/her annual vacation accrual. Full-time employees accrue twelve days of sick leave: annually from the date of employment. An employee may accumulate sick leave time earned on an unlimited basis. Upon resignation, separation from service, or retirement from District employment, workers in good standing with ten or more years of District employment shall receive a cash payment of the equivalent cash value of accrued sick leave as follows: Percentage of equivalent cash value of accrued Years of Employment sick leave 15-20 20% 16-20 25% 21 or more 30% An employee hired before August 9, 2006, who retires from the District shall receive a cash payment of the percentage of equivalent cash value or accrued sick leave based on years of employment as described above, and apply the remainder of the equivalent cash value toward his/her cost of retiree medical plan premiums and/or other qualified medical expenses. Upon retirement, the amount qualified and designated for retiree medical costs shall be deposited in the Retiree Health Savings (RHS) plan, set up by the District. The cost for maintaining the retiree's RHS account and the annual fee for the reimbursement process of qualified medical expenses will be paid for by the retiree. An employee hired on or after August 9, 2006, who retires from the District may elect to receive only a cash payment of the percentage of equivalent cash value of accrued sick leave based on years of employment as described above. In all cases the equivalent cash value of accrued sick leave will be based on current rate of pay as of the date of separation from District employment. Midpeninsula Regional Open Space District Notes to the Basic Financial Statements For the Fiscal Year Ended March 31, 2015 20 The District accrues for all salary-related items in the government-wide statements for which they are liable to make a payment directly and incrementally associated with payments made for compensated absences on termination. 5. Long-Term/Noncurrent Obligations In the government-wide financial statements, long-term debt and other long-term obligations are reported as liabilities in the Statement of Net Position. 6. Debt Discount and Issuance Costs Debt discounts, premiums, and prepaid issuance costs are capitalized as an offset to long- term debt and amortized using the straight line method over the life of the related debt. Issuance costs for the District's tax-exempt commercial paper short-term borrowings are expensed as incurred. 7. Fund Balance Classifications In accordance with Government Accounting Standards Board 54, Fund Balance Reporting and Governmental Fund Type Definitions, the District classifies governmental fund balances as follows:  Nonspendable fund balance includes amounts that cannot be spent either because it is not in spendable form or because of legal or contractual constraints.  Restricted fund balance includes amounts that are constrained for specific purposes which are externally imposed by providers, such as creditors or amounts constrained due to constitutional provisions or enabling legislation.  Committed fund balances includes amounts that are constrained for specific purposes that are internally imposed by the government through formal action of the highest level of decision making authority and does not lapse at year-end. Committed fund balances are imposed by the District’s board of directors.  Assigned fund balance includes amounts that are intended to be used for specific purposes that are neither considered restricted or committed. Fund balance may be assigned by the General Manager.  Unassigned fund balance includes positive amounts within the general fund which has not been classified within the above mentioned categories and negative fund balances in other governmental funds. The District uses restricted/committed amounts to be spent first when both restricted and unrestricted fund balance is available unless there are legal documents/contracts that prohibit doing this, such as a grant agreement requiring dollar for dollar spending. Additionally, the District would first use committed, then assigned, and lastly unassigned amounts of unrestricted fund balance when expenditures are made. Midpeninsula Regional Open Space District Notes to the Basic Financial Statements For the Fiscal Year Ended March 31, 2015 21 8. Net Position Net position represents the difference between assets, deferred outflows of resources, liabilities and deferred inflows of resources. Net investment in capital assets consists of capital assets, net of accumulated depreciation, reduced by the outstanding balances of any borrowings used for the acquisition, construction or improvement of those assets. In addition, deferred outflows of resources and deferred inflows of resources that are attributable to the acquisition, construction, or improvement of those assets or related debt also are included in the net investment in capital assets component of net position. Net position is reported as restricted when there are limitations imposed on its use either through the enabling legislation adopted by the District or through external restrictions imposed by creditors, grantors, laws or regulations of other governments. The District applies restricted resources when an expense is incurred for purposes for which both restricted and unrestricted net position is available. Unrestricted net position reflect amounts that are not subject to any donor-imposed restrictions. This class also includes restricted contributions whose donor-imposed restrictions were met during the fiscal year. A deficit unrestricted net position may result when significant cash balances restricted for capital projects exist. Once the projects are completed, the restriction on these assets are released and converted to capital assets. 