PRELIMINARY OFFICIAL STATEMENT DATED JUNE 6, 2016

NEW ISSUE - FULL BOOK-ENTRY RATING: Standard & Poor’s: “AA+”

In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject, however to certain qualifications described herein, under existing law, the interest on the Bonds is excluded from gross income for federal income tax purposes, and such interest is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, provided, however, that, for the purpose of computing the alternative minimum tax imposed on corporations, such interest is taken into account in determining certain income and earnings. In the further opinion of Bond Counsel, such interest is exempt from California personal income taxes. See “LEGAL MATTERS - Tax Exemption.”

$15,000,000* CITY OF BERKELEY 2016 General Obligation Bonds (Street and Integrated Watershed Improvements)

Dated: Date of Delivery Due September 1, as shown on inside front cover

Issuance. The general obligation bonds captioned above (the “Bonds”) are being issued by the City of Berkeley (the “City”) under provisions of the California Government Code and under a Resolution adopted by the City Council of the City (the “City Council”) on May 31, 2016 (the “Bond Resolution”). The Bonds were authorized at an election of the registered voters of the City held on November 6, 2012, at which more than two-thirds of the persons voting on the proposition voted to authorize the issuance and sale of not to exceed $30,000,000 principal amount of general obligation bonds. The City previously issued its City of Berkeley 2014 General Obligation Bonds (Street and Integrated Watershed Improvements) in the principal amount of $15,000,000. The Bonds are the second and final series of bonds to be sold and issued under this authorization. See “THE BONDS - Authority for Issuance.”

Purpose. The Bonds are being issued to finance improvements to streets, with integrated watershed improvements within the City. See “PLAN OF FINANCE - Purpose of Issue.”

Security. The Bonds are general obligations of the City, payable solely from ad valorem property taxes levied by the City and collected by Alameda County (the “County”). The City Council is empowered and is obligated to annually levy ad valorem taxes for the payment of interest on, and principal of, the Bonds upon all property subject to taxation by the City, without limitation of rate or amount (except certain personal property which is taxable at limited rates). See “SECURITY FOR THE BONDS.”

Book-Entry Only. The Bonds will be issued in book-entry form only, and will be initially issued and registered in the name of Cede & Co. as nominee of The Depository Trust Company, New York, New York (“DTC”). The Bonds are issuable as fully registered securities in denominations of $5,000 or any integral multiple of $5,000. Purchasers of the Bonds (the “Beneficial Owners”) will not receive physical certificates representing their interest in the Bonds. See “THE BONDS” and “APPENDIX E - DTC AND THE BOOK- ENTRY ONLY SYSTEM.”

Payments. Interest on the Bonds accrues from the date of delivery and is payable semiannually on March 1 and September 1 of each year, commencing March 1, 2017. Payments of principal and interest on the Bonds will be paid by The Bank of New York Mellon Trust Company, N.A., as Paying Agent, to DTC for subsequent disbursement to DTC Participants, which will remit such payments to the Beneficial Owners of the Bonds. See “THE BONDS - Description of the Bonds.”

Redemption. The Bonds are subject to optional and mandatory redemption prior to maturity. See “THE BONDS - Redemption.”

The following firm, serving as municipal advisor to the City, has structured this issue.

Maturity Schedule (See inside cover)

Cover Page. This cover page contains certain information for general reference only. It is not a summary of all the provisions of the Bonds. Prospective investors must read the entire Official Statement to obtain information essential to making an informed investment decision.

The Bonds will be offered when, as and if issued and accepted by the Underwriter, subject to the approval as to legality by Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel to the City, and subject to certain other conditions. Jones Hall is also serving as Disclosure Counsel to the City. Certain legal matters are being passed upon for the City by the City Attorney. It is anticipated that the Bonds, in book entry form, will be available for delivery by DTC in New York, New York, on or about July 6, 2016.

The date of this Official Statement is ______, 2016.

* Preliminary; subject to change.

MATURITY SCHEDULE (Base CUSIP†: 084113)

$______Serial Bonds

Maturity Date Principal Interest (September 1) Amount Rate Yield Price CUSIP†

C: Priced to first par optional call date of September 1, 20__.

$______% Term Bond Due September 1, 20__, Yield: ____%, Price: ____; CUSIP†: ___

$______% Term Bond Due September 1, 20__, Yield: ____%, Price: ____; CUSIP†: ___

† Copyright 2016, American Bankers Association. CUSIP data herein are provided by Standard & Poor’s CUSIP Service Bureau, a division of The McGraw-Hill Companies, Inc., and are provided for convenience of reference only. Neither the City nor the Underwriter assumes any responsibility for the accuracy of these CUSIP data.

GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT

Use of Official Statement. This Official Statement is submitted in connection with the sale of the Bonds referred to herein and may not be reproduced or used, in whole or in part, for any other purpose. This Official Statement is not a contract between any bond owner and the City or the Underwriter. This Official Statement and the information contained herein are subject to completion or amendment without notice.

No Offering Except by This Official Statement. No dealer, broker, salesperson or other person has been authorized by the City or the Underwriter to give any information or to make any representations relating to the Bonds other than those contained in this Official Statement and, if given or made, such other information or representation must not be relied upon as having been authorized by the City or the Underwriter.

No Unlawful Offers or Solicitations. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor may there be any sale of the Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale.

Estimates and Projections. When used in this Official Statement and in any continuing disclosure by the City, in any press release and in any oral statement made with the approval of an authorized officer of the City, the words or phrases “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project,” “forecast,” “expect,” “intend” and similar expressions identify “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward-looking statements. Any forecast is subject to such uncertainties. Inevitably, some assumptions used to develop the forecasts will not be realized and unanticipated events and circumstances may occur. Therefore, there are likely to be differences between forecasts and actual results, and those differences may be material.

Information in Official Statement. The information set forth in this Official Statement has been furnished by the City and other sources which are believed to be reliable, but it is not guaranteed as to accuracy or completeness by the City.

Involvement of Underwriter. The Underwriter (as defined in “UNDERWRITING”) has reviewed the information in this Official Statement in accordance with, and as a part of, its responsibilities to investors under the Federal Securities Laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information.

Document Summaries. All summaries of the Bond Resolution or other documents referred to in this Official Statement are made subject to the provisions of such documents and qualified in their entirety to reference to such documents, and do not purport to be complete statements of any or all of such provisions.

No Securities Laws Registration. The Bonds have not been registered under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, in reliance upon exceptions therein for the issuance and sale of municipal securities. The Bonds have not been registered or qualified under the securities laws of any state.

Effective Date. This Official Statement speaks only as of its date, and the information and expressions of opinion contained in this Official Statement are subject to change without notice. Neither the delivery of this Official Statement nor any sale of the Bonds will, under any circumstances, give rise to any implication that there has been no change in the affairs of the City, or the other parties described in this Official Statement, or the condition of the property within the City since the date of this Official Statement.

Website. The City maintains a website. However, the information presented on the website is not a part of this Official Statement and should not be relied upon in making an investment decision with respect to the Bonds.

CITY OF BERKELEY

ELECTED OFFICIALS

Tom Bates, Mayor Linda Maio, Councilmember District 1 Darryl Moore, Councilmember District 2 Max Anderson, Councilmember District 3 Jesse Arreguín, Councilmember District 4 Laurie Capitelli, Councilmember District 5 Susan Wengraf, Councilmember District 6 Kriss Worthington, Councilmember District 7 Lori Droste, Councilmember District 8

CITY OFFICIALS

Dee Williams-Ridley City Manager

Henry Oyekanmi Gil Dong Director of Finance Interim Deputy City Manager

Zach Cowan Ann-Marie Hogan City Attorney Auditor

PROFESSIONAL SERVICES

BOND AND DISCLOSURE COUNSEL

Jones Hall, A Professional Law Corporation San Francisco, California

MUNICIPAL ADVISOR

NHA Advisors, LLC San Rafael, California

BOND REGISTRAR, TRANSFER AGENT, AND PAYING AGENT

The Bank of New York Mellon Trust Company, N.A. Los Angeles, California TABLE OF CONTENTS

INTRODUCTION ...... 1 PLAN OF FINANCE ...... 3 Purpose of Issue ...... 3 Sources and Uses of Funds ...... 3 THE BONDS ...... 4 Authority for Issuance ...... 4 Description of the Bonds ...... 4 Payment ...... 5 Redemption ...... 5 Registration, Transfer and Exchange of Bonds ...... 6 Defeasance ...... 7 DEBT SERVICE SCHEDULE ...... 8 SECURITY FOR THE BONDS ...... 10 Ad Valorem Taxes ...... 10 Debt Service Fund ...... 10 Limited Obligation ...... 11 PROPERTY TAXATION ...... 11 Property Tax Collection Procedures ...... 11 Taxation of State-Assessed Utility Property ...... 12 Assessed Valuation ...... 12 Alternative Method of Tax Apportionment - Teeter Plan ...... 14 Appeals of Assessed Value ...... 15 Tax Rates ...... 16 Major Taxpayers ...... 17 Direct and Overlapping Debt ...... 17 CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING CITY REVENUES AND APPROPRIATIONS ...... 19 Article XIIIA of the State Constitution ...... 19 Legislation Implementing Article XIIIA ...... 19 Article XIIIB of the State Constitution ...... 20 Articles XIIIC and XIIID of the State Constitution ...... 20 Proposition 62 ...... 21 Proposition 1A ...... 22 Possible Future Initiatives ...... 22 LEGAL MATTERS ...... 23 Tax Exemption ...... 23 Continuing Disclosure ...... 24 Absence of Material Litigation ...... 25 RATING ...... 25 MUNICIPAL ADVISOR ...... 26 UNDERWRITING ...... 26

APPENDIX A - FINANCIAL, ECONOMIC AND DEMOGRAPHIC INFORMATION FOR THE CITY OF BERKELEY AND ALAMEDA COUNTY APPENDIX B - COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR YEAR ENDED JUNE 30, 2015 APPENDIX C - PROPOSED FORM OF OPINION OF BOND COUNSEL APPENDIX D - FORM OF CONTINUING DISCLOSURE CERTIFICATE APPENDIX E - DTC AND THE BOOK-ENTRY ONLY SYSTEM

i

______

OFFICIAL STATEMENT ______

$15,000,000* CITY OF BERKELEY 2016 General Obligation Bonds (Street and Integrated Watershed Improvements)

The purpose of this Official Statement, which includes the cover page, inside cover page and attached appendices, is to set forth certain information concerning the sale and delivery of the bonds captioned above (the “Bonds”) by the City of Berkeley (the “City”). All capitalized terms used in this Official Statement, unless noted otherwise, have the meanings set forth in the Bond Resolution (as defined below).

INTRODUCTION

This Introduction is not a summary of this Official Statement. It is only a brief description of and guide to, and is qualified by, more complete and detailed information contained in the entire Official Statement and the documents summarized or described herein. A full review should be made of the entire Official Statement. The offering of Bonds to potential investors is made only by means of the entire Official Statement.

The City. The City is located in Alameda County (the “County”) on the east side of the San Francisco Bay, approximately 10 miles northeast of San Francisco. The City encompasses a total area of approximately 19 square miles and had an estimated January 1, 2015 population of 118,780, giving it the highest population density of any city in the East Bay. The City is defined to a large degree, both culturally and economically, by the presence of the University of California campus located on the eastern side of the City. The University of California is a major component of the City's economy, employing approximately 14,629 full and part-time workers.

The City is among the oldest in California. The City was founded in 1864, incorporated as a town in 1878, and incorporated as a City in 1909. The City's charter was adopted in 1895.

See “APPENDIX A - FINANCIAL, ECONOMIC AND DEMOGRAPHIC INFORMATION FOR THE CITY OF BERKELEY AND ALAMEDA COUNTY” and “APPENDIX B - COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR YEAR ENDED JUNE 30, 2015,” for demographic and financial information regarding the City.

Authority for Issuance. The Bonds represent a sale of bonds approved by more than two-thirds of the qualified voters in the City voting at a municipal election on November 6, 2012 to approve the issuance of up to $30,000,000 of general obligation bonds. The City previously issued its City of Berkeley 2014 General Obligation Bonds (Street and Integrated Watershed

* Preliminary; subject to change.

-1-

Improvements) in the aggregate principal amount of $15,000,000 (the “2014 Bonds”). The Bonds are the second and final series of bonds issued under the 2012 authorization. See “THE BONDS - Authority for Issuance.”

The Bonds are being issued under Article 4.5 of Chapter 3 of Part 1 of Division 2 of Title 5 of the Government Code of the State of California, and pursuant to and consistent with the Charter of the City. The City authorized the issuance of the Bonds under a Resolution adopted by the City Council of the City (the “City Council”) on May 31, 2016 (the “Bond Resolution”).

Purpose for Issuance. The Bonds are being issued to finance improvements to City streets, together with integrated watershed improvements. See “PLAN OF FINANCE - Purpose of Issue.”

Security and Sources of Payment for the Bonds. The Bonds are general obligations of the City payable solely from ad valorem property taxes levied by the City and collected by the County. The City Council is empowered and is obligated to annually levy ad valorem taxes for the payment of interest on, and principal of, the Bonds upon all property subject to taxation by the City, without limitation of rate or amount (except with respect to certain personal property which is taxable at limited rates). See “SECURITY FOR THE BONDS.”

Payment and Registration of the Bonds. The Bonds will be dated their date of original issuance and delivery (the “Dated Date”) and will be issued as fully registered bonds, without coupons, in the denominations of $5,000 or any integral multiple of $5,000, registered in the name of Cede & Co. as nominee of The Depository Trust Company, New York, New York (“DTC”), and will be available under the book-entry system maintained by DTC, only through brokers and dealers who are or act through DTC Participants as described below. Beneficial Owners will not be entitled to receive physical delivery of the Bonds. See “THE BONDS” and “APPENDIX E - DTC AND THE BOOK-ENTRY ONLY SYSTEM.”

Interest on the Bonds accrues from the Dated Date and is payable semiannually on March 1 and September 1 of each year, commencing March 1, 2017. See “THE BONDS - Description of the Bonds.”

Early Redemption. The Bonds are subject to optional and mandatory redemption prior to their maturity as described in “THE BONDS - Redemption.”

Other Information. This Official Statement speaks only as of its date, and the information contained herein is subject to change. Copies of documents referred to in this Official Statement and information concerning the Bonds are available from the City of Berkeley City Clerk, 2180 Milvia Street, Berkeley, California 94704, (510) 981-7000. The City may impose a charge for copying, mailing and handling.

-2-

PLAN OF FINANCE

Purpose of Issue

The net proceeds of the Bonds will be used to finance improvements to City streets, together with integrated watershed improvements.

Sources and Uses of Funds

The estimated sources and uses of funds with respect to the Bonds will be applied as follows:

Sources of Funds Principal Amount of Bonds Plus: Net Original Issue Premium Less: Underwriter’s Discount Total Sources

Uses of Funds Deposit to Project Fund Deposit to Debt Service Fund Costs of Issuance(1) Total Uses

(1) Includes Municipal Advisor fees, Bond Counsel and Disclosure Counsel fees, printing costs, rating agency fees and other related costs.

-3-

THE BONDS

Authority for Issuance

The Bonds are issued under Article 4.5 of Chapter 3 of Part 1 of Division 2 of Title 5 of the Government Code of the State of California (the “Act”) and other applicable law, and pursuant to the City’s powers under and consistent with the Charter of the City. The City authorized the issuance of the Bonds pursuant to the Bond Resolution.

The City received authorization at an election held on November 6, 2012, by an affirmative vote of 73.29% of the eligible voters within the City (the “Authorization”) to issue $30,000,000 of general obligation bonds. The City previously issued the 2014 Bonds on January 21, 2014. The Bonds are the second and final series of Bonds to be sold and issued under the Authorization.

Description of the Bonds

Book-Entry Form. The Bonds will be issued in book-entry form only, and will be initially issued and registered in the name of Cede & Co. as nominee of The Depository Trust Company, New York, New York (“DTC”). Purchasers of the Bonds (the “Beneficial Owners”) will not receive physical certificates representing their interest in the Bonds. Payments of principal of and interest on the Bonds will be paid by the Paying Agent to DTC for subsequent disbursement to DTC Participants which will remit such payments to the Beneficial Owners of the Bonds.

As long as DTC’s book-entry method is used for the Bonds, the Paying Agent will send any notice of prepayment or other notices to owners only to DTC. Any failure of DTC to advise any DTC Participant, or of any DTC Participant to notify any Beneficial Owner, of any such notice and its content or effect will not affect the validity or sufficiency of the proceedings relating to the prepayment of the Bonds called for prepayment or of any other action premised on such notice.

The Paying Agent, the City, and the Underwriter of the Bonds have no responsibility or liability for any aspects of the records relating to or payments made on account of beneficial ownership, or for maintaining, supervising or reviewing any records relating to beneficial ownership, of interests in the Bonds.

See “APPENDIX E - DTC AND THE BOOK-ENTRY ONLY SYSTEM.”

Interest. Interest on the Bonds is payable semiannually on March 1 and September 1 of each year (the “Interest Payment Dates”), commencing March 1, 2017.

Interest on the Bonds is payable from the Interest Payment Date next preceding the date of authentication thereof unless:

1. a Bond is authenticated as of an Interest Payment Date, in which event it will bear interest from such date,

2. a Bond is authenticated prior to an Interest Payment Date and after the close of business on the 15th day of the month preceding the Interest Payment Date

-4-

(each, a “Record Date”), in which event it will bear interest from such Interest Payment Date,

3. a Bond is authenticated on or before February 15, 2017, in which event it shall bear interest from the Closing Date, or

4. at the time of authentication of a Bond, interest is in default thereon, in which event it will bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment thereon.

Interest on the Bonds will be calculated on the basis of a 360-day year comprised of twelve 30-day months.

Denominations and Maturity. The Bonds shall be issued in the denomination of $5,000 each or any integral multiple of $5,000. The Bonds mature on September 1 in the years and amounts set forth on the inside cover page hereof.

See the maturity schedule on the inside cover page hereof and “DEBT SERVICE SCHEDULE” below.

Payment

Interest on the Bonds (including the final interest payment upon maturity) is payable by check of the Paying Agent mailed to the owner thereof at such owner’s address as it appears on the Registration Books (as defined below) at the close of business on the 15th day of the month preceding the Interest Payment Date, except that at the written request of the Owner of at least $1,000,000 aggregate principal amount of the Bonds, which written request is on file with the Paying Agent as of any Record Date, interest on such Bonds shall be paid by wire transfer on the succeeding Interest Payment Date to an account in the United States of America as shall be specified in such written request.

Principal of and premium (if any) on the Bonds is payable in lawful money of the United States of America upon presentation and surrender at the principal office of the Paying Agent.

Redemption

Optional Redemption. The Bonds maturing on or before September 1, 2024, are not subject to redemption prior to their respective stated maturities. The Bonds maturing on or after September 1, 2025, are subject to redemption prior to maturity, at the option of the City, in whole or in part among maturities on such basis as designated by the City and by lot within a maturity, from any available source of funds, on September 1, 2024, and on any date thereafter, at a redemption price equal to 100% of the principal amount of Bonds to be redeemed together with accrued interest thereon to the date fixed for redemption, without premium.

Mandatory Sinking Fund Redemption. The Term Bonds maturing on September 1, 20__ and September 1, 20__ (the “Term Bonds”) are subject to redemption prior to their stated maturity date, without a redemption premium, in part by lot, from mandatory sinking fund payments on each September 1, on and after September 1, 20__, in the principal amounts as set forth in the following tables:

-5-

$______Term Bond Due September 1, 20__

Payment Date Payment (September 1) Amount

(Maturity)

$______Term Bond Due September 1, 20__

Payment Date Payment (September 1) Amount

(Maturity)

Redemption Procedure. The Paying Agent will cause notice of any redemption to be mailed, first class mail, postage prepaid, at least 30 days but not more than 60 days prior to the date fixed for redemption, (i) to the Securities Depositories and the Municipal Securities Rulemaking Board, and (ii) to the respective Owners of any Bonds designated for redemption, at their addresses appearing on the Registration Books (as defined below) maintained by the Paying Agent. Such mailing will not be a condition precedent to such redemption and failure to mail or to receive any such notice will not affect the validity of the proceedings for the redemption of such Bonds.

Such notice will state the redemption date and the redemption price and, if less than all of the then Outstanding Bonds are to be called for redemption, will designate the serial numbers of the Bonds to be redeemed by giving the individual number of each Bond or by stating that all Bonds between two stated numbers, both inclusive, or by stating that all of the Bonds of one or more maturities have been called for redemption, and will require that such Bonds be then surrendered at the principal office of the Paying Agent for redemption at the said redemption price, giving notice also that further interest on such Bonds will not accrue from and after the redemption date.

Partial Redemption. Upon surrender of Bonds redeemed in part only, the City will execute and the Paying Agent will authenticate and deliver to the owner, at the expense of the City, a new Bond or Bonds, of the same maturity, of authorized denominations in aggregate principal amount equal to the unredeemed portion of the Bond or Bonds.

Effect of Redemption. From and after the date fixed for redemption, if notice of such redemption has been duly given and funds available for the payment of the principal of and interest (and premium, if any) on the Bonds so called for redemption have been duly provided, such Bonds so called will cease to be entitled to any benefit under the Bond Resolution other than the right to receive payment of the redemption price, and no interest will accrue thereon on or after the redemption date specified in such notice.

Registration, Transfer and Exchange of Bonds

If the book-entry system as described above and in Appendix E is no longer used with respect to the Bonds, the following provisions will govern the registration, transfer, and exchange of the Bonds.

-6-

Registration Books. The Paying Agent will keep or cause to be kept sufficient books for the registration and transfer of the Bonds (the “Registration Books”), which will at all times be open to inspection by the City upon reasonable notice; and, upon presentation for such purpose, the Paying Agent shall, under such reasonable regulations as it may prescribe, register or transfer or cause to be registered or transferred, on said books, the Bonds.

Transfer. Any Bond may, in accordance with its terms, be transferred, upon the Registration Books, by the person in whose name it is registered, in person or by his duly authorized attorney, upon surrender of such Bond for cancellation at the principal office of the Paying Agent, accompanied by delivery of a written instrument of transfer in a form approved by the Paying Agent, duly executed.

Whenever any Bond or Bonds are surrendered for transfer, the City will execute and the Paying Agent will authenticate and deliver a new Bond or Bonds, for like aggregate principal amount.

Exchange. Bonds may be exchanged at the principal office of the Paying Agent for a like aggregate principal amount of Bonds of authorized denominations and of the same maturity. The City may charge a reasonable sum for each new Bond issued upon any exchange.

Defeasance

The City has the option to pay and discharge the entire indebtedness on all or any portion of the outstanding Bonds in any one or more of the following ways:

(a) by paying or causing to be paid the principal of and interest on such Bonds, as and when the same become due and payable;

(b) by irrevocably depositing, in trust, at or before maturity:

(i) lawful money of the United States of America in an amount equal to the principal amount of such Bonds and all unpaid interest thereon to maturity; or

(ii) Federal Securities (as defined below), the principal of and interest on, which when due, in the opinion of a certified public accountant delivered to the City, will provide money sufficient to pay the principal of and all unpaid interest to maturity on the Bonds to be paid, as such principal and interest become due.

(c) by delivering such Bonds to the Paying Agent for cancellation by it.

“Federal Securities” means United States Treasury notes, bonds, bills or certificates of indebtedness, or any other obligations, the timely payment of which is directly or indirectly guaranteed by the faith and credit of the United States of America.

-7-

DEBT SERVICE SCHEDULES

The following table shows the debt service schedule with respect to the Bonds (assuming no optional redemptions).

Year Ending Total September 1 Principal Interest Debt Service 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 Total

-8-

The following table shows the total debt service payable with respect to all outstanding general obligation bonds of the City, including the Bonds (assuming no optional redemptions).

Year Ending The 2014 2015 Refunding The 2016 Total September 1 2009 Bonds 2010 Bonds Bonds Bonds Bonds Debt Service 2016 $431,193.75 $660,403.13 $593,225.00 $3,362,206.25 - 2017 671,537.50 956,206.26 905,250.00 4,410,262.50 2018 674,875.00 956,006.26 905,750.00 3,956,587.50 2019 676,812.50 956,256.26 905,500.00 3,952,087.50 2020 683,937.50 955,506.26 904,500.00 3,951,337.50 2021 678,337.50 958,756.26 902,750.00 3,104,587.50 2022 677,087.50 954,956.26 905,250.00 3,106,587.50 2023 674,862.50 955,856.26 901,750.00 3,103,087.50 2024 671,662.50 955,093.76 902,500.00 3,099,087.50 2025 667,487.50 955,093.76 905,350.00 3,104,337.50 2026 673,537.50 959,293.76 902,225.00 3,108,087.50 2027 678,275.00 957,493.76 903,250.00 3,105,287.50 2028 676,825.00 954,893.76 905,450.00 2,140,087.50 2029 679,487.50 956,493.76 901,850.00 1,001,287.50 2030 683,312.50 957,093.76 902,650.00 399,887.50 2031 680,762.50 955,900.00 902,650.00 399,975.00 2032 682,112.50 958,675.00 901,850.00 399,737.50 2033 684,362.50 955,212.50 904,575.00 398,768.76 2034 685,362.50 955,718.76 906,268.76 397,043.76 2035 690,112.50 959,987.50 901,931.26 399,968.76 2036 693,362.50 956,837.50 905,243.76 397,368.76 2037 693,700.00 957,412.50 902,243.76 398,956.26 2038 692,462.50 956,500.00 903,150.00 - 2039 694,650.00 959,100.00 902,743.76 - 2040 - - 906,025.00 - 2041 - - 901,825.00 - 2042 - - 906,275.00 - 2043 - - 903,925.00 - 2044 - - - - 2045 - - - - 2046 - - - - Total $16,096,118.75 $22,664,747.03 $24,995,956.30 $47,696,625.05

-9-

SECURITY FOR THE BONDS

Ad Valorem Taxes

Bonds Payable from Ad Valorem Property Taxes. The Bonds are general obligations of the City, payable solely from ad valorem property taxes levied by the City and collected by the County. The City is empowered and is obligated to annually levy ad valorem taxes for the payment of the Bonds and the interest thereon upon all property within the City subject to taxation by the City, without limitation of rate or amount (except certain personal property which is taxable at limited rates).

