HomeMy Public PortalAbout20141125 - Agenda Packet - Board of Directors (BOD) - 14-33
SPECIAL MEETING
BOARD OF DIRECTORS OF THE
MIDPENINSULA REGIONAL OPEN SPACE DISTRICT
330 Distel Circle
Los Altos, CA 94022
Tuesday, November 25, 2014
SPECIAL MEETING BEGINS AT 5:00
A G E N D A
5:00 SPECIAL MEETING OF THE MIDPENINSULA REGIONAL OPEN SPACE DISTRICT
CLOSED SESSION – CONFERENCE WITH LEGAL COUNSEL – POTENTIAL LITIGATION
(GOVERNMENT CODE SECTION 54956.9(d)(2))
One Case: Discuss with Legal Counsel the Securities and Exchange Commission’s Municipal
Continuing Disclosure Cooperation Initiative
ADJOURNMENT TO A MEETING OF THE MIDPENINSULA REGIONAL OPEN SPACE
DISTRICT BOARD OF DIRECTORS
6:00 SPECIAL MEETING OF THE BOARD OF DIRECTORS OF THE MIDPENINSULA
REGIONAL OPEN SPACE DISTRICT
ORAL COMMUNICATIONS – PUBLIC
ADOPTION OF AGENDA
CONSENT CALENDAR
1. Approve Minutes of the November 12, 2014 Board Meeting
2. Approve Claims Report
BOARD BUSINESS
3. Fund Balance Policy and Initial Reserve Commitments (R-14-150)
Staff Contact: Mike Foster, District Controller
District Controller’s Recommendation: (1) Approve the proposed new District Fund Balance Policy.
(2) Approve initial amounts for committed reserves and minimum general fund balance.
4. Resolution approving a Board Policy on Initial and Continuing Disclosures Relating to
Meeting 14-33
Bond Issuances (R-14-149)
Staff Contact: Sheryl Schaffner, General Counsel
District Controller’s Recommendation: Adopt a Resolution of the Board of Directors of the
Midpeninsula Regional Open Space District approving a new Board Policy: “Initial and
Continuing Disclosures Relating to Bond Issuances.”
ADJOURNMENT TO A MEETING OF THE MIDPENINSULA REGIONAL OPEN SPACE
DISTRICT FINANCING AUTHORITY
SPECIAL MEETING OF THE MIDPENINSULA REGIONAL OPEN SPACE DISTRICT
FINANCING AUTHORITY
ROLL CALL
1. Annual Financial Report of the Midpeninsula Regional Open Space District Financing
Authority (R-14-144)
Staff Contact: Mike Foster, Controller
Controller’s Recommendation: Accept the Annual Financial Report of the Midpeninsula
Regional Open Space District Financing Authority.
2. Resolution Authorizing the Execution and Delivery of Documents in Connection with the
Refinancing of the 2004 Revenue Bonds (R-14-146)
Staff Contact: Mike Foster, Controller and Steve Abbors, Executive Director
Executive Director and Controller’s Recommendation: Adopt a Resolution of the Board of
Directors of the Midpeninsula Regional Open Space District Financing Authority authorizing the
execution and delivery of documents in connection with the refinancing of the Authority’s
outstanding 2004 Revenue Bonds, and approving related documents and official actions.
ADJOURNMENT OF SPECIAL MEETING OF THE MIDPENINSULA REGIONAL OPEN
SPACE DISTRICT FINANCING AUTHORITY
RECONVENE THE SPECIAL MEETING OF THE BOARD OF DIRECTORS OF THE
MIDPENINSULA REGIONAL OPEN SPACE DISTRICT
5. Resolution Approving Documents Relating to Issuance of 2014 Refunding Promissory Notes
(R-14-145)
Staff Contact: Mike Foster, District Controller
District Controller’s Recommendation: Adopt a Resolution of the Board of Directors of the
Midpeninsula Regional Open Space District authorizing the issuance of a series of Refunding
Promissory Notes, approving an Official Statement, and providing other matters properly related
thereto.
TO ADDRESS THE BOARD: The President will invite public comment on agenda items at the time each item is considered by the Board of Directors. You may address the
Board concerning other matters during Oral Communications. Each speaker will ordinarily be limited to three minutes. Alternately, you may comment to the Board by a
written communication, which the Board appreciates.
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.
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 and Regular Meetings of the MROSD Board of Directors was posted and available for review on November 21, 2014, at
the Administrative Offices of MROSD, 330 Distel Circle, Los Altos California, 94022. Agenda materials are also available on the
District’s website at http://www.openspace.org.
Signed this 21st day of November, 2014, at Los Altos, California.
November 12, 2014
Board Meeting 14-32
SPECIAL AND REGULAR MEETING
BOARD OF DIRECTORS
MIDPENINSULA REGIONAL OPEN SPACE DISTRICT
330 Distel Circle
Los Altos, CA 94022
November 12, 2014
DRAFT MINUTES
SPECIAL MEETING – STUDY SESSION
CALL TO ORDER
President Harris called the Special Meeting of the Midpeninsula Regional Open Space District
Board of Directors to order at 5:34 p.m.
ROLL CALL
Members Present: Cecily Harris, Larry Hassett, Curt Riffle, and Pete Siemens
Members Absent: Jed Cyr, Nonette Hanko, and Yoriko Kishimoto
Staff Present: General Manager Steve Abbors, Assistant General Manager Kevin
Woodhouse, General Counsel Sheryl Schaffner, District Clerk Jennifer
Woodworth
III. STUDY SESSION
1. Financial and Operational Sustainability Model Study Update (R-14-140)
General Manager Steve Abbors provided comments regarding the purpose of the Financial and
Operational Sustainability Model Study (FOSM) and its implications moving forward during the
implementation of Measure AA.
Director Kishimoto arrived at 5:37 p.m.
Nancy Hetrick of Management Partners and project manager on the FOSM, summarized the
work completed thus far on the FOSM, including field tours, completion of a peer agency
survey, informational interviews with members of District staff, and conducting focus groups
and project team meetings. Ms. Hetrick also summarized the next steps of the project including
data analysis and financial analysis.
Meeting 14-32 Page 2
Andy Belknap of Management Partners and project director for the FOSM summarized the
emerging themes of the FOSM including a need for updated business and management systems
and an increasing focus on operations and restoration. Mr. Belknap outlined various
sustainability challenges that will emerge as the District works to implement Measure AA,
including a need for the Board of Directors to focus on policymaking over project
implementation, the General Manager’s statute-limited spending authority, and a resource
capacity gap.
Director Riffle expressed his concern that the FOSM is looking backwards instead of looking at
how the District will move forward toward Measure AA implementation.
Mr. Belknap explained the FOSM has looked at what changes need to be made and mistakes
corrected in order to create a sure foundation for the District to move forward.
Director Kishimoto inquired regarding whether technology improvements for the Operations
department were being suggested in addition to administrative information technology
improvements.
Mr. Belknap explained that a maintenance operating system will lead to an improved District
visitor experience.
Director Kishimoto suggested additional organizations, including the Golden Gate National
Recreation Area that could be studied to learn about best practices and inquired as to why they
were not studied.
Ms. Hetrick explained that additional organizational analysis will continue outside of the peer
agencies surveyed in order to develop recommendations for best practices for the District.
Director Riffle inquired if Management Partners has uncovered any problems in District
activities due to the Board obstructing staff efforts to complete their work.
Mr. Belknap stated that the Board will need to elevate to a policymaking level instead of
becoming involved in the details of project implementation. This change will be able to occur as
the Board creates policies to govern project implementation, which will allow projects to move
forward in a manner that the Board is comfortable with as staff will be implementing Board-
created policy.
Director Siemens inquired as to the type of management systems Management Partners is
suggesting.
Mr. Belknap explained that various software programs are available depending on the District’s
need and suggested an Information Technology Strategic Plan is necessary to determine the
systems needed and their ability to integrate into the District’s current software programs.
Public comment opened at 6:43 p.m.
No speakers present.
Public comment closed at 6:43 p.m.
Meeting 14-32 Page 3
No Board action required.
IV. MEETING ADJOURNED
President Harris adjourned the special meeting of the Board of Directors of the Midpeninsula
Regional Open Space District at 6:46 p.m.
REGULAR MEETING
I. CALL TO ORDER
President Harris called the Regular Meeting of the Midpeninsula Regional Open Space District
Board of Directors to order at 7:01 p.m.
II. ROLL CALL
Members Present: Cecily Harris, Larry Hassett, Yoriko Kishimoto, Curt Riffle, and Pete
Siemens
Members Absent: Jed Cyr and Nonette Hanko
Staff Present: General Manager Steve Abbors, Assistant General Manager Ana Ruiz,
Assistant General Manager Kevin Woodhouse, General Counsel Sheryl
Schaffner, Natural Resources Manager Kirk Lenington, Planning Manager
Jane Mark, Planner II Gretchen Laustsen, and District Clerk Jennifer
Woodworth
III. ORAL COMMUNICATIONS
No speakers present.
IV. ADOPTION OF AGENDA
Motion: Director Siemens moved, and Director Riffle seconded the motion to adopt the agenda.
VOTE: 5-0-0 (Directors Cyr and Hanko absent)
V. CONSENT CALENDAR
1. Approve Minutes of the Special and Regular Board Meetings of October 22, 2014,
October 28, 2014, and October 29, 2014, as amended.
2. Approve the Claims Report
3. Authorization to Reject All Bids Received October 30, 2014 for the McDonald
Ranch Fence Installation Project at La Honda Creek Open Space Preserve (R-14-131)
General Manager’s Recommendation:
Meeting 14-32 Page 4
1. Authorize the General Manager to reject all bids received to complete the McDonald Ranch
Fence Installation Project at La Honda Creek Open Space Preserve.
2. Authorize the General Manager to solicit new bids to complete the McDonald Ranch Fence
Installation Project at La Honda Creek Open Space Preserve.
Public hearing opened at 7:05 p.m.
No speakers present.
Public hearing closed at 7:05 p.m.
Motion: Director Riffle moved, and Director Hassett seconded the motion to approve the
Consent Calendar, as amended.
VOTE: 5-0-0 (Directors Cyr and Hanko absent)
VI. BOARD BUSINESS
4. Deed Restriction as Required by Habitat Conservation Fund and Land and Water
Conservation Fund Grants for El Corte de Madera Creek Staging Area and Trails Project
(R-14-138)
Planner II Gretchen Laustsen summarized the history of the project and recent changes to the
administrative guidelines of the grant program which were implemented following the District’s
original grant application.
Public hearing opened at 7:11 p.m.
No speakers present.
Public hearing closed at 7:11 p.m.
Motion: Director Siemens moved, and Director Kishimoto seconded the motion to authorize the
General Manager to execute a deed restriction on parcels that pertain to the El Corte de Madera
Creek Staging Area and Trails Project to fulfill Habitat Conservation Fund and Land and Water
Conservation Fund Grant Agreements.
VOTE: 5-0-0 (Directors Cyr and Hanko absent)
VII. COMMITTEE REPORTS
Director Kishimoto reported that the Action Plan and Budget Committee met twice recently to
discuss the draft Employee Compensation Guiding Principles and midyear budget.
VIII. STAFF REPORTS
Assistant General Manager Kevin Woodhouse provided an update on the District’s ongoing
work with Pacific Gas & Electric regarding the gas line through Edgewood. Mr. Woodhouse
Meeting 14-32 Page 5
also provided an update on current Operations department recruitments and a scheduled
Operations department staff retreat.
General Manager Steve Abbors reported that he and Acting Skyline Superintendent Tom Lausten
participated in a speed coaching event in partnership with the Santa Clara and San Mateo County
City Managers Association. Mr. Abbors also provided an update regarding ongoing
conversations with Lehigh Quarry.
IX. DIRECTOR REPORTS
The Board submitted their compensatory forms to the District Clerk.
Directors Hassett, Kishimoto, Riffle, Siemens, and Harris reported that they attended the recent
District Partners event at Picchetti Winery and thanked staff for their efforts in organizing the
event.
Director Harris requested that an item be added to a future Board meeting agenda regarding the
potential Highway 17 wildlife crossing including whether the District has a grant for the project.
X. ADJOURNMENT TO CLOSED SESSION
President Harris adjourned the regular meeting of the Board of Directors of the Midpeninsula
Regional Open Space District to a closed session at 7:27 p.m.
1. CONFERENCE WITH LEGAL COUNSEL – ANTICIPATED LITIGATION
(GOVERNMENT CODE SECTION 54956.9(b))
Two potential cases
2. CONFERENCE WITH REAL PROPERTY NEGOTIATORS (GOVERNMENT
CODE SECTION 54956.8)
Property: 3500 Portola Heights Road, La Honda, CA, 94020, San Mateo County APN
080-410-270
Agency Negotiator: Allen Ishibashi, Real Property Specialist
Negotiating Party: Thomas Anderson, Sharon Niswander and Sid Frederick (Agent)
Under Negotiation: Waiver of Right of First Refusal
XII. ADJOURN MEETING
President Harris adjourned the meeting of the Board of Directors of the Midpeninsula Regional
Open Space District at 9:00 p.m.