9. Property Taxes The District receives property tax revenue from Santa Clara and San Mateo Counties (the Counties). The Counties are responsible for assessing, collecting and distributing property taxes in accordance with state law. Secured property taxes are recorded as revenue when apportioned, in the fiscal year of the levy. The counties apportion secured property tax revenue in accordance with the alternate method of distribution prescribed by Section 4705 of the California Revenue and Taxation Code. This alternate method provides for crediting each applicable fund with its total secured taxes upon completion of the secured tax roll - approximately October 1 of each year. Taxes are levied annually on July 1st, and one-half are due by November 1st and one-half by February 1st. Taxes are delinquent after December 10th and April 10th, respectively. Supplemental property taxes are levied on a pro-rata basis when changes in assessed valuation occur due to the completion of construction or sales transactions. Liens on real property are established on January 15th for the ensuing fiscal year. On March 31, 1993, the Board of Supervisors adopted the "Teeter" method of property tax allocation. This method allocates property taxes based on the total property tax billed. At year-end, the County advances cash to each taxing jurisdiction equal to its current year delinquent taxes. Once the delinquent taxes are collected, the revenue from penalties and interest remains with the County and is used to pay the interest cost of borrowing the cash used for the advances. 10. Accounting Estimates The presentation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and Midpeninsula Regional Open Space District Notes to the Basic Financial Statements For the Fiscal Year Ended March 31, 2015 22 assumptions that affect the reported amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates. I. Upcoming Accounting and Reporting Changes Summary of Statement No. 67 - Financial Reporting for Pension Plans - an amendment of GASB Statement No. 25 (Issued 06/12). This Statement replaces the requirements of Statements No. 25, Financial Reporting for Defined Benefit Pension Plans and Note Disclosures for Defined Contribution Plans, and No. 50, Pension Disclosures, as they relate to pension plans that are administered through trusts or equivalent arrangements (hereafter jointly referred to as trusts) that meet certain criteria. This Statement establishes a definition of a pension plan that reflects the primary activities associated with the pension arrangement-determining pensions, accumulating and managing assets dedicated for pensions, and paying benefits to plan members as they come due. This Statement also details the note disclosure requirements for defined contribution pension plans administered through trusts that meet the identified criteria. This Statement is effective for financial statements for fiscal years beginning after June 15, 2013. Earlier application is encouraged. There will be no impact on the Entity’s financial statements from the implementation of this standard. Summary of Statement No. 68 - Accounting and Financial Reporting for Pensions - an amendment of GASB Statement No. 27 (Issued 06/12). The primary objective of this Statement is to improve accounting and financial reporting by state and local governments for pensions. It also improves information provided by state and local governmental employers about financial support for pensions that is provided by other entities. This Statement replaces the requirements of Statement No. 27, Accounting for Pensions by State and Local Governmental Employers, as well as the requirements of Statement No. 50, Pension Disclosures, as they relate to pensions that are provided through pension plans administered as trusts or equivalent arrangements (hereafter jointly referred to as trusts) that meet certain criteria. This Statement establishes a definition of a pension plan that reflects the primary activities associated with the pension arrangement-determining pensions, accumulating and managing assets dedicated for pensions, and paying benefits to plan members as they come due. This Statement is effective for fiscal years beginning after June 15, 2014 (fiscal year ended March 31, 2016). Earlier application is encouraged. The determination of the impact on the Entity’s financial statements from the implementation of this standard is pending as of the issuance date of this report. Statement No. 69 – In January, 2013, GASB issued Statement No. 69, Government Combinations and Disposal of Government Operations. This Statement establishes accounting and financial reporting standards related to government combinations and disposal of government operations. As used in this Statement, combinations includes a variety of transactions referred to as mergers, acquisitions, and transfers of operations. The District believes there will be no financial statement effect related to this Statement. Statement No. 70 – In April, 2013, GASB issued Statement No 70, Accounting and Financial Reporting for Nonexchange Financial Guarantees. Some governments extend financial guarantees for the obligations of another government, a not-for-profit entity, or private entity without directly receiving equal or approximately equal value in exchange (a nonexchange Midpeninsula Regional Open Space District Notes to the Basic Financial Statements For the Fiscal Year Ended March 31, 2015 23 transaction). The District does not participate in nonexchange transactions and this Statement will have no financial statement effect. Statement No. 71 – In November, 2013, GASB issued Statement No 71, Pension Transition for Contributions Made Subsequent to the Measurement Date—an amendment of GASB Statement No. 68. The objective of this Statement is to address an issue regarding application of the transition provisions of Statement No. 68, Accounting and Financial Reporting for Pensions. The issue relates to amounts associated with contributions, if any, made by a state or local government