Levy and Collection. The City will levy and the County will collect such ad valorem taxes in such amounts and at such times as is necessary to ensure the timely payment of debt service. Such taxes, when collected, will be deposited into a debt service fund for the Bonds, which is maintained by the City and which is irrevocably pledged for the payment of principal of and interest on the Bonds when due.

City property taxes are assessed and collected by the County in the same manner and at the same time, and in the same installments as other ad valorem taxes on real property, and will have the same priority, become delinquent at the same times and in the same proportionate amounts, and bear the same proportionate penalties and interest after delinquency, as do the other ad valorem taxes on real property. As described below, although the County has adopted the Teeter Plan, the City has elected not to participate in the Teeter Plan, meaning that the City receives all of the property taxes which are actually collected, and the City also receives any penalties and interest on delinquent taxes. See “PROPERTY TAXATION - Alternative Method of Tax Apportionment - Teeter Plan.”

Annual Tax Rates. The amount of the annual ad valorem tax levied by the City to repay the Bonds will be determined by the relationship between the assessed valuation of taxable property in the City and the amount of debt service due on the Bonds. Fluctuations in the annual debt service on the Bonds and the assessed value of taxable property in the City may cause the annual tax rate to fluctuate.

Economic and other factors beyond the City’s control, such as economic recession, deflation of land values, a relocation out of the City or financial difficulty or bankruptcy by one or more major property taxpayers, or the complete or partial destruction of taxable property caused by, among other eventualities, earthquake, flood or other natural disaster, could cause a reduction in the assessed value within the City and necessitate a corresponding increase in the annual tax rate.

Debt Service Fund

The City will establish the Debt Service Fund (the “Debt Service Fund”), which will be established as a separate fund to be maintained distinct from all other funds of the City. All taxes levied by the City pursuant to the Bond Resolution for the payment of the principal of and interest and premium (if any) on the Bonds will be deposited in the Debt Service Fund by the City promptly upon the receipt from the County. The Debt Service Fund is pledged for the payment of the principal of and interest and premium (if any) on the Bonds when and as the same become due. The City will transfer amounts in the Debt Service Fund, to the extent necessary to pay the principal of and interest on the Bonds as the same become due and

-10-

payable, to the Paying Agent, as required to pay the principal of and interest and premium (if any) on the Bonds.

If, after payment in full of the Bonds, any amounts remain on deposit in the Debt Service Fund, the City shall transfer such amounts to its General Fund, to be applied solely in a manner which is consistent with the requirements of applicable state and federal tax law.

Limited Obligation

The Bonds are payable solely from the proceeds of an ad valorem tax levied by the City, and collected by the County, for the payment of principal and interest on the Bonds. Although the County is obligated to collect the ad valorem tax for the payment of the Bonds, the Bonds are not a debt of the County.

PROPERTY TAXATION

Property Tax Collection Procedures

In California, property which is subject to ad valorem taxes is classified as “secured” or “unsecured.” The “secured roll” is that part of the assessment roll containing state assessed public utilities’ property and property, the taxes on which are a lien on real property sufficient, in the opinion of the county assessor, to secure payment of the taxes. A tax levied on unsecured property does not become a lien against such unsecured property, but may become a lien on certain other property owned by the taxpayer. Every tax which becomes a lien on secured property has priority over all other liens arising pursuant to State law on such secured property, regardless of the time of the creation of the other liens. Secured and unsecured property are entered separately on the assessment roll maintained by the county assessor. The method of collecting delinquent taxes is substantially different for the two classifications of property.

Property taxes on the secured roll are due in two installments, on November 1 and February 1 of each fiscal year. If unpaid, such taxes become delinquent after December 10 and April 10, respectively, and a 10% penalty attaches to any delinquent payment. In addition, property on the secured roll with respect to which taxes are delinquent is declared tax defaulted on or about June 30 of the fiscal year. Such property may thereafter be redeemed by payment of the delinquent taxes and a delinquency penalty, plus a redemption penalty of 1-1/2% per month to the time of redemption. If taxes are unpaid for a period of five years or more, the property is subject to sale by the County.

Property taxes are levied for each fiscal year on taxable real and personal property situated in the taxing jurisdiction as of the preceding January 1. A bill enacted in 1983, SB813 (Statutes of 1983, Chapter 498), however, provided for the supplemental assessment and taxation of property as of the occurrence of a change of ownership or completion of new construction. Thus, this legislation eliminated delays in the realization of increased property taxes from new assessments. As amended, SB813 provided increased revenue to taxing jurisdictions to the extent that supplemental assessments of new construction or changes of ownership occur subsequent to the January 1 lien date and result in increased assessed value.

Property taxes on the unsecured roll are due on the January 1 lien date and become delinquent, if unpaid on the following August 31. A 10% penalty is also attached to delinquent

-11-

taxes in respect of property on the unsecured roll, and further, an additional penalty of 1-1/2% per month accrues with respect to such taxes beginning the first day of the third month following the delinquency date. The taxing authority has four ways of collecting unsecured personal property taxes: (1) a civil action against the taxpayer; (2) filing a certificate in the office of the county clerk specifying certain facts in order to obtain a judgment lien on certain property of the taxpayer; (3) filing a certificate of delinquency for record in the county recorder’s office, in order to obtain a lien on certain property of the taxpayer; and (4) seizure and sale of personal property, improvements or possessory interests belonging or assessed to the assessee. The exclusive means of enforcing the payment of delinquent taxes in respect of property on the secured roll is the sale of the property securing the taxes for the amount of taxes which are delinquent.

Taxation of State-Assessed Utility Property

The State Constitution provides that most classes of property owned or used by regulated utilities be assessed by the State Board of Equalization (“SBE”) and taxed locally. Property valued by the SBE as an operating unit in a primary function of the utility taxpayer is known as “unitary property,” a concept designed to permit assessment of the utility as a going concern rather than assessment of each individual element of real and personal property owned by the utility taxpayer. State-assessed unitary and “operating nonunitary” property (which excludes nonunitary property of regulated railways) is allocated to the counties based on the situs of the various components of the unitary property. Except for unitary property of regulated railways and certain other excepted property, all unitary and operating nonunitary property is taxed at special county-wide rates and tax proceeds are distributed to taxing jurisdictions according to statutory formulae generally based on the distribution of taxes in the prior year.

Assessed Valuation

Assessed Valuation History. The following is a table summarizing the historical and current assessed valuation of the taxable property in the City.

Table 1 CITY OF BERKELEY Assessed Valuations of All Taxable Property Fiscal Years 2004-05 to 2015-16

Fiscal Year Local Secured Utility Unsecured Total Percent Change 2004-05 $8,687,909,495 $3,075,097 $571,603,260 $9,262,587,852 7.01% 2005-06 9,499,976,877 2,520,396 574,192,669 10,076,689,942 8.79 2006-07 10,377,045,760 2,335,203 592,977,821 10,972,358,784 8.89 2007-08 11,160,531,045 1,324,910 606,785,227 11,768,641,182 7.26 2008-09 11,918,409,630 473,910 671,983,004 12,590,866,544 6.99 2009-10 12,085,578,735 473,910 720,264,455 12,806,317,100 1.71 2010-11 12,147,575,627 555,664 677,887,524 12,826,018,815 0.15 2011-12 12,525,929,662 555,664 667,789,011 13,194,274,337 2.87 2012-13 12,834,926,300 555,664 673,174,230 13,508,656,194 2.38 2013-14 13,686,258,913 555,664 677,170,723 14,363,985,300 6.33 2014-15 14,116,003,890 630,615 658,143,878 14,774,778,383 2.86 2015-16 15,224,697,461 388,860 702,428,523 15,927,514,844 7.80

Source: Alameda County Auditor-Controller’s Office

-12-

Assessed Valuation by Land Use. The following table shows the land use of parcels in the City, according to assessed valuation. As shown, the majority of land in the City is used for residential purposes.

Table 2 CITY OF BERKELEY Assessed Valuation and Parcels by Land Use Fiscal Year 2015-16

2015-16 % of No. of % of Non-Residential: Assessed Valuation (1) Total Parcels Total Commercial/Office $1,863,638,153 12.15% 1,565 5.44% Vacant Commercial 22,691,889 0.15 60 0.21 Industrial 905,126,387 5.90 449 1.56 Vacant Industrial 9,181,320 0.06 33 0.11 Recreational 37,795,326 0.25 15 0.05 Government/Social/Institutional 17,177,081 0.11 648 2.25 Subtotal Non-Residential $2,855,610,156 18.61% 2,770 9.62%

Residential: Single Family Residence $ 8,152,926,067 53.14% 17,301 60.09% Condominium/Townhouse 761,303,588 4.96 2,671 9.28 Cooperative 23,158,338 0.15 113 0.39 2-4 Residential Units 1,591,796,276 10.38 4,007 13.92 5+ Residential Units/Apartments 1,887,486,901 12.30 1,415 4.91 Miscellaneous Residential 2,327,871 0.02 13 0.05 Vacant Residential 67,525,864 0.44 501 1.74 Subtotal Residential $12,486,524,905 81.39% 26,021 90.38% ______(1) Local Secured Assessed Valuation; excluding tax-exempt property. Source: California Municipal Statistics, Inc.

-13-

Assessed Valuation of Single Family Residential Parcels. The following table shows a breakdown of the assessed valuations of improved single-family residential parcels in the City, according to assessed valuation.

Table 3 CITY OF BERKELEY Per Parcel 2015-16 Assessed Valuation of Single Family Homes

No. of 2015-16 Average Median Parcels Assessed Valuation Assessed Valuation Assessed Valuation Single Family Residential 17,301 $8,152,926,067 $471,240 $381,460

2015-16 No. of % of Cumulative Total % of Cumulative Assessed Valuation Parcels (1) Total % of Total Valuation Total % of Total $0 - $49,999 836 4.832% 4.832% $ 33,897,517 0.416% 0.416% $50,000 - $99,999 1,844 10.658 15.490 139,613,395 1.712 2.128 $100,000 - $149,999 1,552 8.971 24.461 191,005,784 2.343 4.471 $150,000 - $199,999 1,056 6.104 30.565 184,427,953 2.262 6.733 $200,000 - $249,999 948 5.479 36.044 213,763,095 2.622 9.355 $250,000 - $299,999 975 5.636 41.680 268,114,490 3.289 12.644 $300,000 - $349,999 916 5.294 46.974 297,478,915 3.649 16.292 $350,000 - $399,999 833 4.815 51.789 311,822,686 3.825 20.117 $400,000 - $449,999 832 4.809 56.598 353,775,977 4.339 24.456 $450,000 - $499,999 775 4.480 61.077 367,327,688 4.505 28.962 $500,000 - $549,999 737 4.260 65.337 385,970,211 4.734 33.696 $550,000 - $599,999 732 4.231 69.568 420,181,714 5.154 38.850 $600,000 - $649,999 651 3.763 73.331 406,440,190 4.985 43.835 $650,000 - $699,999 594 3.433 76.764 400,530,772 4.913 48.748 $700,000 - $749,999 563 3.254 80.018 407,642,407 5.000 53.747 $750,000 - $799,999 494 2.855 82.874 381,798,140 4.683 58.430 $800,000 - $849,999 448 2.589 85.463 369,099,224 4.527 62.958 $850,000 - $899,999 397 2.295 87.758 346,143,077 4.246 67.203 $900,000 - $949,999 317 1.832 89.590 292,541,181 3.588 70.791 $950,000 - $999,999 252 1.457 91.047 245,263,001 3.008 73.800 $1,000,000 and greater 1,549 8.953 100.000 2,136,088,650 26.200 100.000 Total 17,301 100.000% $8,152,926,067 100.000% ______(1) Improved single family residential parcels. Excludes condominiums and parcels with multiple family units. Source: California Municipal Statistics, Inc.

Alternative Method of Tax Apportionment - Teeter Plan

The Board of Supervisors of the County has approved the implementation of the Alternative Method of Distribution of Tax Levies and Collections and of Tax Sale Proceeds (the “Teeter Plan”), as provided for in Section 4701 et seq. of the California Revenue and Taxation Code. Under the Teeter Plan, the County apportions secured property taxes on an accrual basis when due (irrespective of actual collections) to participating political subdivisions, for which the County acts as the tax-levying or tax-collecting agency. In return, the County receives and retains delinquent payments, penalties and interest as collected that would have been due the local agency in the absence of the Teeter Plan. The City has elected not to participate in the Teeter Plan, so the City receives property taxes actually collected, as well as any penalties and interest on delinquent taxes.

-14-

The property tax levies and collections for the City for 2002-03 through 2014-15 are shown in the following table:

Table 4 CITY OF BERKELEY SECURED TAX CHARGES AND DELINQUENCIES 2003-04 TO 2014-15 (Dollar amounts in thousands)

Amount Delinquent % Delinquent Fiscal Year Secured Tax Charge(1) June 30 June 30 2003-04 $25,985,291.16 $515,310.65 1.98% 2004-05 28,028,117.55 552,435.47 1.97 2005-06 30,573,949.35 684,004.33 2.24 2006-07 33,552,146.54 1,189,361.30 3.54 2007-08 36,038,297.51 1,680,289.97 4.66 2008-09 38,438,858.24 1,757,281.78 4.57 2009-10 38,834,067.28 1,222,174.35 3.15 2010-11 38,858,160.99 937,557.29 2.41 2011-12 40,085,111.77 814,536.14 2.03 2012-13 40,863,072.01 588,607.19 1.44 2013-14 43,482,172.03 491,490.18 1.13 2014-15 45,452,269.29 477,676.28 1.05

(1) 1% General Fund apportionment. Source: California Municipal Statistics, Inc.

Appeals of Assessed Value

There are two types of appeals of assessed values that could adversely impact property tax revenues within the City.

Appeals may be based on Proposition 8 of November 1978, which requires that for each January 1 lien date, the taxable value of real property must be the lesser of its base year value, annually adjusted by the inflation factor pursuant to Article XIIIA of the State Constitution, or its full cash value, taking into account reductions in value due to damage, destruction, depreciation, obsolescence, removal of property or other factors causing a decline in value.

Under California law, property owners may apply for a Proposition 8 reduction of their property tax assessment by filing a written application, in form prescribed by the State Board of Equalization, with the County board of equalization or assessment appeals board. In most cases, the appeal is filed because the applicant believes that present market conditions (such as residential home prices) cause the property to be worth less than its current assessed value. Proposition 8 reductions may also be unilaterally applied by the County Assessor.

Any reduction in the assessment ultimately granted as a result of such appeal applies to the year for which application is made and during which the written application was filed. These reductions are subject to yearly reappraisals and are adjusted back to their original values when market conditions improve. Once the property has regained its prior value, adjusted for inflation, it once again is subject to the annual inflationary factor growth rate allowed under Article XIIIA.

-15-

A second type of assessment appeal involves a challenge to the base year value of an assessed property. Appeals for reduction in the base year value of an assessment, if successful, reduce the assessment for the year in which the appeal is taken and prospectively thereafter. The base year is determined by the completion date of new construction or the date of change of ownership. Any base year appeal must be made within four years of the change of ownership or new construction date.

In recent years, Proposition 8 appeals resulted in changes to assessed valuation as follows:

Year Changes in Assessed Valuation 2008-09 $(75,979,469) 2009-10 (314,664,420) 2010-11 (95,766,898) 2011-12 34,276,814 2012-13 (164,188,930) 2013-14 166,912,985 2014-15 167,148,023

The City cannot predict the changes in assessed values that might result from pending or future appeals by taxpayers. Any reduction in aggregate City assessed valuation due to appeals, as with any reduction in assessed valuation due to other causes, will cause the tax rate levied to repay the Bonds to increase accordingly, so that the fixed debt service on the Bonds (and other outstanding general obligation bonds, if any) may be paid.

Tax Rates

The table below shows historical property tax rates within the City:

Table 5 CITY OF BERKELEY TYPICAL TAX RATE PER $100 ASSESSED VALUATION (TRA 13-000 – 2015-16 Assessed Valuation: $15,596,938,160)

Fiscal Fiscal Fiscal Fiscal Fiscal Year Year Year Year Year 2011-12 2012-13 2013-14 2014-15 2015-16 Countywide Rate 1.0000 1.0000 1.0000 1.0000 1.0000 Berkeley Unified School District Bonds .1478 .1406 .1544 .1353 .1321 Peralta Community College District .0436 .0434 .0419 .0412 .0337 Bay Area Rapid Transit .0041 .0043 .0075 .0045 .0026 East Bay Municipal Utility District .0071 .0068 .0066 .0085 .0067 East Bay Regional Park District .0067 .0051 .0078 .0047 .0034 City of Berkeley .0470 .0470 .0535 .0505 .0433 Total 1.2563 1.2472 1.2717 $1.2447 1.2218

Source: California Municipal Statistics, Inc.

-16-

Major Taxpayers

The following table shows the twenty largest taxpayers in the City as determined by their secured assessed valuations in 2015-16.

Table 6 CITY OF BERKELEY Largest 2015-16 Local Secured Taxpayers

2015-16 % of Property Owner Primary Land Use Assessed Valuation Total (1) 1. Bayer Healthcare LLC Industrial $ 286,048,950 1.86% 2. EQR Berkeley Apartments 142,492,279 0.93 3. CVBAF ACQ LLC Apartments 69,859,327 0.46 4. Granite Library Gardens LP Apartments 68,869,174 0.45 5. Hanumandla J. and Hanumandla R. Reddy, Trust Apartments 50,550,356 0.33 6. Essex Berkeley 4th Street LP Apartments 48,447,217 0.32 7. SC Hillside Berkeley Inc. Apartments 47,784,518 0.31 8. 1950 MLK LLC Apartments 37,660,627 0.25 9. Ed Roberts Campus Office Building 36,900,227 0.24 10. Fifth & Potter Street Associates LLC Industrial 36,732,625 0.24 11. John K. Gordon and Janis L. Mitchell, Trust Office Building 30,340,258 0.20 12. Archstone Southwest Berkeley LLC Apartments 29,389,420 0.19 13. 2600 Tenth Street LLC Office Building 28,591,926 0.19 14. BVP Fulton LLC Apartments 28,548,483 0.19 15. Prasad R. and Santi Lakireddy Office Building 28,344,615 0.18 16. Mach I GE Campanile LLC Apartments 28,186,430 0.18 17. Kaiser Foundation Health Plan Inc. Industrial 27,685,344 0.18 18. 920 Heinz LP Commercial 25,451,315 0.17 19. 7th Street Properties II Industrial 23,904,651 0.16 20. Pyramid Gilman Street Property LLC Industrial 22,517,129 0.15 $1,098,304,871 7.16% ______(1) 2015-16 Local Secured Assessed Valuation: $15,342,135,061. Source: California Municipal Statistics, Inc.

Direct and Overlapping Debt

Set forth below is a direct and overlapping debt report (the “Debt Report”) prepared by California Municipal Statistics, Inc. and effective May 1, 2016. The Debt Report is included for general information purposes only. The City has not reviewed the Debt Report for completeness or accuracy and makes no representation in connection therewith.

The Debt Report generally includes long-term obligations sold in the public credit markets by public agencies whose boundaries overlap the boundaries of the City in whole or in part. Such long-term obligations generally are not payable from revenues of the City (except as indicated) nor are they necessarily obligations secured by land within the City. In many cases, long-term obligations issued by a public agency are payable only from the general fund or other revenues of such public agency.

The contents of the Debt Report are as follows: (1) the first column indicates the public agencies which have outstanding debt as of the date of the Debt Report and whose territory overlaps the City; (2) the second column shows the percentage that the City’s assessed valuation represents of the total assessed valuation of each public agency identified in the first column; and the third column is an apportionment of the dollar amount of each public agency’s outstanding debt to property in the City, as determined by multiplying the total outstanding debt

-17-

of each agency by the percentage of the City’s assessed valuation represented in the second column.

Table 7 CITY OF BERKELEY STATEMENT OF DIRECT AND OVERLAPPING BONDED DEBT (As of May 1, 2016)

2015-16 Assessed Valuation: $16,045,093,244

DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable Debt 5/1/16 Bay Area Rapid Transit District 2.664% $ 14,041,012 East Bay Municipal Utility District, Special District No. 1 17.598 1,292,573 Peralta Community College District 18.858 69,006,137 Berkeley Unified School District 99.997 264,352,069 City of Berkeley 100.000 74,835,000 City of Berkeley Community Facilities District No. 1 100.000 3,940,000 East Bay Regional Park District 4.082 6,120,755 City of Berkeley Thousand Oaks Heights AFUU Assessment District 100.000 1,170,000 TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT $434,757,546

DIRECT AND OVERLAPPING GENERAL FUND DEBT: Alameda County and Coliseum Obligations 6.754% $ 57,575,283 Alameda County Pension Obligation Bonds 6.754 3,181,883 Alameda-Contra Costa Transit District Certificates of Participation 8.001 1,703,013 Peralta Community College District Pension Obligation Bonds 18.858 30,918,414 City of Berkeley Lease Revenue Bonds and Certificates of Participation 100.000 29,535,000 (1) City of Berkeley Pension Obligations 100.000 815,000 TOTAL DIRECT AND OVERLAPPING GENERAL FUND DEBT $123,728,593

COMBINED TOTAL DEBT $558,486,139 (2)

Ratios to 2015-16 Assessed Valuation: Direct Debt ($74,835,000)...... 0.47% Total Direct and Overlapping Tax and Assessment Debt ...... 2.71% Combined Direct Debt ($105,185,000) ...... 0.66% Combined Total Debt ...... 3.48%

(1) Excludes Bonds to be sold. (2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded capital lease obligations. Source: California Municipal Statistics, Inc.

-18-

CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING CITY REVENUES AND APPROPRIATIONS

Principal of and interest on the Bonds are payable from the proceeds of an ad valorem tax levied by the City for the payment thereof. See “THE BONDS” and “SECURITY FOR THE BONDS” above. Articles XIIIA, XIIIB, XIIIC and XIIID of the State Constitution, Propositions 62, 111, and 218 and 1A, and certain other provisions of law discussed below are included in this section to describe the potential effect of these Constitutional and statutory measures on the ability of the City to levy taxes and spend tax proceeds for operating and other purposes, and it should not be inferred from the inclusion of such materials that these laws impose any limitation on the ability of the City to levy taxes for payment of the Bonds. The tax levied by the City for payment of the Bonds was approved by the City’s voters in compliance with Article XIIIA and all applicable laws.

Article XIIIA of the State Constitution

On June 6, 1978, California voters approved Proposition 13, which added Article XIIIA to the State Constitution. Article XIIIA, as amended, limits the amount of any ad valorem tax on real property to one percent of the full cash value thereof, except that additional ad valorem taxes may be levied to pay debt service (i) on indebtedness approved by the voters prior to July 1, 1978, (ii) on bonded indebtedness approved by a two-thirds vote on or after July 1, 1978, for the acquisition or improvement of real property or (iii) bonded indebtedness incurred by a school district, community college district or county office of education for the construction, reconstruction, rehabilitation or replacement of school facilities, including the furnishing and equipping of school facilities or the acquisition or lease of real property for school facilities, approved by 55 percent of the voters voting on the proposition. Article XIIIA defines full cash value to mean “the county assessor’s valuation of real property as shown on the 1975-76 tax bill under “full cash value,” or thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred after the 1975 assessment.” This full cash value may be increased at a rate not to exceed two percent per year to account for inflation.

Article XIIIA has subsequently been amended to permit reduction of the “full cash value” base in the event of declining property values caused by damage, destruction or other factors, to provide that there would be no increase in the “full cash value” base in the event of reconstruction of property damaged or destroyed in a disaster, and in other minor or technical ways.

Legislation Implementing Article XIIIA

Legislation has been enacted and amended a number of times since 1978 to implement Article XIIIA. Under current law, local agencies are no longer permitted to levy directly any property tax (except to pay voter-approved indebtedness). The one percent property tax is automatically levied by the County and distributed according to a formula among taxing agencies. The formula apportions the tax roughly in proportion to the relative shares of taxes levied prior to 1989.