________________________________
Jennifer Woodworth, CMC
District Clerk
page 1 of 4
CLAIMS REPORT
MEETING 14-33
DATE 11-25-2014
MIDPENINSULA REGIONAL OPEN SPACE DISTRICT
Check
Number
Notes Vendor No. and Name Invoice Description Check
Date
Payment
Amount
68059 11454 - DECON ENVIRONMENTAL SERVICES, INC.Sierra Azul Demolitions Progress Payment - Crites/Stanton Property (SA)11/19/2014 $94,149.75
68090 11369 - BANK OF THE WEST COMMERCIAL CARD USA $74.16 - Tools, Batteries, Field Supplies 11/19/2014 $28,324.64
$504.76 - Regis. Fees and Lodging for CA Invasive Weed Symposium Conf.11/19/2014
$640.99 - CSDA Conference Expenses 11/19/2014
$248.11 - Office Supplies, Business Meal, Flag, E&O Insurance 11/19/2014
$52.86 - Lodging for CAL-IPC Conference 11/19/2014
$862.25 - Field Supplies, Regis. Fees for CA Invasive Weed Symposium 11/19/2014
$396.88 - Field Supplies, (1) Car Wash for District Vehicle 11/19/2014
$1,631.74 - Employee Recognition Event Expense, Career Fair Parking 11/19/2014
$1,335.04 - Tools & Equipment 11/19/2014
$781.92 - Web Services 11/19/2014
$259.69 - Tools, Replacement Parts for Saw 11/19/2014
$646.91 - Supplies for Bald Mtn Joint Work Day and Office Supplies 11/19/2014
$4,482.09 Well Permit, Rental Residence Repairs, Business Lunch 11/19/2014
$255.00 - IRWA Conference Registration 11/19/2014
$196.10 - Water Testing Materials 11/19/2014
$57.25 - Resource Book, Parking Fee, Supplies for Outreach Event 11/19/2014
$115.19 - Safety Program Water Jugs, Reusable Water Bottles for Staff Event 11/19/2014
$560.96 - Volunteer Supplies & Equipment, Conference Fees 11/19/2014
$372.43 - Name Badges, Event Supplies 11/19/2014
$443.33 - Parts for Water Line Repairs, Shutters (DHF)11/19/2014
$880.65 - Travel Expenses for NWS Training, IT Supplies 11/19/2014
$540.45 - AutoCad Software Annual License for Planning 11/19/2014
$430.44 -AO Supplies, Lunch Meeting 11/19/2014
$665.02 - Support Services Field & Uniform Supplies 11/19/2014
$122.51 - Sign Materials & Welding Equipment 11/19/2014
$505.44 - Training & Video Camera 11/19/2014
$2,804.52 - Event Catering at Picchetti Winery Event & Chairs 11/19/2014
$277.99 - Field Supplies - Camera 11/19/2014
$1,828.21 - CSDA Conference Expenses, Bay Nature Ad 11/19/2014
$816.00 - Signboard Materials for New Sign 11/19/2014
$631.25 - Volunteer Supplies, GPS Unit 11/19/2014
$351.72 - Removal of Propane Tank Fee, Hand Soap for Poison Oak 11/19/2014
$945.34 - Recruitment Expenses for HR Analyst Position 11/19/2014
$543.65 - Signboard Materials, Parts, Wood Stakes 11/19/2014
$53.74 - 16th Annual Central California Invasive Weed Synopsium Training 11/19/2014
$27.13 - Wireless Keyboard, Batteries 11/19/2014
$1,010.00 - CalPelra Conference Registration Fee (11-19 - 11-20)11/19/2014
$6.51 - 2015 Planner 11/19/2014
$147.51 - Nature Center & Geocaching Supplies 11/19/2014
$112.17 - Business Meal for AdHoc Committee Meeting 11/19/2014
$309.73 - Timers for Skills Assessments, Office Supplies 11/19/2014
68064 10452 - IFLAND SURVEY Mt. Umunhum Property Boundary Survey & Mapping 11/19/2014 $20,735.00
page 2 of 4
Purisima Creek Uplands Lot Line Adjustment 11/19/2014
68011 10662 - DAVID J POWERS & ASSOCIATES INC Ridge Vineyards Exchange Environmental Review Services 11/12/2014 $11,694.50
68019 11352 - HAMMER FENCES Pond DR05 Cattle Exclusion Fencing 11/12/2014 $11,480.00
68044 *10216 - VALLEY OIL COMPANY Fuel for District vehicles 11/12/2014 $11,322.37
68086 11139 - WINEGAR AIR SCIENCES Air Monitoring Study at Rancho San Antonio 11/19/2014 $9,407.00
68051 11442 - ACCO ENGINEERED SYSTEMS Administrative Office HVAC Assessment 11/19/2014 $6,028.00
68056 10723 - CALLANDER ASSOCIATES Bay Trail Concept Plan Study at Ravenswood OSP 11/19/2014 $5,235.54
68078 10102 - SHUTE, MIHALY & WEINBERGER LLP CEQA Legal Services - Ridge Vineyards Exchange (MB)11/19/2014 $3,853.40
Legal Services for Henry's Creek 11/19/2014
68017 10509 - GEOCON CONSULTANTS INC Geotechnical Consulting - Bald Mtn Staging Area - SAU 11/12/2014 $3,500.00
68025 10058 - LIEBERT CASSIDY WHITMORE Legal Consulting Services for Human Resources 11/12/2014 $2,952.00
68074 11241 - QUESTA ENGINEERING CORPORATION Harkins Bridge Engineering (PCR)11/19/2014 $2,477.50
68047 *11118 - WEX BANK Fuel for District vehicles 11/12/2014 $2,266.54
68007 11443 - CATERPILLAR FINANCIAL SERVICES CORPORATION Excavator Rental for Mt Umunhum Trail Construction (SAU)11/12/2014 $2,006.58
68073 *10180 - PG & E Electric Service - AO, AO2, Driscoll Ranch , Event Center 11/19/2014 $1,762.48
68032 11282 - PROELIA DEFENSE AND ARREST TACTICS, LLC Defensive Tactics Training for Rangers 10-2014 11/12/2014 $1,749.96
68053 *10128 - AMERICAN TOWER CORPORATION Repeater Site Lease - Coyote Peak 11/19/2014 $1,668.00
68081 10152 - TADCO SUPPLY Janitorial Supplies - (RSA)11/19/2014 $1,555.56
68020 10222 - HERTZ EQUIPMENT RENTAL INC Excavator/Bucket Equipment Rental (SAO/DHF/Hendrys Creek)11/12/2014 $1,522.50
68030 10641 - OVERLOOK ROAD MAINTENANCE ASSOC Road Maintenance Dues (ES)11/12/2014 $1,501.00
68060 10654 - DUTRA MATERIALS 40 Tons of Rock for Ancient Oaks Trail - RR 11/19/2014 $1,322.18
68040 11451 - SMITH SYSTEMS DRIVER TRAINING Driver Training 11/12/2014 $1,293.13
1195 **10177 - WOODSIDE & PORTOLA PRIVATE PATROL Patrol Service - Hawthorn 11/12/2014 $1,200.00
68021 10043 - HOWARD ROME MARTIN & RIDLEY LLP ECDM Parking Area Legal Consulting Services 11/12/2014 $1,184.56
68009 *10445 - COMMUNICATION & CONTROL INC Repeater Site Lease - Antenna Rental/Utility Fee 11/12/2014 $1,172.00
68079 10585 - SOL'S MOBILE SERVICE Vehicle Maintenance & Repairs - M24/M42 11/19/2014 $1,132.25
68027 10288 - MISSION VALLEY FORD TRUCK SALES, INC Vehicle Maintenance & Repairs - T32 11/12/2014 $1,130.39
68088 10959 - STATE WATER RESOURCES CONTROL Water Rights Fees - La Honda (LH)/Alpine Lake (SR)/Horseshoe Lake (RR)11/19/2014 $1,057.42
68023 11450 - LEE PANICH Archeological Surveys - Hicks Road Cultural Resource Assessment 11/12/2014 $1,051.91
68014 11172 - FUNIESTAS, APRIL Mileage/Lodging Reimbursement CalJPIA Risk Mgmt Forum 11/12/2014 $1,046.10
68070 10190 - METROMOBILE COMMUNICATIONS Portable radio 11/19/2014 $935.49
68057 10352 - CMK AUTOMOTIVE INC Vehicle Maintenance & Repairs - P83/P78 11/19/2014 $915.10
68061 10038 - ERGO VERA Ergonomic Evaluations for New Employees 11/19/2014 $858.00
68034 10194 - REED & GRAHAM INC Filter Fabric/Erosion Control Supplies (SAU)11/12/2014 $801.49
68077 11262 - SERVICE STATION SYSTEMS Diesel Hose & Retractor Repairs on Fuel Tank (FFO)11/19/2014 $771.01
68071 10125 - MOFFETT SUPPLY COMPANY INC Janitorial Supplies 11/19/2014 $768.78
68062 10187 - GARDENLAND POWER EQUIPMENT Helmet System/Chainsaw Service & Parts 11/19/2014 $768.73
68002 10004 - ACCOUNTEMPS Accounting Temp 11/12/2014 $761.57
68041 10302 - STEVENS CREEK QUARRY INC Base Rock for Mt. Umunhum Staging Area (SAU)11/12/2014 $748.31
68012 10032 - DEL REY BUILDING MAINTENANCE Janitorial Supplies (AO)11/12/2014 $651.42
Janitorial Service - Vacant Rental Residence 11/12/2014
68052 10004 - ACCOUNTEMPS Accounting Temp 11/19/2014 $625.61
68049 10185 - COSTCO Office Supplies/Staff Recognition Event Supplies 11/13/2014 $616.06
68037 *10136 - SAN JOSE WATER COMPANY Water Service (RSA/CP)11/12/2014 $599.48
68006 10141 - BIG CREEK LUMBER CO INC Lumber for Staging Area (SAU)11/12/2014 $524.02
68069 10512 - MARK THOMAS & COMPANY INC Lehigh Surveys & Rights of Way Engineering 11/19/2014 $495.00
68035 10324 - RICH VOSS TRUCKING INC Trucking of Base Rock (SAU)11/12/2014 $467.50
68066 11041 - INTERSTATE ALL BATTERY CENTER - SILICON VALLEY Batteries for Portable Radios 11/19/2014 $464.37
68010 10540 - CRAFTSMEN PRINTING RediRef Printing for Patrol Staff 11/12/2014 $455.66
68028 10073 - NORMAL DATA Measure AA Projects Database Development 11/12/2014 $435.00
68055 *10454 - CALIFORNIA WATER SERVICE CO-949 Water Service (FFO)11/19/2014 $406.32
page 3 of 4
68033 *10589 - RECOLOGY SOUTH BAY Garbage Service (RSA)11/12/2014 $393.93
68013 10169 - FOSTER BROTHERS SECURITY SYSTEMS Replacement Locks & Keys (SAU/ FFO)11/12/2014 $366.43
68042 10143 - SUMMIT UNIFORMS Uniform Jacket 11/12/2014 $346.91
68043 10107 - SUNNYVALE FORD Vehicle Maintenance & Repair - P84 11/12/2014 $341.88
68003 11170 - ALEXANDER ATKINS DESIGN, INC.Design of November 2014 Events Poster 11/12/2014 $330.00
68045 10977 - VOISS, SUE Mileage Reimbursement - CJPIA Conference 11/12/2014 $327.04
68039 10993 - SCHAFFNER, SHERYL Mileage Reimbursement for CJPIA Conference - Santa Barbara, CA 11/12/2014 $323.68
68008 10352 - CMK AUTOMOTIVE INC Vehicle Maintenance & Repairs - P80/P79/M24 11/12/2014 $288.27
68015 10168 - G & K SERVICES INC Shop Towel Service (FFO + SFO)11/12/2014 $275.68
68063 10655 - GRANDVIEW/ESPINOSA ROAD FUND Grandview/Espinosa Road Maintenance (TW)11/19/2014 $200.00
68048 11360 - YUNKER, CHRISTINA Mileage Reimbursement 11/12/2014 $183.68
68024 11326 - LEXISNEXIS MATTHEW BENDER Subscription Print Service Oct 2014 11/12/2014 $178.00
68084 10527 - WASTE MANAGEMENT Disposal of Wood Chips - Bald Mt (SAU)11/19/2014 $175.09
68065 10895 - INFANTE, LISA Mileage Reimbursement 11/19/2014 $175.06
68046 10527 - WASTE MANAGEMENT Hazardous Waste Fee 11/12/2014 $170.00
68068 11102 - KOENIG, PEGGY Reimbursement for Mileage & Event Supplies 11/19/2014 $169.90
68089 10960 - STATE WATER RESOURCES CONTROL Oversight for Mindego Landfill Closure 11/19/2014 $167.21
68029 10670 - O'REILLY AUTO PARTS Wiper Fluid for Vehicles (FFO)11/12/2014 $147.04
Replacement Battery for P80 11/12/2014
68083 10438 - VP II LLC Outreach Event Supplies 11/19/2014 $140.96
68018 10267 - HALF MOON BAY REVIEW Legal Ad - LHC Livestock Fence Installation Project 11/12/2014 $140.00
68004 10183 - BARRON PARK SUPPLY CO INC Faucet Repairs (RSA/CP)11/12/2014 $136.97
68067 10051 - JIM DAVIS AUTOMOTIVE Smog Check/Test - M42/M24/P84 11/19/2014 $135.00
68031 10422 - PEREZ, MIKE Reimbursement - Helmet 11/12/2014 $125.93
68038 11042 - SANTA CLARA COUNTY-OFFICE OF THE SHERIFF Live Scan Services for September 2014 11/12/2014 $120.00
68082 10338 - THE ED JONES CO INC Refurbished Ranger Badges 11/19/2014 $117.49
68005 10122 - BECK'S SHOES Boot Oil for (FFO/SAO)11/12/2014 $113.08
68054 10533 - ANDERSEN, JULIE Mileage Reimbursement 11/19/2014 $112.00
1196 **10850 - COMPLETE PEST CONTROL Bi-Weekly Rodent Control - Hawthorn Property 11/19/2014 $100.00
68072 10253 - PETERSON TRACTOR CO Tractor Parts 11/19/2014 $89.33
68058 10257 - DANIELSON, DENNIS Refund of security deposit less 6 days rent 11/19/2014 $83.97
68022 10394 - INTERSTATE TRAFFIC CONTROL PRO Signs - Mt Umunhum 11/12/2014 $74.32
68050 *10810 - A T & T Daniel Nature Center (SR)11/19/2014 $61.38
68026 11449 - MARK, JANE Cell Phone Reimbursement - (Jul-Sep-2014)11/12/2014 $60.00
68036 11426 - RIDGE WIRELESS INC.Internet Service (FFO)11/12/2014 $50.00
68080 10143 - SUMMIT UNIFORMS Uniform Baton Holder 11/19/2014 $42.41
68087 11176 - ZORO TOOLS Cord Assembly for Tool 11/19/2014 $32.65
68016 10187 - GARDENLAND POWER EQUIPMENT Chain Sharpening Kit (GP)11/12/2014 $32.43
68075 10134 - RAYNE OF SAN JOSE Water Service (FO)11/19/2014 $26.25
68076 11289 - SANTA CLARA CO. PUBLIC HEALTH LAB Water Testing (FO)11/19/2014 $20.00
$256,225.15
*Annual Claims
**Hawthorn Expense
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
ECdM = El Corte de Madera LT = Los Trancos RSA = Rancho San Antonio SR= Skyline Ridge AO = Administrative Office
page 4 of 4
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 PR = Picchetti Ranch SJH = St Joseph's Hill TW = Thornewood SAO = South Area Outpost
RR/MIN = Russian Ridge - Mindego Hill
R-14-150
Meeting 14-33
November 25, 2014
AGENDA ITEM 3
AGENDA ITEM
Fund Balance Policy and Initial Reserve Commitments
DISTRICT CONTROLLER’S RECOMMENDATIONS
1. Approve the proposed new District Fund Balance Policy.
2. Approve initial amounts for committed reserves and minimum general fund balance.
SUMMARY
This report outlines a proposed Fund Balance Policy to establish appropriate District reserves for
financial stability and in accordance with GASB 54. The report also recommends initial
amounts for committed reserves and minimum general fund balance.
DISCUSSION
As the District has grown in size over the years, the complexity of its financial operations has
also increased and the recent passage of Measure AA will add to the complexity. The District
Controller recommends the Board of Directors adopt a new District Fund Balance Policy to
strengthen the District’s financial management practices.
The proposed Fund Balance Policy (Attachment 1) meets the requirements of GASB 54, which
established the following five fund balance classifications with varying constraints: Non-
Spendable, Restricted, Committed, Assigned, and Unassigned. These classifications are defined
as part of the draft policy which is attached to this report and include Restricted funds for
Hawthorn and OPEB, Committed Funds for (non-Measure AA-funded) infrastructure,
emergency (fire, earthquake, and flood) response, and equipment replacement, and minimum
balance requirements for the General Fund for working capital liquidity and land acquisitions
prior to general obligation bond reimbursement. The proposed policy describes the purpose of
each fund, authority for establishment and change, trigger for usage, procedure for
replenishment, and frequency of review.
Proposed amounts to be initially established for committed reserves and minimum general fund
balance are shown in Attachment 2.
R-14-150 Page 2
FISCAL IMPACT
The policy changes and reserves discussed in this report will strengthen the financial stability of
the District against present and future uncertainties such as economic downturns and revenue
shortfalls. Maintenance of the proposed reserve amounts may restrict future spending on
activities not covered by the reserves.
BOARD COMMITTEE REVIEW
The proposed policy changes and initial reserve amounts were reviewed by the Action Plan and
Budget Committee on November 18, 2014.
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 acceptance of the recommended policy changes, the General Manager will
implement the policy. Following Board approval of the initial reserve amounts, the fund balance
portion of the District balance sheet will reflect the new reserves.
Attachment:
1. Draft Fund Balance Policy in Accordance with GASB Statement No. 54
2. Proposed initial amounts for Committed Reserves and minimum General Fund Balance
Prepared by:
Michael Foster, District Controller
Kate Drayson, Administrative Services Manager
Contact person:
Michael Foster, District Controller
Midpeninsula Regional Open Space District
Board Policy Manual
Fund Balance Policy in Accordance
with GASB Statement No. 54
Policy 3.07
Chapter 3 – Fiscal Management
Effective Date: Revised Date:
Prior Versions:
Board Policy 3.07 Page 1 of 3
Purpose
The following policy is created and approved by the Board of Directors in order to [1] provide
adequate funding to meet the District’s short-term and long-term plans, [2] provide funds for
unforeseen expenditures related to emergencies such as natural disasters, [3] strengthen the
financial stability of the District against present and future uncertainties such as economic
downturns and revenue shortfalls, and [4] maintain an investment-grade bond rating. This policy
has been developed, with the counsel of the District auditors, to meet the requirements of GASB
54.
This policy identifies the required components of fund balance, the level of management
authorized to approve or change target balances in each fund, the amounts that the District will
strive to maintain in each fund, and the conditions under which fund balances may be spent,
reimbursed and reviewed.
Policy
The components of District fund balance are as follows:
Non-Spendable fund balance includes amounts that cannot be spent either because they are not
in spendable form, e.g. prepaid insurance, or because of legal or contractual constraints. At all
times, the District shall hold fund balance equal to the sum of its non-spendable assets.
Restricted fund balance includes amounts that are constrained for specific purposes which are
externally imposed by constitutional provisions, enabling legislation, creditors, or contracts.
Individual funds will be identified by the General Manager and Controller and the amounts set
based on legal or contractual requirements. Funds may only be spent as specified by contract or
as externally directed. The continuing need for each fund and the amount reserved will be
reviewed annually.
Committed fund balance includes amounts that are constrained for specific purposes that are
internally imposed by the District Board of Directors. Individual funds and target amounts will be
established by the Board. Projects to be funded by committed funds require the approval of the
Board. Funds spent from committed funds shall be reimbursed from the general fund within two
years. The continuing need for each fund and the amount reserved will be reviewed annually. Any
changes require the approval of two-thirds of the Board.
ATTACHMENT 1
Board Policy 3.07 Page 2 of 3
Assigned fund balance includes amounts that are intended to be used for specific purposes that
are neither restricted nor committed. Such amounts may be assigned by the General Manager if
authorized by the Board of Directors to make such designations. Projects to be funded by assigned
funds require the approval of the General Manager. Funds spent from assigned funds shall be
reimbursed from the general fund within two years. The continuing need for each fund and the
amount reserved will be reviewed annually.
Unassigned fund balance includes amounts within the general fund which have not been classified
within the above categories. The Board shall designate the minimum amount of unassigned fund
balance which is to be held in reserve in consideration of unanticipated events that could
adversely affect the financial condition of the District and jeopardize the continuation of necessary
public services. Any spending from this minimum general fund reserve requires the approval of
the Board. Any such spending will be reimbursed within two years. The minimum reserve amount
will be reviewed annually.
The specific reserve funds and amounts are as follows:
Restricted Funds
[1] 2004 Bond Reserve Fund: required by the terms of the 2004 Revenue Bonds; held by Bond
Trustee; minimum amount $1,393,435.
[2] Retiree Healthcare Plan Fund: established in 2008 with a $1.9 million contribution to the
California Employers’ Retiree Benefit Trust; all withdrawals per Board-approved plan; amount of
annual contribution authorized by the Board as part of the annual budget.
[3] Hawthorns Fund: established in 2011 with a $2.0 million endowment from the Woods Family
Trust, to provide stewardship funding for the Hawthorns property in Portola Valley; amount to be
withdrawn each year authorized by the Board as part of the annual budget.
Committed Funds
[1] Infrastructure Fund: Implementation of the 2011 Strategic Plan, 2014 Vision Plan, and
Measure AA projects will require expansion of field and office facilities beginning in fiscal 2016.
Funding for such capital expenditures is not available from general obligation bonds under
Measure AA. The Board shall commit an initial reserve amount and amend the amount as needed.
The amount to be withdrawn each year for the Infrastructure Fund will be authorized by the Board
as part of the annual budget.
[2] Equipment Replacement Fund: Implementation of the 2011 Strategic Plan, 2014 Vision Plan,
and Measure AA projects will, over time, require replacement of field and office equipment and
vehicles. Funding for such capital expenditures is not available from general obligation bonds
under Measure AA. The Board shall commit an initial reserve amount and amend the amount as
needed. The amount to be withdrawn each year for the Equipment Replacement Fund will be
authorized by the Board as part of the annual budget.