employer or nonemployer contributing entity to a defined benefit pension plan after the measurement date of the government’s beginning net pension liability. The provisions of this Statement are required to be applied simultaneously with the provisions of Statement 68. The District is in the process of determining the impact this statement will have on the financial statements. Statement No. 72 – In February, 2015, GASB issued Statement No 72, Fair Value Measurement and Application. This Statement addresses accounting and financial reporting issues related to fair value measurements. The definition of fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. This Statement provides guidance for determining a fair value measurement for financial reporting purposes. This Statement also provides guidance for applying fair value to certain investments and disclosures related to all fair value measurements. The requirements of this Statement are effective for financial statements for periods beginning after June 15, 2015. The District is in the process of determining the impact this statement will have on the financial statements. NOTE 2 - CASH AND INVESTMENTS Summary of Cash and Investments The following summarizes deposits as of March 31, 2015: Cash and Cash Equivalents Available Investment Cash and Investments for Operations Restricted Total Rating Maturities Cash Deposits: Cash in Banks 77,447$ 1,693,990$ 1,771,437$ N/A N/A Petty Cash 1,500 - 1,500 N/A N/A Total Cash Deposits 78,947 1,693,990 1,772,937 Investments: California Local Agency Investment Fund 7,843,853 - 7,843,853 Not Rated < 1yr Santa Clara County Pool 25,945,291 - 25,945,291 Not Rated < 1yr Total Investments 33,789,144 - 33,789,144 Total Cash and Investments 33,868,091$ 1,693,990$ 35,562,081$ Midpeninsula Regional Open Space District Notes to the Basic Financial Statements For the Fiscal Year Ended March 31, 2015 24 Cash in Banks Cash balances in banks are insured up to $250,000 per insured bank by the Federal Deposit Insurance Corporation ("FDIC"). The District’s accounts are held with various banks. As of March 31, 2015, the District’s bank balances exceeded FDIC coverage by $1,505,165. Cash in Santa Clara County Treasury Santa Clara County is a fiscal agent of the District. The fair value of the District's investment in the county pool is reported at amounts based on the District's pro-rata share of the fair value provided by the County Treasurer for the entire portfolio (in relation to the amortized cost of the portfolio). The balance available for withdrawal is based on the accounting records maintained by the County Treasurer, which is recorded on the amortized costs basis. Santa Clara County investment pool funds were available for withdrawal on demand and had an average maturity date of less than one year. All cash and investments are stated at fair value. Pooled investment earnings are allocated monthly based on the average cash and investment balances of the various funds of the County. California Local Agency Investment Fund The District is a participant in the Local Agency investment Fund (LAIF) that is regulated by California Government Code Section 16429 under the oversight of the Treasurer of the State of California. The District reports its investment in LAIF at the fair value amount provided by LAIF, which is the same as the value of the pool share. The balance is available for withdrawal on demand, and is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis. Included in LAIF's investment portfolio are collateralized mortgage obligations, mortgage-backed securities, other asset-backed securities, loans to certain state funds, and floating rate securities issued by federal agencies, government-sponsored enterprises, United States Treasury Notes and Bills, and corporations. At March 31, 2015, these investments had an average maturity date of less than one year. Investments Authorized by Debt Agreements The District must maintain required amounts of cash and investments with trustees or fiscal agents under the terms of certain debt issues. These funds are used if the District fails to meet its obligations under these debt issues. Restricted for Debt Service During the year the District had money held by Bank of New York as trustee, pledged to the payment or security of its outstanding bond issues. All transactions associated with debt serve were administered by the Bank. Cash Restricted for Hawthorne Property Maintenance On November 10, 2011, the District received the gift of the 79 acre Hawthorne property, in Portola Valley, California, and an endowment of $2,018,445 to manage the property in perpetuity. The cash balance restricted for this purpose at March 31, 2015 was $1,690,779. Midpeninsula Regional Open Space District Notes to the Basic Financial Statements For the Fiscal Year Ended March 31, 2015 25 Policies and Practices The District's Investment Policy and the California Government Code allow the District to invest in the following, provided the credit ratings of the issuers are acceptable to the District and approved percentages and maturities are not exceeded. The table below also identifies certain provisions of the California Government Code or the District's Investment Policy where it is more restrictive: Authorized Investment Type Maximum Remaining Maturity Maximum Percentage of Portfolio Maximum Investment In One Issuer Medium Term Notes 5 years 30% No Limit Money Market and Mutual Funds N/A 20% 10% U.S. Treasury Obligations 5 years No Limit No Limit Federal Agency Securities 5 years No Limit No Limit Banker's Acceptance 180 days 40% 30% Commercial Paper 270 days 25% 10% Negotiable Certificates of Deposit 5 years 30% No Limit Repurchase Agreements 1 year No Limit No Limit Reverse Repurchase Agreements 92 days 20% No Limit Local Agency Investment Fund (LAIF) N/A $40 million per account No Limit a) Interest Rate Risk Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to the changes in market interest rates. The District manages its exposure to interest rate risk by investing in the Santa Clara County investment pool and LAIF, which had fair values of approximately $5.6 billion and $62.5 billion, respectively as of March 31, 2015. b) Credit Risk Credit risk is the risk of loss due to the failure of the security issuer. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. The investment with the County’s investment pool is governed by the County’s general investment policy. The County’s investments in 2013-14 included U.S. government securities or obligations explicitly guaranteed by the U.S. government that are not considered to have credit risk exposure. The County’s two other investment types, LAIF and money market mutual funds, are not rated. c) Custodial Credit Risk – Deposits Custodial credit risk is the risk that in the event of a bank failure, the District’s deposits may not be returned to it. The District does not have a policy for custodial credit risk for deposits. However, the California Government code requires that a financial institution secure deposits made by State or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under State law (unless so waived by the governmental unit). The market value of the pledged securities in the collateral pool must equal at least 110 percent of the total amount deposited Midpeninsula Regional Open Space District Notes to the Basic Financial Statements For the Fiscal Year Ended March 31, 2015 26 by the public agencies. California law also allows financial institutions to secure public deposits by pledging first trust deed mortgage notes having a value of 150 percent of the secured public deposits and letters of credit issued by the Federal Home Loan Bank of San Francisco having a value of 105 percent of the secured deposits. d) Concentration of Credit Risk The District was not exposed to concentration of credit risk because it had no investments in any one issuer that exceeded 5% of its total investment portfolio. NOTE 3 – RENTAL INCOME The District rents certain land and structures to other entities under operating leases with terms generally on a month-to-month basis. Rental income of $1,122,266 was received during the year ended March 31, 2015. NOTE 4 – NOTES RECEIVABLE On December 17, 1997, the District sold the title to and possession of a 50-year fee determinable estate 10-acre parcel near the Skyline Ridge Open Space Preserve. The District financed the purchase in the amount of $288,800 over 25 years at a rate of 10% per annum. Monthly principal and interest payments of $2,634 are due on the 1st of each month and late if not paid by the 10th, with the final payment scheduled December 1, 2022. The outstanding balance at March 31, 2015 was $169,368. NOTE 5 - CAPITAL ASSETS AND DEPRECIATION Capital asset activity for the year ended March 31, 2015, is shown below: Balance Transfers/ Balance Description March 31, 2014 Additions Deletions Adjustments March 31, 2015 Non-depreciable Capital Assets: Land and land improvements 383,509,165$ 5,219,301$ -$ 1,962,230$ 390,690,696$ Construction in progress 4,709,807 1,031,671 (59,246) (2,431,639) 3,250,593 Total non-depreciable capital assets 388,218,972 6,250,972 (59,246) (469,409) 393,941,289 Depreciable Capital Assets: Structure and Improvements 14,899,885 341,906 - 77,926 15,319,717 Infrastructure 8,640,137 684,628 - 391,483 9,716,248 Equipment 1,724,511 144,953 (25,960) - 1,843,504 Vehicles 3,145,161 483,754 (214,257) - 3,414,658 Total depreciable capital assets 28,409,694 1,655,241 (240,217) 469,409 30,294,127 Less accumulated depreciation for: Structure and improvements 7,698,023 433,437 - - 8,131,460 Infrastructure 1,628,456 387,377 - - 2,015,833 Equipment 840,087 114,979 (22,059) - 933,007 Vehicles 1,539,159 296,088 (156,956) - 1,678,291 Total accumulated depreciation 11,705,725 1,231,881 (179,015) - 12,758,591 Total depreciable capital assets - net 16,703,969 423,360 (61,202) 469,409 17,535,536 Total capital assets - net 404,922,941$ 6,674,332$ (120,448)$ -$ 411,476,825$ Midpeninsula Regional Open Space District Notes to the Basic Financial Statements For the Fiscal Year Ended March 31, 2015 27 NOTE 6 – LONG-TERM DEBT The following is a summary of the changes in long-term debt for the year ended March 31, 2015: Balance Balance Due Within Long-term Obligations April 01, 2014 Additions Deductions March 31, 2015 One Year Promissory Notes: Current Interest 18,891,204$ 23,630,000$ 1,650,096$ 40,871,108$ 1,226,382$ Capital Appreciation 15,474,708 - - 15,474,708 - Accreted interest 1,918,995 1,005,799 - 2,924,794 - Unamortized Bond Premium 2,011,284 4,948,500 67,391 6,892,393 67,391 Subtotal Promissory Notes 38,296,191 29,584,299 1,717,487 66,163,003 1,293,773 Revenue Bonds: Current Interest 99,395,000 - 29,075,000 70,320,000 2,730,000 Capital Appreciation 1,340,010 - 1,340,010 - - Accreted interest 950,769 116,183 1,066,952 - - Unamortized Bond Premium 176,926 - 96,182 80,744 96,182 Subtotal Revenue Bonds 101,862,705 116,183 31,578,144 70,400,744 2,826,182 Compensated Absences 1,263,913 272,766 - 1,536,679 230,536 Total Long-term Obligations 141,422,809$ 29,973,248$ 33,295,631$ 138,100,426$ 4,350,491$ Promissory Notes Daloia Land Purchase Contract Promissory Note During the fiscal year ending 2003 the District entered into a land purchase contract promissory note in the amount of $240,000. The promissory note bears interest at a fixed rate of 6.25% and matures October 10, 2017. At March 31, 2015, the outstanding balance of the Daloia Land Contract note was $61,109. Hunt Living Trust Promissory Note 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 note is due in full on April 1, 2023 and bears interest at 5.5% semi-annually through April 1, 2013 and 5.0% per annum until the maturity, or prior redemption, of the note. At March 31, 2015, the outstanding balance on the note was $1,500,000. 