Increases of assessed valuation resulting from reappraisals of property due to new construction, change in ownership or from the two percent annual adjustment are allocated among the various jurisdictions in the “taxing area” based upon their respective “situs.” Any such allocation made to a local agency continues as part of its allocation in future years.

-19-

All taxable property is shown at full market value on the tax rolls. Consequently, the tax rate is expressed as $1 per $100 of taxable value. All taxable property value included in this Official Statement is shown at 100 percent of market value (unless noted differently) and all tax rates reflect the $1 per $100 of taxable value.

Article XIIIB of the State Constitution

In addition to the limits Article XIIIA imposes on property taxes that may be collected by local governments, certain other revenues of the State and most local governments are subject to an annual “appropriations limit” imposed by Article XIIIB which effectively limits the amount of such revenues those entities are permitted to spend. Article XIIIB, approved by the voters in June 1979, was modified substantially by Proposition 111 in 1990. The appropriations limit of each government entity applies to “proceeds of taxes,” which consist of tax revenues, State subventions and certain other funds, including proceeds from regulatory licenses, user charges or other fees to the extent that such proceeds exceed “the cost reasonably borne by such entity in providing the regulation, product or service.” “Proceeds of taxes” excludes tax refunds and some benefit payments such as unemployment insurance. No limit is imposed on the appropriation of funds which are not “proceeds of taxes,” such as reasonable user charges or fees, and certain other non-tax funds. Article XIIIB also does not limit appropriation of local revenues to pay debt service on Bonds existing or authorized by January 1, 1979, or subsequently authorized by the voters, appropriations required to comply with mandates of courts or the federal government, appropriations for qualified capital outlay projects, and appropriation by the State of revenues derived from any increase in gasoline taxes and motor vehicle weight fees above January 1, 1990, levels. The appropriations limit may also be exceeded in case of emergency; however, the appropriations limit for the next three years following such emergency appropriation must be reduced to the extent by which it was exceeded, unless the emergency arises from civil disturbance or natural disaster declared by the Governor, and the expenditure is approved by two-thirds of the legislative body of the local government.

The State and each local government entity has its own appropriations limit. Each year, the limit is adjusted to allow for changes, if any, in the cost of living, the population of the jurisdiction, and any transfer to or from another government entity of financial responsibility for providing services. Proposition 111 requires that each agency’s actual appropriations be tested against its limit every two years.

If the aggregate “proceeds of taxes” for the preceding two-year period exceeds the aggregate limit, the excess must be returned to the agency’s taxpayers through tax rate or fee reductions over the following two years.

The City has never exceeded its appropriations limit. Because the issuance of the Bonds has been approved by the voters, the tax levy which is required to pay debt service on the Bonds is not subject to the limitations of Article XIIIB.

Articles XIIIC and XIIID of the State Constitution

On November 5, 1996, the voters of the State approved Proposition 218, known as the “Right to Vote on Taxes Act.” Proposition 218 adds Articles XIIIC and XIIID to the California Constitution and contains a number of interrelated provisions affecting the ability of the City to levy and collect both existing and future taxes, assessments, fees and charges. The

-20-

interpretation and application of Proposition 218 will ultimately be determined by the courts with respect to a number of the matters discussed below, and it is not possible at this time to predict with certainty the outcome of such determination.

Article XIIIC requires that all new local taxes be submitted to the electorate before they become effective. Taxes for general governmental purposes of the City require a majority vote and taxes for specific purposes, even if deposited in the City’s General Fund, require a two- thirds vote. The voter approval requirements of Proposition 218 reduce the flexibility of the City to raise revenues for the General Fund, and no assurance can be given that the City will be able to impose, extend or increase such taxes in the future to meet increased expenditure needs.

Article XIIID also adds several provisions making it generally more difficult for local agencies to levy and maintain property-related fees, charges, and assessments for municipal services and programs. These provisions include, among other things, (i) a prohibition against assessments which exceed the reasonable cost of the proportional special benefit conferred on a parcel, (ii) a requirement that assessments must confer a “special benefit,” as defined in Article XIIID, over and above any general benefits conferred, (iii) a majority protest procedure for assessments which involves the mailing of notice and a ballot to the record owner of each affected parcel, a public hearing and the tabulation of ballots weighted according to the proportional financial obligation of the affected party, and (iv) a prohibition against fees and charges which are used for general governmental services, including police, fire or library services, where the service is available to the public at large in substantially the same manner as it is to property owners. If the City is unable to continue to collect these revenues, the services and programs funded with these revenues would have to be curtailed and/or the City’s General Fund might have to be used to support them. The City is unable to predict whether or not in the future it will be able to continue all existing services and programs funded by the fees, charges and assessments in light of Proposition 218 or, if these services and programs are continued, which amounts (if any) would be used from the City’s General Fund to continue to support these activities.

Article XIIIC also removes limitations on the initiative power in matters of reducing or repealing local taxes, assessments, fees or charges. No assurance can be given that the voters of the City will not, in the future, approve an initiative or initiatives which reduce or repeal local taxes, assessments, fees or charges currently comprising a substantial part of the City’s General Fund.

Proposition 62

Proposition 62 was adopted by the voters at the November 4, 1986, general election and (a) requires that any new or higher taxes for general governmental purposes imposed by local governmental entities such as the City be approved by a two-thirds vote of the governmental entity’s legislative body and by a majority vote of the voters of the governmental entity voting in an election on the tax, (b) requires that any special tax (defined as taxes levied for other than general governmental purposes) imposed by a local governmental entity be approved by a two- thirds vote of the voters of the governmental entity voting in an election on the tax, (c) restricts the use of revenues from a special tax to the purposes or for the service for which the special tax was imposed, (d) prohibits the imposition of ad valorem taxes on real property by local governmental entities except as permitted by Article XIIIA, (e) prohibits the imposition of transaction taxes and sales taxes on the sale of real property by local governmental entities, and (f) requires that any tax imposed by a local governmental entity on or after August 1, 1985,

-21-

be ratified by a majority vote of the voters voting in an election on the tax within two years of the adoption of the initiative or be terminated by November 15, 1988.

California appellate court cases have overturned the provisions of Proposition 62 pertaining to the imposition of taxes for general government purposes. However, the California Supreme Court upheld Proposition 62 in its decision on August 28, 1995, in Fresno County Transportation Authority v. Guardino. This decision reaffirmed the constitutionality of Proposition 62. Certain matters regarding Proposition 62 were not addressed in the Supreme Court’s decision, such as what remedies exist for taxpayers subject to a tax not in compliance with Proposition 62, and whether the decision applies to charter cities. The City has not experienced any substantive adverse financial impact as a result of the passage of this initiative.

Proposition 1A

Proposition 1A, proposed by the Legislature in connection with the State’s Fiscal Year 2004-05 Budget, approved by the voters in November 2004 and generally effective in Fiscal Year 2006-07, provides that the State may not reduce any local sales tax rate, limit existing local government authority to levy a sales tax rate or change the allocation of local sales tax revenues, subject to certain exceptions. Proposition 1A generally prohibits the State from shifting to schools or community colleges any share of property tax revenues allocated to local governments for any fiscal year, as set forth under the laws in effect as of November 3, 2004. Any change in the allocation of property tax revenues among local governments within a county must be approved by two-thirds of both houses of the Legislature. Proposition 1A provides, however, that beginning in fiscal year 2008-09, the State may shift to schools and community colleges up to 8% of local government property tax revenues, which amount must be repaid, with interest, within three years, if the Governor proclaims that the shift is needed due to a severe state financial hardship, the shift is approved by two-thirds of both houses and certain other conditions are met. The State may also approve voluntary exchanges of local sales tax and property tax revenues among local governments within a county. Proposition 1A also provides that if the State reduces the motor vehicle license fee rate currently in effect, 0.65 percent of vehicle value, the State must provide local governments with equal replacement revenues. Further, Proposition 1A requires the State, beginning July 1, 2005, to suspend State mandates affecting cities, counties and special districts, excepting mandates relating to employee rights, schools or community colleges, in any year that the State does not fully reimburse local governments for their costs to comply with such mandates.

Proposition 1A may result in increased and more stable City revenues. The magnitude of such increase and stability is unknown and would depend on future actions by the State. However, Proposition 1A could also result in decreased resources being available for State programs. This reduction, in turn, could affect actions taken by the State to resolve budget difficulties. Such actions could include increasing State taxes, decreasing spending on other State programs or other action, some of which could be adverse to the City.

Possible Future Initiatives

Articles XIIIA, XIIIB, XIIIC and XIIID and Propositions 62, 111, 218 and 1A were each adopted as measures that qualified for the ballot pursuant to the State’s initiative process. From time to time other initiative measures could be adopted, further affecting revenues of the City or the City’s ability to expend revenues. The nature and impact of these measures cannot be anticipated by the City.

-22-

See the section entitled “CITY FINANCES – State Budget and its Impact on the City” in Appendix A for information about the State’s fiscal year 2009-10 budget and a shift of local property revenues under Proposition 1A.

LEGAL MATTERS

Tax Exemption

Federal Tax Status. In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject, however to certain qualifications set forth below, under existing law, the interest on the Bonds is excluded from gross income for federal income tax purposes, such interest is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, provided, however, that, for the purpose of computing the alternative minimum tax imposed on corporations (as defined for federal income tax purposes), such interest is taken into account in determining certain income and earnings.

The opinions set forth in the preceding sentence are subject to the condition that the City comply with all requirements of the Internal Revenue Code of 1986 (the “Tax Code”) that must be satisfied subsequent to the issuance of the Bonds in order that such interest be, or continue to be, excluded from gross income for federal income tax purposes. The City has covenanted to comply with each such requirement. Failure to comply with certain of such requirements may cause the inclusion of such interest in gross income for federal income tax purposes to be retroactive to the date of issuance of the Bonds.

Tax Treatment of Original Issue Discount and Premium. If the initial offering price to the public (excluding bond houses and brokers) at which a Bond is sold is less than the amount payable at maturity thereof, then such difference constitutes “original issue discount” for purposes of federal income taxes and State of California personal income taxes. If the initial offering price to the public (excluding bond houses and brokers) at which each Bond is sold is greater than the amount payable at maturity thereof, then such difference constitutes “original issue premium” for purposes of federal income taxes and State of California personal income taxes. De minimis original issue discount and original issue premium is disregarded.

Under the Tax Code, original issue discount is treated as interest excluded from federal gross income and exempt from State of California personal income taxes to the extent properly allocable to each owner thereof subject to the limitations described in the first paragraph of this section. The original issue discount accrues over the term to maturity of the Bond on the basis of a constant interest rate compounded on each interest or principal payment date (with straight- line interpolations between compounding dates). The amount of original issue discount accruing during each period is added to the adjusted basis of such Bonds to determine taxable gain upon disposition (including sale, redemption, or payment on maturity) of such Bond. The Tax Code contains certain provisions relating to the accrual of original issue discount in the case of purchasers of the Bonds who purchase the Bonds after the initial offering of a substantial amount of such maturity. Owners of such Bonds should consult their own tax advisors with respect to the tax consequences of ownership of Bonds with original issue discount, including the treatment of purchasers who do not purchase in the original offering, the allowance of a deduction for any loss on a sale or other disposition, and the treatment of accrued original issue discount on such Bonds under federal individual and corporate alternative minimum taxes.

-23-

Under the Tax Code, original issue premium is amortized on an annual basis over the term of the Bond (said term being the shorter of the Bond's maturity date or its call date). The amount of original issue premium amortized each year reduces the adjusted basis of the owner of the Bond for purposes of determining taxable gain or loss upon disposition. The amount of original issue premium on a Bond is amortized each year over the term to maturity of the Bond on the basis of a constant interest rate compounded on each interest or principal payment date (with straight-line interpolations between compounding dates). Amortized Bond premium is not deductible for federal income tax purposes. Owners of premium Bonds, including purchasers who do not purchase in the original offering, should consult their own tax advisors with respect to State of California personal income tax and federal income tax consequences of owning such Bonds.

California Tax Status. In the further opinion of Bond Counsel, interest on the Bonds is exempt from California personal income taxes.

Other Tax Considerations. Owners of the Bonds should also be aware that the ownership or disposition of, or the accrual or receipt of interest on, the Bonds may have federal or state tax consequences other than as described above. Bond Counsel expresses no opinion regarding any federal or state tax consequences arising with respect to the Bonds other than as expressly described above.

Form of Opinion. A copy of the proposed form of opinion of Bond Counsel is attached hereto as APPENDIX C.

Continuing Disclosure

The City will covenant for the benefit of owners of the Bonds to provide certain financial information and operating data relating to the City by not later than April 1 after the end of each fiscal year of the City (currently June 30th), commencing with the report for the 2015-16 fiscal year (the “Annual Report”), and to provide notices of the occurrence of certain enumerated events. The specific nature of the information to be contained in the Annual Report or the notices of material events is summarized in “APPENDIX D - FORM OF CONTINUING DISCLOSURE CERTIFICATE,” attached to this Official Statement. These covenants have been made in order to assist the Underwriter (as defined below) in complying with Securities Exchange Commission Rule 15c2-12(b)(5) (the “Rule”).

The City and its related governmental entities have previously entered into numerous disclosure undertakings under the Rule in connection with the issuance of long-term obligations (See “APPENDIX B – The City’s Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2015.” Notes to Financial Statements, Note 6”). In order to meet its continuing disclosure obligations, the City retained NHA Advisors, LLC as dissemination agent (the “Dissemination Agent”). The City’s prior dissemination agent, the City and the City's affiliated governmental entities have not, on a handful of occasions during the past five years, fully complied, in all material respects, with the City's disclosure undertakings.

Specifically, from 2011 through 2013:

(i) Audited financial statements and Annual Reports with respect to several series of the City's bonds (or series of bonds of the City's affiliated governmental entities) were not filed on a timely basis or were not filed. In several instances, the City

-24-

(or its affiliated governmental entities) submitted audited financial statements and annual reports to the prior dissemination agent, but they were misfiled, not filed, or filed late to the applicable information repository.

(ii) Material event notices were not filed on a timely basis or were not filed in response to changes to the underlying bond ratings of certain of the City's obligations and changes to the credit ratings of bond insurance companies that insured its bonds.

(iii) Annual Reports with respect to several series of the City's bonds (or series of bonds of the City's affiliated governmental entities), failed to include all of the required financial and operating data.

(iv) The City failed to file on a timely basis notice that certain bonds had been defeased and redeemed.

In addition, in the first half of 2014, material event notices were not filed in connection with changes to the credit ratings of bond insurance companies that insured two series of the City’s bonds.

Supplemental Annual Reports, notices of the rating changes and filings to correct all known filing errors made by the prior dissemination agent, the City and the City's affiliated governmental entities in their attempts to fully comply with the City's continuing disclosure were filed in connection with a prior bond issuance and the City is currently in compliance with its continuing disclosure undertakings.

To ensure future compliance with its continuing disclosure undertakings, the City has developed procedures for including all required continuing disclosure information in the supplementary section of its audited financial statements. In addition, the City engaged NHA Advisors, LLC to review this information annually to ensure compliance with its continuing disclosure undertakings.

Neither the County nor any other entity other than the City shall have any obligation or incur any liability whatsoever with respect to the performance of the City’s duties regarding continuing disclosure.

Absence of Material Litigation

No litigation is pending or threatened concerning the validity of the Bonds, and a certificate to that effect will be furnished to the purchasers at the time of the original delivery of the Bonds. The City is not aware of any litigation pending or threatened questioning the political existence of the City or contesting the City’s ability to receive ad valorem taxes or to collect other revenues or contesting the City’s ability to issue and repay the Bonds.

RATING

Upon issuance of the Bonds, Standard & Poor’s Ratings Services, a division of the McGraw-Hill Companies, Inc. (“S&P”) will assign the Bonds a rating of “AA+.”

The City has furnished to S&P information and material which has not been included in this Official Statement. Generally, rating agencies base their ratings on information and material

-25-

so furnished and on investigations, studies and assumptions made by the rating agencies. The ratings reflect only the view of such organization and an explanation of the significance of such rating may be obtained from S&P.

There is no assurance that the rating will continue for any given period of time or that they will not be revised downward or withdrawn entirely by such rating agency, if, in the judgment of such rating agency, circumstances so warrant. Any such downward revision or withdrawal of such rating may have an adverse effect on the market price of the Bonds.

MUNICIPAL ADVISOR

The City has retained NHA Advisors, LLC, San Rafael, California, as its municipal advisor (the “Municipal Advisor”) in connection with the preparation of this Official Statement and with respect to the issuance of the Bonds. The Municipal Advisor is not obligated to undertake, and has not undertaken to make, an independent verification or assume responsibility for the accuracy, completeness, or fairness of the information contained in this Official Statement. NHA Advisors, LLC is an independent registered municipal advisory firm and is not engaged in the business of underwriting, trading or distributing municipal securities or other public securities. The Municipal Advisor’s compensation is contingent upon the delivery of the Bonds.

UNDERWRITING

Purchase of the Bonds. Under the terms of a competitive bid, ______(the “Underwriter”) has agreed to purchase the Bonds at a price of $______(which is equal to the aggregate principal amount of the Bonds ($______), plus a net original issue premium of $______, less an Underwriter’s discount of $______). The Underwriter will purchase all of the Bonds if any are purchased, the obligation to make such purchase being subject to certain terms and conditions set forth in the “Official Notice of Sale,” including the approval of certain legal matters by counsel and certain other conditions.

Offering of the Bonds. The Underwriter intends to offer the Bonds to the public at the offering prices set forth on the inside cover page of this Official Statement. The Underwriter may offer and sell to certain dealers and others at a price lower than the offering prices stated on the inside cover page hereof. The offering price may be changed from time to time by the Underwriter.

EXECUTION

The execution of this Official Statement and its delivery have been approved by the City Council.

CITY OF BERKELEY

By: City Manager

-26-

APPENDIX A

CERTAIN INFORMATION CONCERNING THE CITY OF BERKELEY

Introduction

The City of Berkeley, California (the “City”) is located in Alameda County (the “County”) on the east side of the San Francisco Bay, approximately 10 miles northeast of San Francisco. The City encompasses a total area of approximately 19 square miles and had an estimated January 1, 2015 population of 118,780, giving it the highest population density of any city in the East Bay. The City is defined to a large degree, both culturally and economically, by the presence of the University of California campus located on the eastern side of the City. The University of California is a major component of the City's economy, employing approximately 14,629 full and part-time workers.

The City is among the oldest in California. The City was founded in 1864, incorporated as a town in 1878, and incorporated as a City in 1909. The City's charter was adopted in 1895.

Population

Population figures for the City, the County and the State for the last five years are shown in the following table.

CITY OF BERKELEY Population Estimates As of January 1

City of County of State of Year Berkeley Alameda California 2011 113,925 1,517,756 37,427,946 2012 114,688 1,530,176 37,668,804 2013 115,716 1,548,681 37,966,471 2014 117,383 1,574,497 38,357,121 2015 118,780 1,594,569 38,714,725

Source: State Department of Finance estimates (as of January 1).

City Government

The City operates under a Council-Manager form of government. The City is governed by a nine-member City Council, eight of whom are elected by district, plus the Mayor, who is elected on a city-wide basis. The Mayor and the City Council members serve four-year terms. The Council appoints a City Manager who is responsible for daily administration of City affairs, preparation and submission of the annual budget under the direction of the Mayor and the City Council for the Mayor's submission to the City Council. The City Manager appoints a Director of Finance to supervise the City's financial affairs. The Director of Finance also serves as the City's Treasurer.

A-1

The City Attorney, City Clerk and Director of Finance are appointed by the City Manager, subject to City Council approval. The City Auditor is elected at the same time as the Mayor. The current members of the City Council are as shown:

Member District Term Expires Tom Bates Mayor 11/30/2016 Linda Maio 1 11/30/2018 Darryl Moore 2 11/30/2016 Maxwell Anderson 3 11/30/2016 Jesse Arreguin 4 11/30/2018 Laurie Capitelli 5 11/30/2016 Susan Wengraf 6 11/30/2016 Kriss Worthington 7 11/30/2018 Lori Droste 8 11/30/2018

CITY FINANCIAL INFORMATION

Accounting Policies and Financial Reporting

The accounts of the City are organized on the basis of funds and account groups, to account for different activities. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues, and expenditures or expenses, as appropriate. Government resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which the spending activities are controlled. The City’s general fund and other governmental fund types use the modified accrual basis of accounting. All of the City’s other funds, including proprietary fund types and fiduciary fund types use the accrual basis of accounting. The basis of accounting for all funds is more fully explained in the “Notes to the Financial Statements” contained in Appendix B.

The City Council employs, at the beginning of each fiscal year, an independent certified public accountant who, at such time or times as specified by the City Council, at least annually, and at such other times as he or she shall determine, examines the combined financial statements of the City in accordance with generally accepted auditing standards, including such tests of the accounting records and such other auditing procedures as such accountant considers necessary. As soon as practicable after the end of the fiscal year, a final audit and report is submitted by such accountant to the City Council and a copy of the financial statements as of the close of the fiscal year is published.

The City, all its funds and the funds of certain other component entities of the City are audited annually by a certified public accounting firm. The firm of Badawi and Associates, Certified Public Accounts, Oakland, California, is the City’s current auditor (the “Auditor”). The comprehensive annual financial report of the City for fiscal year 2014-15 is attached hereto as Appendix B. The City’s financial statements are public documents and are included within this Official Statement without the prior approval of the Auditor. Accordingly, the Auditor has not performed any post-audit of the financial condition of the City.

The Governmental Accounting Standards Board (“GASB”) published its Statement No. 34 “Basic Financial Statements – and Management’s Discussion and Analysis – for State and

A-2

Local Governments” on June 30, 1999. Statement No. 34 provides guidelines to auditors, state and local governments and special purpose governments such as school districts and public utilities, on new requirements for financial reporting for all governmental agencies in the United States. Generally, the basic financial statements and required supplementary information should include (i) Management’s Discussion and Analysis; (ii) government-wide financial statements prepared using the economic measurement focus and the accrual basis of accounting and fund financial statements prepared using both the current financial resources measurement focus and the modified accrual method of accounting (governmental funds) and funds using the economic measurement focus and the accrual basis of accounting (proprietary funds) and (iii) required supplementary information. The City’s financial statements are prepared in conformance with the requirements of Statement No. 34.

Comparative Financial Statements

The following tables provide a four-year history of the City’s Comparative Balance Sheet, General Fund revenues, expenditures, transfers, and ending fund balances.

A-3

CITY OF BERKELEY GENERAL FUND BALANCE SHEET (Fiscal Year Ending June 30) (Dollar amounts in thousands)

Actual Actual Actual Actual 2011-12 2012-13 2013-14 2014-15 ASSETS: Cash and investments in treasury* $80,422 $59,334 $67,259 $74,532 Receivables (net of allowance where applicable): Accounts 8,221 12,666 13,472 6,310 Interest 817 542 608 507 Taxes 5,404 6,184 6,355 5,329 Due from other funds 6,777 5,328 2,415 4,465 Due from Components Units 180 ------Notes receivable 3,439 3,648 3,648 3,648 Other 488 553 544 477 Total assets 105,746 88,255 94,301 96,267

LIABILITIES: Accounts payable 2,951 4,771 4,974 5,500 Accrued salaries and wages 2,368 2,456 2,941 3,531 Deposits held 603 902 943 883 Deferred revenue 6,392 11,068 -- 4,493 Other liabilities 5,363 3,146 3,805 3,578 Tax and revenue anticipation notes* 50,000 25,000 24,995 24,995 Total liabilities 67,677 47,342 37,658 42,980

FUND BALANCES Reserved for: Encumbrances/Assigned to 2,344 2,002 10,954 3,831 Notes receivable/Nonspendable 3,439 3,648 3,648 3,648

Unreserved/Unassigned, report in: General fund 32,287 35,261 39,214 45,810 Total fund balances 38,069 40,912 45,692 53,289

Total liabilities and fund balances $105,746 $88,255 $94,301 $96,269

Source: City of Berkeley, Comprehensive Annual Financial Reports for 2011-12 through 2014-15

A-4

CITY OF BERKELEY STATEMENT OF GENERAL FUND REVENUES, EXPENDITURES AND BALANCES (Fiscal Year Ending June 30) (Dollar amounts in thousands)

Adopted Actual Actual Actual Actual Budget 2011-12 2012-13 2013-14 2014-15 2015-16 REVENUES: Taxes $ 102,406 $109,027 $115,220 $120,869 $118,721 Licenses and Permits 682 545 578 494 530 Subvention and Grants/Intergovernmental 9,023 9,605 10,122 10,686 10,695 Service Fees 7,736 8,288 8,431 9,899 8,407 Fines and Forfeitures 9,496 8,342 8,048 5,943 7,584 Rents 116 120 108 537 133 Franchises 1,540 1,810 1,834 1,821 1,827 Interest 2,529 1,707 3,431 2,349 2,470 Other 15 522 524 439 949 TOTAL REVENUES 133,893 139,966 148,308 153,037 151,316

EXPENDITURES: General Government 27,234 27,038 26,345 27,953 36,644 Public Safety 81,385 80,898 83,295 84,925 86,135 Highways and Streets 2,119 1,383 1,087 1,193 1,411 Health and Human Services 6,364 6,475 6,602 6,761 7,460 Culture-Recreation 5,522 5,156 5,260 5,452 5,545 Community Development 6,487 6,231 6,631 6,647 6,405 Economic Development 1,889 1,884 1,990 1,949 2,039 Debt Service 185 103 106 85 200 TOTAL EXPENDITURES 131,185 129,259 131,315 134,967 145,839

Excess Revenues Over (Under) Expenditures 2,708 10,707 16,992 18,070 5,477

Transfers In(out)/Other (6,289) (7,164) (12,213) (10,472) (5,884)

Net Change in Fund Balance (3,581) 3,543 40,912 7,598 (407)

Fund Balance, July 1 41,650 38,069 4,779 45,692 53,289 Prior Period Adjustment -- (700) -- --

Fund Balance, June 30 $ 38,069 $40,912 $45,692 $53,289 $52,882

* Totals may not add due to rounding. Source: City of Berkeley Comprehensive Annual Financial Reports; City of Berkeley for 2015-16 Budgeted.