Board Policy 3.07 Page 3 of 3
[3] Natural Disaster Fund: The District must be prepared to undertake emergency expenditures
required to respond quickly to a major fire, earthquake or flood. Funding for such expenditures is
not available from general obligation bonds under Measure AA. The Board shall commit an initial
reserve amount and amend the amount as needed. All withdrawals from the Natural Disaster
Fund require the approval of the General Manager.
Assigned Funds
None
ATTACHMENT 2
Proposed Initial Reserve Amounts
Per the new District Fund Balance Policy in Accordance with GASB Statement 54, the
Controller recommends that the Board approve the following initial reserve amounts.
Committed Funds
Infrastructure Fund: $15.0 million; projected minimum requirement for expansion of field
and office facilities over the next five years.
Equipment Replacement Fund: $2.4 million; projected requirement for equipment and vehicle
replacement based on the amount of accumulated depreciation recorded on capital assets in
service.
Natural Disaster Fund: $3.0 million; projected emergency expenditures required to respond
quickly to a major fire, earthquake or flood.
Unassigned Funds
Minimum Balance of General Fund: $10.0 million; estimated amount needed to maintain cash
flow liquidity over the fiscal year and to close land acquisition transactions when general
obligation funding is temporarily not available.
Total of Committed Reserves and Minimum General Funds: $30.4 million
R-14-149
Meeting 14-33
November 25, 2014
AGENDA ITEM 4
AGENDA ITEM
Resolution approving a Board Policy on Initial and Continuing Disclosures Relating to Bond
Issuances
GENERAL MANAGER’S AND CONTROLLER’S RECOMMENDATIONS
Adopt a Resolution of the Board of Directors of the Midpeninsula Regional Open Space District
(District) approving a new Board Policy: “Initial and Continuing Disclosures Relating to Bond
Issuances.”
SUMMARY
The District has issued bonds relatively infrequently over the forty-two years of its existence.
The voters recently authorized the issuance of up to $300 million in additional bonds over the
next thirty years. This will increase the need for efficient and effective bond management
protocols. In addition, the Securities and Exchange Commission has recently asked that all
issuers of municipal bonds focus on improving overall performance on related disclosure
requirements. For these reasons, it appears prudent at this time to adopt a formal policy to guide
staff and the District’s Board of Directors relating to bond disclosure procedures and
requirements.
DISCUSSION
Securities and Exchange Commission (SEC) Rule 15c2-12 requires that before a local
government can issue municipal bonds to investors in a public sale, the bond underwriters must
reasonably determine that the issuer has undertaken to provide certain updated disclosure
information to the Municipal Securities Rulemaking Board after the issuance of the bonds. This
information is contained in the continuing disclosure certificate and includes annual financial and
operating data, audited financial statements and notices of certain listed events, and any material
failure to disclose such events in the past. The SEC has recently begun to focus on trying to
increase transparency in municipal securities and to improve consistency in meeting disclosure
obligations, nation-wide. One of the identified means of accomplishing this goal is the use of
formally adopted disclosure policies.
The District’s role in fulfilling the underwriters obligations under this rule have traditionally
been handled under the professional guidance and management of the General Manager,
Controller, General Counsel and outside experts working with the District on each transaction,
annually, and as needed. As the District’s finances and organization grow and become more
complex, and in the interest of transparency and ensuring that our obligations are met in this
R-14-149 Page 2
area, staff recommends the adoption of the attached Board Policy governing “Initial and
Continuing Disclosures Relating to Bond Issuances.”
The proposed policy, as presently crafted, is based on a template recommended by our bond
counsel at Jones Hall. It is complex, befitting the subject. It will undoubtedly benefit from
refinement and amendment as it is put to use.
The proposed policy has the following key features:
It sets up a Disclosure Working Group, made up of the three Board appointees:
the General Manager, the Controller and General Counsel to review, oversee,
and approve all disclosure documents.
It sets up a Disclosure Coordinator role, to ensure that all of the appropriate
information is compiled and reviewed.
It sets up a Financing Group, made up of the Disclosure Working Group, the
Disclosure Coordinator and appropriate outside experts, for preparing the
documents requiring for each new financing or re-financing.
It ensures that the Board of Directors regularly receives an appropriate level of
information and training to fulfill its obligations. (Training is the only new
aspect.)
All of these functions are presently being undertaken by the same people set out in the proposed
policy, with the exception of the creation of a “Disclosure Coordinator” which is new, and the
anticipation of a role for a Finance Manager, which position does not exist at this time, but is
anticipated to be recommended for addition in the next year. It is recommended that the policy
take effect at the beginning of the FY2015-16 to allow the current Disclosure Working Group
time to set up any adjustments to our processes necessary to ensure full compliance with the
policy.
As noted above, as the District’s “first take” on how to routinize and formalize this process, it is
likely to need amendment as we start using it and figure out what parts work and what parts need
improvement. This will be figured out as the process is applied to a series of actions that can
have short timeframes for fulfilling the disclosure obligations addressed by the Policy. It
therefore contains a clause delegating to the General Manager the ability to make temporary
changes as needed to stay in compliance with the District’s disclosure obligations, but requiring
any such changes be brought back to the Board within 90 days.
FISCAL IMPACT
No new impact. The policies proposed formalize and strengthen procedures for compliance with
existing obligations and practices, and should add no new costs.
PUBLIC NOTICE
Public notice was provided as required by the Brown Act.
R-14-149 Page 3
CEQA COMPLIANCE
No compliance is required as this action is not a project under CEQA.
NEXT STEPS
After the Board’s adoption of this Policy, the General Manager, Controller and General Counsel
will take all steps necessary to ensure compliance with it.
Attachments:
1. Resolution Approving new Board Policy: “Initial and Continuing Disclosures Relating to
Bond Issuances.”
2. Proposed Board Policy: “Initial and Continuing Disclosures Relating to Bond Issuances.”
Responsible Department Heads:
General Manager Steve Abbors
Controller Mike Foster
General Counsel, Sheryl Schaffner
Prepared by:
General Counsel Sheryl Schaffner
Attachment 1
Resolutions/2014/14-__ Disclosure Policy Relating to Bond Issuances 1
RESOLUTION NO. 14-__
RESOLUTION OF THE MIDPENINSULA REGIONAL OPEN SPACE
DISTRICT ADOPTING A BOARD POLICY: “INITIAL AND CONTINUING
DISCLOSURE POLICIES RELATING TO BOND ISSUANCES”
WHEREAS, the Midpeninsula Regional Open Space District (the “District”) has issued
and in the future will continue to issue securities in the forms of bonds, notes or other types of
indebtedness (referred to herein as “bonds”) in order to finance or refinance various open space
projects; and
WHEREAS, Securities and Exchange Commission Rule 15c2-12 (“SEC Rule 15c2-12”)
sets forth certain obligations of bond underwriters to review and distribute official statements
prepared by bond issuers and to obtain from bond issuers agreements to provide continuing
disclosure on a continuing basis pursuant to SEC Rule 15c2-12 (“Continuing Disclosure
Undertakings”) while bonds are outstanding such that the bond marketplace has continuing
access to information about the issuer and its outstanding bonds and the security for such bonds;
and
WHEREAS; pursuant to SEC Rule 15c2-12, annual reports and notice of certain events
are to be provided to the Municipal Securities Rulemaking Board (“MSRB”) through the
Electronic Municipal Market Access (“EMMA”) online portal; and
WHEREAS, the financial crisis of 2008 underscored the importance of providing bond
investors with all material information regarding an issuer’s bonds and the importance of
providing continuing disclosure to the municipal marketplace in order to enhance transparency
and credibility in the marketplace; and
WHEREAS, to that end, the Board of Directors of the District has determined that
ensuring a solid continuing disclosure track record that will be viewed favorably by bond
investors, rating agencies and the public is in the best interests of the District, and has determined
to adopt this resolution setting forth a Board Policy regarding Initial and Continuing Disclosure
Policies Relating to Bond Issuances, to ensure that each of the District’s annual reports and event
filings are done in a timely and complete manner;
NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the
Midpeninsula Regional Open Space District, as follows:
Section 1. The above recitals are true and correct.
Section 2. Adoption of Board Policy. The “Initial and Continuing Disclosure Policies
Relating to Bond Issuances” is hereby approved and adopted.
Section 3. Effective Date. This resolution shall take effect on the first day of the
District’s upcoming Fiscal Year 2015/2016, April 1, 2015.
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
2
PASSED AND ADOPTED by the Board of Directors of the Midpeninsula Regional
Open Space District on ______, 2014, at a special meeting thereof, by the following vote:
AYES:
NOES:
ABSTAIN:
ABSENT:
ATTEST: APPROVED:
Secretary
Board of Directors
President
Board of Directors
APPROVED AS TO FORM:
General Counsel
I, the District Clerk of the Midpeninsula Regional Open Space District, hereby certify
that the above is a true and correct copy of a resolution duly adopted by the Board of Directors
of the Midpeninsula Regional Open Space District by the above vote at a meeting thereof duly
held and called on the above day.
District Clerk
Midpeninsula Regional Open Space District
Board Policy Manual
Initial and Continuing
Disclosures Relating to Bond
Issuances
Policy 3.06
Chapter 3 – Fiscal Management
Effective Date: 04/01/2015 Revised Date: (none)
Prior Versions: (none)
Attachments:
A – List of Disclosure Documents, to be Amended as Necessary
B – Listed Events
C – Cover Sheet Documenting Approval of Disclosure Document By Disclosure Working Group
D – Form of Cover Letter for Transmittal of Official Statement by Financing Group to Disclosure Working
Group
E – Form of Staff Report Transmitting Official Statement by District Manager to District Board of
Directors
F – Form of Cover Letter for Transmittal of Financial Statements to Disclosure Working Group
G – Required Tables and Supplemental Financial Disclosures
Board Policy 3.06 Page 1 of 7
Attachment 2
Purpose
The disclosure policies and procedures contained herein (the “Disclosure Procedures”) of the
Midpeninsula Regional Open Space District (the “District”) are intended to ensure that the District’s
disclosure documents(the “Disclosure Documents”), as listed on Attachment A to these Disclosure
Procedures, are accurate and in compliance with applicable federal and state securities laws.
Policy
Article I: Key Participants and Responsibilities
Section 1.01. Disclosure Working Group.
(A) Composition. By adoption of these Disclosure Procedures, the District hereby
establishes a disclosure working group (the “Disclosure Working Group”). The members of the
Disclosure Working Group shall be the following:
i. General Manager;
ii. Controller; and
iii. General Counsel.
(B) Responsibilities. The Disclosure Working Group shall consult with the Financing Group
(as defined in Section 1.03) or other interested parties as the Controller or any other member of the
Disclosure Working Group determines is advisable related to disclosure issues and practices. The
Disclosure Working Group shall meet as often as necessary to fulfill its obligations, but not less than
once per calendar year. Members of the Disclosure Working Group may participate in meetings by
telephone.
Board Policy 3.06 Page 2 of 7
The Disclosure Working Group is responsible for:
i. Reviewing and approving all preliminary and final official statements, private
placement memoranda and remarketing memoranda relating to the District’s
securities, together with any supplements, for which a continuing disclosure
undertaking is required (each, an “Official Statement”) as further described in
Article II, before such documents are released;
ii. Reviewing and approving the District’s Financial Statements (as defined and further
described in Section 3.02 below);
iii. Reviewing and approving any other Disclosure Documents before such documents
are released;
iv. Reviewing annually the District’s status and compliance with continuing disclosure
undertakings including filings of Disclosure Documents and compliance with these
Disclosure Procedures and the annual financial report as described in Article III
below;
v. Reviewing any other items referred to the Disclosure Working Group; and
vi. Evaluating the effectiveness of these Disclosure Procedures and approving changes
to these Disclosure Procedures as further described in Section 5.04 of this Policy.
(C) Determination of Disclosure Document Status. Whether or not a particular document or
other communication is a Disclosure Document shall be determined by the Disclosure Working Group.
At its initial meeting, the Disclosure Working Group shall establish a list of the District’s recurring
Disclosure Documents, which list shall be added to Attachment A to these Disclosure Procedures to the
extent such documents are not already contained therein. The Disclosure Working Group shall continue
to update Attachment A to these Disclosure Procedures when appropriate.
(D) Review and Approval. Following receipt of a Disclosure Document from a disclosure
coordinator selected by the Finance Manager (the “Disclosure Coordinator”) or the Financing Group (as
defined in Section 1.03 below), the Disclosure Working Group shall evaluate the Disclosure Document
for accuracy and compliance with federal and state securities laws, and shall, if appropriate, ask
questions of the Disclosure Coordinator. The Disclosure Working Group may send the Disclosure
Document back to the Financing Group for revisions.
The Disclosure Coordinator shall consult with the District’s disclosure counsel to the extent the
Disclosure Coordinator considers appropriate to perform his or her responsibilities.
Section 1.02. Disclosure Coordinator.
(A) Appointment. The Controller, in consultation with the other members of the Disclosure
Working Group, shall select and appoint the Disclosure Coordinator.
(B) Responsibilities. The Disclosure Coordinator is responsible for:
i. Serving as a “point person” for personnel to communicate issues or information that
should be or may need to be included in any Disclosure Document;
Board Policy 3.06 Page 3 of 7
ii. Monitoring compliance by the District with these Disclosure Procedures, including
timely dissemination of the annual financial report and Listed Event filings;
iii. Recommending changes to these Disclosure Procedures to the Disclosure Working
Group as necessary or appropriate;
iv. Communicating with third parties, including coordination with outside consultants
assisting the District, in the preparation and dissemination of Disclosure Documents
to make sure that assigned tasks have been completed on a timely basis and making
sure that the filings are made on a timely basis and are accurate;
v. In anticipation of preparing Disclosure Documents, soliciting “material” information
(as defined for purposes of federal securities law) from District departments;
vi. Maintaining records documenting the District’s compliance with these Disclosure
Procedures;
vii. Determining when Disclosure Documents are final and ready for review by the
Disclosure Working Group to the extent required by these Disclosure Procedures;
and
viii. Ensuring compliance with training procedures as described below.
The Disclosure Coordinator may file the following documents with the Municipal Securities
Rulemaking Board (the “MSRB”), without prior review and approval of the Disclosure Working Group
but after prior review and approval from the Controller if the Controller selects someone other than
himself or herself to fill the role of Disclosure Coordinator: those Disclosure Documents that (i) the
District is contractually obligated to file with the MSRB as a result of the occurrence of a Listed Event (as
defined in Section 2.03) or as a result of the failure to timely file the required annual financial report and
(ii) contain no discretionary content.
(C) Training. Separate training sessions shall be conducted by the District’s disclosure counsel,
with the assistance of the District General Counsel, for the District Board of Directors members. At a
minimum, each District Board of Directors member must participate in a disclosure training session as
part of his or her new member orientation.
Section 1.03. Financing Group.
General. The Controller shall identify a Financing Group (the “Financing Group”) for each
financing (the composition of which may differ for each financing), which shall include, at a minimum,
the following individuals:
i. General Manager
ii. General Counsel;
iii. Controller;
iv. Disclosure Coordinator;
Board Policy 3.06 Page 4 of 7
v. The District’s outside bond counsel and disclosure counsel;
vi. The District’s financial advisor (if any);
vii. The District’s underwriter (if any); and
viii. Such other such District staff as the Controller determines to be appropriate.
It is the District’s policy to establish continuing working relationships with professional advisors
with expertise in the area of public finance and federal securities laws applicable to the issuance of
securities by the District.
Article II: Review and Approval of Official Statements
Section 2.01. Responsibilities of Financing Group. The Financing Group shall prepare the Official
Statement and transmit the Official Statement to the Disclosure Working Group. More specifically:
(A) The Financing Group shall be responsible for reviewing disclosure documents solicited
from the Departments by the Disclosure Coordinator, as required by Section 1.04(B) above. The
Financing Group shall identify persons assigned to assist with the review or preparation of an Official
Statement (“Contributors”) who (a) should prepare portions of the Official Statement, (b) may have
information necessary to prepare portions of the Official Statement or (c) should review portions of the
Official Statement.
(B) The Controller shall contact the individuals and departments identified as Contributors
as soon as possible in order to provide adequate time for them to perform their assigned tasks. At the
time a Contributor is first contacted, he or she shall be informed by the Controller of the applicable
requirements of federal and state securities law, including the standard established by Rule 10b-5,
promulgated by the Securities and Exchange Commission.
(C) The Financing Group shall transmit the Official Statement to the Disclosure Working
Group, using the cover letter attached to these Disclosure Procedures as Attachment D to these
Disclosure Procedures. In so doing, the Financing Group shall (a) confirm that the Official Statement
accurately states all material information relating to the District and that all information relating to the
District has been reviewed by an appropriate person, (b) confirm that all information in the Official
Statement other than the information described in the previous clause (a) will be addressed by a closing
certificate or opinion by an appropriate person, (c) report any disclosure issues and concerns to the
Disclosure Working Group and (d) confirm that the Official Statement is in substantially final form and is
in a form ready to be “deemed final” by the District Board of Directors pursuant to Rule 15c2-12,
promulgated by the Securities and Exchange Commission.
(D) The Financing Group shall have at least one all-hands meeting or conference call to
review the Official Statement before transmitting it to the Disclosure Working Group.
Section 2.02. Responsibilities of Contributors. A Contributor shall assist in reviewing and preparing
the Official Statement using his or her knowledge of the District and, if appropriate, by discussing the
Official Statement with other members of the Contributor’s department, all for the purpose of ensuring
the accuracy of the relevant portions of the Official Statement. The Financing Group shall identify all
Contributors that participated in preparing the Official Statement and their responsibilities in the cover
Board Policy 3.06 Page 5 of 7
letter it uses to transmit the Official Statement to the Disclosure Working Group (see Attachment D to
these Disclosure Procedures).
Section 2.03. Responsibilities of District General Counsel. The District General Counsel (or a designee)
shall review the Official Statement and shall draft for the Official Statement descriptions of (i) any
material current, pending or threatened litigation, (ii) any material settlements or court orders and (iii)
any other legal issues that are material information for purposes of the Official Statement.