2005 Refunding Promissory Note On June 30, 2005, the District issued $4,630,000 of 2005 Refunding Promissory Notes for the purpose of refunding all of its outstanding 1995 Promissory Notes. The 2005 notes bear interest rates from 3.25% to 5.00%. Principal and interest rates are due semi-annually on March 1 and September 1. At March 31, 2015, there was no outstanding balance. 2010 Bergman Note On Nov 30, 2010, the District issued a promissory note with Principal of $850,000 and interest of 4% to finance the purchase of land. Interest is due on a quarterly basis beginning February 28, 2011 and mature on November 30, 2015. The principal is due in full at maturity. At March 31, 2015, the outstanding balance was $850,000. Midpeninsula Regional Open Space District Notes to the Basic Financial Statements For the Fiscal Year Ended March 31, 2015 28 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. The 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 statements. At March 31, 2015, the outstanding balance of the notes, including accreted interest of $2,924,794, was $33,229,501. 2015 Refunding Promissory Notes On January 22, 2015, the District advance refunded $29,986,962 in 2004 Revenue Bonds by issuing $28,578,500 in promissory notes. The 2015 notes bear interest rates ranging from 2.00% to 5.00%. The notes are current interest notes maturing through 2035. The net proceeds of $28,325,491 (after payment of $253,009 in underwriting fees, insurance, and other issuance costs and a premium of $4,948,500) 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 2004 Revenue Bonds. As a result, the 2004 Revenue Bonds are considered to be defeased and the liability for those bonds has been removed from the long-term debt in the financial statements. At March 31, 2015, the outstanding balance of the notes was $23,630,000. Revenue Bonds 2004 Revenue Bonds On January 20, 2004, the Authority on behalf of the District, issued $31,900,010 of 2004 Revenue Bonds for the purpose of acquiring land to preserve and use as open space, repay a portion of a 1995 Promissory Note, purchase a reserve fund surety policy, and pay bond issue costs. The bonds consist of Current Interest and Capital Appreciation Bonds. The Current Interest Bonds bear interest at 2.0% to 5.4% and are due semi-annually on March 1 and September 1. The Capital Appreciation Bonds accrete interest at 5.2% to 5.53% and compound semi-annually on March 1 and September 1. Principal payments on the Current Interest Bonds are due annually September 1. Principal payments on the Capital Appreciation Bonds are payable at maturity beginning March, 2020. The outstanding balance of these bonds was refunded in January of 2015. 2007 Series A Revenue Refunding Bonds and Series B-T Taxable Revenue Refunding Bonds On December 15, 2006 the District issued six series of promissory notes (2007 District Notes) for the purpose of refunding its 1996 Project Lease, 1996 Promissory Notes, 1999 Project Lease, and 1999 Promissory Notes. On December 15, 2006 the Authority, on behalf of the District, issued $52,415,000 of 2007 Series A Revenue Refunding Bonds and $6,785,000 of 2007 Series B-T Taxable Revenue Refunding Bonds for the purpose of defeasing the aggregate purchase price of the 2007 District Notes. The Series A bonds bear interest from 4.0% to 5.0% and Series B-T bonds bear interest at 5.15%. Interest for both series A and B-T are due semiannually on March 1 and September 1. Principal payments for the Series A bonds began September, 2012 and are due annually, thereafter. Midpeninsula Regional Open Space District Notes to the Basic Financial Statements For the Fiscal Year Ended March 31, 2015 29 Principal payments for the Series B-T bonds are due annually on September 1. At March 31, 2015 the outstanding balance of the 2007 Series A Bonds is $49,935,000. There is no remaining balance on the 2007 Series B-T Bonds. 2011 Revenue Bonds On May 19, 2011, the Authority, on behalf of the District, issued $20,500,000 of 2011 Revenue Bonds for the purpose of acquiring land to preserve and use as open space and pay bond issue and related costs. The Bonds are not general obligations. Each year, the District will appropriate revenues-mainly limited properly tax collections that Santa Clara County and 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 Current Interest Bonds bear interest at 2.0% to 6.0% and are due semi-annually on March 1 and September 1. Principal payments on the Current Interest Bonds are due annually September 1. At March 31, 2015, the outstanding balance of these bonds was $20,455,000. The following schedule summarizes the District’s outstanding Promissory Notes and Revenue Bonds as of March 31, 2015: Original Outstanding Outstanding Long Term Debt Issue April 01, 2014 Additions Retirements March 31, 2015 Promissory Notes: Daloia Note 240,000$ 81,205$ -$ 20,096$ 61,109$ Hunt Note 1,500,000 1,500,000 - - 1,500,000 2005 Refunding Note 4,630,000 1,210,000 - 1,210,000 - Bergman Note 850,000 850,000 - - 850,000 2012 Refunding Note 15,790,000 15,249,999 - 420,000 14,829,999 2012 Refunding Note 15,474,707 15,474,708 - - 15,474,708 2015 Refunding Note 23,630,000 - 23,630,000 - 23,630,000 Subtotal Promissory Notes 62,114,707 34,365,912 23,630,000 1,650,096 56,345,816 Revenue Bonds: 2004 Revenue Bonds 30,560,000 28,275,000 - 28,275,000 - 2004 Revenue Bonds 1,340,010 1,340,010 - 1,340,010 - 2007 Series A Refunding 52,415,000 50,665,000 - 730,000 49,935,000 2011 Lease Revenue 20,500,000 20,455,000 - 70,000 20,385,000 Subtotal Revenue Bonds 104,815,010 100,735,010 - 30,415,010 70,320,000 Accreted Interest: 2012 Refunding Note 1,918,995 1,005,799 - 2,924,794 2004 Revenue Bonds 950,769 116,183 1,066,952 - Subtotal Accreted Interest 2,869,764 1,121,982 1,066,952 2,924,794 Unamortized Bond Premium 2,188,210 4,948,500 163,573 6,973,137 Total Long Term Debt 166,929,717$ 140,158,896$ 29,700,482$ 33,295,631$ 136,563,747$ Midpeninsula Regional Open Space