A-5

Budgetary Process and Administration

The City employs a two-year budget process. In year one of the biennial budget cycle, the City Council formally adopts authorized appropriations for the first fiscal year and approves “planned” appropriations for the second fiscal year. In year two, the City Council considers revisions and formally adopts authorized appropriations for the second fiscal year. Although the budget cycle covers a two-year period, the City Charter requires that the City Council adopt an annual appropriations ordinance for each budget year.

From about January to May of each year, the City Council meets in public to discuss policies and priorities for the upcoming budget. The City Manager prepares a proposed budget based on input from department heads, and presents this to the City Council by the first Monday in May of a budget year or as fixed by the City Council. The City also maintains additional budgetary controls to ensure compliance with the annual appropriated budget. The City Manager is authorized to transfer budgeted amounts within funds as deemed necessary to meet the City’s needs. However, revisions that alter the total budget or move amounts from one fund to another must be approved by the City Council.

See “SECURITY FOR AND SOURCES OF PAYMENT OF THE NOTES – The City’s Approach to Budgeting and Current Budget Status” in the body of this Official Statement.

Revenues and expenditures relating to the City’s general governmental operations are budgeted and accounted for in the City’s general fund, including public safety, highways and streets, health and welfare, culture and recreation, community development, housing and economic development. General taxes and fees support most of these activities. The “business” or proprietary activities of the City are accounted for in each of eight enterprise funds, which include those established for Refuse Collection, Marina Operations, Sanitary Sewers, Clean Storm Water, Permit Service Center, Off-Street Parking, Parking Meter, and Building Purchases & Management. These activities are intended to be completely or largely self-supporting through user fees and charges.

The balance of this Appendix is concerned with the operations and performance of the City’s General Fund, unless otherwise noted.

State Budget and its Impact on the City

General. In recent years, the State of California has faced significant financial and budgetary stress, from which it began to recover in fiscal year 2012-13, experiencing budget shortfalls in the billions of dollars each of the last several years. State revenues declined significantly as a result of recent economic conditions and other factors.

Dissolution of Redevelopment Agencies. State legislation enacted as part of the 2011 Budget Act, and upheld by the California Supreme Court (as amended, the “Dissolution Act”), resulted in the formal dissolution of redevelopment agencies, including the Berkeley Redevelopment Agency (the “Redevelopment Agency”), effective as of February 1, 2012. The impact on the City’s General Fund of the dissolution of the Redevelopment Agency is minimal because the City is in the process of winding down its redevelopment program, and the funding the City received from the Redevelopment Agency prior to its dissolution only supported 1.5 full- time employees.

A-6

Constitutional Amendment: Rainy Day Fund. The 2014-15 State Budget included a proposed constitutional amendment which was approved by State voters in November 2014. The measure alters the State’s existing requirements for the Budget Stabilization Account, the State’s existing rainy day account, as follows:

 Requires deposits into the Rainy Day Fund whenever capital gains revenues rise to more than 8 percent of General Fund tax revenues, and sets the maximum size of the Rainy Day Fund at 10 percent of the General Fund revenues.

 Requires half of each year’s deposit for the next 15 years be used for supplemental payments of debt or other long-term liabilities.

 Allows for withdrawal of funds only for a disaster or if spending remains at or below the highest level of spending from the past three years. The maximum amount that may be withdrawn in the first year of a recession is limited to half of the Rainy Day Fund’s balance.

 Requires that the state provide a multiyear budget forecast to better manage the state’s long-term finances.

 Creates a Proposition 98 reserve, known as the Public School System Stabilization Account, so that spikes in funding are saved for future years. This is intended to smooth school spending and minimize future cuts to education funding. Additional legislation requires that in future years, school districts may not adopt budgets containing reserves in excess of twice the applicable minimum reserve amount.

Emergency Drought Response. On January 17, 2014, Governor Brown proclaimed a state of emergency due to the severe drought conditions faced by the state. Legislation was enacted in February which provided $687.4 million to support drought relief. The 2014-15 Budget includes additional one-time resources to continue immediate drought-related efforts started in 2014, such as an increase of $53.8 million General Fund and $12.2 million other funds for firefighting efforts, and an increase of $18.1 million General Fund to aid in assessing water conditions and provide public outreach regarding water conservation.

2015-16 Adopted State Budget. On June 24, 2015, Governor Brown signed the 2015- 16 State Budget (the “2015-16 State Budget”). The 2015-16 State Budget is balanced, implements the first year of Proposition 2 to maintain a $3.5 billion rainy day fund, and pays down $1 billion in deferrals to schools and community colleges. Funding for schools will be at an all time high of $68.4 billion in 2015-16, with the Proposition 98 maintenance factor reduced to $772 million. Funding is also increased for the University of California and California State University higher education systems, which will allow tuition for California undergraduate students to remain flat through 2016-17. The 2015-16 State Budget includes an additional $1.8 billion of one-time resources to continue the State’s response to drought impacts. The 2015-16 State Budget also provides $125 million to address deferred maintenance issues.

The execution of the 2015-16 State Budget may be affected by numerous factors, including but not limited to: (i) shifts of costs from the federal government to the State, (ii) national, State and international economic conditions, (iii) litigation risk associated with spending reductions, including the elimination of redevelopment agencies, (iv) rising health care costs (v)

A-7

large unfunded liabilities for retired State employee’s pensions and healthcare, (vi) deferred maintenance of State’s critical infrastructure and (vii) other factors, all or any of which could cause the revenue and spending projections made in 2015-16 State Budget to be unattainable. The City cannot predict the impact that the 2015-16 State Budget, or subsequent budgets, will have on its own finances and operations. Additionally, the City cannot predict the accuracy of any projections made in the State’s 2015-16 State Budget.

The complete 2015-16 State Budget is available from the California Department of Finance website at www.dof.ca.gov. The City can take no responsibility for the continued accuracy of this internet address or for the accuracy, completeness or timeliness of information posted there, and such information is not incorporated in this Official Statement by such reference. The information referred to above should not be relied upon in making an investment decision with respect to the Refunding Bonds.

2016-17 Proposed State Budget. On January 7, 2016, Governor Brown presented his proposed budget for the 2016-17 fiscal year (the “2016-17 Proposed State Budget”) to the State Senate and Assembly. The 2016-17 Proposed State Budget proposes a multiyear plan that is balanced and that, among other items, provides for the following:

 contributions to both state budget reserves: the Special Fund for Economic Uncertainties, the state’s discretionary reserve, and the Budget Stabilization Account, the state’s constitutional rainy day fund, raising such reserves to $2.2 billion and $8 billion, respectively;

 an increase in funding for K-12 schools of $2.8 billion by raising the funding level under the LCFF to $14,184 per pupil in fiscal year 2015-16 (representing an increase of 5.4% over the LCFF funding level for fiscal year 2014-15);

 an increase of more than $1.2 billion in one-time discretionary general funds for school districts, charter schools and county offices of education to use at local discretion;

 a $1.6 billion early education block grant by combining three existing programs to promote local flexibility, focusing on disadvantaged students and improved accountability;

 $807 million for statewide deferred maintenance at levees, state parks, universities, community colleges, prisons, state hospitals, and other state facilities;

 a $3.1 billion cap-and-trade expenditure plan to reduce greenhouse gas emissions; and

 $710 million to pay for the costs of wildfires and for other effects of the drought.

In May 2016, Governor Brown is expected to issue the May Revision to the 2016-17 Proposed State Budget to reflect updated revenue and expenditure estimates.

A-8

LAO Budget Overview. On January 11, 2016, the Legislative Analyst’s Office (the “LAO”), a nonpartisan State office that provides fiscal and policy information and advice to the State Legislature, released its report on the 2016-17 Proposed State Budget entitled, “The 2016-17 Budget: Overview of the Governor’s Budget” (the “2016-17 Proposed Budget Overview”). In the 2016-17 Proposed Budget Overview, among other items, the LAO commends the State for its emphasis on increasing budget reserves. The LAO believes that this general approach is prudent and is the key to weathering the next recession with minimal disruption to public programs. Though the LAO anticipates the State’s economic growth will continue in the near term, the LAO warns that the Proposition 98 minimum guarantee could decrease in fiscal year 2017-18 or future years if stock market prices were to drop or growth in the economy and personal income were to decline. The LAO notes that such a scenario serves as a caution against the State committing all available Proposition 98 funding for ongoing purposes.

Other General Fund Revenues

In addition to property taxes, the City has several other major tax and fee revenue sources, as described below. The following table summarizes the City’s actual general fund revenues from fiscal year 2011-12 through fiscal year 2014-15 (actuals) and fiscal year 2015-16 (budgeted) revenues.

CITY OF BERKELEY GENERAL FUND REVENUES

Adopted

Actual Actual Actual Actual Budget Revenue Revenue Revenue Revenue Revenue FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 Real Property $38,820,291 $40,210,337 $42,181,381 $44,187,339 $46,351,907 Property Transfer Tax 8,422,912 11,663,871 14,017,607 15,178,243 10,500,000 Unsecured Property 2,447,266 2,298,522 2,496,321 2,602,010 2,797,777 Sales Tax 14,910,245 15,708,700 16,500,324 16,708,652 18,116,161 Business License 15,645,924 15,386,878 15,370,377 16,102,327 16,762,680 Hotel Tax 4,918,033 5,562,168 6,169,161 7,038,640 6,561,872 Utility Users Tax 14,231,620 14,350,002 14,321,714 14,302,057 14,447,392 Vehicle In-Lieu 8,477,452 8,738,075 9,277,702 9,616,322 10,167,383 Parking Fines 9,483,199 8,484,032 6,850,399 6,932,288 7,322,500 Moving Violations 228,447 248,798 670,363 673,244 234,600 Interest 4,761,231 3,320,372 2,465,334 2,650,102 2,470,000 Service Fees 7,702,479 8,170,473 8,463,613 9,556,323 7,991,504 SUB-TOTAL $130,049,099 $134,142,228 138,784,296 $145,547,547 $143,723,776 Other Revenues 17,776,142 16,023,652 16,431,847 18,450,547 15,731,199 TOTAL $147,825,241 $150,165,880 $155,216,143 $163,997,992 $159,454,975

Source: City of Berkeley FY 2016-17 Adopted Biennial Budget; City of Berkeley Budget Office.

2016 Mid-Year Budget Update. The Fiscal Year 2016 Mid-Year Budget Update (the “2016 Mid-Year Budget Update”) estimates that declines in sales tax and parking fines will be offset by projected increases in transient occupancy tax, the new sugar-sweetened beverage tax and property transfer tax. The 2016 Mid-Year Budget Update projects general fund revenues will be increased from the adopted budget of $159.5 million to a projected year-end balance of $162.8 million.

A-9

Sales and Use Tax. The sales tax is an excise tax imposed on retailers for the privilege of selling or leasing tangible personal property. The use tax is an excise tax imposed for the storage, use, or other consumption of tangible personal property purchased from any retailer. The total sales tax rate within the City is currently 9.50%. The proceeds of sales and uses taxes imposed within the City are distributed by the State to various agencies, with the City receiving 1.0% of the amount collected less 0.25% shifted to the State pursuant to a mechanism commonly known as “Triple Flip.” The 0.25% reduction in local sales tax is used to pay State economic recovery bonds, but cities and counties are then provided with ad valorem property tax revenues in lieu of these revenues. See “RISK FACTORS – Impact of State Sales and Use Tax Redirection.”

Collection of the sales and use tax is administered by the California State Board of Equalization. Under its procedures, the State Board of Equalization projects receipts of the sales and use tax on a quarterly basis and remits an advance of the receipts of the sales and use tax to the City on a monthly basis. The amount of each monthly advance is based upon the State Board of Equalization’s quarterly projection. During the last month of each quarter, the State Board of Equalization adjusts the amount remitted to reflect the actual receipts of the sales and use tax for the previous quarter. The Board of Equalization receives an administrative fee based on the cost of services provided by the Board to the City in administering the City’s sales tax, which is deducted from revenue generated by the sales and use tax before it is distributed to the City.

A summary of historic taxable sales within the City during the past five calendar years is shown in the following table.

CITY OF BERKELEY TAXABLE TRANSACTIONS (Figures in Thousands)

2009 2010 2011 2012 2013 Retail and Food Services: Apparel Stores $54,648 $54,930 $58,189 $58,945 $58,294 Gen. Merchandise Stores 9,020 9,119 9,796 10,984 11,876 Food Stores 82,004 89,959 99,355 102,640 113,764 Eating and Drinking Places 226,592 233,765 247,864 274,112 286,626 Home Furnishings and Appliances 61,908 64,135 60,559 63,544 68,097 Bldg. Materials, Farm Implements 80,987 80,430 79,168 83,947 90,090 Auto Dealers, Auto Supplies 105,991 112,777 111,874 129,075 124,818 Gas/Service Stations 69,433 81,167 96,585 104,802 99,403 Other Retail Stores 258,281 243,838 252,917 241,548 240,873 Total Retail and Food Services $948,865 $970,121 $1,016,307 $1,069,598 $1,093,841 All Other Outlets 281,337 299,939 306,720 353,778 365,931 TOTAL ALL OUTLETS $1,230,203 $1,270,060 $1,323,027 $1,423,376 $1,459,772

Source: State Board of Equalization

Total taxable sales during the first three quarters of calendar year 2014 in the City were reported to be $1,136 billion, a 6.2% increase over the total taxable sales of $1.069 billion reported during the first three quarters of calendar year 2013. Annual figures are not yet available for 2014.

Factors that have historically affected sales tax revenues include the overall economic growth of the Bay Area, competition from neighboring cities, the growth of specific industries within the City, the City’s business attraction and retention efforts, and catalog and Internet

A-10

sales. In fiscal year 2014-15, revenues from sales and use taxes increased by 1.26% from fiscal year 2013-14. The 2016 Mid-Year Budget Update estimates that sales tax revenues will be $1 million below the adopted budget of $18.1 million.

Utility Users Tax. The City imposes a 7.5% tax on users of gas, electricity, telephone and water, as well as cellular telephone services for billing addresses within the City. The tax is not applicable to State, County, or City agencies, or to insurance companies and banks. Some of the factors affecting this revenue stream include consumer demand for these utilities, legislative and regulatory action, rate changes, and the evolution of technology. Telecommunications and cable generated approximately 40% of this revenue in fiscal year 2014-15, with revenue from gas and electricity usage generating approximately 60%. Electricity and gas rates are expected to be higher, but reductions in usage should partially offset the effect of the rate increases. In fiscal year 2014-15, revenues from utility users taxes decreased by 0.14% from fiscal year 2013-14.

Business License Tax. The City requires all businesses within the City to be licensed and imposes a business license tax on all business locations and a new license registration fee on applicants for a new license. The annual tax is generally determined based on the type of business and the business’s gross receipts. The tax rate varies between $0.60 per $1,000 gross receipts for grocers, on the low end, and $25.00 per $1,000 gross receipts for cannabis clubs on the high end. Most types of businesses are required to pay a minimum tax of at least $51 per year. The overall revenue from this tax is dependent on the number of license renewals each year and the growth of businesses and industries within the City and the Bay Area more generally. In fiscal year 2014-15, revenues from the business license tax increased by 4.76% from fiscal year 2013-14.

Property Transfer Tax. The City collects a 1.5% tax on the value of any documented sale or transfer of real property within the City. The tax is due when the transfer is recorded with the County. Title companies collect the tax as part of the sale closing process and remit the funds to the County when sales or transfers are finalized. The County remits the amounts due monthly, and the amounts are credited to the general fund. A buyer of residential housing built before 1989 may voluntarily choose to reserve up to one-third of the transfer tax to perform seismic upgrades. Buyers typically have up to one year to complete the work and file for a rebate. Previously the title companies held the reserved amount in escrow until the work was completed, but since May 2007, the City has held the money in escrow accounts, with the interest going to the City. In fiscal year 2014-15, revenues from property transfer taxes increased by 8.28% from fiscal year 2013-14. The 2016 Mid-Year Budget Update projects an increase in transfer tax of $3.8 million in excess of the adopted budget.

Parking Fines. The City issues and adjudicates citations and civil penalties for parking violations through its own administrative structure. It has a great degree of control over the administration of parking fines, although issuing agencies within the County try to standardize parking penalties to the extent possible. Revenue from parking fines is affected by the penalties imposed for violations, the number of employees issuing tickets, how many tickets employees are able to issue, and the number of working parking meters, among other factors. Currently, the City must remit an additional $12.50 per citation to the State/County for State and County construction funds, Maddy emergency medical fund, and DNA identification fund. In fiscal year 2014-15, revenues from parking fines increased by 1.20% from fiscal year 2013-14.

Vehicle In Lieu Fees. Vehicle license fees (“VLF”) imposed for the operation of vehicles on state highways are collected by the State Department of Motor Vehicles in lieu of personal

A-11

property taxes on vehicles. In connection with the offset of the VLF, the State Legislature authorized appropriations from the State General Fund to “backfill” the offset so that local governments, which receive all of the vehicle license fee revenues, would not experience any loss of revenues. The legislation that established the VLF offset program also provided that if there were insufficient State General Fund moneys to fully “backfill” the VLF offset, the percentage offset would be reduced proportionately (i.e., the license fee payable by drivers would be increased) to assure that local governments would not be underfunded.

As part of the 2004 Budget Act negotiations, an agreement was made between the State and local government officials under which the VLF rate was permanently reduced from 2% to 0.65%. In order to protect local governments, the reduction in VLF revenue to cities and counties from this rate change was replaced by an increase in the amount of property tax they receive. Commencing in fiscal year 2004-05, local governments began to receive their full share of replacement property taxes, and those replacement property taxes now enjoy constitutional protection against certain transfers by the State because of the approval of Proposition 1A at the November 2004 election.

As a part of its fiscal year 2009-10 budget, California increased the vehicle license fee from 0.65% to 1.15% for registration fees due on or after the May 19, 2009 special election. This provision expired on July 1, 2011. On July 1, 2011, vehicle license fees returned to 0.65%, and the City is unaware of any current State legislative efforts likely to increase these in fees in the future.

In fiscal year 2014-15, the VLF revenues increased by 3.65% from fiscal year 2013-14.

Sugar Tax. In 2015, the voters approved a one-cent per ounce excise tax on sugar- sweetened beverages. The sugar tax was not included in the fiscal year 2016 adopted budget. The 2016 Mid-Year Budget Update projects sugar tax revenues of $1.2 million.

Other Revenues. The City also collects additional general fund revenues from franchise fees, transient occupancy taxes, ambulance fees, and other more minor sources. Under the City’s cable and electric and gas franchise fee arrangements, the local cable provider pays an annual franchise fee of 5% of gross revenues, and the electricity and gas providers pay the greater of 2% of gross receipts attributable to miles of line operated or 0.5% of gross receipts. The transient occupancy tax, also known as the hotel tax, is a 12% tax on the room charge for rental of transient lodging; it is paid by the hotel guest. The City also has an agreement with the County to be the exclusive provider of all emergency ground ambulance services within the City; the specific ambulance fee depends on the type of service delivered and is billed to clients or their insurance companies. Finally, other more minor revenue sources include payments for moving violations, interest on existing funds, and other service fees. The 2016 Mid-Year Budget Update projects an increase in transient occupancy taxes of $438,128 in excess of the adopted budget.

Retirement Programs

PERS Plan Description. The City contributes to three plans in California Public Employees’ Retirement System (“PERS”). The first plan covers all of the City’s full-time and part-time benefited sworn uniformed fire employees and all chiefs (and is referred to as the Safety Fire Plan in this Official Statement). The second covers all of the City’s full-time and part- time benefited sworn uniformed police employees and all chiefs (and is referred to as the Safety Police Plan in this Official Statement). The third plan covers all remaining eligible City

A-12

employees (and is referred to as the Miscellaneous Plan in this Official Statement). These plans are agent multiple-employer defined benefit pension plans administered by PERS, which acts as a common investment and administrative agent for participating public employers within the State of California.

PERS Plan Eligibility. For a more detailed discussion of the eligibility requirements for the City’s PERS retirement plans, see Appendix B, Note III(D).

PERS Plan Contributions and Funding Status. The City is required to contribute the actuarially determined remaining amounts necessary to fund the benefits for its members. The actuarial methods and assumptions used are those adopted by the PERS Board of Administration. The required employer contribution rate for fiscal year 2014-15 was 21.9%, 33.2%, and 46.6% for Miscellaneous Plan, Safety Fire Plan and Safety Police Plan employees annual covered payroll, respectively; the rates for fiscal year 2015-16 are 24.0%, 36.6%, and 48.6%, respectively; for fiscal year 2016-17, the rates are 25.9%, 38.8% and 52.1%, respectively. The contribution requirements of the plan members are established by State statute, and the employer contribution rates are established and may be amended by PERS.

For a more detailed discussion of the eligibility requirements for the City’s retirement plans, see Appendix B, Note III(D) for detailed information about the actuarial assumptions underlying the contributions.

The City’s fiscal year 2014-15 contributions to the pension plans and the funded status of the pension plans are set forth below.

Plan Plan Net Fiduciary Net Pension Position as a Liability as a Percentage Percentage of the Total Covered of Covered Fiscal Year Total Pension Plan Fiduciary Contributions Net Pension Pension Employee Employee Ended Liability Net Position Employer Liability Liability Payroll Payroll CalPERS – Miscellaneous Plan 6/30/2015 $863,980,146 $655,032,952 $17,742,374 $208,947,194 75.82% $87,614,737 238.48%

CalPERS – Public Safety Fire Plan 6/30/2015 $241,186,083 $185,810,226 $4,754,912 $55,375,857 77.04% $14,907,370 371.47%

CalPERS – Public Safety Police Plan 6/30/2015 $357,374,497 $233,396,527 $10,060,801 $123,977,970 65.31% $22,471,207 551.72%

Recent Actions by PERS. On March 14, 2012, the PERS Board voted to reduce its discount rate, which rate is attributable to its expected price inflation and investment rate of return (net of administrative expenses), from 7.75% to 7.5%. As a result of such discount rate decrease, among other things, (i) the amounts of PERS member state and schools employer contributions will increase by 1.2 to 1.6% for Miscellaneous plans and 2.2 to 2.4% for Safety plans beginning fiscal year 2012-13 and (ii) the amounts of PERS member public agency contributions will increase by 1 to 2% for Miscellaneous plans and 2 to 3% for Safety plans beginning fiscal year 2013-14. More information about the PERS discount rate adjustment can be accessed through PERS's web site at www.calpers.ca.gov/index.jsp?bc=/about/press/pr- 2012/mar/discount-rate.xml. The reference to this internet website is shown for reference and convenience only, the information contained within the website may not be current and has not been reviewed by the City and is not incorporated herein by reference.

A-13

The PERS Board adjustment has been undertaken in order to address underfunding of the PERS funds, which arose from significant losses incurred as a result of the economic crisis arising in 2008 and persists due to a slower than anticipated, subsequent economic recovery. The City is unable to predict what the amount of PERS liabilities will be in the future, or the amount of the PERS contributions which the City may be required to make.

At its April 17, 2013 meeting, the PERS Board of Administration approved a recommendation to change the PERS amortization and smoothing policies. Prior to this change, PERS employed an amortization and smoothing policy which spread investment returns over a 15-year period with experience gains and losses paid for over a rolling 30-year period. After this change, PERS will employ an amortization and smoothing policy that will pay for all gains and losses over a fixed 30-year period with the increases or decreases in the rate spread directly over a 5-year period.

The new amortization and smoothing policy will be used for the first time in the June 30, 2013 actuarial valuations. These valuations will be performed in the fall of 2014 and will set employer contribution rates for the fiscal year 2015-16. The City cannot predict how this change in amortization and smoothing policies will affect its contribution levels.

According to PERS, the current amortization and smoothing policy was designed to reduce volatility in employer contribution rates, and, although the policy accomplished this goal fairly well since its adoption, a number of concerns have developed:

 The use of an actuarial value of assets corridor can lead to significant single year increases to rates in years when there are large investment losses.  The use of long asset smoothing periods and long rolling amortization periods result in slow progress toward full funding.  The use of an actuarial value of assets requires the disclosure of two different funded statuses and unfunded liability numbers in actuarial valuation reports. This adds confusion and inhibits transparency.  The use of rolling amortization and long asset smoothing periods makes it difficult for employers to predict when contribution rates will peak and how high that peak will be.  The use of rolling amortization and asset smoothing periods may result in additional calculations for the new accounting standards. These calculations would be avoided with a quicker funded status recovery.