Section 2.04. Responsibilities of Controller. The Controller shall review the Official Statement, identify
any material difference in presentation of financial information from the Financial Statements and
ensure there are no misstatements or omissions of material information in any sections that contain
descriptions of information prepared by the Controller or other Contributors or of relevance to the
finances of the District.
In addition, the Controller shall determine whether the District’s then-available Financial
Statements are appropriate to be included in the Official Statement and whether to seek the consent of
the District’s auditor to include the Financial Statements in the Official Statement.
Section 2.05. Review by Disclosure Working Group. Following receipt of the Official Statement from
the Financing Group, the Disclosure Working Group shall evaluate the Official Statement for accuracy
and compliance with federal and state securities laws, and shall, if appropriate, ask questions of the
Financing Group and of any Contributor or other person who reviewed or drafted any section of the
Official Statement. The Disclosure Working Group may send Official Statements back to the Financing
Group for revisions and may instruct the Financing Group to solicit contributions from additional
Contributors.
Section 2.06. Approval by Disclosure Working Group. Upon approval of the Official Statement by the
Disclosure Working Group, the Disclosure Working Group shall attach to the Official Statement a cover
sheet in the form of Attachment C to these Disclosure Procedures. Each Official Statement and the
attached cover sheet shall be retained in the files of the District Clerk for 5 years (or such longer period
of time as may be required by state law).
Section 2.07. Submission of Official Statements to District Board of Directors for Approval. As part of
the docketing process, the District General Manager shall submit all Official Statements to the District
Board of Directors for approval using a staff report that is similar in form and substance to the template
attached as Attachment E to these Disclosure Procedures. The approval of an Official Statement by the
District Board of Directors shall be docketed as a new business matter and shall not be approved as a
consent item. The District Board of Directors shall undertake such review as deemed necessary by the
District Board of Directors, following consultation with the Controller, to fulfill the District Board of
Directors’s responsibilities under applicable federal and state securities laws. In this regard, the
Controller shall consult with the District’s disclosure counsel to the extent necessary.
Article III: Continuing Disclosure Filings
Section 3.01. Overview. Under the continuing disclosure undertakings the District has entered into in
connection with its debt offerings, the District is required each year to file annual financial reports with
the MSRB’s Electronic Municipal Market Access (“EMMA”) system in accordance with such
undertakings. Such annual financial reports are required to include certain updated financial and
operating information, and the District’s audited financial statements.
Board Policy 3.06 Page 6 of 7
The District is also required under its continuing disclosure undertakings to file notices of certain
events with EMMA.
Section 3.02. Financial Statements. The Controller shall submit the District’s audited financial
statements (“Financial Statements”), as they are available, to the Disclosure Working Group with a
cover sheet in the form of Attachment F to these Disclosure Procedures. The Disclosure Working Group
shall review the audited Financial Statements according to these Disclosure Procedures and, when
reviewed and approved for disclosure, shall transmit the audited Financial Statements to the District
Board of Directors with a cover sheet in the form of Attachment C to these Disclosure Procedures.
If the District does not have audited Financial Statements available, the Controller shall instead
submit the District’s unaudited financial statements.
Section 3.03. Annual Financial Reports. The Disclosure Coordinator shall ensure that the preparation
of the District’s annual financial reports shall commence as required under each specific continuing
disclosure undertaking. Before any annual financial report is submitted to EMMA, the Disclosure
Coordinator shall confer with the Disclosure Working Group as needed regarding the content and
accuracy of any such report, including all tables for all Official Statements for all outstanding District
debt, including but not limited to those listed in Attachment G.
Section 3.04. Disclosure of Listed Events. Pursuant to Rule 15c2-12(b)(5)(i)(C), the District is obligated
to disclose to the MSRB notice of certain specified events with respect to the District’s securities (a
“Listed Event”). Each member of the Disclosure Working Group shall notify the other members of the
Disclosure Working Group if he or she becomes aware of any of the Listed Events listed in the District’s
continuing disclosure undertakings. The Disclosure Working Group may meet to discuss the event and to
determine, in consultation with disclosure counsel to the extent determined by the Disclosure
Coordinator, whether a filing is required or is otherwise desirable. If such a filing is deemed necessary,
the Disclosure Coordinator shall cause a notice of the Listed Event (a “Listed Event Notice”) that
complies with Rule 15c2-12 to be prepared, and the Disclosure Coordinator shall file the Listed Event
Notice as required by Rule 15c2-12. For securities issued after December 1, 2010, and variable rate
demand obligations issued at any time but which convert from a mode exempted from Rule 15c2-12 to
a mode not so exempted on or after December 1, 2010, such related continuing disclosure undertakings
should contain Listed Events as listed in Attachment B to these Disclosure Procedures.
Article IV: Public Statements Regarding Financial Information
Section 4.01. Financial Information. Whenever the District makes statements or releases information
relating to its finances to the public that are reasonably expected to reach investors and the trading
markets (including, without limitation, all Listed Event Notices, statements in the audited Financial
Statements, and other financial reports and statements of the District), the District is obligated to
ensure that such statements and information are complete, true, and accurate in all material respects.
The Controller shall have primary responsibility for ensuring that such statements and information are
accurate and not misleading in any material respect.
Article V: Miscellaneous
Section 5.01. Documents to be Retained. The Disclosure Coordinator, working with the District Clerk
as needed, shall be responsible for retaining records demonstrating compliance with these Disclosure
Procedures. The Disclosure Coordinator shall retain an electronic or paper file (“Deal File”) for each
continuing disclosure annual financial report that the District completes. Each Deal File shall include
Board Policy 3.06 Page 7 of 7
final versions of Disclosure Documents accompanied by the cover sheet attached as Attachment C to
these Disclosure Procedures; written confirmations, certifications, letters and legal opinions described
herein; copies of these Disclosure Procedures and a list of individuals to whom they have been
distributed and the dates of such distributions; and a written record of the dates of meetings of the
Disclosure Working Group. The Deal File shall be maintained in a central depository for a period of five
years from the later of the date of delivery of the securities referenced in the Disclosure Document, or
the date the Disclosure Document is published, posted, or otherwise made publicly available, as
applicable.
Section 5.02. Education and Training. The Disclosure Coordinator shall ensure that the Disclosure
Working Group, all Contributors, and the District Board of Directors are properly trained to understand
and perform their responsibilities.
The Disclosure Coordinator shall arrange for at least annual disclosure training sessions
conducted by the District’s disclosure counsel. Such training sessions shall include education on these
Disclosure Procedures, the District’s disclosure obligations under applicable federal and state securities
laws and the disclosure responsibilities and potential liabilities of members of District staff and members
of the District Board of Directors. Such training sessions may be conducted using a recorded
presentation.
Section 5.03. District’s Website. The District shall maintain an investor information section of the
District’s website. Disclosure Documents that are material to the District’s securities, and no other
information, shall be posted to the investor information section of the District’s website following
review and approval as set forth in this Section 5.03. The investor information of the District’s website
shall include the following statement:
“The only information on this Web site that is posted with the intention of reaching the
investing public, including bondholders, rating analysts, investment advisors, or any
other members of the investment community, is located on the investor information
web pages. Other than the specific information presented in the investor information
web pages, no other information on the District’s website is intended to be the basis of
or should be relied upon in making an investment decision. Because each security
issued by the District or its related entities may involve different sources of payment
and security, you should refer for additional information to the official statement and
continuing disclosure filings for the particular security. The information posted in the
investor information web pages speaks only as of its date.”
Section 5.04. Amendments. In addition to the General’s Manager’s authority to adopt an
Administrative Policy to make this Board Policy more specific, any provision of these Disclosure
Procedures may be waived or amended at any time by the General Manager, with the written
confirmation of the members of the Disclosure Working Group. This authority is triggered only if such
waiver or amendment is necessary for timely and effective compliance with disclosures laws. Any
waivers or amendments made under this provision shall be reported to the Board of Directors, with
conforming revisions recommended for the Board’s consideration at the next update of this Board Policy
and no later than within three months of implementation of such waiver or amendment.
Board Policy 3.06
ATTACHMENT A
LIST OF DISCLOSURE DOCUMENTS, TO BE AMENDED AS NECESSARY
1. Preliminary and final official statements, private placement memoranda and remarketing
memoranda relating to the District’s securities, together with any supplements.
2. Financial Statements.
3. Filings made by the District with the Municipal Securities Rulemaking Board, whether made
pursuant to a continuing disclosure undertaking to which the District is a party or otherwise.
4. Press releases and other information distributed by the District for public dissemination to
the extent that such releases are reasonably expected, in the determination of the Disclosure
Working Group, to reach investors and the trading markets for municipal securities.
5. Rating agency presentations.
6. Postings on the investor information section of the District’s website.
7. Such portions of the District’s published adopted annual budget as the Disclosure Working
Group determines to be appropriate, which shall, at a minimum, include the executive
summary.
8. Any other communications that are reasonably expected, in the determination of the
Disclosure Working Group, to reach investors and the trading markets for municipal
securities.
Board Policy 3.06
ATTACHMENT B
LISTED EVENTS
The Disclosure Coordinator should review this list at least once each week to determine whether any
event has occurred that may require a filing with EMMA.
For securities (subject to Rule 15c2-12) issued on or after December 1, 2010, or for variable rate
demand bonds that are converted from a mode currently exempted from rule 15c2-12 to a mode not so
exempted on or after December 1, 2010, the following events automatically trigger a requirement to file on
EMMA within ten (10) business days of their occurrence, without regards to the materiality of the event:
1. principal and interest payment delinquencies
2. unscheduled draws on debt service reserves reflecting financial difficulty
3. unscheduled draws on credit enhancements reflecting financial difficulty
4. substitution of credit or liquidity providers, or their failure to perform
5. adverse tax opinions or events affecting the tax-exempt status of the security
6. tender offers
7. defeasances
8. rating changes
9. bankruptcy, insolvency, receivership or similar event of the obligated person
10. failure to provide in a timely manner notice to provide required annual financial information by
the date specified in any continuing disclosure undertaking
The following events trigger a requirement to file notice of their occurrence on EMMA within a
reasonable period of time after their occurrence, once they are determined to be material by the Disclosure
Working Group:
1. non-payment related defaults
2. modifications to the rights of security holders
3. bond calls
4. release, substitution or sale of property securing repayments of the securities
5. the consummation of a merger, consolidation, or acquisition involving an obligated person or the
sale of all or substantially all of the assets of the obligated person, other than in the ordinary course of
business, the entry into a definitive agreement to undertake such an action or the termination of a definitive
agreement relating to any such actions, other than pursuant to its terms6. appointment of a successor or
additional trustee or the change of name of a trustee
Board Policy 3.06
ATTACHMENT C
Cover Sheet Documenting Approval of Disclosure Document
By Disclosure Working Group
Date:
[Option #1] The attached Disclosure Document has been reviewed and approved by the
Disclosure Working Group pursuant to the District’s Disclosure Policies and Procedures.
General Manager
Controller
General Counsel
Note: The approval of only the Disclosure Coordinator is required for Disclosure Documents that
(i) the District is contractually obligated to file with the MSRB as a result of the occurrence of a Listed
Event or as a result of the failure to file the required annual financial report on a timely basis or (ii)
contain no discretionary content.
[Option #2] The attached Disclosure Document has been reviewed and approved by the
Disclosure Coordinator pursuant to the District’s Disclosure Policies and Procedures.
Disclosure Coordinator
Board Policy 3.06
ATTACHMENT D
Form of Cover Letter for
Transmittal of Official
Statement by Financing Group
to Disclosure Working Group
Disclosure Working Group:
With respect to the attached Official Statement:
(i) the Financing Group has performed its responsibilities set forth in subsection iii. of Section
3.01 of the Disclosure Policies and Procedures;
(ii) the members of the Financing Group and the Contributors to the Official Statement are listed
below;
(iii) the Official Statement accurately reports all material information relating to the District, and
all information relating to the District has been critically reviewed by an appropriate person; and
(iv) all information in the Official Statement, other than the information described in the
previous clause (iii) will be addressed by an appropriate person in a closing certificate or opinion and (iv)
[Option #1: in our judgment, the Official Statement is in substantially final form and ready for review by
the Disclosure Working Group] [Option #2: the following are significant disclosure issues or concerns
identified by the Financing Group].
Controller
Members of Financing Group:
[to come]
Contributors:
[to come]
Board Policy 3.06
ATTACHMENT E
Form of Staff Report Transmitting
Official Statement by District Manager to District Board of Directors
To: Members of the Board of Directors
From: General Manager
Date: __________________
This Staff Report relates to the proposed issuance of ______ (the “Obligations”) by the District.
The Board of Directors (Board) is asked to approve issuance of the Obligations and all related
documents. The near-final versions of these documents are attached.
The attached Preliminary Official Statement has been reviewed and approved for transmittal to
the Board by the District’s Disclosure Working Group. The distribution of the Preliminary Official
Statement by the District is subject to federal securities laws, including the Securities Act of 1933 and
the Securities Exchange Act of 1934. These laws require the Preliminary Official Statement to include all
facts that would be material to an investor in the Obligations. Material information is information that
there is a substantial likelihood would have actual significance in the deliberations of the reasonable
investor when deciding whether to buy or sell the Obligations. If the District Council concludes that the
Preliminary Official Statement includes all facts that would be material to an investor in the Obligations,
it must adopt a resolution that authorizes staff to execute a certificate to the effect that the Preliminary
Official Statement has been “deemed final.”
The Securities and Exchange Commission (the “SEC”), the agency with regulatory authority over
the District’s compliance with the federal securities laws, has issued guidance as to the duties of the
elected body with respect to its approval of the Preliminary Official Statement. In its “Report of
Investigation in the Matter of County of Orange, California as it Relates to the Conduct of the Members
of the Board of Supervisors” (Release No. 36761 / January 24, 1996) (the “Release”), the SEC stated that,
if a member of the elected body has knowledge of any facts or circumstances that an investor would
want to know about prior to investing in the Obligations, whether relating to their repayment, tax-
exempt status, undisclosed conflicts of interest with interested parties, or otherwise, he or she should
endeavor to discover whether such facts are adequately disclosed in the Preliminary Official Statement.
In the Release, the SEC stated that the steps that a member of the elected body take include becoming
familiar with the Preliminary Official Statement and questioning staff and consultants about the
disclosure of such facts.
Section 1. Purpose of Financing.
Section 2. Documents for Approval; Security for the Obligations.
Section 3. Risks Relating to Repayment and Tax-Exempt Status of the Obligations.
Section 4. Requested Approvals.
Board Policy 3.06
ATTACHMENT F
Form of Cover Letter for
Transmittal of Financial Statements
to Disclosure Working Group
Disclosure Working Group:
I attach the District’s financial statements as of March 31, ____, along with an opinion of our
independent auditor. I believe the financial statements present fairly, in all material respects, the
financial position of the District as of March 31, ____ in accordance with accounting principles generally
accepted in the United States of America and applicable laws and regulations of the State of California.
In addition, the financial statements include a Management Statement and certain supplementary
schedules that I conclude are true and accurate. These Financial Statements are ready for review by the
Disclosure Working Group pursuant to Section 4.02 of the Disclosure Procedures.
Controller
Board Policy 3.06
ATTACHMENT G
Annual Financial Report
Required Tables and Supplemental Financial Disclosures
The Annual financial report is due 210 days after end of fiscal year and will update all tables for all
Official Statements for all outstanding District debt and CUSIP number, including:
1. Updated Tables from Official Statement
a. District Secured and Unsecured Tax Receipts
b. Projected District Revenues
c. Projected Debt Coverage
d. Composite District Payment Obligations
e. District Debt Outstanding
f. District Assessed Valuation
g. Direct and Overlapping Debt
2. Supplemental Financial Disclosures
a. Bonds Redeemed Prior to Maturity
b. Amount of Bond Reserve Funds
R-14-145
Meeting 14-33
November 25, 2014
AGENDA ITEM 5
AGENDA ITEM
Resolution Approving Documents Relating to Issuance of 2014 Refunding Promissory Notes
GENERAL MANAGER AND CONTROLLER’S RECOMMENDATION
Adopt a Resolution of the Board of Directors of the Midpeninsula Regional Open Space District
authorizing the issuance of a series of Refunding Promissory Notes, approving an Official
Statement, and providing other matters properly related thereto.
SUMMARY
The resolution authorizes the District to issue up to $32 million of 2014 Refunding Promissory
Notes (2014 Notes) and approves the Official Statement, other required note documents, and
agreements with bond counsel and underwriters. The objective is to refinance the Financing
Authority’s 2004 Revenue Bonds in order to obtain significant future cash savings.
DISCUSSION
The Financing Authority issued $31.9 million of revenue bonds in January 2004, with repayment
beginning in 2005 and scheduled to complete in 2034. The current outstanding balance of the
2004 Revenue Bonds is $29.8 million. These bonds were issued at a true interest cost of 4.95%.
The bond documents allow redemption, without penalty, on any March 1 or September 1, on or
after September 1, 2014. Interest rates for municipal bonds have fallen to near historic lows,
providing an opportunity to achieve significant savings on future debt service. Based on current
market conditions, it is estimated that the 2004 Revenue Bonds can be refinanced at a true
interest cost in the 3.4% to 3.6% range, and redeemed on March 1, 2015. The estimated future
savings are $6.6 to $7.6 million, with present value savings of between $3.8 and $4.6 million.
The 2014 Notes are proposed to be structured as current interest notes, maintaining the same
final maturity as the 2004 Bonds of September 2034. Consistent with the District’s latest, post-
Measure AA financial model, the amortization is slightly accelerated to back-load the debt
service savings, when they are anticipated to be most valuable. The 2014 Notes will have the
same terms and security as the District’s outstanding 2012 Notes, with the exception that the
Additional Bonds Test has been slightly strengthened (at the suggestion of the rating agencies).
There will be no reserve fund. The existing 2004 Bond Reserve Fund, with a current balance of
$1.6 million, will be closed and the funds utilized to reduce the par amount of the 2014 Notes.