District Notes to the Basic Financial Statements For the Fiscal Year Ended March 31, 2015 30 Promissory Notes future debt service requirements as of March 31, 2015 were as follows: Year Ending March 31, Principal Remaining Accretion Interest Total 2016 1,631,382$ -$ 2,030,237$ 3,661,619$ 2017 1,062,750 - 1,856,021 2,918,771 2018 1,131,977 - 1,816,666 2,948,643 2019 1,200,000 - 1,765,775 2,965,775 2020 1,285,000 - 1,707,675 2,992,675 2021-2025 9,215,000 - 7,551,100 16,766,100 2026-2030 18,147,418 - 4,570,000 22,717,418 2031-2035 14,781,048 10,811,786 927,250 26,520,084 2036-2040 6,022,461 16,660,661 - 22,683,122 2041-2042 1,868,780 17,998,052 - 19,866,832 Total Debt Service 56,345,816$ 45,470,499$ 22,224,724$ 124,041,039$ Revenue Bonds future debt service requirements as of March 31, 2015 were as follows: Year Ending March 31, Principal Interest Total 2016 2,730,000$ 3,491,125$ 6,221,125$ 2017 3,355,000 3,351,150 6,706,150 2018 3,555,000 3,186,100 6,741,100 2019 3,765,000 3,005,500 6,770,500 2020 3,490,000 2,826,100 6,316,100 2021-2025 22,045,000 11,107,356 33,152,356 2026-2030 16,230,000 5,703,013 21,933,013 2031-2035 4,555,000 4,114,744 8,669,744 2036-2040 - 3,038,625 3,038,625 2041-2042 10,595,000 911,588 11,506,588 Total Debt Service 70,320,000$ 40,735,301$ 111,055,301$ Amortization of the deferred loss on early retirement of long-term debt for the fiscal year ended March 31, 2015 was as follows: Beginning Balance, at April 1, 2014 2,962,414$ Net Change (339,194) Ending Balance, at March 31, 2015 2,623,220$ NOTE 7 - EMPLOYEE RETIREMENT SYSTEMS Pension Plan All permanent District employees are eligible to participate in the pension plan offered by California Public Employees Retirement System (CALPERS) an agent multiple employer defined benefit pension plan with acts as a common investment and administrative agent for its participating member employers. CALPERS provides retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries. The District's employees participate in the Miscellaneous (non safety) Employee Plan. Benefit provisions under the Midpeninsula Regional Open Space District Notes to the Basic Financial Statements For the Fiscal Year Ended March 31, 2015 31 Plan are established by State statute and District resolution. Benefits are based on years of credited service, equal to one year of full time employment. Funding contributions for the Plan are determined annually on an actuarial basis as of June 30 by CALPERS; the District must contribute these amounts. The pension plans' provisions and benefits in effect at March 31, 2015, are summarized as follows: Benefit vesting schedule 5 years service Benefit payments Monthly for life Retirement age 55 Monthly benefits, as a % of annual salary 2.0-2.5% Required employee contribution rates 7.89% Required employer contribution rates 15.70% CALPERS determines contribution requirements using a modification of the Entry Age Normal Method. Under this method, the District's total normal benefit cost for each employee from date of hire to date of retirement is expressed as a level percentage of the related total payroll cost. Normal benefit cost under this method is the level amount the District must pay annually to fund an employee's projected retirement benefit. This level percentage of payroll method is used to amortize any unfunded actuarial liabilities. The actuarial assumptions used to compute contribution requirements are also used to compute the actuarial accrued liability. The District does not have a net pension obligation since it pays these actuarially required contributions bi-weekly. CALPERS uses the market related value method of valuing the Plan's assets. An investment rate of return of 7.50% is assumed, including inflation at 2.75%. Annual salary increases are assumed to vary by duration of service. Changes in liability due to plan amendments, changes in actuarial assumptions, or changes in actuarial methods are amortized as a level percentage of payroll on a closed basis over twenty years. Investment gains and losses are accumulated as they are realized and ten percent of the net balance is amortized annually. As required by State law, effective July l, 2005, the District's Miscellaneous Plan was terminated, and the employees in the plan were required by CALPERS to join new State-wide pools. One of the conditions of entry to these pools was that the District true-up any unfunded liabilities in the former Plans, either by paying cash or by increasing its future contribution rates through a Side Fund offered by CALPERS. The District satisfied its Miscellaneous Plan's unfunded liability of $2,510,958 by agreeing to contribute that amount to the Side Fund through an addition to its normal contribution rates over the next 21 years. In 2013, the District made a one-time payment of $2,510,958 to eliminate the liability. The required contributions representing annual pension cost, for the last three fiscal years was as follows: Fiscal Year Ending Annual Pension Cost (APC) Percentage of APC Contributed Net Pension Obligation 3/31/2015 1,343,244$ 100% -$ 3/31/2014 1,461,069 100% - 3/31/2013 4,298,913 100% - Midpeninsula Regional Open Space District Notes to the Basic Financial Statements For the Fiscal Year Ended March 31, 2015 32 The latest available actuarial values of the above State-wide pools (which differs from market value) and funding progress were set forth as follows. The information presented below relates to the State- wide pools as a whole, of which the District is one of the participating employers: Valuation Date Accrued Liability Value of Assets Unfunded (Overfunded) Liability Funded Ratio Annual Covered Payroll Unfunded (Overfunded) Liability as % of Payroll 6/30/2012 2,254,622,362 1,837,489,422 417,132,490 81.50% 339,228,272 122.97% Audited annual financial statements are available from CALPERS at PO Box 942709, Sacramento, CA 94229-2709. Other Postemployment Benefits (OPEB) Plan