According to PERS, the adoption of the new smoothing and amortization policies will change future employer contribution rates, as follows:

 Funding levels will improve, which will reduce the funding level risk.  Local agencies’ plans will experience more rate volatility in normal years, but a much reduced chance of very large rate increases in years when there are large investment losses.  Contribution rates in the near term will increase.  Long-term contribution rates will be lower.  There will be greater transparency about the timing and impact of future employer contribution rate changes.

A-14

 The new policy eliminates the need for an actuarial value of assets. As a result, there will be only one funded status and unfunded liability in actuarial reports.  There will be less confusion when the new accounting standards are implemented since there will be no need for extra liability calculations.

Dollar Contribution Based on Projected PERS Rate Increases. The City’s projected annual financial contributions as a result of the PERS rate changes for the next five years are shown in the table below:

2015-16 2016-17 2017-18 2018-19 2019-20 Projected Projected Projected Projected Projected Miscellaneous $28,600,000 $29,900,000 $31,200,000 $32,500,000 $33,800,000 Police 10,800,000 11,300,000 11,800,000 12,200,000 12,700,000 Fire 5,600,000 5,900,000 6,300,000 6,700,000 7,000,000 Total 45,000,000 $47,100,000 $49,300,000 $51,400,000 53,500,000

Pension Reform Act of 2013 (Assembly Bill 340). On September 12, 2012, Governor Brown signed AB 340, a bill that will enact the California Public Employees’ Pension Reform Act of 2013 (“PEPRA”) and that will also amend various sections of the California Education and Government Codes, including the County Employees Retirement Law of 1937. AB 340 (i) increases the retirement age for new State, school, and city and local agency employees depending on job function, (ii) caps the annual PERS pension benefit payout, (iii) addresses numerous abuses of the system, and (iv) requires State, school, and certain city and local agency employees to pay at least half of the costs of their PERS pension benefits. PEPRA will apply to all public employers except the University of California, charter cities and charter counties (except to the extent they contract with PERS).

The provisions of AB 340 went into effect on January 1, 2013 with respect to State employees hired on that date and after; local government employee associations, including employee associations of the City, will have a five-year window to negotiate compliance with AB 340 through collective bargaining. If no deal is reached by January 1, 2018, a city, public agency or school district could force employees to pay their half of the costs of PERS pension benefits, up to 8 percent of pay for civil workers and 11 percent or 12 percent for public safety workers.

PERS predicts that the impact of AB 340 on employers, including the City, and employees will vary, based on each employer’s current level of benefits. To the extent that the new formulas lower retirement benefits, employer contribution rates could decrease over time as current employees retire and employees subject to the new formulas make up a larger percentage of the workforce. This change would, in some circumstances, result in a lower retirement benefit for employees than they currently earn. Additionally, PERS notes that changes arising from AB 340 could ultimately have an adverse impact on public sector recruitment in areas that have historically experienced recruitment challenges due to higher pay for similar jobs in the private sector.

More information about AB 340 can be accessed through PERS’s website at www.calpers.ca.gov/index.jsp?bc=/member/retirement/pension-reform-impacts.xml&pst=ACT& pca=ST. The reference to this internet website is shown for reference and convenience only; the information contained within the website may not be current and has not been reviewed by the City and is not incorporated in this Official Statement by reference.

A-15

Berkeley Police Retirement Income Benefit Plan. Up to December 22, 2012, the City maintained the Berkeley Police Retirement Income Benefit Plan (“BPRIBP”), a single-employer defined benefit income plan, for its police retirees and surviving spouses. Effective September 19, 2012, police retired on or after this date are no longer covered by BPRIBP. The City replaced this plan with the “Retiree Health Premium Assistance Coverage Plan.”

The City’s fiscal year 2014-15 contribution to the BPRIBP and the funded status of the BPRIBP is set forth below.

Plan Plan Net Fiduciary Net Pension Position as a Liability as a Percentage Percentage of the Total Covered of Covered Fiscal Year Total Pension Plan Fiduciary Contributions Net Pension Pension Employee Employee Ended Liability Net Position Employer Liability Liability Payroll Payroll Berkeley Police Retirement Income Benefit Plan 6/30/2015 $61,611,058 $6,499,461 $1,467,997 $55,111,597 10.55% $20,002,000 7.34%

For a more detailed discussion of the BPRIP, see Appendix B, Note IV(2).

Peace Officers Research Association of California. Effective December 23, 2012, the City established a new sick leave program called Peace Officers Research Association of California (“PORAC”). If a sworn member of the Berkeley Police department has an accrued sick leave balance on December 23, 2012 that exceeds 200 hours, one half of all those hours in excess of 200 shall be maintained in a separate account. The financial value of those hours shall be converted and deposited into the employee’s PORAC medical trust account over five successive years in equal installments commencing on January 1, 2013. The conversion was at the employee’s rate of pay on December 23, 2012. The City may accelerate the payment of hours to be converted. The remaining fifty percent of the sick leave balance in excess of 200 hours was credited into the employee’s separate “catastrophic/service time” bank no later than February 1, 2013, up to a maximum of 500 hours.

The City’s contribution to PORAC for fiscal year ending June 30, 2015 was $829,405.

Safety Members Pension Fund. In addition, the City maintains the Safety Members Pension Fund (“SMPF”), a defined benefit plan for fire and police officers who retired prior to March 1973. In March 1973, all active fire and police officers were transferred from SMPF to PERS. The City pays the benefits to SMPF members on a pay-as-you-go basis, primarily through a Funding Agreement, purchased by the Berkeley Civic Improvement Corporation on behalf of the City in 1989. For the fiscal year ended June 30, 2015, the City’s contribution to SMPF was $568,620.

A-16

The funded status of the SMPF as of June 30, 2014, the most recent actuarial date, is set forth below:

Unfunded UAAL Actuarial Actuarial as Actuarial Actuarial Accrued Accrued Percentage Valuation Asset Liability-Entry Liability- Funded Covered of covered Date Value Age UAAL Ratio Payroll Payroll Berkeley Safety Members Pension Fund 6/30/2014 $1,254,005 $4,828,175 $3,574,170 25.97% N/A N/A

For a more detailed discussion of the SMPF, see Appendix B, Note IV(3).

Post-Employment Health Benefits

The City offers certain post-employment health benefits to retirees. There are three plans: (i) the City of Berkeley Fire Employees Retiree Health Plan (“FRHF”), (ii) the City of Berkeley Miscellaneous Employees Retiree Health Plan (“RHPAP”) and (iii) the Police Retiree Premium Assistance Plan (“PRPAP”).

The City has adopted Government Accounting Standards Board Statement 45 which requires governmental agencies to change their accounting for Other Post-Employment Benefits (“OPEB”) from pay-as-you-go to an accrual basis.

See Appendix B, Note IV for information about the City’s OPEB liabilities.

City of Berkeley Fire Employees Retiree Health Plan. The FRFH is a single-employer defined benefit medical plan. To be eligible for benefits, sworn Fire employees must retire from the City on or after July 1, 1997, be vested in a PERS pension, and retire from the City on or after age 50. Benefits commence immediately upon retirement. Benefits are payable for the retiree’s lifetime and continue for his or her covered spouse’s/domestic partner’s lifetime. The amount the City contributes toward the Fire Employees Retiree Health Plan is 4.5% per year regardless of the amount of increase in the underlying premium rate. The establishment and amendments of benefit provisions are negotiated between the employee bargaining units and the City Labor Negotiating Team, and are approved by the City Manager and City Council. As of July 1, 2015, there were 122 active employees, 21 retirees deferred and 60 retirees receiving benefits.

The City’s targeted funding policy is equal to the service cost for active employees plus an amount to amortize unfunded liabilities over 30 years (rolling 30-year amortization) as a level percentage of payroll. The City strives to contribute the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45.

A-17

For the FRFH, the City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB asset for fiscal year 2014-15 and the two preceding years were as follows:

Percentage of Fiscal Year Annual OPEB Net OPEB Ended Annual OPEB Cost Contributed Asset 6/30/2013 $729,963 95% $38,397 6/30/2014 829,699 96 4,947 6/30/2015 864,975 100 2,383

The funded status of the FRFH as of July 1, 2014, the date of the most recent actuarial report, is set forth below:

Actuarial Unfunded UAAL Accrued Actuarial as Actuarial Actuarial Liability Accrued Percentage Valuation Value of (AAL)-Unit Liability- Funded Covered of covered Date Assets Credit UAAL Ratio Payroll Payroll Berkeley Fire Employees Retiree Health Plan (FRHF) 7/1/2014 $7,977,731 $13,870,802 $5,893,071 57.5% $13,460,000 43.8%

The actuarial value of the assets in the FRFH as of July 1, 2014 was equal to their market value.

City of Berkeley Miscellaneous Employees Retiree Health Premium Assistance Plan. The RHPAP is a single-employer defined benefit medical plan. It provides retiree health benefits to eligible retirees and his/her spouse or domestic partner. The establishment and amendments of benefit provisions are negotiated between the employee bargaining units and the City, and are approved by the City Council.

Retirees who are at least age 50, with at least 8 years service with the City at the time of separation from service are eligible to receive retiree health benefits commencing at age 55. Benefits are payable for the retiree’s lifetime and continue for his or her covered spouse’s/domestic partner’s lifetime. The City pays the monthly cost of the monthly premiums up to a participant’s applicable percentage of the base dollar amount and subject to annual 4.5% increases regardless of the amount of increase in the underlying premium rate. As of July 1, 2015, there were 1,017 active employees, 245* terminated participants and 213 retirees.

The City’s targeted funding policy is equal to the normal cost for active employees plus an amount to amortize unfunded liabilities over 30 years as a level percentage of payrolls. The City is required to contribute the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45. Any changes to the contribution requirements of the plan are negotiated by the bargaining units and City negotiating staff, and approved by the City Council.

* Excluded 86 terminated participants who are age 70 or older at valuation date.

A-18

For the RHPAP, the City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for fiscal year 2014-15 and the two preceding years were as follows:

Percentage of Fiscal Year Annual Annual OPEB Net OPEB Ended OPEB Cost Contributed Obligation 6/30/2013 $3,122,564 62.9% $3,375,598 6/30/2014 3,574,421 51.0 5,126,082 6/30/2015 3,785,359 41.0 7,367,230

The funded status of the RHPAP as of July 1, 2014, the most recent actuarial report, is set forth below:

Unfunded UAAL Actuarial Actuarial as Actuarial Accrued Actuarial Accrued Percentage Valuation Liability Value of Liability- Funded Covered of covered Date (AAL) Assets UAAL Ratio Payroll Payroll Berkeley Miscellaneous Employees Retiree Health Plan (RHPAP) 7/1/2014 $44,160,386 $16,572,443 $27,587,943 37.5% $87,604,000 31.5%

The actuarial value of the assets in the RHPAP as of July 1, 2014 was equal to their market value.

Police Retiree Premium Assistance Plan. Effective September 19, 2012, the City replaced the “Berkeley Police Retirement Income Benefit Plan” with the “Retiree Health Premium Assistance Coverage Plan” for any police employees hired on or after that date, as well as any current employees who retire on or after such date. Under the newly established retiree health premium assistance plan, benefits will be the paid by the City directly to the provider who is providing retiree health coverage to the retiree or his or her surviving spouse. The maximum amount will be equal in value to the City sponsored health plan.

In order to be eligible for the Retiree Health Premium Assistance Coverage a “Retiree” must meet all of the following criteria:

(a) A person who is vested in CalPERS, and (b) Has reached the age of 50, and (c) Has retired from the City at age 50 or thereafter, and (d) Has applied for and is receiving a pension from CalPERS at the time of retirement.

The maximum amount the City will contribute toward the payment of medical insurance premiums is based on the employee’s years of service as a sworn member of the Berkeley Police Department at time of retirement. The retiree must have at least 10 years of service as a sworn member of the Berkeley Police Department to qualify for this benefit.

Years of Service City Percentage 10 to 14 25% Either the single party or two party amount 15 to 19 50 Either the single party or two party amount 20 or more 100 Either the single party or two party amount

A-19

Beginning September 19, 2012, each month after the employee retires the City will pay the health care service provider an appropriate percentage based on years of service above an amount equal to $1,200 per month for two-party coverage for the retiree and a qualifying spouse/domestic partner or $600 per month for single party coverage. Upon death of either the retiree or the retiree’s spouse, the City will only pay the appropriate percentage of the single party rate to the provider on behalf of the surviving retiree or spouse/domestic partner. If there is no spouse/domestic partner at the time of retirement, the City shall only pay the single party rate. The retiree and/or surviving spouse/domestic partner will be responsible for payment of the difference between the amount the City contributes toward payment of the premium and the actual premium cost. The funds for this difference will come from the retirees CalPERS retirement account and the retiree must authorize such withdrawal of funds.

Beginning July 1, 2013 and effective each July 1 thereafter, the base rates the City contributes toward payment of the premium amount described in the preceding paragraph shall be increased by either the amount Kaiser increases the retiree medical premium for that year, or 6%, whichever is less. The retiree and/or surviving spouse/domestic partner shall pay the difference between the amount the City contributes toward payment of the premium and the actual premium cost. As of July 1, 2015, there were 166 active employees and 5 retirees.

The following shows the calculation of the Annual Required Contribution for FY 2014-15:

Amount Normal Cost at Year End $3,623,511 Amortization of UAAL 2,506,491 Annual Required Contribution (ARC) $6,130,002

The actuarial cost method used for determining the benefit obligations is the Projected Unit Credit Cost Method. Under this method, the actuarial present value of projected benefits is the value of benefits expected to be paid for current actives and retirees and is calculated based on the assumptions and census data described this report. The Actuarial Accrued Liability (AAL) is the actuarial present value of benefits attributed to employee service rendered prior to the valuation date. The AAL equals the present value of benefits multiplied by a fraction equal to service to data over service at expected retirement. The Normal Cost is the actuarial present value of benefits attributed to one year of service. This equals the present value of benefits divided by service at expected retirement. Since retirees are not accruing any more service, their normal cost is zero. In determining the Annual Required Contribution, the Unfunded AAL is amortized as a level percentage of payroll over 30 years.

As of July 1, 2014, the most recent actuarial valuation date, the plan was 1.32% funded. The actuarial accrued liability for benefit was $34.2 million, and the actuarial value of assets was $600,000, resulting in an unfunded accrued liability of $44.7 million. The fair value of the assets was determined using market values as of the date of the actuarial report. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. Funded stats of the plan as of July 1, 2014, the most recent actuarial valuation date is as follows:

A-20

Actuarial Unfunded UAAL Accrued Actuarial as Actuarial Actuarial Liability Accrued Percentage Valuation Value of (AAL)-Unit Liability- Funded Covered of covered Date Assets Credit UAAL Ratio Payroll Payroll Berkeley Police Employees Retiree Premium Assistance Plan 7/1/2014 $599,675 $45,288,424 $44,688,748 0.0% $20,002,000 223.42%

Defined Contribution Plans

The City offers certain supplemental retirement and income plans to retirees. See Appendix B, Note IV(B) for information about the City’s defined contribution plans.

Labor Relations

As of May 1, 2016, the City employed approximately 1,326 full-time equivalent budgeted employees. There are six employee unions as shown below. In addition, the City employs approximately 101 unrepresented Executive Management, Confidential professional or Confidential Office support positions. The City has not experienced any work stoppages or strikes by its employees.

CITY OF BERKELEY Labor Relations

Contract Expiration Labor Organization Employees Date

Berkeley Fire Fighters Association/I.A.F.F. Local 119 June 17, 2017 1227 Berkeley Police Association 166 June 30, 2017 I. B. E. W. Local 1245 15 June 17, 2017 Service Employees International Local 1021 456 June 16, 2018 Maintenance and Clerical Chapters Service Employees International Local 1021 303 June 20, 2015 Community Services and Part-Time Recreation Leaders Association Chapters Public Employees Local 1 166 June 20, 2015 Unrepresented Employees 101 None

Source: City of Berkeley

Risk Management

The City is exposed to various risks of loss related to torts; theft of, damage to, or restriction of assets; errors or omissions; injuries to employees; or acts of God.

The City is self-insured for liability claims below $350,000. The City is a member of the Bay Cities Joint Powers Insurance Authority (“BCJPIA”). The BCJPIA consists of 20 municipal or public agency members, all located within the metropolitan San Francisco Bay Area. The BCJPIA provides general liability, auto liability, and errors and omissions coverage between $350,000 and $1,000,000. The California Affiliated Risk Management Authority (“CARMA”) provides additional coverage to the BCJPIA and its member entities for claims in excess of $1,000,000, up to $29,000,000.

A-21

The City is self-insured for workers’ compensation. Payments are made to the Workers’ Compensation Self-Insurance Internal Service Fund by transfers from the City’s general fund and other funds of the City on a pay-as-you-go basis.

The City requires pre-employment physical examinations for high risk, high hazard employees as well as annual examination for all uniformed officers. As part of its workers’ compensation program, copies of all injured employee medical reports are monitored by a third party agent to insure that injured employees receive proper care.

City Debt Structure

Short-Term Debt. The City has issued Tax and Revenue Anticipation Notes (“TRANs”) in each recent year. The City’s TRANs are a general obligation of the City, payable from the City’s general fund and any other lawfully available moneys. For fiscal year 2015-16, the City issued TRANs in the amount of $24,995,000. The fiscal year 2015-16 TRANs mature on July 21, 2016. For fiscal year 2016-17, the City expects to issue TRANs in the amount of approximately $17,000,000, to mature in July 2017.

General Obligation Bonds. The City issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. General obligation bonds are payable solely from ad valorem taxes levied by the City and collected by the County.

Debt service for the City’s outstanding general obligation bonds, following issuance of the Bonds, is shown under “DEBT SERVICE SCHEDULES – Combined General Obligation Bonds Debt Service Schedule.”

Outstanding General Fund Obligations. The City currently has outstanding long-term general fund debt and lease obligations described below. The City has never defaulted on the payment of principal of or interest on any of its indebtedness.

Certificates of Participation. In June 2010, the Authority issued certificates of participation on behalf of the City in the aggregate principal amount of $5,750,000. The City’s underlying rental obligation is a general obligation payable from any available funds of the City. The certificates bear interest at rates between 3.50%-5.75% and the final maturity date is August 1, 2040. As of May 1, 2016, the principal balance outstanding was $5,345,000.

Lease Revenue Bonds. In October 2012, the Authority issued lease revenue bonds on behalf of the City in the aggregate principal amount of $27,260,000 to refund the Authority’s 1999 Lease Revenue Bonds and 2003 Certificates of Participation. The City’s underlying rental obligation is a general fund obligation of the City. The bonds bear interest at rates between 3.00%-5.00% and the final maturity date is October 1, 2031. As of May 1, 2016, the principal balance outstanding was $24,190,000.

Pension Obligation Bonds. In May 1998, the City issued pension obligation refunding bonds in the aggregate principal amount of $12,415,000 to refund the City’s certificates of participation issued in February 1989. The certificates were sold to satisfy a portion of the City’s obligations under an ordinance adopted to provide payments to the Safety Members Pension Fund. The bonds bear an interest rate of 5.00% and the final maturity date is June 1, 2018. As of May 1, 2016, the principal balance outstanding was $815,000. The obligation to repay the bonds is a general fund obligation of the City.

A-22

Employment

The unemployment rate in the Oakland-Fremont-Hayward MD was 4.4% in January 2016, unchanged from a revised 4.4% in December 2015, and below the year-ago estimate of 5.5%. This compares with an unadjusted unemployment rate of 5.8% for California and 5.3% for the nation during the same period. The unemployment rate was 4.3% in Alameda County and 4.5% in Contra Costa County. The table below shows the civilian labor force and industry employment for Alameda County.

ALAMEDA COUNTY Civilian Labor Force, Employment and Unemployment; Employment by Industry (Annual Averages)

2010 2011 2012 2013 2014 Civilian Labor Force (1) 762,000 765,300 778,300 806,400 811,300 Employment 676,000 686,100 708,600 747,800 763,700 Unemployment 85,900 79,200 69,700 58,600 47,700 Unemployment Rate 11.3% 10.4% 9.0% 7.3% 5.9% Wage and Salary Employment: (2) Agriculture 700 600 700 600 600 Goods Producing 91,800 91,700 94,400 100,200 104,000 Wholesale Trade 34,200 34,100 35,400 36,500 37,100 Retail Trade 59,900 60,000 62,600 66,100 67,900 Transportation, Warehousing, Utilities 23,500 23,600 24,800 24,600 26,000 Information 14,000 13,700 13,600 12,900 12,700 Finance and Insurance 13,800 14,100 14,300 14,200 14,200 Real Estate and Rental and Leasing 9,000 8,700 9,100 9,600 10,100 Professional and Business Services 107,500 108,800 118,100 121,300 126,000 Educational and Health Services 88,700 88,300 104,400 112,400 114,300 Leisure and Hospitality 54,500 55,100 58,700 62,800 66,600 Other Services 23,200 23,500 23,900 24,800 25,200 Federal Government 10,500 9,700 9,600 9,300 9,300 State Government 36,900 37,200 37,300 37,600 38,000 Local Government 68,700 67,800 68,000 68,200 69,800 Total, All Industries (3) 636,900 636,700 674,800 699,200 721,700

(1) Labor force data is by place of residence; includes self-employed individuals, unpaid family workers, household domestic workers, and workers on strike. (2) Industry employment is by place of work; excludes self-employed individuals, unpaid family workers, household domestic workers, and workers on strike. (3) Totals may not add due to rounding. Source: State of California Employment Development Department.

A-23

The following tables show the major employers in the City and the County.

CITY OF BERKELEY Major Employers 2015

Number of % of Total Employer Employees Employment University of California Berkeley 14,540 22.35% Lawrence Berkeley National Laboratory 3,385 5.20 Sutter East Bay Hospitals 2,376 3.65 Berkeley Unified School District 1,733 2.66 City of Berkeley 1,417 2.18 Bayer Corporation 1,336 2.05 Kaiser Permanente Medical Group/Kaiser Foundation Health Plan/ Kaiser Foundation Hospitals 728 1.12 Berkeley Bowl 560 0.86 Berkeley YMCA 500 0.77 Pacific Steel Casting Company 418 0.64

Source: City of Berkeley, Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2015.

[Remainder of Page Intentionally Left Blank]

A-24

COUNTY OF ALAMEDA Major Employers (Listed Alphabetically) 2016

Employer Name Location Industry Alameda County Law Enforcement Oakland Government Offices-County Alameda County Sheriff's Ofc Oakland Government Offices-County Alta Bates Summit Medical Ctr Oakland Hospitals Alta Bates Summit Medical Ctr Berkeley Hospitals Bayer Health Care Berkeley Laboratories-Pharmaceutical (Mfrs) Berkeley Coin & Stamp Fosters Berkeley Coin Dealers Supplies & Etc. California State-East Bay Hayward Schools-Universities & Colleges Academic CooperVision Inc Advanced Pleasanton Optical Goods-Wholesale East Bay Water Oakland Transit Lines Highland Hospital Oakland Hospitals Kaiser Permanente Medical Ctr Oakland Hospitals Lawrence Livermore Natl Lab Livermore Small Arms Ammunition (Mfrs) Life Scan Inc. Fremont Physicians & Surgeons equip & Supls-Mfrs Oakland Police Patrol Div Oakland Police Departments Residential & Student Svc Prog Berkeley Schools-Universities & Colleges Academic Safeway Inc Pleasanton Grocers-Retail Tesla Motors Fremont Automobile Dealers-Electric Cars Transportation Dept-California Oakland Government Offices-State University of CA-Berkeley Berkeley Schools-Universities & Colleges Academic Valley Care Health System Livermore Hospitals Washington Hospital Healthcare Fremont Hospitals Waste Management Oakland Garbage Collection Western Digital Corp Fremont Electronic Equipment & Supplies-Mfrs

Source: State of California Employment Development Department, extracted from The America's Labor Market Information System (ALMIS) Employer Database, 2016 1st Edition.

Effective Buying Income

“Effective Buying Income” is defined as personal income less personal tax and nontax payments, a number often referred to as “disposable” or “after-tax” income. Personal income is the aggregate of wages and salaries, other labor-related income (such as employer contributions to private pension funds), proprietor’s income, rental income (which includes imputed rental income of owner-occupants of non-farm dwellings), dividends paid by corporations, interest income from all sources, and transfer payments (such as pensions and welfare assistance). Deducted from this total are personal taxes (federal, state and local), nontax payments (fines, fees, penalties, etc.) and personal contributions to social insurance. According to U.S. government definitions, the resultant figure is commonly known as “disposable personal income.”

A-25

The following table summarizes the total effective buying income for the City of Berkeley, the County of Alameda, the State and the United States for the period 2010 through 2014. Data for 2015 is not yet available.