The District is seeking bond ratings from Standard & Poor’s and Fitch and the interest cost
estimates are based on an AA rating, as achieved in 2012. The agencies indicate that they will be
able to report the rating on November 25.
R-14-145 Page 2
The estimated Sources and Uses of the proposed refunding notes are shown below.
SOURCES:
Note Proceeds: Par Amount $26,085,000
Note Proceeds: Premium 3,194,160
Prior Reserve Fund 1,633,229
Total Sources $30,912,389
USES:
Project Fund: New Money $ 0
Refunding Escrow Deposit: 2004 Bonds 30,651,964
Underwriters Discount 130,425
Other Cost of Issuance 130,000
Total Uses $30,912,389
If approved by the board, the schedule is to distribute the Preliminary Official Statement the
week of December 1, price the notes during the week of December 8, close the transaction
during the week of December 15, and call the 2004 Bonds on March 1, 2015. The proposed issue
improves the District’s long-term financial plan and is easily accommodated within our statutory
debt limit. After the proposed sale, District’s bonded indebtedness would be about 61% of the
District’s statutory debt limit.
The proposed bond counsel is Jones Hall of San Francisco. In August 2006, staff selected Chris
Lynch of Jones Hall as our new bond counsel and we have been very pleased with his work on
the 2007 and 2011 Bonds and 2012 Notes. Mr. Lynch is again working with the District on the
2014 Notes. Jones Hall is also proposed as Disclosure Counsel. District General Counsel has
negotiated a fee of $72,500 for Jones Hall to provide both bond counsel and disclosure counsel
services.
The proposed underwriter is Stifel, which acquired the District’s long time banker, Stone &
Youngberg (S&Y), in 2011. The Stifel/S&Y team has successfully managed many District
financings, including the 2012 Notes, which the proposed issue closely resembles. Staff believes
that Stifel can execute this transaction in an efficient and effective manner. The proposed
underwriting fee of 0.5% of par value is competitive and consistent with fees on prior bond
issues.
SUMMARY OF THE PROPOSED TRANSACTION:
1. Amount: Par value of $26.1M; total amount of approximately $30.9M
2. Term: Twenty years
3. Average Life: 12.4 years
4. Purpose: Refinance the 2004 Bonds to reduce future debt service payments;
projected net reduction of debt service of $6.6 to $7.6 million
5. Interest Rates: Estimated true interest cost of 3.4% to 3.6%
6. Reserve Fund: None
7. Underwriting Fee: 0.5% of par amount of amount issued, about $130,425
8. Other Costs of Issuance: Estimated at $130,000
9. Closing Schedule: Price by December 14, Close by December 21
R-14-145 Page 3
PARTIES TO THE TRANSACTION:
1. Issuer: Midpeninsula Region Open Space District
2. Trustee: Bank of New York Mellon Trust Company (BNY)
3. Underwriter: Stifel
4. Bond Counsel: Jones Hall
5. Disclosure Counsel: Jones Hall
DUTIES OF THE PARTIES:
1. Issuer: Issue notes, make principal and interest payments
2. Trustee: Administers notes for the benefit of the holders, collects
principal and interest from the District, makes payments to
to holders; pays -off the 2004 bond
3. Underwriter: Purchases notes from the District and sells them to buyers
4. Bond Counsel: Prepares and certifies note documents; assures buyers of the
tax-exempt status of the notes
5. Disclosure Counsel: Drafts District official statement and advises on compliance
with federal securities laws
THE DISTRICT’S DISCLOSURE OBLIGATIONS
The attached Preliminary Official Statement has been reviewed and approved for transmittal to
the Board of Directors by staff and the District’s financing team. The distribution of the
Preliminary Official Statement by the District is subject to federal securities laws, including the
Securities Act of 1933 and the Securities Exchange Act of 1934. These laws require the
Preliminary Official Statement to include all facts that would be material to an investor in the
2014 Notes. Material information is information that there is a substantial likelihood that it
would have actual significance in the deliberations of the reasonable investor when deciding
whether to buy or sell the 2012 Refunding Notes.
The Securities and Exchange Commission (the “SEC”), the agency with regulatory authority
over the District’s compliance with the federal securities laws, has issued guidance as to the
duties of the Board of Directors with respect to its approval of the Preliminary Official
Statement. In its “Report of Investigation in the Matter of County of Orange, California as it
Relates to the Conduct of the Members of the Board of Supervisors” (Release No. 36761 /
January 24, 1996) (the “Release”), the SEC stated that, if a member of the Board of Directors has
knowledge of any facts or circumstances that an investor would want to know about prior to
investing in the 2014 Notes, whether relating to their repayment, tax-exempt status, undisclosed
conflicts of interest with interested parties, or otherwise, he or she should endeavor to discover
whether such facts are adequately disclosed in the Preliminary Official Statement. In the Release,
the SEC stated that the steps that a member of the Board of Directors could take include
becoming familiar with the Preliminary Official Statement and questioning staff and consultants
about the disclosure of such facts.
MAIN AGREEMENTS:
Note that these documents are substantially complete and correct but are not meant to be in final
form at this time.
R-14-145 Page 4
1. Preliminary Official Statement: Describes note issue to potential buyers
2. Indenture (between District and BNY): Appoints BNY as Trustee for the notes, lists its
duties and responsibilities, and details how the notes will be administered.
3. Escrow Deposit and Trust Agreement: Appoints BNY as Escrow Agent for District and
Authority and specifies how the 2004 Bonds are to be paid-off.
4. Purchase Contract (between District and Stifel): Defines terms under which Stifel will
purchase the notes from the District.
5. Professional Services Agreement (between District and Jones Hall): Appoints Jones Hall as
Bond Counsel and Disclosure Counsel.
FISCAL IMPACT
Sale of the proposed 2014 Notes will reduce overall District debt service payments by $6.6 to
$7.6 million over the next twenty years. The proposed sale is consistent with, and, in fact,
improves, the District’s long-term financial model.
BOARD COMMITTEE REVIEW
The sale of the proposed 2014 Notes was not reviewed by committee, but will be considered by
the full Board following the meeting of the Midpeninsula Regional Open Space Financing
Authority on November 25, 2014.
PUBLIC NOTICE
Notice was provided pursuant to the Brown Act. No additional notice is necessary.
CEQA COMPLIANCE
No compliance is required as this action is not a project under CEQA.
NEXT STEPS
If approved by the Board, staff will proceed with finalization of the documentation and sell the
notes.
Attachment:
1. Resolution Authorizing the Issuance of a Series of Refunding Promissory Notes, Approving
an Official Statement, and Providing Other Matters Properly Relating Thereto
Prepared by:
Michael Foster, Controller
Resolutions/2014/14-___2004 Bond Refinance 1
RESOLUTION NO. 14-__
RESOLUTION OF THE MIDPENINSULA REGIONAL OPEN SPACE
DISTRICT AUTHORIZING THE ISSUANCE OF A SERIES OF
REFUNDING PROMISSORY NOTES, APPROVING AN OFFICIAL
STATEMENT, AND PROVIDING OTHER MATTERS PROPERLY
RELATING THERETO
WHEREAS, the Midpeninsula Regional Open Space District (the “District”) previously
entered into a Project Lease dated as of January 1, 1994 (the “2004 Project Lease”), with the
Midpeninsula Regional Open Space District Financing Authority (the “Authority”) for the
purpose of (i) financing the acquisition of open space, (ii) refunding on an advance basis, a
portion of its 1995 Promissory Notes and (iii) prepaying on a current basis the District’s
outstanding Certificates of Participation (1993 Open Space Project); and
WHEREAS, the Authority issued its 2004 Revenue Bonds (the “2004 Bonds”) pursuant
to an Indenture dated as of January 1, 2004 (the “2004 Indenture”), by and between the Authority
and The Bank of New York Mellon Trust Company, N.A., as successor trustee (the “1999
Trustee”); and
WHEREAS, the 2004 Bonds were secured by and payable from the Base Rental
Payments payable by the District under the 2004 Project Lease; and
WHEREAS, the District wishes to refinance the 2004 Project Lease and the 2004 Bonds,
and, for that purpose, wishes to issue its 2014 Refunding Promissory Notes (2004 Project Lease)
(the “Notes”) pursuant to Article 3 of Chapter 3 of Division 5 of the Public Resources Code of
the State of California (the “Law”) and an Indenture; and
WHEREAS, in order to accomplish the prepayment of the 1999 Base Rental Payments
and redemption and defeasance of the 2004 Bonds, the District and the Authority will enter into
an Escrow Deposit and Trust Agreement (the “Escrow Agreement”); and
WHEREAS, District staff has caused to be prepared and has reviewed a preliminary
form of the Official Statement for the Notes (the "Official Statement"), which preliminary form
is on file with the Secretary, and the District wishes at this time to approve the Official Statement
in the public interests of the District; and
WHEREAS, all conditions, things and acts required to exist, to have happened and to
have been performed precedent to and in the issuance of the Notes, as contemplated by this
resolution and the documents referred to herein exist, have happened and have been performed in
due time, form and manner as required by the laws of the State of California.
NOW, THEREFORE, BE IT RESOLVED by the Midpeninsula Regional Open Space
District, as follows:
Section 1. Recitals True and Correct. The District hereby finds and declares that the
above recitals are true and correct.
2
Section 2. Issuance and Sale of the Notes. The District hereby authorizes and approves
the issuance of the Notes to be designated “Midpeninsula Regional Open Space District
Refunding Promissory Notes (2004 Project Lease).” The Notes may be issued in any
combination of current interest notes and capital appreciation notes as determined by the
Controller. The name of the Notes shall specify the year in which they were issued.
Section 3. Security for the Notes. The Board hereby approves the pledge pursuant to
the Indenture (as defined below) as security for the payment of principal of and interest on the
Notes of the “Limited Taxes,” which term is generally defined in the Indenture as the limited ad
valorem property taxes levied upon all taxable property in the District by the Board of
Supervisors of Santa Clara County, the Board of Supervisors of San Mateo County and the
Board of Supervisors of Santa Cruz County and allocated to the District under applicable law
that are legally available to pay the interest on and principal of the Notes. The District shall not
be obligated to pay the principal of or interest on the Notes except from the Limited Taxes.
The pledge of the Limited Taxes to the Notes shall be on a parity with the District’s
pledge of the Limited Taxes to following outstanding promissory notes of the District: (i) the
Midpeninsula Regional Open Space District 2007 Refunding Promissory Notes (1996 Project
Lease – 2nd Issue); (ii) the Midpeninsula Regional Open Space District 2007 Refunding
Promissory Notes (1996 Promissory Notes); (iii) the Midpeninsula Regional Open Space District
2007 Refunding Promissory Notes (1999 Promissory Notes); (iv) the Midpeninsula Regional
Open Space District 2007 Refunding Promissory Notes (1999 Project Lease – 2nd Issue); and (v)
2012 Refunding Promissory Notes (1999 Project Lease).
Section 4. Approval of Indenture. The Indenture related to the Notes, by and between
the District and The Bank of New York Mellon Trust Company, N.A., as trustee (the
"Indenture"), in the form presented to this meeting, is hereby approved. The President, the
Secretary, the General Manager and the Controller of the District (the "Designated Officers") are,
and each of them acting alone is, hereby authorized and directed, for and in the name and on
behalf of the District, to execute and deliver the Indenture, and the Secretary is hereby authorized
and directed, for and in the name and on behalf of the District, to attest the Designated Officer's
signature to the Indenture, in such form, together with such additions thereto or changes therein
as are recommended or approved by the Designated Officer, upon consultation with Jones Hall,
A Professional Law Corporation, bond counsel to the District, including such additions or
changes as are necessary or advisable in accordance with Section 8 hereof; provided that no
additions or changes shall authorize an aggregate principal amount of the Notes in excess of
$32,000,000, or result in a true interest cost in excess of 4.25% per annum.
The approval of such additions or changes shall be conclusively evidenced by the
execution and delivery by a Designated Officer on behalf of the District of the Indenture. The
date, maturity dates, aggregate principal amount (or maturity amount in the case of capital
appreciation notes), annual maturity amounts, interest rate or rates, interest payment dates (or
compounding dates in the case of capital appreciation notes), denominations, form, registration
privileges, manner of execution, place of payment, terms of redemption and other terms of the
Notes shall be as provided in the Indenture, as finally executed.
Section 5. Approval of Refinancing and Escrow Agreement. The prepayment of the
2004 Base Rental Payments and the refunding of the 2004 Bonds are hereby approved, subject to
achieving debt service savings in an amount acceptable to the Controller; issuance of the 2014
3
Notes in an amount sufficient to prepay the 2004 Base Rental Payments and the refunding of the
2004 Bonds shall be conclusive evidence of the Controller’s approval. The Designated Officers
are, and each of them acting alone is, hereby authorized and directed, for and in the name of and
on behalf of the District, to execute the Escrow Agreement in the form on file with the Secretary,
together with any changes therein or additions thereto approved by the Designated Officers,
whose execution thereof shall be conclusive evidence of approval of any such additions and
changes, and such other documents as the Designated Officers determine are necessary to
effectuate such refunding.
Section 6. Sale of the Notes. The District hereby appoints Stifel, Nicolaus & Company,
Incorporated (the “Underwriter”), as the underwriter for the Notes, and approves the sale of the
Notes by negotiation with the Underwriter, pursuant to the Purchase Contract by and between the
Authority and the Underwriter. The underwriter's discount (excluding original issue discount)
proposed by the Underwriter, in an amount not to exceed 0.5% of the aggregate par amount (or
maturity amount in the case of capital appreciation notes) of the Notes, is both reasonable and
customary under the prevailing market conditions and is hereby approved, with the final discount
to be identified in the Purchase Contract. The Designated Officers are, and each of them acting
alone is, hereby authorized and directed, for and in the name of and on behalf of the District, to
execute the Purchase Contract in the form approved by the Designated Officers, whose execution
thereof shall be conclusive evidence of approval of the Purchase Contract.
Section 7. Official Statement. The District hereby approves the preliminary Official
Statement describing the Notes, in substantially the form on file with the Secretary. Distribution
of the preliminary Official Statement and the final Official Statement by the Underwriter is
hereby approved. The Designated Officers are hereby authorized and directed to approve any
changes in or additions to the final form of the Official Statement, whose execution thereof shall
be conclusive evidence of approval of any such changes and additions, and the Designated
Officers are hereby authorized to execute a certificate deeming the preliminary Official
Statement to be final for purposes of Rule 15c2-12 promulgated under the Securities Exchange
Act of 1934.
Section 8. Municipal Bond Insurance. The Designated Officers, each acting alone, are
hereby authorized and directed to obtain a municipal bond insurance policy for the Notes if it is
determined, upon consultation with the Underwriter that such municipal bond insurance policy
will reduce the true interest cost with respect to the Notes.
Section 9. Official Action. All actions heretofore taken by the officers and agents of the
District with respect to the preparation of the Official Statement and the Indenture and the sale
and issuance of the Notes, are hereby approved, confirmed and ratified, and the proper officers of
the District, including the Designated Officers and the District’s general counsel, are hereby
authorized and directed, for and in the name and on behalf of the District, to do any and all
things and take any and all actions and execute and deliver any and all certificates, agreements
and other documents which they, or any of them, may deem necessary or advisable in order to
consummate the lawful issuance and delivery of the Notes in accordance with this Resolution,
including but not limited to those certificates, agreements and other documents described in the
Indenture and the other documents herein approved, a termination agreement to terminate the
2004 Project Lease, and any certificates, agreements or documents as may be necessary to
further the purpose hereof or provide additional security for the Notes, but which shall not create
any obligation or liability of the District other than with respect to the limited tax revenues
4
pledged as security for the Notes in the Indenture and assets derived from the proceeds of the
Notes.
Section 10. Approval of Professional Service Agreement. The District hereby approves
the form of the professional services agreement on file with the Secretary with respect to the
services of Jones Hall, A Professional Law Corporation as bond counsel and disclosure counsel.
The General Manager is hereby authorized and directed to execute the agreement on behalf of
the District with such changes, additions or deletions as may be approved by the General
Manager.
Section 11. Effective Date. This resolution shall take effect from and after the date of
approval and adoption thereof.
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
PASSED AND ADOPTED by the Board of Directors of the Midpeninsula Regional
Open Space District on ______, 2014, at a special meeting thereof, by the following vote:
AYES:
NOES:
ABSTAIN:
ABSENT:
ATTEST: APPROVED:
Secretary
Board of Directors
President
Board of Directors
APPROVED AS TO FORM:
General Counsel
I, the District Clerk of the Midpeninsula Regional Open Space District, hereby certify
that the above is a true and correct copy of a resolution duly adopted by the Board of Directors
of the Midpeninsula Regional Open Space District by the above vote at a meeting thereof duly
held and called on the above day.
District Clerk
R-14-144
Meeting 14-33
November 25, 2014
FINANCING AUTHORITY MEETING AGENDA ITEM 1
AGENDA ITEM
Annual Financial Report of the Midpeninsula Regional Open Space District Financing Authority
DISTRICT CONTROLLER’S RECOMMENDATION
Accept the Annual Financial Report of the Midpeninsula Regional Open Space District
Financing Authority.
DISCUSSION
In May 1996, the District and Santa Clara County established the Midpeninsula Regional Open
Space District Financing Authority (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 5, 2014,
the District’s independent auditors, Chavan & Associates, LLP., issued its report on the District’s
financial statements for the fiscal year ending March 31, 2014 (Attachment 1).
Through March 2014, 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
Three Financing Authority bond issues remained outstanding on March 31, 2014, with a total
outstanding balance of $101.69 million. This represented 73% of the District’s total outstanding
R-14-144 Page 2
debt balance. The average total interest cost of these outstanding Financing Authority bonds was
4.95%. A summary of the activity on the Financing Authority bonds in fiscal 2014 is shown
below. During the 2014 fiscal year, $1.30 million of principal was repaid, $4.97 million of
interest was paid, and $116,990 of accretion was accrued. Accretion arises from the portion of
notes sold as capital appreciation bonds (CABs). CABs are like zero-coupon bonds; they do not
pay interest, instead they accrete each year to reflect the growing principal value to be paid at
maturity. The purpose of CABs is to lengthen the average life of the debt. The 2004 Bonds
include $1.3 million of CABs.