Description 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 District Board authorized a deposit of $1,900,000 in CERBT on June 5, 2008, to begin funding its OPEB liability. By Board 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 Service or disability retirement from the District 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: $350 per month effective 1/1/2009 Must be at least equal to statutory PEMHCA minimum ($115 in 2013, $119 in 2014) PEMHCA Administrative Fee District pays CalPERS administrative fees (0.33% of premiums for 2013/14) Surviving Spouse Continuation Retiree benefit continues to surviving spouse if retiree elects survivor annuity under CalPERS retirement plan Other OPEB None Funding Policy In accordance with the District's budget, the Annual Required Contribution (ARC) is to be funded throughout the year as a percentage of payroll. Concurrent with implementing Statement No. 45, the District’s Board of Directors passed a resolution to participate in CERBT, an irrevocable trust established to fund OPEB. CERBT is managed by an appointed board not under the control of the Midpeninsula Regional Open Space District Notes to the Basic Financial Statements For the Fiscal Year Ended March 31, 2015 33 District. This Trust is not considered a component unit by the District and has been excluded from these financial statements. Separately issued financial statements for CERBT may be obtained from CALPERS at P.O. Box 942709, Sacramento, CA 94229-2709. Annual OPEB Cost and Net OPEB Obligation The District’s annual OPEB cost is calculated based on the ARC, an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The following table shows the components of the District’s annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the District’s net OPEB obligation: Annual required contribution 261,000$ Interest on net OPEB asset (60,000) Adjustment to annual required contribution 97,000 Annual OPEB cost (expense) 298,000 Contributions made (157,251) Decrease in net OPEB asset 140,749 Net OPEB obligation (asset) - beginnin g (1,003,925) Net OPEB obligation (asset) - ending $ (863,176) The District’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2015 was as follows: Fiscal Percentage Net OPEB Year Annual of Annual Obligation/ Ended OPEB Cost Cost Contributed (Asset) March 31, 2013 237,000$ 0% (1,097,306)$ March 31, 2014 265,000 65% (1,003,925) March 31, 2015 298,000 53% (863,176) Midpeninsula Regional Open Space District Notes to the Basic Financial Statements For the Fiscal Year Ended March 31, 2015 34 Funded Status and Funding Progress The most recent actuarial valuation date was June 30, 2013. The following summarizes the funded status of the plan as of March 31, 2015: 2,555,000$ 2,469,473 85,527$ 97% 8,506,000$ 1% Funded ratio (actuarial value of plan assets/AAL) Projected covered payroll (active Plan members) UAAL as a percentage of covered payroll Actuarial accrued liability (AAL) Value of plan assets Unfunded actuarial accrued liability (UAAL) Actuarial Methods and Assumptions The ARC was determined as part of a June 30, 2013 actuarial valuation using the entry age normal actuarial cost method. This is a projected benefit cost method, which takes into account those benefits that are expected to be earned in the future as well as those already accrued. The actuarial assumptions included (a) 6.25% to 7.25% investment rate of return, (b) 3.25% projected annual salary increase, and (c) health inflation increases of 0% for 1 year, 1.5% for the next 5 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 biannually 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. NOTE 8 - JOINT VENTURES (JOINT POWERS AGREEMENTS) 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. CAL JPIA's 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 operates through a nine member Executive Committee. During the past three fiscal years, none of the programs of protection have had settlements or judgments that exceeded pooled or insured coverage. There have been no significant reductions in pooled or insured liability coverage from coverage in the prior year. Midpeninsula Regional Open Space District Notes to the Basic Financial Statements For the Fiscal Year Ended March 31, 2015 35 Self-Insurance Programs of the CAL JPIA 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 provides automobile liability coverage. Six months after the close of a fiscal year, 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 member's share of costs under $30,000; costs in excess of $750,000 are shared by the members based upon each individual 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, up to $50,000,000. Worker's Compensation The District also participates in the Worker's Compensation program administered by CAL JPIA. Pool deposits and retrospective adjustments are valued in a manner similar to the General Liability 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 provides coverage to statutory limits. Purchased Insurance Environmental Insurance 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 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 3-year period from July 1, 2008 through July 1, 2011. Each member of CAL JPIA has a $10,000,000 aggregate limit during the 3-year policy term. Property Insurance The District participates in the All-Risk property program of CAL JPIA which includes all-risk coverage for real and personal property (such as 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 & Machinery Insurance 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. Midpeninsula Regional Open Space District Notes to the Basic Financial Statements For the Fiscal Year Ended March 31, 2015 36 Crime Insurance The District participates in the crime program of 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 Insurance The District participates in the special events program of CAL JPIA which provides liability insurance when