CITY OF BERKELEY AND COUNTY OF ALAMEDA Effective Buying Income As of January 1, 2010 through 2014

Total Effective Median Household Buying Income Effective Buying Year Area (000’s Omitted) Income

2010 Berkeley $ 2,996,260 $44,932 Alameda County 38,097,873 54,732 California 801,393,028 47,177 United States 6,365,020,076 41,368

2011 Berkeley $ 3,060,805 $43,939 Alameda County 39,064,683 54,542 California 814,578,458 47,062 United States 6,438,704,664 41,253

2012 Berkeley $ 3,581,245 $46,898 Alameda County 43,677,855 55,396 California 864,088,828 47,307 United States 6,737,867,730 41,358

2013 Berkeley $ 3,513,983 $48,301 Alameda County 43,770,518 57,467 California 858,676,636 48,340 United States 6,982,757,379 43,715

2014 Berkeley $ 3,909,548 $52,592 Alameda County 47,744,408 60,575 California 901,189,699 40,072 United States 7,357,153,421 45,448

Source: The Nielsen Company (US), Inc.

A-26

Construction Activity

Provided below are the building permits and valuations for the City of Berkeley for calendar years 2010 through 2014.

CITY OF BERKELEY Total Building Permit Valuations (Valuations in Thousands)

2010 2011 2012 2013 2014 Permit Valuation New Single-family $1,133.0 $1,150.3 $1,382.3 $3,462.0 $5,453.0 New Multi-family 2,337.0 4,500.0 12,100.0 6,261.7 23,757.6 Res. Alterations/Additions 38,019.5 33,936.8 35,020.5 37,857.3 53,835.6 Total Residential $41,489.5 $39,587.1 $48,502.8 $47,581.0 $82,946.2 New Commercial $0.0 $693.5 $7,744.6 $8,689.9 $31,152.1 New Industrial 0.0 0.0 110.0 0.0 0.0 New Other 2,478.4 65.0 0.0 1,823.6 12,156.5 Com. Alterations/Additions 34,104.3 43,056.9 30,095.7 37,688.6 46,571.3 Total Nonresidential $36,582.8 $43,815.4 $37,950.3 $48,202.1 $89,779.9

New Dwelling Units Single Family 2 4 4 15 15 Multiple Family 16 38 94 45 249 TOTAL 18 42 98 60 264

Source: Construction Industry Research Board, Building Permit Summary.

A-27

APPENDIX B

COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR YEAR ENDED JUNE 30, 2015

B-1 CITY

Comprehensive Annual Financial Report for Year Ended June 30, 2015 CITY OF BERKELEY CALIFORNIA Comprehensive Annual Financial Report

For the fiscal year ended June 30, 2015

Prepared by Finance Department CITY OF BERKELEY Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2015

TABLE OF CONTENTS

INTRODUCTORY SECTION Letter of Transmittal 1-20 GFOA Certificate of Achievement 21 Government Structure 22 List of Elected and Appointed Officials 23 Organizational Chart 24

FINANCIAL SECTION Independent Auditor's Report 27-29 Management's Discussion and Analysis 31-48

Basic Financial Statements Government-wide Financial Statements: Statement of Net Position 50 Statement of Activities 51

Fund Financial Statements Governmental Funds: Balance Sheet 52 Reconciliation of the Governmental Funds Balance Sheet to the Government-wide Statement of Net Position - Governmental Activities 53 Statement of Revenues, Expenditures, and Changes in Fund Balances 54 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities - Governmental Activities 55

Proprietary Funds: Statement of Net Position 56 Statement of Revenues, Expenses and Changes in Fund Net Position 57 Statement of Cash Flows 58-59

Fiduciary Funds: Statement of Fiduciary Net Position 60 Statement of Changes in Fiduciary Net Position 61

Notes to the Financial Statements 63-150 Notes to the Private Trust Funds of the Successor Agency 151-154

Required Supplementary Information: Schedule of Revenues, Expenditures and Changes in Fund Balances - General Fund - Budgetary Basis 156 Schedule of Revenues, Expenditures and Changes in Fund Balances - Other Major Special Revenue Funds - Budgetary Basis 157-158 Schedule of Funding Progress - CALPERS, Safety Members Pension Fund (SMPF), Police Retirement Income Benefit Plan, and OPEB Plans 159-170 Note to Required Supplementary Information 171

Other Supplementary Information: Combining and Individual Fund Statements and Schedules: 173

Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual - Major Capital Project Funds - Budgetary Basis 174

Fund legend for Nonmajor Governmental Funds 175-183

Combining Balance Sheet 184-192 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 193-201 CITY OF BERKELEY Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2015

TABLE OF CONTENTS

Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual - Budgetary Basis 202-222

Fund legend for Internal Service Funds 223

Combining Statement of Net Position - Internal Service Funds 224 Combining Statement of Revenues, Expenses and Changes in Fund Net Position- Internal Service Funds - Budgetary Basis 225 Combining Statement of Cash Flows - Internal Service Funds 226-227

Fund legend for Fiduciary Funds 229

Combining Statement of Fiduciary Net Position - Pensions and Other Employee Benefit Trust Funds 230 Combining Statement of Changes in Fiduciary Net Position - Pension and Other Employee Benefit Trust Funds 231

Fund legend for Agency Funds 233

Statement of Changes in Assets and Liabilities - Agency Funds 234

STATISTICAL SECTION Index to Statistical Section 237 Financial Trends: Net Position by Component 238 Changes in Net Position 239-241 Fund Balance, Governmental Funds 242 Changes in Fund Balances, Governmental Funds 243-244 Revenue Capacity: Assessed Value and Estimated Actual Values of Taxable Property 245 Direct and Overlapping Property Tax Rates 246 Principle Property Tax Payers 247 Property Tax levies and Collections 248 Debt Capacity: Ratios of Outstanding Debt by Type 249 Ratios of General Bonded Debt Outstanding 250 Direct and Overlapping Governmental Activities Debt 251 Legal Debt Margin Information 252 Pledged Revenue Coverage 253 Demographic and Economic Information: Demographic and Economic Statistics 254 Principal Employers 255 Full-Time-Equivalent City Government Employees by Function/Program 256 Operating Information: Operating Indicators 257-259 Capital Asset Statistics by Function/Program 260

City of Berkeley General Obligation and General Fund Obligations Continuing Disclosure 261-271 Report Information

INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL AND ON COMPLIANCE 272-273 AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS I. INTRODUCTORY THIS PAGE LEFT INTENTIONALLY BLANK Department of Finance Office of the Director MEMORANDUM

DATE: December 22, 2015

TO: Honorable Mayor and Members of the City Council, City Manager, and Citizens of the City of Berkeley

FROM: Henry Oyekanmi, Director ofFinance

RE: Presentation of the Comprehensive Annual Financial Report

Attached is the Comprehensive Annual Financial Report (CAFR) of the City of Berkeley for the fiscal year ended June 30, 2015. The CAFR has been prepared by the Finance Department in confonnance with the principles and standards for financial reporting set forth by the Governmental Accounting Standards Board (GASB). Responsibility for the accuracy, comprehensiveness and fairness of the presented data, including all disclosures, rests with the City's management. The report bas been compiled in a manner designed to fairly set forth the financial position and results of operations of the City as measured by the financial activity of its various funds. All disclosures necessary to enable the reader to gain an understanding of the City's financial affairs have been included.

The City prepared the CAFR in accordance with generally accepted accounting principles, which included using the financial reporting requirements prescribed by GASB Statement No. 34, Basic Financial Statements and Management's Discussion and Analysis for State and Local Governments (GASB 34). This statement requires that management provide a narrative overview and analysis to introduce the basic financial statements in the form of Management's Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The MD&A can be found immediately following the independent auditor's report.

THE REPORTING ENTITY

This report combines the financial statements of the City and the Rent Stabilization Board (RSB) in accordance with principles defining the governmental reporting entity adopted by the Governmental Accounting Standards Board (GASB). The Rent Stabilization Board is a discretely presented component unit because the citizens elect its nine-member Board of Commissioners. It also receives support services from the City, and it provides regulation of residential rents throughout the City.

1 December 22, 2015 Presentation of the Comprehensive Annual Financial Report Page 2

PROFILE OF THE CITY

The City of Berkeley is located in Alameda County on the east side of the San Francisco Bay approximately ten ( 10) miles east of San Francisco. The City encompasses a total area of approximately 19 square miles and has an estimated population of 118,853, giving it the highest population density of any city in the East Bay. The City is defined to a large degree, both culturally and economically, by the presence of the University of California campus located on the eastern side of the City.

The City of Berkeley is among the oldest cities in California. It was founded in 1864, incorporated as a town in 1878, and incorporated as a city in 1909. The original City Charter was adopted in 1895. At the geographic midpoint of the Greater Bay Area, Berkeley is 20 minutes from San Francisco and close to population centers in Contra Costa County and the Silicon Valley. The City is governed by a City Council composed of members elected from eight districts to serve four-year terms, and a Mayor who serves as the president of the City Council, elected citywide to a four-year term. The City's FY 2015 adopted budget included $323,370,010 of expenditures and reserves, of which $154,3 81,484 was allocated to the General Fund of the City and $122,044,474 to all other funds. The City employs approximately 1,336 full-time equivalent employees.

The City provides a full range of services exceeding that of most similarly sized cities in California. Services include public safety (police and fire); sanitation and sewer; housing; leisure (parks, recreation and marina); health and human services including City funded health clinics; animal control; public improvements; planning and zoning; general and administrative services; and library services. In addition, the City's reporting entity includes the financial activities of the Rent Stabilization Board.

The budget process is the vehicle through which the City establishes goals and objectives, and prioritizes the desired programs or services that the City should provide, and which can be financed by the City's projected revenue for the budget year. It is the vehicle through which policy decisions are made, effected, controlled and monitored. Under the City Charter, the City Manager is responsible for preparing and recommending an operating budget and a capital improvements budget for City Council consideration and adoption.

The City of Berkeley employs a two-year budget process. In year one of the biennial budget cycle, the City Council formally adopts authorized appropriations for the first year of the two­ year budget and approves "planned" appropriations for the second fiscal year. In year two of the budget cycle, the City Council considers revisions and formally adopts authorized appropriations for the second fiscal year. Although the budget cycle covers a two-year period, the City Charter requires that the City Council adopt an annual appropriations ordinance for each budget year.

The City's Capital Budget is considered a part of the City's Five-Year Capital Improvement Plan. Upon adoption each year by Council, the projects included in the annual budget represent legal appropriations. Capital expenditures are not fully "consumed" in the year of expenditure but instead produce long-term, tangible, future benefits.

In addition to this budget planning process, the City maintains budgetary controls. The City's objective in maintaining budgetary control is to ensure compliance with legal provisions

2 December 22, 2015 Presentation of the Comprehensive Annual Financial Report Page 3 embodied in the annual appropriated budget approved by the City Council. The City Manager is authorized to transfer budgeted amounts within funds as deemed necessary in order to meet the City's needs. However, revisions that alter the total budget or move amounts from one fund to another must be approved by the City Council. Activities of the General Fund, Special Revenue Funds, Debt Service Funds, Capital Project Funds, and Proprietary Funds are included in the annual appropriated budget.

The City maintains an encumbrance accounting system as one technique of accomplishing budgetary control. Purchase orders, contracts, and other commitments for the expenditure of money are secured in order to reserve that portion of the applicable appropriation. Encumbrances outstanding at year-end are reported as reservations of fund balance. Unencumbered amounts lapse at year-end and may be appropriated as part of the following year's budget.

LOCAL ECONOMY

The recovery from the recession continued in FY 2015. The FY 2015 economic rebound resulted in increases in most economically-sensitive and most property-related revenue sources in the General Fund. The total of Economically-sensitive revenue sources increased by $1.1 million or 2.7% during the fiscal year. There was also a rebound of $3.0 million or 5.0% in Property-related revenues.

3 December 22, 2015 Presentation of the Comprehensive Annual Financial Report Page 4

I $ 44,082,239 I $ 42,257,932 I 11 2,620,834 2,491,747 129,087 5.2% I I I ---- I 1,461,459 ,--1,172,077-··, 289,382 I 24.7% I 15,153,844 j 14,236,155 I 917,689 I 6.4% Redemptions 791,338 913,338 ---··i- (122,000) ,-(13.4)% i I T?~al I s 64,109,714 I s 61,011,249 I $3,038,465 I 5.0%

16,098,978 --1-5,-37-o-.3-n--l 725,231 4.7% ~;nsient occupancy!....--7-,-13-1-,5-6_8_1 6,245,833 ,.-----88_5_,-73_5_....., 14.2%

-11-11-ye-.... ~-!m_e_n-!1-.1.1-co_m_.e-. --...-I -2-,3-4-8,-86_7_1 3,431,423 I (l)c1,082,556) ---(3-1-.5-)o/c_o_

,__IT-o-ta_l _____ l $ 42,691,351 I $ 41,570,756 I $ 1,120,595 2.7% rn Includes approximately $.2 million in one-time decrease in the market value of investments held by the General Fund in FY 2015, primarily as a result of the maturity or near maturity of high-yielding securities purchased by the City. GASB Statement Number 3 I requires that investments held at year-end be marked-to-market, and the increase or decrease in the market value of the investments be added to or subtracted from interest income.

During FY 2015, the City of Berkeley's financial position increased and the City continued to be financially strong and continues to benefit from participation in the Bay Area's diverse and stable economy. The City continues to maintain a bond rating of AA+ from Standard and Poor's, and Aa2 at Moody's, two of the national rating agencies.

The City is home to the main campus of the University of California. With 37,581 students and approximately 14,540 employees, the University provides a high degree of economic stability for the City and has spurred growth in the high technology and biotechnology sectors. The Lawrence Berkeley Laboratory also has 3,385 employees, and the Sutter East bay Hospitals has approximately 2,376 employees. Despite the large student population, the City has an average household income of $101,774.

During the fiscal year, the local economy rebounded slightly consistent with regional trends. Berkeley's current economic base consists of over 12,674 licensed businesses operating in the City. These businesses include private manufacturing, technology research, retail and service businesses, educational services, healthcare and social assistance, consulting, arts and entertainment, hospitality services, along with several state, federal, and non-profit institutions. These businesses provide employment for 65,048 (down from 65,575 in June 2014), according to the State Economic Development Department. This economic base generated $17 .1 billion in sales taxes revenue in FY2015, an increase of 3.2% from the $16.6 billion in FY2013. In

4 December 22, 2015 Presentation of the Comprehensive Annual Financial Report Page 5 addition, the City's unemployment rate (as reported by the State of California Employment Development Department) declined from 5.8% in June 2014 to 4.0% in June 2015, compared to 5.0% for the County, 6.5% for the state and 5.3% for the U.S.

Growth in assessed valuation on secured property increased by 4.0% to $14.2 billion in FY 2015, for a strong level of $119,755 per capita. The tax base is diverse, with the top ten property taxpayers accounting for 5 .61 % of total assessed valuation. Residential construction improved in FY 2015 with the estimated value of permits totaling $161,551,963 (up from $95,615,783 in FY 2014), in addition, commercial construction improved in FY 2015, with the estimated value of permits issued totaling $72,691,761, versus $56,376,980 in FY2014.

The City takes an active role in guiding economic development to serve the business and residential community. The City manages a number of programs intended to assist in local business expansion and retention efforts, provides permit assistance to new businesses, seeks appropriate sites, and works directly with local businesses and merchant organizations to improve the local business climate. Major business development programs have also been initiated and are funded, in part, by a grant from the Metropolitan Transportation Commission (MTC), including managing parking for greater efficiency, and planning for the construction of larger replacement City parking facilities.

Since 1994, the City Council resolved to promote environmentally sustainable businesses in Berkeley and formally adopted the Precautionary Principle based on the outcomes of the Kyoto Accord.

Community Planning - City Work Plan. One of the major components of the City's efforts to develop an integrated budget process is the establishment of policy priorities by the City Council. One element of this process is an attempt, through the biennial Budget and the annual Citywide Work Plan, to align City Council and community expectations with resources available to the City to deliver desired results.

ADDRESSING LONG-TERM UNCERTAINTIES/ FINANCIAL POLICIES

The City, like most other cities throughout the state, as well as the state of California itself, faces significant long-term costs in the areas of employee and retiree costs, capital assets, and infrastructure. The City weathered the effects of the recession over the last six years by reducing expenditures and deferring capital improvement costs. Expenditure controls during that period also included assessing some employee benefits on a pay-as-you-go basis. As the economy begins to recover, the City must strategically address its long-term obligations. The goal is to achieve a stable fiscal position that allows the City to move forward strategically, as the economy slowly recovers, to address historically underfunded infrastructure needs, and to plan carefully for employee costs and benefits.

While we have established a stability budget for FY 2016 and FY 2017, we still need to continue to develop solutions that resolve the long-term challenges presented by expenditures growing faster than revenues. The Council has adopted budget development policies which have served the City well over the long term, and has also established several budget policies that begin to address some of the long-term problems.

5 December 22, 2015 Presentation of the Comprehensive Annual Financial Report Page 6

The fiscal policies adopted by the Council include:

•!• Focusing on the long-term fiscal health of the City by adopting a two-year budget and conducting multi-year planning; •!• Building a prudent reserve; •!• Developing long-term strategies to reduce unfunded liabilities; •!• Controlling labor costs while minimizing layoffs; •!• Allocating one-time revenue for one-time expenses; •!• Requiring enterprise and grant funds to balance and new programs to pay for themselves; and •!• Any new expenditure requires revenue or expenditure reductions. •!• Transfer Tax in excess of $10.5 million dollars will be treated as one-time revenue to be used for the City's capital infrastructure needs (fund 610).

•!• As the General Fund subsidy to the Safety Members Pension Fund declines over the next several years, the amount of the annual decrease will be used to help fund the new Police Employee Retiree Health Plan (fund 903).

Also, used as a guide to developing the budget is the "fix it first" approach in which we fund current capital improvements before funding new projects.

The proposed budget provides a plan to control costs and maximize the use of City resources. It is a balanced budget and thus does not require further General Fund expenditure reductions. The General Fund, however, is less than half of the City's total budget. Many of the special funds that were struggling are starting to become healthy again due to the City Council and City staff actions over the last several years that have allowed the City to effectively manage and balance its budget as we begin to recover from some very difficult times.

LONG-TERM DEBT RATINGS

Standard & Poor's Corporation and Moody's Investors Service assigned the General Obligation Bonds ratings of AA+ and Aa2, respectively, upon their issuance. The City was able to maintain these ratings in the face of challenges to the local economy and the City's budgets, due to a proven record of sound fiscal management by the Mayor, City Council, City Manager and City staff.

SPENDING LIMITATION

Article XIIIB of the California Constitution, also known as the GANN spending limit, restricts the amount of "proceeds of taxes" California governments may spend. As of June 30, 2015, the City was $46.9 million or 21.6% under the total Article XIIIB (Gann) spending limitation. The City was not impacted by the spending limitation in FY 2015.

6 December 22, 2015 Presentation of the Comprehensive Annual Financial Report Page 7

MAJOR IMPACTS AND INITIATIVES

1. MAJOR CAPITAL PROJECTS

(a). Waterfront Overview: The Marina Fund is an enterprise fund that covers the costs of operations, maintenance, and capital improvements of City parks and facilities west of Highway 80, including the Berkeley Marina. Revenue for the fund comes primarily from berth rentals and property leases. The Waterfront is in need of major infrastructure improvements such as dock and piling replacements, pier upgrades, parking lot and restroom renovations and dredging, which projected costs over $15 million in the next 5 years.

In FY 2015, the City spent marina capital funds on some major maintenance such as painting 125-127 University, seal coating parking lots DI E, Fl G, and H/I, and reconstructing the bait shop wall. Additionally, funds were spent on the design of Bay Trail Segment Three, South Cove Access I Restroom, and the launch ramp gate projects.

In FY 2016 with the use of grants received from the California Department of Boating and Waterways, the State Coastal Conservancy, the Costco Busan Grant program and the Marina Fund; the Bay Trail Segment Three and the South Cove Access/ Restroom projects will be completed. Planned major maintenance projects include the Marina launch ramp gate project, the LIM Dock restroom upgrade, the replacement of five finger docks, and the seal coating of the F/G Dock parking lot. Additionally, funds will be spent on designing and costing a potential fix to a portion of the Berkeley Pier.

(b). Parks and Recreation Overview: The City relies on the Parks Tax and General Funds to provide annual revenues to fund the major maintenance and capital improvements of City parks, park buildings and pools. Additional funds are available from the 2008 voter-approved East Bay Regional Park District Parks Bond (Measure WW) that provides funding for major capital projects for parks. The City's share of the bond funding is $4,876,000. Despite these funding sources, parks, parks buildings and pools have approximately $31 million in unfunded major maintenance and capital project needs over the next five years.

With FY 2015 funds Virginia-McGee Totland, Terrace View Phase 1, Rose Garden Phase 1, Ohlone Dog Park, Grove Park Basketball and Tennis Courts and the Willard Park play equipment will be constructed in FY16. Additionally the MLK teen/game room, Ohlone Park basketball courts/ picnic area and Aquatic Park north end pathways were designed in FY 2015

In FY 2016 funds are allocated for the construction of the San Pablo Park electrical meter split, the James Kenney Park picnic and play areas, and the John Hinkle upper picnic area. Additionally $1 million has been set aside for the James Kenney Community Center seismic project, while the John Hinkle lower playground, Strawberry Creek sport courts, Becky Temko and Marin Circle projects will all be designed.

(c). Camps Overview: In FY 2015, the City continued The conceptual design work for Berkeley Tuolumne Camp (BTC), which was destroyed by the California Rim fire in August of 2013. The Conceptual design work will lead to a joint Environmental Analysis (EA) submittal with the United States Forest Service (USFS). This scoping work included an extensive public process that will lead to a final conceptual design. Also, in FY 2015 the City completed renovation of the

7 December 22, 2015 Presentation of the Comprehensive Annual Financial Report Page 8

Echo Lake Dinning Hall and lodge deck structures that were damaged as a result of the abnormal snow fall in 2011.

In FY 2016, the city will proceed with a new USFS Special Use Permit application and EA process for BTC. Additionally, the Echo Lake Make-up Air project and several new cabins will be constructed, while the Echo Lake leach fields' project will commence design.

(d). Libraries: Access and professional assistance to information remain at the core of the services offered by the Berkeley Public Library. Based on similar sized cities in California, the Berkeley Public Library is among the state's top ranked public libraries on a per capita basis for circulation of materials, items in the library collection, and attendees at programs.

In FY 2015, the Central Library, four neighborhood branch libraries, the Tool Lending Library and the Branch Van welcomed over 1 million visitors. With the Library's collection of over 600,000 items, including books, magazines, CDs, DVDs, audio books, and tools, the Library's total annual circulation (i.e. the number of borrowed items from the collection) topped 1.8 million. Free public-use computers, laptops, and tablets; and unlimited Wi-Fi continued to offer unrestricted access to the Internet. Daily, the Library sponsored or hosted a diverse program of activities and events to appeal to a wide cross-section of ages and interests. On any given day, somewhere in the Library, there is likely to be a film, seminar, lecture, or children's program going on. And for adults wanting to improve their basic reading and writing skills, the Library's literacy program offers a variety of services such as one-on-one tutoring with trained volunteers, family literacy programming for students with small children, computer-assisted learning, and small group instruction.

Branch Libraries: The Measure FF Branch Library Improvement Project concluded in FY2014. In FY2015, all four branches were fully operational for the whole year for the first time since 2011.

While the construction is completed, the Measure FF bond program continues to gamer honors and designations, particularly the West Branch Library, which has been granted NetZero Building Certification by the International Living Future Institute and was named as one of only 39 Verified Zero Energy Buildings in the United States as listed by the New Buildings Institute. The branch is the only public library on that list. The West Branch Project has also been recognized by the construction industry, having been granted the Gold Nugget Merit Award and Gold Nugget Grand Award by the Pacific Coast Builders Conference and two Project Excellence Awards (Under $1 Million Energy Solutions/Green Building Category) by NorCal NECA [National Electrical Contractors Association of Northern California].

2. PUBLIC WORKS

(a). Measure M Streets & Watershed General Obligation Bond: In November 2012, Berkeley voters approved Measure M, a $30 million general obligation (GO) bond to significantly accelerate the implementation of the 5-Y ear Street Paving Plan and, when appropriate, install green infrastructure, as it is defined in the Watershed Management Plan (WMP). Public Works staff and the Public Works Commission successfully collaborated with other commissions and the public to gather input for developing an Expenditure Plan with defined goals and evaluation methods.

8 December 22, 2015 Presentation of the Comprehensive Annual Financial Report Page 9

Staff also initiated a technical evaluation to prioritize streets for the accelerated 5-Year Street Paving Plan, and alternative paving treatment scenarios are being used to improve the overall Pavement Condition Index (PCI) of the City's streets. Staff is reviewing projects to incorporate WMP storm water treatment measures (such as green infrastructure). This evaluation will merge with the public planning process to achieve key goals, including 1) raising the PCI; 2) treating storm water using green infrastructure; 3) increasing flood protection; 4) creating visible improvements early in the construction period; and 5) ensuring as many projects are funded as possible.