Table 2:
FY2013-14 Financing Authority Activity
($ millions)
Balance
March 2013
Principal
Paid/Refunded
Accretion
Balance
March 2014
Interest Paid
FY2013-14
2004 Bonds $31.07 $0.62 $0.12 $30.57 $1.37
2007 Bonds $51.29 $0.63 $0.00 $50.66 $2.52
2011 Bonds $20.50 $0.05 $0.00 $20.46 $1.08
$102.86 $1.30 $0.12 $101.69 $4.97
It is currently anticipated that the District will prepay the 2004 Bonds, in their entirety, before the
end of fiscal 2014-15, from the proceeds of a planned issuance of 2014 Refunding Promissory
Notes.
FISCAL IMPACT
There are no unbudgeted fiscal impacts associated with the recommended action.
BOARD COMMITTEE REVIEW
This item was not previously reviewed by a Board Committee.
PUBLIC NOTICE
Notice was provided pursuant to the Brown Act. No additional notice is necessary.
CEQA COMPLIANCE
No compliance is required as this action is not a project under the California Environmental
Quality Act.
NEXT STEPS
None.
Attachment
1. District’s Financial Statements for the Fiscal Year ended March 31, 2014.
Prepared by:
Michael Foster, District Controller
MIDPENINSULA REGIONAL
OPEN SPACE DISTRICT
ANNUAL FINANCIAL AUDIT REPORT
MARCH 31, 2014
CHAVAN & ASSOCIATES, LLP
CERTIFIED PUBLIC ACCOUNTANTS
1475 SARATOGA AVE., SUITE 180
SAN JOSE, CA 95129
Midpeninsula Regional Open Space District
Santa Clara County
Table of Contents
TITLE PAGE
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
SUPPLEMENTARY INFORMATION:
Schedule of Expenditures of Federal Awards ............................................................................. 39
Notes to Schedule of Expenditures of Federal Awards ............................................................... 40
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 ......................................... 41 - 42
Independent Auditor’s Report on Compliance with Requirements that Could Have a
Direct and Material Effect on Each Major Program and on Internal Control over
Compliance in Accordance with OMB Circular A-133 ....................................................... 43 - 44
FINDINGS AND RECOMMENDATIONS:
Schedule of Findings and Questioned Costs ............................................................................... 45
Status of Prior Year’s Findings and Recommendations .............................................................. 46
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, 2014, 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, 2014, 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 Information
As discussed in Note 1 to the financial statements, the District adopted the provisions of GASB
Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of
Resources, and Net Position, and GASB Statement No. 65, Items Previously Reported as Assets and
Liabilities, effective July 1, 2012.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated June 5,
2014 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 5, 2014
San Jose, California
Management’s Discussion and Analysis
Midpeninsula Regional Open Space District
Management’s Discussion and Analysis
For the Fiscal Year Ended March 31, 2014
INTRODUCTION
The Management’s Discussion and Analysis (MD&A) is a required section of the District’s annual financial
report, as shown in the overview below. The purpose of the MD&A is to present a discussion and analysis of
the District’s financial performance during the fiscal year that ended on March 31, 2014. This report will (1)
focus on significant financial issues, (2) provide an overview of the District’s financial activity, (3) identify
changes in the District’s financial position, (4) identify any individual fund issues or concerns, and (5) provide
descriptions of significant asset and debt activity.
This information, presented in conjunction with the annual Basic Financial Statements, is intended to provide a
comprehensive understanding of the District’s operations and financial standing.
Required Components of the Annual Financial Report
FINANCIAL HIGHLIGHTS
Driven by the strong economy in Silicon Valley, District property tax revenue increased above its long-term
trend line in fiscal 2014, growing by $2.2 million, or 7.1%. Tax revenue also exceeded budget by $0.7 million,
or 2.2%. The assessed valuation of secured and unsecured property within the District, as of July 1, 2013,
increased by 8.1%. District tax revenue growth never exactly matches the rate of increase in assessed
valuation because the District’s hybrid fiscal year spans two tax years and redevelopment-related taxes include
some one-time distributions. The District received 67% of its tax revenue from Santa Clara County and 33%
from San Mateo County.
The District purchased $3.6 million of land and associated structures in fiscal 2014, highlighted by a 148 acre
addition to the Monte Bello Open Space Preserve.
District expenditures were again within the annual budget. Excluding land acquisition transactions and debt
service, total District spending, $21.9 million, was $3.0 million, or 12.0%, below budget. As in most recent
years, a large majority of the budget variance was due to delays and deferrals of capital projects; the District
spent 95% of its budget for salaries and benefits, and 90% of the budget for services and supplies.
The District’s net position increased by $11.9 million, or 4.0%, in fiscal 2014, as revenues exceeded
expenditures. The assets of the District exceeded liabilities at the close of the 2014 fiscal year by $311.1
million. Of this total net asset amount, $268.9 million, or 86%, is invested in capital assets, net of related debt.
Management’s
Discussion & Analysis
Government-Wide
Financial Statements
Fund
Financial Statements
Notes to the
Financial Statements
Basic
Financial Statements
3
Midpeninsula Regional Open Space District
Management’s Discussion and Analysis
For the Fiscal Year Ended March 31, 2014
USING THE ANNUAL REPORT
This annual report consists of a series of basic financial statements and notes to those statements. These
statements are organized so the reader can understand the District as an entire operating entity. The statements
provide an increasingly detailed look at specific financial activities.
The Statement of Net Position and Statement of Activities comprise the government-wide financial statements
and provide information about the activities of the whole District, presenting both an aggregate view of the
District’s finances and a longer-term view of those finances. Fund financial statements provide the next level
of detail. For governmental funds, these statements tell how services were financed in the short-term as well as
what remains for future spending. The basic financial statements also include notes that explain some of the
information in the financial statements and provide more detailed data.
OVERVIEW OF THE FINANCIAL STATEMENTS
The full annual financial report is a product of three separate parts: the basic financial statements,
supplementary information, and this section, the Management’s Discussion and Analysis. The three sections
together provide a comprehensive financial overview of the District. The basic financials are comprised of two
kinds of statements that present financial information from different perspectives, government-wide and fund
statements.
Government-wide financial statements, which comprise the first two statements, provide both short-term
and long-term information about the District’s overall financial position.
Individual parts of the District, which are reported as fund financial statements, focus on reporting the
District’s operations in more detail. These fund financial statements comprise the remaining statements.
Notes to the financials, which are included in the financial statements, provide more detailed data and
explain some of the information in the statements. The required supplementary information section
provides further explanations and provides additional support for the financial statements.
GOVERNMENT-WIDE FINANCIAL STATEMENTS - STATEMENT OF NET POSITION AND THE STATEMENT OF
ACTIVITIES
The view of the District as a whole looks at all financial transactions and asks the question, “How did we do
financially during the fiscal year 2013 - 2014?” The Statement of Net Position and the Statement of Activities
answer this question. These statements include all assets and liabilities using the accrual basis of accounting
similar to the accounting practices used by most private-sector companies. This basis of accounting takes into
account all of the current year revenues and expenses regardless of when cash is received or paid.
These two statements report the District’s net position and changes in net position. This change in net position
is important because it tells the reader that, for the District as a whole, the financial position of the District has
improved or diminished. The causes of this change may be the result of many factors, some financial, and
some not. Non-financial factors include the District’s property tax base, current property tax laws in California
restricting revenue growth, facility conditions and other factors.
In the Statement of Net Position and the Statement of Activities, the District reports governmental activities.
Governmental activities are the activities where the District’s programs and services are reported. The District
does not have any business type activities.
4
Midpeninsula Regional Open Space District
Management’s Discussion and Analysis
For the Fiscal Year Ended March 31, 2014
REPORTING THE DISTRICT’S MOST SIGNIFICANT FUNDS
Fund Financial Statements
The analysis of the District’s fund financial statements begins on page 11. Fund financial reports provide
detailed information about the District’s major funds. The District uses one operating fund, the General Fund,
to account for a multitude of financial transactions.
Governmental Funds
The General Fund is a governmental fund type and is reported using an accounting method called modified
accrual accounting, which measures cash and all other financial assets that can readily be converted to cash.
The governmental fund statements provide a detailed short-term view of the District’s general government
operations and the basic services it provides. Governmental fund information helps determine whether there
are more or fewer financial resources that can be spent in the future to finance educational programs. The
relationship (or differences) between governmental activities (reported in the Statement of Net position and the
Statement of Activities) and governmental funds is reconciled in the financial statements.
THE DISTRICT AS A WHOLE
Recall that the Statement of Net Position provides the perspective of the District as a whole. Table 1 provides a
summary of the District’s net position as of March 31, 2014 as compared to March 31, 2013:
Percentage
2014 2013 Change Change
Assets
Current Assets 44,530,822$ 44,722,294$ (191,472)$ -0.43%
Noncurrent Assets 407,253,012 399,686,916 7,566,096 1.89%
Total Assets 451,783,834$ 444,409,210$ 7,374,624$ 1.66%
Deferred Outflows of Resources
Deferred loss on early retirement of long-term debt 2,962,414$ 3,301,608$ (339,194)$ 100.00%
Total Deferred Outflows of Resources 2,962,414$ 3,301,608$ (339,194)$ 100.00%
Liabilities
Current Liabilities 2,175,974$ 4,693,345$ (2,517,371)$ -53.64%
Noncurrent Liabilities 141,422,809 143,729,335 (2,306,526) -1.60%
Total Liabilities 143,598,783$ 148,422,680$ (4,823,897)$ -3.25%
Net Position
Net Investment in Capital Assets 268,869,441$ 259,637,822$ 9,231,619$ 3.56%
Restricted 4,326,997 2,730,928 1,596,069 58.44%
Unrestricted 37,951,027 36,919,388 1,031,639 2.79%
Total Net Position 311,147,465$ 299,288,138$ 11,859,327$ 3.96%
Table 1 - Summary of Statement of Net Position
Total net position increased by $11.9 million, as revenues exceeded expenditures. Noncurrent assets increased
due to $8.1 million of capital expenditures. Total liabilities decreased due to $3.0 million of principal
payments on outstanding debt and the reclassification of the $2.0 million Hawthorn endowment, received in
fiscal 2012, from deferred revenue to fund equity.
5
Midpeninsula Regional Open Space District
Management’s Discussion and Analysis
For the Fiscal Year Ended March 31, 2014
Table 2 shows the changes in net position for fiscal year 2014 as compared to 2013.
Percentage
2014 2013 Change Change
Revenues
Program revenues 3,322,797$ 6,184,430$ (2,861,633)$ -46.27%
General revenues:
Property taxes 32,433,076 30,269,803 2,163,273 7.15%
Investment earnings 137,619 287,642 (150,023) -52.16%
Miscellaneous 182,011 298,068 (116,057) -38.94%
Total Revenues 36,075,503 37,039,943 (964,440) -2.60%
Program Expenses
Land preservation 17,929,658 19,338,464 (1,408,806) -7.28%
Interest 7,162,596 7,272,915 (110,319) -1.52%
Depreciation 1,094,962 839,870 255,092 30.37%
Total Expenses 26,187,216 27,451,249 (1,264,033) -4.60%
Change in Net Position 9,888,287 9,588,694 299,593 3.12%
Adjustment to Beginning Net Position 1,971,040 - 1,971,040 100.00%
Begininng Net Position 299,288,138 289,699,444 9,588,694 3.31%
Ending Net Position 311,147,465$ 299,288,138$ 11,859,327$ 3.96%
Table 2 - Summary of Changes in Net Position
Program revenues decreased because the District received no material land donations in fiscal 2014. In fiscal
2013, the District received $3.9 million of land donations. Grant revenue totaled $1.9 million in fiscal 2014, a
$1.0 million increase over the prior year. Approximately 82% of this grant revenue was related to the
demolition of the old Air Force structures on the top of Mt. Umunhum. Property tax revenue increased by
7.1% due to growth in assessed valuation in both Santa Clara and San Mateo portions of the District.
Investment earnings declined due to the impact of lower interest rates.
THE DISTRICT’S FUND BALANCE
Table 3 provides an analysis of the District’s fund balances and the total change in fund balances from the
prior year.
Percentage
2014 2013 Change Change
Restricted for debt service 1,620,515$ 1,633,622$ (13,107)$ -1%
Restricted for Hawthorne maintenance 1,702,557 - 1,702,557 100%
Assigned for economic contingencies 5,000,000 - 5,000,000 100%
Unassigned 34,453,279 37,513,062 (3,059,783) -8%
Total Fund Balance 42,776,351$ 39,146,684$ 3,629,667$ 9%
Table 3 - Summary of Fund Balance
Following the completion of its new thirty year strategic plan, District management will develop
recommendations for the Board of Directors to commit or assign a majority of the unassigned fund balance
during fiscal 2015.
6
Midpeninsula Regional Open Space District
Management’s Discussion and Analysis
For the Fiscal Year Ended March 31, 2014
GENERAL FUND BUDGETING HIGHLIGHTS
The District’s budget is prepared according to California law and in the modified accrual basis of accounting.
During the course of the 2013-14 fiscal year, the District revised its General Fund budget which resulted in an
increase in budgeted expenditures of $41,000 from the original to final budget. The final budgeted revenue and
other financing sources estimate was $37,332,927. The original budgeted estimate was $36,046,000.
CAPITAL ASSETS
Table 4 shows March 31, 2014 capital asset balances as compared to March 31, 2013.
Percentage
2014 2013 Change Change
Land 383,509,165$ 379,410,829$ 4,098,336$ 1.08%
Work-in-Progress 4,709,807 4,396,366 313,441 7.13%
Structure and Improvements 7,201,862 7,397,095 (195,233) -2.64%
Infrastructure 7,011,681 5,146,364 1,865,317 36.25%
Equipment 884,424 775,677 108,747 14.02%
Vehicles 1,606,002 1,463,279 142,723 9.75%
Total Capital Assets - Net 404,922,941$ 398,589,610$ 6,333,331$ 1.59%
Table 4 - Summary of Capital Assets Net of Depreciation
LONG TERM LIABILITIES
Table 5 summarizes the percent changes in long-term liabilities over the past two years.
Percentage
2014 2013 Change Change
Promissory Notes 38,296,191$ 39,117,305$ (821,114)$ -2.10%
Revenue Bonds 101,862,705 103,136,897 (1,274,192) -1.24%
Compensated Absences 1,263,913 1,475,939 (212,026) -14.37%
Total Long-term Liabilities 141,422,809$ 143,730,141$ (2,307,332)$ -1.61%
Table 5 - Summary of Long-term Liabilities
BUDGETARY PERFORMANCE
The budgetary comparison schedule following Note 10 of the footnotes shows how the District financial
results of fiscal 2014, on a GAAP basis, compared to the original budget adopted in March 2013 and the final
budget adjusted in December 2013. Total revenue was $1.3 million, or 3.3%, under budget, entirely due to
delays in completing land transactions which included land donations. Total expenditures were $6.6 million,
or 20.4%, below budget, leaving an excess of revenue over expenditure of $10.5 million. Delays and deferrals
of capital outlays accounted for 78% of the total spending variance. Spending for salaries, benefits, services
and supplies was at 92.4% of budget, higher than most recent years.
ECONOMIC FACTORS AND NEXT YEAR’S BUDGET
The Board of Directors adopted the District’s budget for fiscal year 2015 on March 26, 2014. This budget
assumes growth in regular property tax income of 6.6% and a decrease of 37% in redevelopment-related taxes,
for a net estimated tax revenue increase of 5.3%. The budget assumes the acquisition of $8.5 million of new
7
Midpeninsula Regional Open Space District
Management’s Discussion and Analysis
For the Fiscal Year Ended March 31, 2014
land and $6.0 million of other capital spending. Operating expenditures and debt service are budgeted at $19.1
million and $8.9 million, respectively. The budget also includes $0.8 million of election expenses and $0.6
million related to completion of the thirty year strategic plan and vision plan. If all revenues and expenditures
occur as budgeted, the District’s cash position would decrease by $5.7 million in fiscal 2015.
CONTACTING THE DISTRICT’S FINANCIAL MANAGEMENT
This financial report is designed to provide our citizens, taxpayers, parents, participants, investors and creditors
with a general overview of the District’s finances and to demonstrate the District’s accountability for the
money it receives. Questions concerning any of the information provided in this report or requests for
additional financial information should be addressed to the District Clerk, Midpeninsula Regional Open Space
District, 330 Distel Circle, Los Altos, California 94022.