District promises 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. Special Event Tenant User Liability Insurance. The District participates in the special events program of CAL JPIA which provides liability insurance when District promises 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 Program General liability coverage is provided to vendors/contractors who otherwise could not contract with the District as they could not meet the minimum insurance requirement: $1 million per occurrence, $1 million in aggregate. NOTE 9 - COMMITMENTS AND CONTINGENCIES Litigation The District may be exposed to various claims and litigation during the normal course of business. However, management believes there were no matters that would have a material adverse effect on the District’s financial position or results of operations as of March 31, 2015. NOTE 10 – SUBSEQUENT EVENTS Management has reviewed subsequent events and transactions that occurred after the date of the financial statements through the date the financial statements were issued. The financial statements include all events or transactions, including estimates, required to be recognized in accordance with generally accepted accounting principles. REQUIRED SUPPLEMENTARY INFORMATION Variance with Final Budget Actual Positive - Original Final (GAAP Basis)(Negative) Revenues: Property taxes 33,556,000$ 33,556,000$ 35,081,540$ 1,525,540$ Grant income 1,624,000 1,624,000 952,925 (671,075) Property management 1,108,948 1,108,948 1,436,680 327,732 Investment earnings 265,000 265,000 174,654 (90,346) Land Donation 1,500,000 1,500,000 - (1,500,000) Other revenues 513,500 513,500 241,335 (272,165) Total revenues 38,567,448 38,567,448 37,887,134 (680,314) Expenditures: Current Salaries and employee benefits 14,755,318 14,755,318 13,629,502 1,125,816 Services and supplies 5,775,152 5,875,152 4,642,351 1,232,801 Capital outlay 14,516,200 14,416,200 8,445,355 5,970,845 Total expenditures 35,046,670 35,046,670 26,717,208 8,329,462 Excess (deficiency) of revenues over (under) expenditures 3,520,778 3,520,778 11,169,926 7,649,148 Other financing sources (uses): Transfers in - - - - Transfers out (8,893,601) (8,893,601) (8,893,601) - Total other financing sources (uses)(8,893,601) (8,893,601) (8,893,601) - Net change in fund balance (5,372,823) (5,372,823) 2,276,325 7,649,148 Fund balance beginning 41,155,836 41,155,836 41,155,836 - Fund balance ending 35,783,013$ 35,783,013$ 43,432,161$ 7,649,148$ Budgeted Amounts Midpeninsula Regional Open Space District Budget to Actual (GAAP) For the Fiscal Year Ended March 31, 2015 Schedule of Revenues, Expenditures and Changes in Fund Balance General Fund 37 Midpeninsula Regional Open Space District Schedule of Funding Progress – Other Postemployment Benefits For the Fiscal Year Ended March 31, 2015 38 Actuarial Accrued UAAL as Actuarial Liability Unfunded a Percentage Actuarial Value of (AAL) AAL Funded Covered of Covered Valuation Assets Entry Age (UAAL) Ratio Payroll Payroll Date (a) (b) (b-a) (a/b) (c) ((b-a/c)) 3/31/2010 1,894,000$ 1,500,000$ (394,000)$ 126.27% 5,772,000$ -6.83% 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% OTHER INDEPENDENT AUDITOR’S REPORTS Page | 39 1475 Saratoga Ave, Suite 180, San Jose, CA 95129 Tel: 408-217-8749 • E-Fax: 408-872-4159 info@cnallp.com • www.cnallp.com INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Board of Directors Midpeninsula Regional Open Space District Los Altos, California We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the District as of and for the year ended March 31, 2015, and the related notes to the financial statements, which collectively comprise the District’s basic financial statements, and have issued our report thereon dated June 25, 2015. Internal Control over Financial Reporting In planning and performing our audit of the financial statements, we considered the District’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control. Accordingly, we do not express an opinion on the effectiveness of the District’s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Compliance and Other Matters As part of obtaining reasonable assurance about whether the District’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not Page | 40 1475 Saratoga Ave, Suite 180, San Jose, CA 95129 Tel: 408-217-8749 • E-Fax: 408-872-4159 info@cnallp.com • www.cnallp.com express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. June 25, 2015 San Jose, California From:Jennifer Woodworth Bcc:BOARD; Ana Ruiz; Kevin Woodhouse Subject:Board Questions for 12/16/15 Agenda Date:Wednesday, December 16, 2015 9:58:51 AM Attachments:20151216_Claims_REVISED.pdf Good morning all, Please find the response to one question received in advance of tonight’s Board meeting. Please let me know if you have any additional questions. Thank you! Jen Purchase of 1 Ford F350 w/ Utility Body $93,000 Seems very high for one vehicle: can you give more info please? There was a mistake on the claims list for the 12/16/15 Board meeting. The second and fourth lines were transposed. The revised claims list is attached and has been uploaded to the website. The correct items and amounts are also below. Check Number Vendor No. and Name Invoice Description Check Date Payment Amount Future check 10413 - DOWNTOWN FORD Purchase of 1 Ford F350 w/ Utility Body Purchase 2 Ford F350 Patrol Trucks TBD $ 91,295.58 Future check 10413 - DOWNTOWN FORD Purchase 2 Ford F350 Patrol Trucks Purchase of 1 Ford F350 w/ Utility Body TBD $ 50,276.19 Jennifer Woodworth, CMC District Clerk jwoodworth@openspace.org Midpeninsula Regional Open Space District 330 Distel Circle, Los Altos, CA 94022 P: (650) 691-1200 - F: (650) 691-0485 E-mail correspondence with the Midpeninsula Regional Open Space District (and attachments, if any) may be subject to the California Public Records Act, and as such may therefore be subject to public disclosure unless otherwise exempt under the Act.