The Public Works Commission collaborated with the Transportation, Parks & Waterfront, Disability, and Community Environmental Advisory Commissions in FY 2013 and FY 2014 and held three community meetings to welcome public participation in the way Measure M funds are spent. The Measure M Expenditure Plan and the accelerated 5-Y ear Street Rehabilitation Plan were adopted by Council in fall 2013, and the first year of Measure M project implementation began in FY 2014. Paving work has commence at double the rate prior to bond passage, with approximately 17 miles of street paving completed to date and five green infrastructure installations. The City will continue paving and green infrastructure work for 14 miles of paving and 12 green infrastructure projects through fiscal 2018.

(b). Other Maior CIP Proiects: Several other significant capital projects were undertaken by Public Works during FY 2015, including construction of the Allston Way Permeable Paver Demonstration Project. The project installed permeable pavers the full width of Allston Way between MLK, Jr. Way and Milvia Street. The project is the first of its kind in Berkeley, and as a demonstration project it will be carefully evaluated for effectiveness. The total cost of the project was approximately $1.9 million. Public Works also designed a project to pave, restripe, and add parking and other traffic improvements on Bay Street and Potter Street from the Bay Street Bridge to the I-80 on-ramp adjacent to Aquatic Park, at an estimated total cost of $1.2 million. In addition, 4 significant storm drainage improvement installations throughout the City were substantially completed. Construction is estimated at a total cost of $1 million.

(c). Parking Meters: Beginning in fiscal 2015, the City of Berkeley completed replacement of coin-only meters in its 3, 700 on-street parking spaces, which are now controlled either by 2,240 single-space credit card enabled smart meters (IPS meters), or 230 multi-space pay stations (Cale EZ Pay Stations). Parking meters limit the amount of time a motorist may park in a space, helping make short-term curbside spaces available, and regulate the hourly parking rates. Both the IPS meters and Cale pay stations use solar power and offer customers the option of paying with credit cards or coins.

In October 2014, the City amended a contract with IPS for the purchase of additional meters to complete the replacement of coin-only meter inventory Citywide. In June 2015, the City authorized a contract to replace all of the City's Cale EZ Pay Stations with new IPS multi-space meters.

These meters are key to the City's ability to complete the Value Priced Parking Pilot component of the go Berkeley program. GoBerkeley is a 3-year program in the City of Berkeley designed to improve the ease of traveling within key areas of the City.

9 December 22, 2015 Presentation of the Comprehensive Annual Financial Report Page 10

(d). Parking Programs: Since October 2013, the City has been conducting the Value Priced Parking Pilot component of the goBerkeley program. This includes adjusting parking rates and time limits at on-street meters in Downtown Berkeley, Telegraph/Southside and the Elmwood commercial districts. The goal of these changes is to: • Increase the number of available parking spaces in Premium Zones • Attract parkers to Value Zones with longer time limits • Encourage short-term parking at City Garages

There are 3 City-owned garages with a combined total of 969 spaces. As part of the goBerkeley Pilot, parking changes were also implemented at these garages to: • Simplify information for drivers • Set lower rates than nearby on-street meters • Set rates lower than the average hourly rate

3. COMMUNITY EMERGENCY PREPARATION

The following overview describes the City's comprehensive efforts to reduce risk, to better prepare for disasters and safety actions taken during the fiscal year to ensure community safety and preparedness. Other City efforts include staff training, response preparations, exercises, community preparedness initiatives, local and regional coordination and other preventive programs that are underway or are in development.

(a). Pre-Disaster Mitigation Efforts: Since 1989, Berkeley has invested in disaster mitigation on many fronts. The City Council established an Office of Emergency Services in July 1989 and convened the commission that later became the Disaster Fire and Safety Commission. This leadership continued and acted to make risk reduction and community sustainability a priority.

Thus far, the City's mitigation efforts include establishment of ordinances requiring mandatory retrofit for unreinforced masonry buildings, as well as soft-story buildings. The City has multiple vegetation management programs to mitigate wildfire risk. The City also adopted an updated Local Hazard Mitigation Plan. Hazards include earthquakes, wildfires, landslides, floods, hazardous materials accidents, terror attacks and other multi-hazard events.

(b). Employee Disaster Response Training: Training for City staff is required to meet the mandates of California Code of Regulations Title 19 Section 2401, 2930 and 2935, and the Homeland Security Presidential Directive 5 that requires workers to use the Standardized Emergency Management System and the National Incident Management System. All local government staff are designated Disaster Service Workers, according to State law. Consequently, it is critical that the City provide adequate training for staff to know their disaster response responsibilities and have learning opportunities to deepen that knowledge. Keeping training and disaster exercises on the organization's larger schedule is a challenge when months of advance planning and practice must be maintained. In FY 2015, the training programs included National Incident Management (NIMS), Incident Command System (ICS) courses, and tabletop exercises. In addition, a multi-year training and exercise plan is in place that will ensure SEMS/NIMS required training for city staff.

10 December 22, 2015 Presentation of the Comprehensive Annual Financial Report Page 11

(c). Community Disaster Preparedness: The City has always been a leader in engaging community and neighborhood groups to be disaster ready. The City offered training classes, made presentations to the public, updated the City's website information, and engaged in other outreach activities to strengthen disaster preparedness for the Berkeley community. The free year-round Community Emergency Response Training (CERT) classes are offered to anyone living or working in the Berkeley community and cover basic preparedness, disaster mental health, disaster first aid, fire suppression, light search and rescue, shelter operations, and radio communication/incident command system. A consistent number of individuals, about 500, attended at least one CERT class. In 2015 the City purchased a CERT vehicle to allow CERT classes to be taught throughout the City. Targeted outreach is underway to improve preparedness for Berkeley's vulnerable populations through mobile CERT classes, Community Resilience Centers, and customized preparedness classes to meet the needs of specific populations

Berkeley voters approved Measure GG in November of 2008, providing critical resources to ensure minimum staffing of all fire suppression companies; enhance the City's Emergency Operations Center; and to continue to focus on community preparedness, including resources for Community Emergency Response Training (CERT) and community caches. Through 2015, there have been an average of 10 caches awarded annually, bringing the total to 97 citywide.

In FY 2014, the City Council authorized two new community preparedness programs funded by Measure GG, a neighborhood dumpster program and an automatic earthquake gas shutoff valve program. Both are incentives for individuals and neighborhoods to organize and participate in training. Initial awarding of dumpsters and gas valves occurred in FY 2015.

To facilitate overall community preparedness, OES coordinated, with the help of CERT volunteers, an October Citywide CERT Exercise. The day of activities promoted preparedness to individuals and neighborhoods. The day culminated with a community meeting to discuss the Exercise and future activities with City leadership.

(d). Response: The City uses an emergency notification system to keep people informed during disasters. The Berkeley Emergency Notification System (BENS) is a telephone notification system that can contact residents and businesses through an automatic message service center in the event of an emergency. Berkeley's emergency radio station is 1610 AM. Over the years, the City has activated its Emergency Operations Center (EOC) and responded to a number of disasters.

(e). Recovery: The City's Finance Department has established procedures and protocols to document expenditures incurred during disaster operations. These procedures are constantly being reviewed as new regulations and procedures for submitting documentation for FEMA are implemented both of the FED and State level.

(!). Health and Human Service Programs: The Public Health Division (PHD) receives CDC and state health department grants to develop plans for large PH emergencies such as bioterrorism or pandemic influenza and to coordinate with health care providers, clinics and hospitals on emergency surge capacity. The PHD coordinates its response to public health emergencies (outbreaks, pandemics) by activating the Public Health Departmental Operations Center (PH DOC), a group of public health staff members specially trained for disease investigations and emergency response. In 2014, the PHD updated plans to improve services for the City's most

11 December 22, 2015 Presentation of the Comprehensive Annual Financial Report Page 12 vulnerable populations with special attention in South and West Berkeley (i.e. Homebound Seniors through Meals on Wheels) and incorporated specific roles for the Mental Health Division to assist in a large scale emergency response. PHD also helped develop a FAST (Functional Assessment Service Team) recruiting Berkeley specific members to Alameda County FAST. FAST members work with emergency response personnel to conduct assessments of people with access and functional needs (PAFN) in emergency shelters. FAST members facilitate the process of getting resources needed by the people with access and functional needs. These resources may include durable medical equipment, consumable medical supplies, prescribed medications, or a person to assist with activities of daily living. PHD continues to collaborate with the Office of Emergency Services in providing disaster preparedness training, education and resources to all Berkeley residents, particularly in South and West Berkeley.

(g). Disaster Fire Protection: In the November 2000 election, Berkeley voters approved Measure Q, which provided $8,000,000 in funding for an Above Ground Portable Water System. This system is designed to provide water for firefighting independent of the domestic water system provided by the local water district. The engineering studies of the domestic water system infrastructure determined that after a major earthquake or in the event of high fire flow demands that can occur during wild land/urban firestorms, the system may not be usable or able to support firefighting operations. The City contracted with Hytrans Systems located in Holland for a pump and hose system that allows use of salt or fresh water sources like the San Francisco Bay or lakes to provide water for firefighting.

The system includes two 6,000-gpm pumps (HS 900) and six containers each with one mile of 12 inch ultra large diameter hose. The pumps and containers can be moved and deployed by trucks using a lift arm loading system. An 8,000 square foot warehouse for both storage of the water system was constructed and is now operational.

(h). Other Disaster Mitigation Effprts: The City's Corporation Yard facility plays a crucial role in the Public Works Department's overall operations and serves as a center for emergency responses and disaster recovery operations. One of the main Corp Yard buildings was seismically unsafe. In July 2006, the State Office of Emergency Services approved a pre-disaster mitigation program grant from the Federal Emergency Management Agency for the relocation of employees from the building, site preparation, and seismic retrofit of the building to essential services standards in the amount of $2.8 million, with local matching funds in the amount of $962,633. Additional local funds have been allocated to the project bringing the current project budget to $7.3 million. The project was completed in July 2012 and now houses the supervisory staff for both Public Works and Parks operations and maintenance as well as serves as the Public Works Department's Operation Center (PW DOC) for emergency responses.

12 December 22, 2015 Presentation of the Comprehensive Annual Financial Report Page 13

4. ECONOMIC DEVELOPMENT

Berkeley's economic development strategy seeks to build on existing strengths to accomplish goals that have been identified by the City Council and citizen planning processes:

(a). Revitalize Downtown Berkeley and strengthen its role in the local and regional economy: Downtown Berkeley's existing strengths include the success of its growing Arts District in attracting a regional nighttime clientele and the emergence of the Downtown as a residential neighborhood. The Arts District is anchored by the Berkeley Repertory Theatre that attracts an annual audience of 180,000 and employs more than 400 artists, artisans and administrators. Other theaters in the area include the 180 seat Aurora Theatre and the 440 seat Freight and Salvage, a traditional musical performance venue. The nighttime audience of these and other arts organizations has attracted new quality restaurants such as Gather, Revival Bar and Grill, Comal, Osteria Belli on the edge of the Arts District and Five in the renovated 200-room Shattuck Hotel. The U.C. Theatre is currently being redeveloped and upon completion in December 2015 will become a premier East Bay contemporary music venue with 1,400 seats along with capacity for food and drink offerings. The new Berkeley Art Museum/Pacific Film Archive is now under construction at the comer of Oxford and Center Street. When it is completed in January 2016, this museum will become a transformative cultural anchor - the largest single investment to date in Downtown Berkeley's arts cluster.

Thanks to the construction of more than 1,500 new housing units since the mid-1990s, Downtown has become an attractive location for urban living. The 148-unit New Californian on the NW comer of University and Martin Luther King Jr. Way continues to be fully leased, as is the 143 unit Berkeley Center project, located on Center Street, one block from the Arts District. Due to an extremely strong local and regional housing market, there are approximately 1,500 additional Downtown housing units either under construction, approved or in the entitlements pipeline. Downtown Berkeley is quickly becoming Berkeley's most dynamic urban neighborhood.

Downtown Berkeley has also become a popular location for startups and University spinout businesses to get a foothold in the office market. The nearly billion dollar pipeline of research investment at the University of California Berkeley and Lawrence Berkeley National Laboratory is a catalyst for entrepreneurship and the Downtown, within close walking distance of campus, is a logical launch pad for these new businesses. The City has supported the startup business growth in Downtown and throughout the City through support and promotion of new incubators and co-working spaces that have begun to populate the area.

The "Sky deck Innovation Accelerator/Incubator" was launched in 2012 to great fanfare and has already graduated a number of growing companies that have moved to office spaces elsewhere in Downtown Berkeley. Located on the top floor of the Chase Building (formerly the Power Bar Building), the Skydeck now houses more than 15 spinouts and more than 50 worker/entrepreneurs. In addition, Helios West, a 112,800 square foot building that houses the Energy Biosciences Institute, is now anchoring the northern part of Downtown on its site at Shattuck and Berkeley Way. Several other private incubators and co-working spaces have sprung up in Downtown in recent years including The HUB, Sandbox Suites, and NextSpace which opened in the former Wells Fargo Annex in mid-2013. Downtown's newest incubator, We Work, opened in early 2015 and now occupies an entire 6 story office building in Downtown.

13 December 22, 2015 Presentation of the Comprehensive Annual Financial Report Page 14

It took We Work just a few months to lease-up and they now house close to 600 people. Staff believes this trend towards co-working will continue in the future as demand grows for small and flexible office spaces. This optimism is also based partly on the University's plan to build up to 800,000 square feet of new research, office and public service space on the eastern edge of the Downtown (which is the western edge of campus.) in the coming years.

Finally, the Berkeley Start-up Cluster (BSC), a partnership of the City, U.C. Berkeley, the Downtown Berkeley Association and the Berkeley Chamber of Commerce, has been doing ongoing work to 'brand' the near-to-campus area as a place of innovation and entrepreneurship. The berkeleystartupcluster.com site provides a range of resources that are helpful to budding tech businesses. The City of Berkeley hosts a website, www.locateinberkeley.com, which displays all vacant commercial space in Berkeley, with a special module for inexpensive space close to campus. The Downtown Berkeley Association's tagline, "It Starts Here" is reflective of the broad goals of the BSC.

(b). Strengthen neighborhood commercial districts such as Solano. Elmwood. Telegraph. Adeline. Fourth Street. San Pablo. North Shattuck and University Avenue: The City seeks to encourage shopping opportunities close to residential neighborhoods, which reduces the need to drive. Efforts are underway to support expansion of district-based niche marketing campaigns that recognize local strengths and "district identity". In 2015, staff continued its marketing initiatives in several districts including the Adeline and Sacramento corridors, in Downtown and on Telegraph Avenue.

The City facilitates five business improvement districts (BIDs) in the Downtown, Telegraph, Elmwood, North Shattuck and Solano commercial districts that generate funds through a self­ assessment to help promote and maintain their districts. There is also a Tourism BID which self assesses Berkeley's hotels and motels and directly supports Visit Berkeley, the City's convention and visitor's bureau. Over the past year the City has provided technical assistance to each of the BIDs, with particular focus on Downtown Berkeley Association, which has commenced a renewal campaign; Telegraph Business Improvement District, which has brought on dynamic new staff leadership; and Elmwood Business Improvement District, which was re-established in 2014.

The revitalization of Telegraph Avenue continues to be a major strategic priority. The City, in partnership with community stakeholders and with support from the UC Berkeley Chancellor's Community Partnership Fund, recently began development of the Telegraph Public Realm Plan. This process will create a framework for near-term public realm enhancements that will improve the pedestrian experience and the retail environment in the Telegraph district. It will also empower the City and its partners to attract funding for comprehensive streetscape improvements. This is especially relevant now that, in June 2015, the Telegraph district was designated by Association of Bay Area Governments (ABAG) and Metropolitan Transportation Commission (MTC) as a Priority Development Area, which qualifies the district for significant regional funding opportunities.

In 2015 the City commenced work on the Adeline Corridor Specific Plan. A land use and transportation plan that will guide development within the district in the coming decades. Adeline Street is an important corridor for South Berkeley, with several distinct commercial clusters and some notable opportunities for transit-oriented residential and commercial development. The City received a $750,000 planning grant from ABAG and MTC to develop

14 December 22, 2015 Presentation of the Comprehensive Annual Financial Report Page 15 this plan and in spring of 2015 began conducting comprehensive community outreach. The plan is expected to be completed and adopted by summer 2017.

In FY 2015, the Office of Economic Development continued its contract with the community-led "Buy Local Berkeley" initiative which is currently also fiscally supported by the Berkeley Chamber of Commerce. The effort uses multiple communication channels to encourage residents to shop at local, independent businesses to retain money and tax revenues in the community. Buy Local Berkeley has over 400 affiliated businesses and over 5,000 subscribers to its electronic newsletter. OED financial support will continue into FY 2016.

(c). Support creation o(good iobs for local residents: While more than 33% percent of the jobs in Berkeley are in the public sector (14,565 (FTE) at UC Berkeley, 3,320 at Lawrence Berkeley Laboratory, 1,336 at City of Berkeley, 1,745 at Berkeley Unified School District, 161 at Berkeley City College), about 42,291 are employees in the private sector (Quarterly Census of Employment & Wages, July 2013). Large private sector employers include Sutter East Bay Hospitals (Alta Bates and Herrick campuses) with 2,435 employees, the Bayer Corporation with 1,203, Kaiser Permanente with 579, the Berkeley Bowl with 504 and Pacific Steel Casting with 412. However, more than 90% of Berkeley's 4,706 private employers have fewer than 20 employees. (There are also over 8,000 self-employed individuals who work and live in Berkeley.) Berkeley's strong sectors include food services, biomedical/ biopharmaceutical, computer systems design services, printing and publishing, environmental consulting services, and arts and entertainment. 180 "Green" businesses (i.e., businesses that either helps the environment or enterprises that have instituted environment-friendly practices) have located in Berkeley (City of Berkeley Office of Energy & Sustainable Development, February 2014).

The American Community Survey shows that 45% of Berkeley's 58,612 employed residents (2013) also work in Berkeley. This high proportion is due in part to the fact that UC faculty have a strong propensity to live in Berkeley, as well as the fact that students who live in Berkeley often have part-time jobs close to where they live. Berkeley's economy has a greater number of jobs than employed residents: at least 64,313 employee positions (July 2013) and over 8,000 self-employed (2013 ACS I-Year Estimates). As a result, many people who live elsewhere in the Bay Area commute to Berkeley work sites. In order to reduce impacts on the environment from commuting as well as provide jobs to unemployed local residents, the City attempts to increase the number of people who both live and work in Berkeley. The City's Work Source employment program requires certain new and expanding businesses to consider Berkeley residents first in their hiring.

(d). Increase technology transfer from UC Berkeley and Lawrence Berkeley National Laboratory and encourage startups in the Downtown and West Berkeley: In recent years, federal, state and private sources have provided more than one billion dollars in new funding for research at UC Berkeley and Lawrence Berkeley National Laboratory in areas that are national priorities such as biofuels, energy conservation, advanced telecommunications and biomedical engineering. Berkeley is working closely with the tech transfer staff of both U.C. and the Lab to retain local startups that are commercializing new technology as well as attract national companies to set up research centers in Berkeley. This collaboration is productive for all parties. The companies benefit from the City's entrepreneurial climate and from interaction with UC faculty and graduate students.

15 December 22, 2015 Presentation of the Comprehensive Annual Financial Report Page 16

Studies have shown that many initial-stage start-ups want to locate close to Campus. As described above, the Berkeley Start-up Cluster is attempting to address these problems by supporting development of the near-to-campus entrepreneurial ecosystem. As companies get established and grow in Downtown they will inevitably begin looking for larger spaces. The City is working to encourage them to consider locating in larger industrial and office spaces in West Berkeley. Zoning changes made in recent years were intended to increase the number of research and development firms, some of which will eventually decide to manufacture new products in West Berkeley.

To help seed the ground, the City's Office of Economic Development is actively working with the City of Emeryville to promote its Berkeley/Emeryville BIO branding strategy. This is an effort to support the cluster of life science and bio pharmaceutical companies concentrated in the two cities. Together, West Berkeley and Emeryville have more bio-lab space than Mission Bay in San Francisco. The two cities are working actively to document the cluster, host regular meet­ up events, and support the growth of new bio-lab spaces that can accommodate additional growth.

West Berkeley hosts an incubator for bioscience businesses seeking to commercialize their innovations. The QB3 East Bay Innovation Center (EBIC) is modeled on the highly successful "QB3 Garage" incubator at UCSF and is the result of a unique public-private sector partnership between UC Berkeley, UCSF, Lawrence Berkeley National Laboratory, Wareham Development, and the cities of Berkeley and Emeryville. Over 50% of the space in QB3 EBIC is devoted to top-quality wet-laboratories, with the balance of the suite being support functions, offices, common lunch and break area, and a formal conference room for important meetings.

Significantly, Berkeley is now experiencing some substantial development of new buildings that will further support the local bioscience industry. A new 105,000 square foot bio-lab building at 740 Heinz in West Berkeley is due to be completed in the fall of 2015 that will provide important growth and retention space for emerging companies. Bayer HealthCare announced in April 2015 that it will invest $100 million to build a new product testing facility at the company's 45-acre West Berkeley manufacturing site that will support their next generation of hemophilia A therapies. Bayer is the City's largest private sector employer so this announcement was a significant vote of confidence in Berkeley's as a good place for bio-pharmaceutical investment.

(e). Generate GIS-based economic data to monitor and analyze local business trends and help fill commercial vacancies: Economic Development staff has recently updated its complete GIS ground floor space inventory in all the City's commercial districts. This effort has proven valuable as an analytic tool and staff has been able to generate reports that outline and assess sectoral and sub-sectoral trends within specific commercial neighborhoods. For the commercial vacancy website referenced above, staff has also completed an inventory and contact listing of all commercial spaces within five blocks of the U.C. Berkeley Campus in order to attract and incubate new companies emerging from the University and Lawrence Berkeley National Lab. Staff eventually intends to generate similar data for the West Berkeley industrial area as resources permit.

(/). Market Berkeley's visitor appeal and support Berkeley's Hotel/Motel Industry: The City provides annual support to Visit Berkeley (the Berkeley Convention and Visitors' Bureau) for its comprehensive marketing efforts aimed at promoting local tourism and hospitality services. The Berkeley Convention and Visitors' Bureau also runs the Berkeley Film Office that markets the

16 December 22, 2015 Presentation of the Comprehensive Annual Financial Report Page 17

City to the film and television industry. In FY 2013, Council approved a "Tourism Business Improvement District" that assesses all of the City's hotel and motel properties for the purposes of promoting increased tourism to Berkeley. This BID effectively doubled the budget of Visit Berkeley and has already had a very positive impact on the local visitor industry.

(g). Build on Berkeley's strength as a regional hub o(arts and culture: More than 130 arts and cultural organizations comprise an arts community that collectively is among the largest employment sectors in Berkeley. The arts provide some 3,400 jobs, reach an annual audience of 1. 7 million people, and have a combined budget of approximately $70 million. Arts, culture, entertainment and restaurants help drive the City's economic engine. The City provides substantial support to the Berkeley Art Center and also small annual arts grants to approximately 60 non-profit arts groups. The City also provides funds for public art commissions based on a 1.5 percent for art program that is tied to City building and infrastructure spending.

Recent public art commission's program include a series of installations on utility boxes throughout the Downtown area. In FY 2015, the City supported several new installations on boxes along Adeline and Telegraph A venue. The Civic Arts Commission has paid for a public art consultant to participate with urban designers on a current effort to redesign the streetscape along Telegraph A venue. Paid for mostly with a U.C. Berkeley Chancellor's Grant, the Telegraph Avenue Public Realm Plan is creating the framework to guide sidewalk and pedestrian improvements in the portion of Telegraph A venue that is immediate to the South of Campus. The Civic Arts Commission has also committed similar funding to provide a public art consultant to the current Adeline Corridor Plan effort now underway in South Berkeley.

Significant new development of Downtown arts and cultural institutions as described above (The U.C. Theatre and the new Berkeley Art Museum/Pacific Film Archive) has the potential to cement Downtown Berkeley as the richest ( and transit accessible) concentration of arts and cultural institutions in the Bay Area. Another exciting development in the local art scene was the recent announcement that the William and Flora Hewlett Foundation has given a $50,000 matching grant to the City of Berkeley to update its 2004 Cultural Plan. This money will be matched by an additional $50,000 from a U.C. Chancellor's Grant and the City's public art budget. When completed, the updated Plan will provide a blueprint for building the strength of Berkeley's arts programs and institutions that have established the City as a regional center for the arts, culture and entertainment.