8
Basic Financial Statements
Governmental
Activities
Assets
Current assets:
Cash and investments 34,330,982$
Accounts Receivable:
Deposits 694,849
Interest 32,773
Due from other governments:
Taxes receivable 8,599,282
Due from grantor government 365,987
Other current assets 506,949
Total current assets 44,530,822
Noncurrent assets:
Net OPEB asset 1,003,925
Notes receivable 183,164
Unamortized issuance costs 1,142,982
Non-depreciable capital assets 388,218,972
Capital assets, net of depreciation 16,703,969
Total noncurrent assets 407,253,012
Total Assets 451,783,834$
Deferred Outflows of Resources
Deferred loss on early retirement of long-term debt 2,962,414$
Liabilities
Current liabilities:
Accounts payable 744,178$
Deposits payable 128,441
Payroll and other liabilities 881,852
Accrued interest 421,503
Total current liabilities 2,175,974
Noncurrent liabilities:
Due within one year 3,498,284
Due after one year 137,924,525
Total noncurrent liabilities 141,422,809
Total Liabilities 143,598,783$
Net Position
Net Investment in Capital Assets 268,869,441$
Restricted for:
Debt service 1,620,515
Hawthorne maintenance 1,702,557
OPEB 1,003,925
Total restricted 4,326,997
Unrestricted 37,951,027
Total Net Position 311,147,465$
Midpeninsula Regional Open Space District
Statement of Net Position
March 31, 2014
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 17,929,658$ 1,422,095$ 1,900,702$ (14,606,861)$
Interest 7,162,596 - - (7,162,596)
Depreciation 1,094,962 - - (1,094,962)
Total governmental activities 26,187,216$ 1,422,095$ 1,900,702$ (22,864,419)
General revenues:
Property taxes 32,433,076
Investment earnings 137,619
Other revenues 240,094
Special items - loss on disposal of capital assets (58,083)
Total general revenues and special items 32,752,706
Change in net position 9,888,287
Net position beginning 299,288,138
Prior period adjustment - Hawthorne contribution 1,971,040
Net position beginning as adjusted 301,259,178
Net position ending 311,147,465$
Midpeninsula Regional Open Space District
Statement of Activities
For the Fiscal Year Ended March 31, 2014
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 32,710,467$ 1,620,515$ 34,330,982$
Receivables:
Deposits 694,849 - 694,849
Interest 32,773 - 32,773
Due from other governments:
Taxes receivable 8,599,282 - 8,599,282
Due from grantor government 365,987 - 365,987
Other current assets 506,949 - 506,949
Notes receivable 183,164 - 183,164
Total Assets 43,093,471$ 1,620,515$ 44,713,986$
LIABILITIES
Liabilities:
Accounts payable 744,178$ -$ 744,178$
Deposits payable 128,441 - 128,441
Payroll and other liabilities 881,852 - 881,852
Total Liabilities 1,754,471 - 1,754,471
DEFERRED INFLOWS OF RESOURCES
Unearned revenue 183,164 - 183,164
FUND BALANCE
Restricted for:
Debt service - 1,620,515 1,620,515
Hawthorne maintenance 1,702,557 - 1,702,557
Assigned for:
Economic contingencies 5,000,000 - 5,000,000
Unassigned 34,453,279 - 34,453,279
Total Fund Balance 41,155,836 1,620,515 42,776,351
Total Liabilities and Fund Balance 43,093,471$ 1,620,515$ 44,713,986$
Balance Sheet
Midpeninsula Regional Open Space District
March 31, 2014
Governmental Funds
The notes to the financial statements are an integral part of this statement.
11
Total fund balance - governmental funds 42,776,351$
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 416,628,666$
Accumulated depreciation (11,705,725) 404,922,941
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. 183,164
Net OPEB assets are not available to pay for current period expenditures and, therefore, are not
recognized in the governmental funds statements. 1,003,925
Interest payable on long-term debt does not require the use of current financial resources and, therefore,
is not reported in the governmental funds.(421,503)
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: (1,045,228)
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. 2,962,414
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 101,685,779$
Promissory notes 36,284,907
Compensated absences 1,263,913 (139,234,599)
Total net position - governmental activities 311,147,465$
Midpeninsula Regional Open Space District
Balance Sheet to the Statement of Net Position
March 31, 2014
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 32,433,076$ -$ 32,433,076$
Grant income 1,900,702 - 1,900,702
Property management 1,422,095 - 1,422,095
Investment earnings 163,215 (13,107) 150,108
Other revenues 144,762 - 144,762
Total revenues 36,063,850 (13,107) 36,050,743
Expenditures:
Current:
Salaries and employee benefits 13,078,635 - 13,078,635
Services and supplies 4,224,310 - 4,224,310
Capital outlay 8,230,927 - 8,230,927
Debt service:
Principal - 2,998,888 2,998,888
Interest - 5,859,356 5,859,356
Total expenditures 25,533,872 8,858,244 34,392,116
Excess (deficiency) of revenues
over (under) expenditures 10,529,978 (8,871,351) 1,658,627
Other financing sources (uses):
Transfers in - 8,858,244 8,858,244
Transfers out (8,858,244) - (8,858,244)
Total other financing sources (uses) (8,858,244) 8,858,244 -
Net changes in fund balance 1,671,734 (13,107) 1,658,627
Fund balance beginning 37,513,062 1,633,622 39,146,684
Prior period adjustment - Hawthorne contribution 1,971,040 - 1,971,040
Fund balance beginning - restated 39,484,102 1,633,622 41,117,724
Fund balance ending 41,155,836$ 1,620,515$ 42,776,351$
Midpeninsula Regional Open Space District
Statement of Revenues, Expenditures and Changes in Fund Balance
Governmental Funds
For the Fiscal Year Ended March 31, 2014
The notes to the financial statements are an integral part of this statement.
13
Total net change in fund balance - governmental funds 1,658,627$
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 7,485,569$
Depreciation expense (1,094,962) 6,390,607
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. (58,083)
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. (12,489)
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.(1,067,155)
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:
Repayment of bond principal 1,295,000$
Repayment of promissory notes princpal 1,703,888 2,998,888
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)
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 used exceeded the
amounts earned.212,026
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: (93,381)
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.103,109
Change in net position of governmental activities 9,888,287$
Midpeninsula Regional Open Space District
Statement of Revenues, Expenditures and Changes in Fund Balance
For the Fiscal Year Ended March 31, 2014
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, 2014
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, 2014
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, 2014
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, 2014
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, 2014
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 (RH:S) 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, 2014
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 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, 2014
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, 2014
22
assumptions that affect the reported amounts reported in the financial statements and
accompanying notes. Actual results may differ from those estimates.
I. New Accounting Pronouncements
Summary of Statement No. 63, Financial Reporting of Deferred Outflows of Resources,
Deferred Inflows of Resources, and Net Position (Issued 06/11). This Statement provides
financial reporting guidance for deferred outflows of resources and deferred inflows of resources.
Concepts Statement No. 4, Elements of Financial Statements, introduced and defined those
elements as a consumption of Net Position by the government that is applicable to a future
reporting period, and an acquisition of Net Position by the government that is applicable to a
future reporting period, respectively. Previous financial reporting standards do not include
guidance for reporting those financial statement elements, which are distinct from assets and
liabilities. Concepts Statement 4 also identifies net position as the residual of all other elements
presented in a statement of financial position. This Statement amends the net asset reporting
requirements in Statement No. 34, Basic Financial Statements-and Management’s Discussion
and Analysis-for State and Local Governments, and other pronouncements by incorporating
deferred outflows of resources and deferred inflows of resources into the definitions of the
required components of the residual measure and by renaming that measure as net position, rather
than net assets. The provisions of this Statement were effective as of July 1, 2012.
Summary of Statement No. 65, Items Previously Reported as Assets and Liabilities (Issued
03/12). This Statement establishes accounting and financial reporting standards that reclassify, as
deferred outflows of resources or deferred inflows of resources, certain items that were
previously reported as assets and liabilities and recognizes, as outflows of resources or inflows of
resources, certain items that were previously reported as assets and liabilities. This Statement
amends the financial statement element classification of certain items previously reported as
assets and liabilities to be consistent with the definitions in Concepts Statement 4. The provisions
of this Statement are effective for financial statements for periods beginning after December 15,
2012. However, the District has chosen to implement these reporting requirements as of July 1,
2012.
J. 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. The determination of the impact on the Entity’s financial
Midpeninsula Regional Open Space District
Notes to the Basic Financial Statements
For the Fiscal Year Ended March 31, 2014
23
statements from the implementation of this standard is pending as of the issuance date of this
report.
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. 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.
NOTE 2 - CASH AND INVESTMENTS
Summary of Cash and Investments
The following summarizes deposits as of March 31, 2014:
Cash and
Cash Equivalents
Available Investment
Cash and Investments for Operations Restricted Total Rating Maturities
Cash Deposits:
Cash in Banks 131,683$ 1,709,132$ 1,840,815$ N/A N/A
Petty Cash 800 - 800 N/A N/A
Total Cash Deposits 132,483 1,709,132 1,841,615
Investments:
California Local Agency Investment Fund 7,825,290 - 7,825,290 Not Rated < 1yr
Santa Clara County Pool 23,043,562 - 23,043,562 Not Rated < 1yr
Cash with Fiscal Agent:
US Federal Agency Securities - 1,407,475 1,407,475 Aaa > 1yr
Money Market Mutual Funds - 213,040 213,040 Aaa > 1yr
Total Investments 30,868,852 1,620,515 32,489,367
Total Cash and Cash Equivalents 31,001,335$ 3,329,647$ 34,330,982$
Midpeninsula Regional Open Space District
Notes to the Basic Financial Statements
For the Fiscal Year Ended March 31, 2014
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, 2014, the
District’s bank balances exceeded FDIC coverage by $1,634,549.
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, 2014, 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
The District has moneys 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 are administered by the Bank. The
cash and investment amounts were $1,620,515 as of March 31, 2014.
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, 2014 was $1,709,132.
Midpeninsula Regional Open Space District
Notes to the Basic Financial Statements
For the Fiscal Year Ended March 31, 2014
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 $4.6 billion and $57.6 billion, respectively as of March 31, 2014.
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, 2014
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 – 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, 2014 was $183,164.
NOTE 4 - CAPITAL ASSETS AND DEPRECIATION
Capital asset activity for the year ended March 31, 2014, is shown below:
Balance Transfers/ Balance
Description March 31, 2013 Additions Deletions Adjustments March 31, 2014
Non-depreciable Capital Assets:
Land and land improvements 379,410,829$ 3,906,775$ -$ 191,561$ 383,509,165$
Construction in progress 4,396,366 2,557,080 (57,276) (2,186,363) 4,709,807
Total non-depreciable capital assets 383,807,195 6,463,855 (57,276) (1,994,802) 388,218,972
Depreciable Capital Assets:
Structure and Improvements 14,675,675 224,210 - - 14,899,885
Infrastructure 6,414,048 231,287 - 1,994,802 8,640,137
Equipment 1,509,218 215,293 - - 1,724,511
Vehicles 2,794,237 350,924 - - 3,145,161
Total depreciable capital assets 25,393,178 1,021,714 - 1,994,802 28,409,694
Less accumulated depreciation for:
Structure and improvements 7,278,580 419,443 - - 7,698,023
Infrastructure 1,267,684 360,772 - - 1,628,456
Equipment 733,541 106,546 - - 840,087
Vehicles 1,330,958 208,201 - - 1,539,159
Total accumulated depreciation 10,610,763 1,094,962 - - 11,705,725
Total depreciable capital assets - net 14,782,415 (73,248) - 1,994,802 16,703,969
Total capital assets - net 398,589,610$ 6,390,607$ (57,276)$ -$ 404,922,941$
Midpeninsula Regional Open Space District
Notes to the Basic Financial Statements
For the Fiscal Year Ended March 31, 2014
27
NOTE 5 – LONG-TERM DEBT
The following is a summary of the changes in long-term debt for the year ended March 31, 2014:
Balance Balance Due Within
Long-term Obligations April 01, 2013 Additions Deductions March 31, 2014 One Year
Promissory Notes:
Current Interest 20,595,092$ -$ 1,703,888$ 18,891,204$ 1,650,096$
Capital Appreciation 15,474,708 - - 15,474,708 -
Accreted interest 968,830 950,165 - 1,918,995 -
Unamortized Bond Premium 2,078,675 - 67,391 2,011,284 67,391
Subtotal Promissory Notes 39,117,305 950,165 1,771,279 38,296,191 1,717,487
Revenue Bonds:
Current Interest 100,690,000 - 1,295,000 99,395,000 1,495,000
Capital Appreciation 1,340,010 - - 1,340,010 -
Accreted interest 833,779 116,990 - 950,769 -
Unamortized Bond Premium 273,108 - 96,182 176,926 96,182
Subtotal Revenue Bonds 103,136,897 116,990 1,391,182 101,862,705 1,591,182
Compensated Absences 1,475,939 - 212,026 1,263,913 189,615
Total Long-term Obligations 143,730,141$ 1,067,155$ 3,374,487$ 141,422,809$ 3,498,284$
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, 2014, the outstanding balance of the Daloia Land Contract note was
$81,205.
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, 2014, 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, 2014, the outstanding balance was $1,210,000.
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
Midpeninsula Regional Open Space District
Notes to the Basic Financial Statements
For the Fiscal Year Ended March 31, 2014
28
mature on November 30, 2015. The principal is due in full at maturity. At March 31, 2014, the
outstanding balance was $850,000.
2012 Refunding Promissory Notes
On January 19. 2012, the District advance refunded $34,652,643 in 1999 lease revenue bonds by
issuing $31,264,707 in promissory notes. The 2012 notes bear interest rates ranging from 2.00% to
6.04%. The notes are a blend of current interest and capital appreciation notes maturing through
2042. 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, 2014, the outstanding balance of the notes, including
accreted interest of $1,918,995, was $32,643,702.
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. At March 31,
2014, the outstanding balance of these bonds was $29,615,010.
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.
Principal payments for the Series B-T bonds are due annually on September 1. At March 31, 2014
the outstanding balance of the 2007 Series A Bonds is $50,665,000. There is no remaining balance
on the 2007 Series B-T Bonds.
Midpeninsula Regional Open Space District
Notes to the Basic Financial Statements
For the Fiscal Year Ended March 31, 2014
29
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, 2014, the outstanding balance of these bonds was $20,455,000.
The following schedule summarizes the District’s outstanding Promissory Notes and Revenue Bonds
as of March 31, 2014:
Year of Interest Year of Original Outstanding Outstanding
Long Term Debt Type Issue Rate Maturity Issue April 01, 2013 Additions Retirements March 31, 2014
Promissory Notes:
Daloia Note Current Interest 2003 6.25% 2018 240,000$ 100,093$ -$ 18,888$ 81,205$
Hunt Note Current Interest 2004 5.00 - 5.50% 2024 1,500,000 1,500,000 - - 1,500,000
2005 Refunding Note Current Interest 2006 3.25 - 5.00% 2016 4,630,000 2,355,000 - 1,145,000 1,210,000
Bergman Note Current Interest 2011 4.00% 2016 850,000 850,000 - - 850,000
2012 Refunding Note Current Interest 2012 2.00 - 6.04% 2042 15,790,000 15,789,999 - 540,000 15,249,999
2012 Refunding Note CAB 2012 2.00 - 6.04% 2042 15,474,707 15,474,708 - - 15,474,708
Subtotal Promissory Notes 38,484,707 36,069,800 - 1,703,888 34,365,912
Revenue Bonds:
2004 Revenue Bonds Current Interest 2004 2.00 - 5.40% 2035 30,560,000 28,895,000 - 620,000 28,275,000
2004 Revenue Bonds CAB 2004 5.20 - 5.53% 2028 1,340,010 1,340,010 - - 1,340,010
2007 Series A Refunding Current Interest 2007 4.00 - 5.00% 2028 52,415,000 51,295,000 - 630,000 50,665,000
2011 Lease Revenue Current Interest 2012 2.00 - 6.00% 2042 20,500,000 20,500,000 - 45,000 20,455,000
Subtotal Revenue Bonds 104,815,010 102,030,010 - 1,295,000 100,735,010
Accreted Interest:
2012 Refunding Note 968,830 950,165 - 1,918,995
2004 Revenue Bonds 833,779 116,990 - 950,769
Subtotal Accreted Interest 1,802,609 1,067,155 - 2,869,764
Unamortized Bond Premium 2,351,783 - 163,573 2,188,210
Total Long Term Debt 143,299,717$ 142,254,202$ 1,067,155$ 3,162,461$ 140,158,896$
Promissory Notes future debt service requirements as of March 31, 2014 were as follows:
Year Ending March 31, Principal
Remaining
Accretion Interest Total
2015 1,650,096$ -$ 831,875$ 2,481,971$
2016 1,226,382 - 782,314 2,008,696
2017 387,750 - 744,646 1,132,396
2018 396,977 - 730,116 1,127,093
2019 395,000 - 714,050 1,109,050
2020-2024 3,700,000 - 3,257,225 6,957,225
2025-2029 7,540,000 - 2,200,275 9,740,275
2030-2034 10,175,601 11,202,899 89,875 21,468,375
2035-2039 6,041,487 17,004,488 - 23,045,975
2040-2042 2,852,619 18,268,911 - 21,121,530
Total Debt Service 34,365,912$ 46,476,298$ 9,350,376$ 90,192,586$
Midpeninsula Regional Open Space District
Notes to the Basic Financial Statements
For the Fiscal Year Ended March 31, 2014
30
Revenue Bonds future debt service requirements as of March 31, 2014 were as follows:
Year Ending March 31, Principal
Remaining
Accretion Interest Total
2015 1,495,000$ -$ 4,916,630$ 6,411,630$
2016 3,260,000 - 4,810,530 8,070,530
2017 3,960,000 - 4,647,855 8,607,855
2018 4,245,000 - 4,456,905 8,701,905
2019 4,545,000 - 4,246,515 8,791,515
2020-2024 25,226,468 324,942 18,558,988 44,110,398
2025-2029 25,433,542 1,263,475 13,229,396 39,926,413
2030-2034 14,265,000 - 6,724,188 20,989,188
2035-2039 7,710,000 - 3,237,069 10,947,069
2040-2042 10,595,000 - 1,519,313 12,114,313
Total Debt Service 100,735,010$ 1,588,417$ 66,347,389$ 168,670,816$
Amortization of the deferred loss on early retirement of long-term debt for the fiscal year ended
March 31, 2014 was as follows:
Beginning Balance, at April 1, 2013 3,301,608$
Net Change (339,194)
Ending Balance, at March 31, 2014 2,962,414$
NOTE 6 – 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 $1,115,570 was received during the year
ended March 31, 2014.
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
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.
Midpeninsula Regional Open Space District
Notes to the Basic Financial Statements
For the Fiscal Year Ended March 31, 2014
31
The pension plans' provisions and benefits in effect at March 31, 2014, 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 17.04%
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 $2,510,958 to
eliminate the liability. The required contributions representing annual pension cost, for the year
ended March 31 were as follows:
Fiscal Year
Ending
Annual
Pension Cost
(APC)
Percentage of
APC
Contributed
Net Pension
Obligation
3/31/2014 1,461,069$ 100% -$
3/31/2013 4,298,913 100% -
3/31/2012 1,572,759 100% -
Midpeninsula Regional Open Space District
Notes to the Basic Financial Statements
For the Fiscal Year Ended March 31, 2014
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
As of March 31, 2014, approximately 99 active employees and 21 retirees were eligible to receive
retirement health care benefits.
Midpeninsula Regional Open Space District
Notes to the Basic Financial Statements
For the Fiscal Year Ended March 31, 2014
33
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
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 $ 225,000
Interest on net OPEB asset
Adjustment to annual required contribution 120,000
Annual OPEB cost (expense) 265,000
Contributions made
Dncrease in net OPEB asset 93,381
Net OPEB obligation (asset) - beginnin g
Net OPEB obligation (asset) - ending
(80,000)
(171,619)
(1,097,306)
$ (1,003,925)
The District’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and
the net OPEB obligation for 2014 was as follows:
Fiscal Net OPEB
Year Annual Percentage of Annual Obligation/
Ended OPEB Cost Cost Contributed (Asset)
March 31, 2012 $ 179,255 0% (1,334,306)$
March 31, 2013 237,000 0% (1,097,306)
March 31, 2014 265,000 65% (1,003,925)
Midpeninsula Regional Open Space District
Notes to the Basic Financial Statements
For the Fiscal Year Ended March 31, 2014
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, 2014:
$ 2,786,000
2,339,701
$ 446,299
84%
$ 8,043,000
6%
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 9-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, 2014
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, 2014
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, 2014.
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.
On June 3, 2014, voters approved Measure AA, a general obligation bond measure authorizing the
District to issue up to $300 million in bonds, at a tax rate not to exceed $3.18 per $100,000 of assessed
value of property owned, and with expenditures verified by an independent citizen oversight committee.
The bond funds will be utilized to add trails and trail connections, open new preserves, protect redwood
forests, preserve farmland, restore wetlands and streams, provide habitat connectivity and reduce fire risk.
The funding for this bond measure will be used toward the 25 highest priority projects. As of June 5,
2014, the date of issuance of the financial statements, no Measure AA bonds were issued. Management
has concluded that no liability exists for the Measure AA bonds as of March 31, 2014.
REQUIRED
SUPPLEMENTARY
INFORMATION
Variance with
Final Budget
Actual Positive -
Original Final (GAAP Basis) (Negative)
Revenues:
Property taxes 30,285,000$ 31,723,000$ 32,433,076$ 710,076$
Grant income 2,386,000 2,234,927 1,900,702 (334,225)
Property management 1,390,000 1,390,000 1,422,095 32,095
Investment earnings 280,000 280,000 163,215 (116,785)
Land Donation 1,500,000 1,500,000 - (1,500,000)
Other revenues 205,000 205,000 144,762 (60,238)
Total revenues 36,046,000 37,332,927 36,063,850 (1,269,077)
Expenditures:
Current
Salaries and employee benefits 13,699,239 13,699,239 13,078,635 620,604
Services and supplies 4,920,501 5,032,001 4,224,310 807,691
Capital outlay 13,511,708 13,441,208 8,230,927 5,210,281
Total expenditures 32,131,448 32,172,448 25,533,872 6,638,576
Excess (deficiency) of revenues
over (under) expenditures 3,914,552 5,160,479 10,529,978 5,369,499
Other financing sources (uses):
Transfers in - - - -
Transfers out (8,874,965) (8,874,965) (8,858,244) 16,721
Total other financing sources (uses) (8,874,965) (8,874,965) (8,858,244) 16,721
Net change in fund balance (4,960,413) (3,714,486) 1,671,734 5,386,220
Fund balance beginning 37,513,062 37,513,062 37,513,062 -
Fund balance ending 34,523,689$ 35,769,616$ 41,155,836$ 5,386,220$
Budgeted Amounts
Midpeninsula Regional Open Space District
Budget to Actual (GAAP)
For the Fiscal Year Ended March 31, 2014
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, 2014
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%
SUPPLEMENTARY
INFORMATION
Midpeninsula Regional Open Space District
Schedule of Expenditures of Federal Awards
For the Fiscal Year Ended March 31, 2014
39
FEDERAL
CATALOG PROGRAM
PROGRAM NAME NUMBER EXPENDITURES
U.S Department of Defense
Community Economic Adjustment
Almaden AFS Midpeninsula (SP), SP1024-10-01 (1)12.600 1,241,196$
Total Expenditures of Federal Awards 1,241,196$
(1)Audited as major program
Midpeninsula Regional Open Space District
Notes to Schedule of Expenditures of Federal Awards
For the Fiscal Year Ended March 31, 2014
40
1. General
The accompanying Schedule of Expenditures of Federal Awards presents activity of the federal
financial assistance programs of the District All federal financial assistance received directly from
federal agencies, as well as federal financial assistance passed through other government agencies, is
included in this schedule.
2. Significant Accounting Policies
The accompanying Schedule of Expenditures of Federal Awards is presented using the modified
accrual basis of accounting, which is described in Note 1. Federal programs are labeled either as
Type A or Type B. Type A programs are defined as based on the following criteria:
Type A program means any
program with all federal
More than Equal to or less than expenditures that exceed:
$300,000 $10 million $300,000
$10 million $100 million 3% of federal awards
$100 million $1 billion $3 million
$1 billion $10 billion 0.3% of federal awards
$10 billion $20 billion $30 million
$20 billion 0.15% of federal awards
When total cash and noncash
expenditures of federal awards
for programs are:
Federal programs not labeled Type A as described above are labeled Type B programs.
3. Relationship to the Basic Financial Statements
The amounts reported in the accompanying Schedule of Expenditures of Federal awards agrees, in all
material respects, to amounts reported within the District’s financial statements. Federal award
revenues are reported principally in the District’s financial statements as grant income.
4. Relationship to Federal Financial Reports
Amounts reported in the accompanying Schedule of Expenditures of Federal Awards agree or can be
reconciled with the amounts reported or to be reported in the federal financial reports.
5. Pass-Through Entities' Identifying Number
When federal awards were received from a pass-through entity, the Schedule of Expenditures of
Federal Awards shows, if available, the identifying number assigned by the pass-through entity.
When no identifying number is shown, the District has determined that no identifying number is
assigned for the program or the District was unable to obtain an identifying number from the pass-
through entity.
OTHER INDEPENDENT
AUDITOR’S REPORTS
Page | 41 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, 2014, 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 5, 2014.
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 | 42 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 5, 2014
San Jose, California
Page | 43 1475 Saratoga Ave, Suite 180, San Jose, CA 95129
Tel: 408-217-8749 • E-Fax: 408-872-4159
info@cnallp.com • www.cnallp.com
INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE WITH REQUIREMENTS
THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR
PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN
ACCORDANCE WITH OMB CIRCULAR A-133
Board of Directors
Midpeninsula Regional Open Space District
Los Altos, California
Report on Compliance for Each Major Federal Program
We have audited the Midpeninsula Open Space District’s (the District) compliance with the types of
compliance requirements described in OMB Circular A-133 Compliance Supplement that could have
a direct and material effect on each of the District’s major federal programs for the year ended March
31, 2014. The District’s major federal programs are identified in the summary of auditor’s results
section of the accompanying schedule of findings and questioned costs.
Management’s Responsibility
Management is responsible for compliance with the requirements of laws, regulations, contracts, and
grants applicable to its federal programs.
Auditor’s Responsibility
Our responsibility is to express an opinion on compliance for each of the District’s major federal
programs based on our audit of the types of compliance requirements referred to above. We
conducted our audit of compliance in accordance with auditing standards generally accepted in the
United States of America; the standards applicable to financial audits contained in Government
Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-
133, Audits of States, Local Governments, and Non‑Profit Organizations. Those standards and OMB
Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about
whether noncompliance with the types of compliance requirements referred to above that could have
a direct and material effect on a major federal program occurred. An audit includes examining, on a
test basis, evidence about the District’s compliance with those requirements and performing such
other procedures as we considered necessary in the circumstances.
We believe that our audit provides a reasonable basis for our opinion on compliance for each major
federal program. However, our audit does not provide a legal determination of the District’s
compliance.
Opinion on Each Major Federal Program
In our opinion, the District complied, in all material respects, with the types of compliance
requirements referred to above that could have a direct and material effect on each of its major federal
programs for the year ended.
Page | 44 1475 Saratoga Ave, Suite 180, San Jose, CA 95129
Tel: 408-217-8749 • E-Fax: 408-872-4159
info@cnallp.com • www.cnallp.com
Report on Internal Control over Compliance
Management of the District is responsible for establishing and maintaining effective internal control
over compliance with the types of compliance requirements referred to above. In planning and
performing our audit of compliance, we considered the District’s internal control over compliance
with the types of requirements that could have a direct and material effect on each major federal
program to determine the auditing procedures that are appropriate in the circumstances for the
purpose of expressing an opinion on compliance for each major federal program and to test and report
on internal control over compliance in accordance with Circular A-133, but not for the purpose of
expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do
not express an opinion on the effectiveness of the District’s internal control over compliance.
A deficiency in internal control over compliance exists when the design or operation of a control over
compliance does not allow management or employees, in the normal course of performing their
assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance
requirement of a federal program on a timely basis. A material weakness in internal control over
compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such
that there is a reasonable possibility that material noncompliance with a type of compliance
requirement of a federal program will not be prevented, or detected and corrected, on a timely basis.
A significant deficiency in internal control over compliance is a deficiency, or a combination of
deficiencies, in internal control over compliance with a type of compliance requirement of a federal
program that is less severe than a material weakness in internal control over compliance, yet
important enough to merit attention by those charged with governance.
Our consideration of internal control over compliance was for the limited purpose described in the
first paragraph of this section and was not designed to identify all deficiencies in internal control over
compliance that might be material weaknesses or significant deficiencies. We did not identify any
deficiencies in internal control over compliance that we consider to be material weaknesses.
However, material weaknesses may exist that have not been identified.
Purpose of Report
The purpose of this report is solely to describe the scope of our testing of internal control over
financial reporting and compliance, and the result of that testing, and not to provide an opinion on the
effectiveness of the District’s internal control over financial reporting or on compliance. This 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. Accordingly, this
report is not suitable for any other purpose.
June 5, 2014
San Jose, California
Midpeninsula Regional Open Space District
Schedule of Findings and Questioned Costs
For the Fiscal Year Ended March 31, 2014
45
Section I - Summary of Auditor’s Results
Financial Statements:
Type of auditor's report issued
Internal control over financial reporting:
Material weaknesses? Yes X No
Significant deficiencies identified not
considered to be material weaknesses? Yes X No
Non-compliance material to financial statements noted? Yes X No
Federal Awards:
Internal control over major programs:
Material weaknesses? Yes X No
Significant deficiencies identified not
considered to be material weaknesses? Yes X No
Type of auditor's report issued on compliance over major progra ms
Any audit findings disclosed that are required to be reported in
accordance with Circular A-133 Section .510(a) Yes X No
Identification of Major Programs:
CFDA Numbers Name of Federal Program
Dollar threshold used to distinguish between
type A and type B programs:
Auditee qualified as low risk auditee? X Yes No
300,000$
Unmodified
Unmodified
12.600 Community Economic Adjustment
Section II - Financial Statement Findings
None
Section III - Federal Award Findings and Questioned Costs
None
Midpeninsula Regional Open Space District
Status of Prior Year’s Findings and Recommendations
For the Fiscal Year Ended March 31, 2014
46
Section II - Financial Statement Findings
None
Section III - Federal Award Findings and Questioned Costs
None
R-14-146
Meeting 14-33
November 25, 2014
FINANCING AUTHORITY AGENDA ITEM 2
Resolution Authorizing the Execution and Delivery of Documents in Connection with the
Refinancing of the 2004 Revenue Bonds
EXECUTIVE DIRECTOR AND CONTROLLER’S RECOMMENDATION
Adopt a Resolution of the Board of Directors of the Midpeninsula Regional Open Space District
Financing Authority authorizing the execution and delivery of documents in connection with the
refinancing of the Authority’s outstanding 2004 Revenue Bonds, and approving related
documents and official actions.
DISCUSSION
In order to achieve significant cash flow savings over the next 20 years, District staff is
proposing to refinance the Authority’s $29.8 million of outstanding 2004 Revenue Bonds
through the issuance of approximately $31 million of 2014 Refunding Promissory Notes. This
proposed transaction is described in District board report number R-14-145, dated November 25,
2014. There is no benefit to utilizing the Authority on the proposed transaction. However, the
Authority must authorize and execute the Escrow and Deposit Agreement related to the
refinancing of its 2004 Revenue Bonds.
Attachment
1. Resolution Authorizing the Execution and Delivery of Documents in Connection with the
Refinancing of the Authority’s Outstanding 2004 Revenue Bonds, and Approving Related
Documents and Official Actions
Prepared by:
Stephen Abbors, Executive Director
Michael Foster, Controller
Resolutions/2014/14-__-FA_2004 Bond Refinancing 1
RESOLUTION NO. 14-___-FA
RESOLUTION OF THE BOARD OF DIRECTORS OF THE
MIDPENINSULA REGIONAL OPEN SPACE DISTRICT FINANCING
AUTHORITY AUTHORIZING THE EXECUTION AND DELIVERY OF
DOCUMENTS IN CONNECTION WITH THE REFINANCING OF THE
AUTHORITY’S OUTSTANDING 2004 REVENUE BONDS, AND
APPROVING RELATED DOCUMENTS AND OFFICIAL ACTIONS
WHEREAS, the Midpeninsula Regional Open Space District (the “District”) previously
entered into a Project Lease dated as of January 1, 2004 (the “2004 Project Lease”), with the
Midpeninsula Regional Open Space District Financing Authority (the “Authority”) for the
purpose of (i) financing the acquisition of open space, (ii) refunding on an advance basis a
portion of its 1995 Promissory Notes and (iii) prepaying on a current basis the District’s
outstanding Certificates of Participation (1993 Open Space Project); and
WHEREAS, the Authority issued its 2004 Revenue Bonds (the “2004 Bonds”) pursuant
to an Indenture dated as of January 1, 2004 (the “2004 Indenture”), by and between the Authority
and The Bank of New York Mellon Trust Company, N.A., as successor trustee (the “2004
Trustee”); and
WHEREAS, the 2004 Bonds were secured by and payable from the Base Rental
Payments payable by the District under the 2004 Project Lease (the “2004 Base Rental
Payments”); and
WHEREAS, the District wishes to refinance the 2004 Project Lease and the 2004 Bonds;
and
WHEREAS, to that end, the District has proposed to issue and sell its Midpeninsula
Regional Open Space District 2014 Refunding Promissory Notes (2004 Project Lease) (the
“2014 Notes”) under the provisions of Article 3 of Chapter 3 of Division 5 of the Public
Resources Code of the State of California (the “Bond Law”); and
WHEREAS, in order to accomplish the prepayment of the 2004 Base Rental Payments
and redemption and defeasance of the 2004 Bonds, the District, the Authority and the 2004
Trustee will enter into an Escrow Deposit and Trust Agreement (the “Escrow Agreement”); and
WHEREAS, the Board of Directors wishes at this time to approve all proceedings to
which it is a party relating to the issuance and sale of the 2014 Notes and the refinancing of the
2004 Project Lease and the 2004 Bonds;
NOW, THEREFORE, BE IT RESOLVED, DETERMINED AND ORDERED by the
Board of Directors of the Midpeninsula Regional Open Space District Financing Authority, as
follows:
SECTION 1. Approval of Refinancing and Escrow Agreement. The prepayment of
the 2004 Base Rental Payments and the refinancing of the 2004 Project Lease and the 2004
Bonds are hereby approved. The Chairperson, the Treasurer or the Controller (each, an
“Authorized Officer”), are, and each of them acting alone is, hereby authorized and directed, for
2
and in the name of and on behalf of the Authority, to execute the Escrow Agreement in the form
on file with the Secretary, together with any changes therein or additions thereto approved by an
Authorized Officer, whose execution thereof shall be conclusive evidence of approval of any
such additions and changes, and such other documents as the Authorized Officer determine are
necessary to effectuate such refunding.
SECTION 2. Approval of Refinancing. The refinancing of the 2004 Project Lease and
the 2004 Bonds is hereby approved, subject to achieving debt service savings in an amount
acceptable to the Controller; issuance of the 2014 Notes by the District in an amount sufficient to
refinance the 2004 Project Lease and the 2004 Bonds shall be conclusive evidence of the
Controller’s approval.
SECTION 3. Official Actions. The Authorized Officers, the Secretary, the Authority,
general counsel, and all other officers of the Authority are each authorized and directed in the
name and on behalf of the Authority to make any and all assignments, certificates, requisitions,
agreements, notices, consents, instruments of conveyance and other documents, which they or
any of them deem necessary or appropriate in order to consummate any of the transactions
contemplated by the agreements and documents approved under this Resolution, including, but
not limited to, a termination agreement related to the termination of the 2004 Project Lease.
Whenever in this resolution any officer of the Authority is authorized to execute or countersign
any document or take any action, such execution, countersigning or action may be taken on
behalf of such officer by any person designated by such officer to act on his or her behalf if such
officer is absent or unavailable.
SECTION 4. Effective Date. This Resolution shall take effect immediately upon its
passage and adoption.
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
The foregoing resolution was passed and adopted by the Board of Directors of the
Midpeninsula Regional Open Space District Financing Authority at a special meeting held on the
_______, 2014, by the following vote:
AYES:
NOES:
ABSTAIN:
ABSENT:
ATTEST: APPROVED:
Secretary
Midpeninsula Regional Open Space District
Financing Authority
Chairperson
Midpeninsula Regional Open Space District
Financing Authority
3
APPROVED AS TO FORM:
General Counsel