5. CLIMATE ACTION PLAN

The Berkeley Climate Action Plan was adopted by City Council on June 2, 2009. The Plan guides the development and implementation of actions that reduce Berkeley's greenhouse gas emissions. The Plan includes the following: • An inventory of Berkeley's main greenhouse gas emissions sources • A forecast of how those emissions are expected to change over time • Recommendations for actions the City government and community can implement to achieve greenhouse gas reductions and other community benefits such as increased green job opportunities, enhanced community sustainability and resiliency, and improved public health

17 December 22, 2015 Presentation of the Comprehensive Annual Financial Report Page 18

• A timeline for the Plan's implementation, including identifying specific actions, existing and potential costs, and funding sources

In fiscal year 2015, the City advanced implementation of the Climate Action Plan in several important ways, including: (a). New Building Energy Saving Ordinance (BESO ): With nearly half of all Berkeley's greenhouse gas emissions resulting from building energy use, the City passed the Building Energy Saving Ordinance (BESO) to make building energy information more transparent and user-friendly. BESO was adopted by City Council on March 10, 2015 requiring all buildings in Berkeley to complete energy assessments. An energy assessment is the first step towards understanding what specific measures can be taken to make a building more efficient, safe, and comfortable. BESO energy assessments provide building owners and prospective buyers easy-to-understand energy data about building performance and information about available incentives to propel energy upgrades. Starting in December 2015, all medium and small buildings, including single family homes will be required to complete an energy assessment at time of sale. Larger buildings will be required to comply on a regular phase-in schedule as well. BESO replaces the Residential and Commercial Energy Conservation Ordinances (RECO and CECO). (b). Streetlight Retrofit: The City completed converting all 8,000 streetlights in Berkeley to energy efficient light emitting diode (LED) lighting. Streetlights make up over 30% of the City's municipal electricity load. The LED streetlight retrofit is expected to cut the energy and greenhouse gas emissions associated with streetlights in half and save over $380,000 in utility costs annually while improving the light quality and distribution of light. (c). Electrical Vehicles: The City continued its efforts to encourage electric vehicles (EV) by removing barriers for EV adoption and increasing EV infrastructure and providing technical assistance and streamlined permitting for both residential and commercial EV charging stations. The City received a grant from the 11th Hour Project to launch a Residential Curbside Electrical Vehicle Charging Pilot Program. The Pilot allows Berkeley residents who lack a garage or driveway to install an EV charging station out front of their homes. In FY2015, the City also approved contracts to add public EV charging stations at the Telegraph/Channing Garage, Oxford Garage and at the Berkeley Marina. An EV produces approximately 70% less emissions than a conventional vehicle. By the end of FY2105, Berkeley had an estimated 700 electric vehicles, doubling the number of EV s in the last 16 months. (d). Resiliency and Climate Adaptation: The Rockefeller Foundation named Berkeley as a grantee of the 100 Resilient Cities in December 2013. As part of the 100 Resilient Cities Network, Berkeley staff is working with regional, state, and federal government agencies to better prepare the community for a range of shocks and stresses, including earthquake and climate change. During the first phase of the resiliency strategy process, Berkeley conducted a risk assessment and inventory of physical assets and systems, and their vulnerability. In addition, the City has begun investigating clean­ powered microgrid energy systems that could be used to provide emergency back-up power for key Berkeley buildings in case of a major loss of power.

18 December 22, 2015 Presentation of the Comprehensive Annual Financial Report Page 19

(e). Georgetown University Energy Prize: The City became a semifinalist in the Georgetown University Energy Prize. It is a friendly competition between small and medium sized cities to see which city can save the most energy over a two year period, beginning January 2015. The winning city will receive a $5 million prize towards making the city more sustainable and energy efficient. The City is offering rebates for home energy assessments to residents and mini-grants for teachers to educate their students about energy efficiency. (!). Tracking our Progress on Climate Action Plan Metrics and Goals: The City monitors and reports a range of metrics designed to illustrate the status of progress toward meeting our Climate Action Plan and greenhouse gas emissions reduction goals. The most recent data (2013) show that community-wide greenhouse gas (GHG) emissions, including emissions from transportation, building energy use, and solid waste disposal, are approximately 9% below year 2000 baseline levels. These metrics and a range of others are available online at www.cityotberkeley.info/climateprogress

Using the Climate Action Plan as a guide, the City will continue to advance efforts to reduce local greenhouse gas emissions and achieve other associated benefits.

6. LEGISLATIVE IMPACTS/SUCCESSOR AGENCY TO THE BERKELEY REDEVELOPMENT AGENCY

The City of Berkeley is the Successor Agency and the Successor Housing Agency to the Berkeley Redevelopment Agency and is responsible for compliance with the Dissolution Act. As the Successor Agency, the City is required to make payments and perform other obligations of the former Redevelopment Agency, to dispose of assets or properties, and to wind down all other Redevelopment affairs.

A finding of completion was granted by the State Department of Finance (Finance) approving the 1997 Tax Allocation Bonds issued by the former Redevelopment Agency and purchased by the City of Berkeley as an enforceable obligation; allowing the Agency to place the loan on the Recognized Payment Schedule (ROPS); and to utilize proceeds derived from bonds issued prior to January 1, 2011 in a manner consistent with the original bond covenants.

The Successor Agency was authorized to transfer 1631 Fifth Street, 1654 Fifth Street, the D&E residential owner-occupied deed restricted properties, and the Delaware Street historical development residential owner-occupied and commercial condominium properties from the Agency to the City of Berkeley (City), acting as successor agency for housing.

The remaining 2005 Refunding Tax Allocation Bonds proceeds were transferred from the Successor Agency to the City of Berkeley to fund these projects. 1) Bicycle Crossing Improvement Project, 2) Pave Sidewalks NW Berkeley and 3) Conduct Gilman overcrossing preliminary study. In accordance with AB 1484, Health and Safety Code Section 34191.4(c) (1) and (2), bond proceeds shall be used for the purposes for which the bonds were sold. Section ( c) (2) expressly allows the creation of new enforceable obligations to expend the excess bond proceeds in a manner consistent with the original bond covenants.

19 December 22, 2015 Presentation of the Comprehensive Annual Financial Report Page20

AWARDS

The Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City for its Comprehensive Annual Financial Report for the fiscal year ended June 30, 2014. In order to receive this prestigious award of the Certificate of Achievement, the city must publish and submit such report to the GFOA for their evaluation. This report satisfied both generally accepted accounting principles and applicable legaJ requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive annual financial report continues to fulfill the Certificate of Achievement Program's requirements and we are submitting it to the GFOA to determine its eligibility for another certificate.

The City also received the GFOA's award for Distinguished Budget Presentation for the biennium (two-year period) beginning July 1, 2013 and staff plans to pursue that award for the cmTent budget.

ACKNOWLEDGMENTS

The preparation of this report could not be accomplished without the efforts of the following individuals: Accounting Manager, Marvin Tam, the CAFR Project Lead, Victor Lo and the entire Accounting Division of the Finance Depa1iment as well as the City's Budget Manager, Teresa Berkeley-Simmons. The accounting Firm of Badawi & Associates, CPA, and the continued support of sound financial management by Mayor Tom Bates and the City Council.

Due to the efforts of the entire City staff, the City's accounting and financial reporting systems continue to improve, as well as the quality of the information being reported to our citizens, the City Council, Department heads and Managers, Bond-holders, Federal, State and County agencies, and to other users of the City's financial reports.

Henry Oyekan · Director of Finance

20 Government Finance Officers Association

Certificate of Achievement for Excellence in Financial Reporting

Presented to City of Berkeley California

For its Comprehensive Annual Financial Report for the Fiscal Year Ended

June 30, 2014

Executive Director/CEO

21 ' Board Trustees I Library Stabilization of Rent STRUCTURE" Board / \. ,I " COUNCIL 11 & Manager 2015 ELECT City CJ?VE"RNt:1E"NT CITIZENS Mayor APPOINTMENT / ' ' ~E"RKE"LE"Y I Auditor ?F" Commissions City & CITY Boards / '

22 DIRECTORY OF CITY OFFICIALS

ELECTED OFFICIALS

City Auditor - Ann-Marie Hogan

Mayor - Tom Bates Vice-Mayor - Linda Maio

Council members

Linda Maio Darry1 Moore Max Anderson Jesse Arreguin Laurie Capitelli Susan W engraf Kriss Worthington Lori Droste

APPOINTED BY CITY COUNCIL

Interim City Manager - Dee Williams-Ridley

23 CITY OF BERKELEY

ORGANIZATIONAL CHART

CITIZENS OF BERKELEY RENT STABILIZATION BOARD CITY AUDITOR

BOARDS & COMMISSIONS MAYOR & COUNCIL ------POLICE REVIEW ----- COMMISSION BOARD OF LIBRARY TRUSTEES I I LIBRARY I

CITY MANAGER DEPUTY CITY MANAGER

I I

CITY CLERK CITY A HORNEY HUMAN RESOURCES

I I I I

HEALTH , HOUSING & PUBLIC WORKS COMMUNITY SERVICES

INFORMATION TECHNOLOGY I I

ECONOMIC DEVELOPMENT PARKS, RECREATION & WATERFRONT

I I FINANCE FIRE PLANNING

I I I I I I

BUDGET & FISCAL POLICE MANAGEMENT I I

24 25 THIS PAGE LEFT INTENTIONALLY BLANK

26 INDEPENDENT AUDITORS’ REPORT

To the Honorable Mayor and Members of City Council of the City of Berkeley Berkeley, California

Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business- type activities, the discretely presented component units, each major fund, and the aggregate remaining fund information of City of Berkeley, California (City), as of and for the year ended June 30, 2015, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s 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 entity’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 entity’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.

Address: 180 Grand Avenue, Suite 1500 Oakland, CA 94612 • Phone: 510.768.8251 • Fax: 510.768.8249

27 To the Honorable Mayor and Members of City Council of the City of Berkeley Berkeley, California Page Two

Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the discretely presented component units, each major fund, and the aggregate remaining fund information of the City, as of June 30, 2015, and the respective changes in financial position, and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of a Matter Management adopted the provisions of Governmental Accounting Standards Board Statement 68 – Accounting and Financial Reporting for Pensions, which became effective June 30, 2015. See Note (III) IV A to the financial statements for disclosure related to the restatement of beginning Net Position. The emphasis of this matter does not constitute a modification to our opinion. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis on pages 31-48, budgetary comparison information 156-158, and pension information on pages 159 to 169, and schedules of funding progress other post-employment benefit plans on page 170 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.

28 To the Honorable Mayor and Members of City Council of the City of Berkeley Berkeley, California Page Three

Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The introductory section, combining and individual nonmajor fund financial statements and budgetary comparison schedules on pages 174 and 202-222, statistical section, and continuing annual disclosure are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual nonmajor fund financial statements and budgetary comparison schedules on 174 and 202-222 are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual nonmajor fund financial statements and budgetary comparison schedules are fairly stated in all material respects in relation to the basic financial statements as a whole. The introductory and statistical sections, and continuing annual disclosure have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them.

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 22, 2015, on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering City’s internal control over financial reporting and compliance.

Badawi and Associates Certified Public Accountants Oakland, California December 22, 2015

29 THIS PAGE LEFT INTENTIONALLY BLANK

30 MANAGEMENT'S DISCUSSION AND ANALYSIS

As management of the City of Berkeley, we offer readers of the City of Berkeley's financial statements this narrative overview and analysis of the financial activities of the City of Berkeley for the fiscal year ended June 30, 2015. We encourage readers to consider the information presented here in conjunction with additional information that we have completed in our letter of transmittal, which can be found on pages 1-20 of this report. All amounts, unless otherwise indicated, are expressed in millions of dollars.

Financial Highlights

• The City's assets and deferred outflows ofresources exceeded its liabilities and deferred inflows of resources by $5.9 million at the close of the fiscal year ended June 30, 2015. Included in this amount was a balance of ($412.4) million in unrestricted net position. Unrestricted net position is net position that may be used to meet the City's ongoing obligations to citizens and creditors. The situation of negative amount was due to the implement of GASB STATEMENT N0.68 of Accounting and Financial Reporting for Pensions during the year.

• During the year, the City's total Deferred Outflows of Resources increased to $32.3 million and $6.5 million respectively for the governmental activities and business type activities. Deferred outflows of resources represent a consumption of net assets by the government that is applicable to a future reporting period. The government has only one type of item, which arises only under accrual basis of accounting that qualifies for reporting in this category. GASB Statement 68 requires recognition of deferred outflows of resources for changes in the net pension liability of employers that arise from several types of events. Accordingly, the item, deferred outflows of resources, is reported only in the Statement of Net Position under the government-wide financial statements. Those requirements include recognition by an employer of a deferred outflow of resources for its contributions made to a defined benefit pension plan between the measurement date of the report net pension liability and the end of the employers reporting period.

• During the year, the City's total net position increased by $14.2 million from ($8.3 restated) million to $5 .9 million. Governmental activities revenues decreased by $7 .1 million while governmental activities expenses increased by $14.8 million. Business-type activities revenues increased by $9.5 million, while business activities expenses increased by $2.3 million.

• As of June 30, 2015 the City's governmental funds reported a combined ending fund balance of $198.9 million, an increase of $10.6 million. Approximately 28.5% percent of this total amount ($56.7 million) is available for spending at the government's discretion (Assigned to and unassigned fund balance).

• The total cost of all City programs increased by $17.1 million from $298.9 to $316.0 million. This was accounted for primarily by increases (decreases) in the following functions/activities: $11.3 million in Public Safety, $5.0 million in Highways and Streets, ($1. 7) million in Interest on long-term debt, $1.8 million in Permit Service Center.

• As of June 30, 2015 the assigned to and unassigned to fund balance for the General fund was $49.6 million or 33.1 % of FY 2015 total General fund expenditures and transfers out.

• The City's total long-term debt decreased by $70.2 million during the current fiscal year. The beginning long-term debt balance for governmental activities increased by $418.4 million as a result of GASB Statement No.68 implementation. During the year, the long-term debt for the City's governmental funds decreased by $52.5 million. This decrease was accounted for by the following: (1) regular principal payments of ($3.7) million; (2) increase in note payable for a new note from California Energy Resources Conservation for $3.0 million and decrease in note payable due to an early payment of note payable for ($4.0) million; (3) decrease in compensated absence payable of ($1.0) million ; ( 4) decrease of police sick leave liability (PORAC) of ($.6)

31 million; (5) decrease in net pension liability for CalPERS Miscellaneous plan ($32.2) million, CalPERS Fire plan ($12.9) million and CalPERS Police plan ($14.9) million; (6) increase of police retirement income plan of $6.8 million; (7) increase in police retiree premium assistance plan of $5.6 million; (8) an increase in miscellaneous employee retiree health plan of $1.8 million.

• The long-term debt for business activities decreased by $17.7 million. The beginning long-term debt balance increased by $71.0 million as a result of GASB Statement No.68 implementation. During the year, the long-term debt for the City's business activities decreased by $17.7 million. This decrease was accounted for by the following: (1) decrease in refunding of lease revenue bonds ($3.9) million; (2) decrease in note payable of (.7) million; (3) decrease in compensated absence payable of ($.6) million; ( 4) decrease in net pension liability for miscellaneous employees ($12.9) million and (5) increase in net pension obligations for miscellaneous employees for $.4 million.

• During the year, the City's deferred inflows of resources increased to $60.0 million and $12.5 million for the governmental activities and business type activities respectively. Deferred inflows ofresources represent an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The government has only one type of item, which arises only under modified accrual basis of accounting that qualifies for reporting in this category. Accordingly, the item, unavailable revenue, is reported only in the governmental fund balance sheet. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available. Statement 68 requires the recognition of differences between projected and actual earnings on pension plan investment as an increase (decrease) in pension expense for current portion. For future portion, it is treated as deferred inflows of resource, is reported only in the Statement of Net Positon under the Government-wide financial statements, and to be amortized for the next four years.

Overview of the Financial Statements

This discussion and analysis is intended to serve as an introduction to the City of Berkeley's basic financial statements. The City's basic financial statements are comprised of three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves.

Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of the City's finances, in a manner similar to a private sector business. The statement of net position presents information on all of the City's assets, deferred outflow, deferred inflow and liabilities. The difference between the assets plus deferred outflow and liabilities plus deferred inflow is reported as "Net Position". Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position is improving or deteriorating. You will need to consider other nonfinancial factors, such as changes in the City's property tax base and the condition of the City's roads, to assess the overall health of the City. The statement of activities presents information showing how the government's net position changed during the fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods ( e.g., uncollected taxes and earned but unused vacation leave). Both of the government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City include all of the City's basic services that are considered to be governmental activities: general government, public safety,

32 highways and streets, health and welfare, culture-recreation, community development/housing and economic development. Property taxes, business license taxes, transient occupancy taxes, sales taxes, utility users' taxes, ambulance fees and franchise fees finance most of these activities. The business-type activities of the City include a Parking related operation, a Clean Storm Water operation, a Marina, a Sanitary Sewer operation, a Refuse Collection and Disposal operation, a Permit Service Center, and Building Purchases and Management. The government-wide financial statements include not only the City itself (known as the primary government), but also a legally separate Rent Stabilization Board for which the City is financially accountable. Financial information for this component unit is reported separately from the financial information presented for the primary government itself. The City adopted GASB Statement No.68, Accounting and Financial Reporting for Pensions; GASB Statement No.69, Government Combinations and Disposal of Government Operations, and GASB Statement No.71, Pension Transition for Contribution Made Subsequent to the Measurement Date. Implementation of GASB Statement No.68 amended GASB Statement No.27, Accounting for Pensions by state and local government employers, GASB Statement No.68 differs from GASB Statement No.27 in the following ways: ( 1) All affected agencies will recognize pension liability or assets; (2) Net pension liability drives pension expense; (3) Pension expense no longer equal to the ARC and with shorter amortization periods; and ( 4) Additional note disclosures and RSI. Whereas, GASB Statement No.27 recognized that (1) Net pension obligation (NPO) if plan sponsor (employer) did not contribute Annual Required Contribution (ARC); and (2) Pension Expense based on ARC/Contribution. This Statement applies to the City's California Public Employees' Retirement System; Berkeley Police Retirement Income Benefit Plan and Safety Members Pension Fund. Implementation of GASB Statement No.69, Government Combinations and Disposal of Government Operations, requires measurements of assets acquired and liabilities assumed generally to be based upon their acquisition values. It also provides guidance for transfers of operations that do not constitute entire legally separate entities in which no significant consideration is exchanged. Implementation of GASB Statement No.71, Pension Transition for Contribution Made Subsequent to the Measurement Date, by recognizing its contribution as a deferred outflows of resources and deferred inflows of resources when a state or local government employer or non-employer contributing entity makes a contribution to a defined benefit pension plan between the measurement date of the reported net pension liability and the end of the government's reporting period. All financial statements set forth below reflects the restatement of the City's financial statements due to adoption of the GASBs as of and for the fiscal year ended June 30, 2015. The government-wide financial statements can be found on pages 50-51 of this report.

Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City of Berkeley, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Some funds are required to be established by State law and by bond covenants. However, the City Council establishes many other funds to help it control and manage money for particular purposes or to show that it is meeting legal responsibilities for using certain taxes, grants, and other money. All of the funds of the City of Berkeley can be divided into three categories: governmental, proprietary, and fiduciary.

• Governmental funds-Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government's near-term financing decisions. Both the governmental fund balance sheet and the

33 governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City of Berkeley maintains 85 individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the General fund, Grant fund, Library fund and Capital Improvements fund, all of which are considered to be major funds. Data from the other 81 governmental funds are combined into a single, aggregated presentation. The City of Berkeley adopts an annual appropriated budget for its General fund, special revenue funds, capital project funds, and debt service funds. The budgetary comparison schedules have been provided for the General Fund, Library Fund and major Special Revenue Funds to demonstrate compliance with this budget under "Required Supplementary Information other than MD&A section". The basic governmental fund financial statements can be found on pages 52-5 5 of this report. • Proprietary funds-The City of Berkeley maintains two different types of proprietary funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City of Berkeley uses enterprise funds to account for its, Zero Waste, Marina Operation/Maintenance, Sanitary Sewer, Clean Storm Water, Permit Service Center, Off-Street Parking, Parking Meter, and Building Purchase and Management operations, which are all considered to be major funds of the City of Berkeley. Internal service funds are an accounting device used to accumulate and allocate costs internally among the City of Berkeley's various functions. The City of Berkeley uses internal service funds to account for its equipment maintenance replacement, building maintenance, central services, computer replacement, workers' compensation program, sick leave and vacation payout, public liabilities, and catastrophic loss reserves. Because these services predominantly benefit governmental rather than business-type functions, they have been included within governmental activities in the government-wide financial statements. Proprietary funds provide the same type of information as the government-wide financial statements, only in more details. The eight internal service funds are combined into a single, aggregated presentation in the proprietary fund financial statements. Individual fund data for the internal service funds is provided in the form of combining statements elsewhere in this report. The basic proprietary fund statements can be found on pages 56-59 of this report. Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statement because the resources of those funds are not available to support the City of Berkeley's own programs. The accounting used for fiduciary funds is much like that for proprietary funds. The basic fiduciary fund financial statements can be found on pages 60-61 of this report. Notes to the financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 63-150 of this report.

Notes to the Private Trust Funds of the Successor Agency. The notes provide additional information that is essential to a full understanding of the data provided for the transition from the Berkeley Redevelopment Agency as governmental funds to the Successor Agency as the Private Trust Funds. The notes can be found on pages 151-154 of this report

Other information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the City of Berkeley's progress in funding its obligation to provide pension benefits and other postemployment benefits to its employees. Required supplementary information can be found on pages 156-171 of this report.

The combining statements referred to earlier in connection with non-major governmental funds and internal service funds are presented immediately following the required supplementary information

34 on pensions and other postemployment benefits. Combining and individual fund statements and schedules can be found on pages 173-234 of this report.

Government-wide Financial Analysis

As noted earlier, net assets may serve over time as a useful indicator of a government's financial position. In the case of the City of Berkeley, assets exceeded liabilities by $5.9 million at the close of the fiscal year ended June 30, 2015. By far the largest portion of the City of Berkeley's net position $293 million reflects its investment in capital assets ( e.g., infrastructure, land, buildings, machinery and equipment, construction in progress); less any related debt used to acquire those assets that are still outstanding. There was a decrease of $1.4 million from $294.4 million in FY2014 down to $293 million in FY2015. The City of Berkeley uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City of Berkeley's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities.

35 Table 1 City of Berkeley Statement of Net Position (In Millions)

Governmental Business type Activities Activities Total 2015 2014 2015 2014 2015 2014 Assets: Current and other assets $ 292.6 $ 278.8 (a)(i) $ 57.3 $ 49.0 $ 349.9 $327.7 Capital assets 216.4 222.8 172.2 168.7 388.6 391.5 Total assets 509.0 501.5 229.5 217.7 738.5 719.2

Deferred Outflows of Resources: Deferred outflows on pension plan employer contribution 32.3 32.3 (a)(ii) 6.5 6.8 (b )(i) 38.7 39.0 Total Deferred Outflows of Resources 32.3 32.3 6.5 6.8 38.7 39.0

Liabilities: Other liabilities 46.9 45.0 5.2 4.6 52.2 49.6 Long-term debt outstanding 552.0 604.5 ( a)(iii) 94.8 112.5 (b )(ii) 646.8 717.0 Total liabilities 598.9 649.4 100.0 117.1 699.0 766.6

Deferred Inflows of Resources: Deferred inflows on difference between projected and actual earnings on pension plan investments 60.0 12.5 72.4 Total Deferred Inflows of Resources 60.0 12.5 72.4

Net position: Net Investment in Capital Assets 144.1 153.3 148.8 141.1 293.0 294.4 Restricted for Debt services 10.3 9.9 3.6 10.3 13.4 Restricted for Special purposes 103.1 98.1 103.1 98.1 Restricted for Capital project 12.0 14.9 12.0 14.9 Unrestricted {387.1} {391.9} {25.3} {37.3} {412.4} {429.2}

Total net position ${117.6} ${115.6} $123.4 $107.3 $ 5.9 $ {8.3}

(a) FY2014 totals ofGovernmental Activities net position have been restated due to GASB68 for a decrease of$388,829, 796 as followings: (i) Decrease of CALPERS net pension asset (other assets) by $2, 722,905 (ii) Increase ofdeferred outflows by $32,284,7 33 (ii) Increase of long term debt(Net pension liability) by $418,391,624 (b) FY2014 totals of Business Activities net position have been restated due to GASB68for a decrease of$64,223,429 as followings: (i) Increase ofdeferred outflows by $6,7 53,162 (ii) Increase of long term debt(Net pension liability) by$ 70,976,591

The restricted component of Net Position $125.4 million represents debt services, special purposes, and capital project requirements. There was an increase of $1.0 million from $124.4 million in FY2014 up to $125 .4 million in FY2015. The remaining balance of unrestricted component of Net Position $(412.4) million may be used to meet the City's ongoing obligations to citizens and creditors. There was an increase of $16.8 million from $(429.2) million in FY2014 up to $(412.4) million in FY2015. At June 30, 2015 and June 30, 2014, the City reported negative balances in unrestricted net assets for its governmental activities and business-type activities after adjusting to GASB Statement No.68 for Accounting and Financial Reporting for Pension. The City's net position was ($117.6) million and $123.4 million from governmental activities and business type activities respectively.

36 Governmental activities. Governmental actlv1tles decreased the City's net pos1t1on by ($2.0) million in FY 2015. Business-type activities increased the City's net position by $16.1 million. Key elements of these changes are as follows:

Table 2 Statement of Activities and Changes in Net Position Governmental Business-type Activities Activities Total {In Millions) 2015 2014 2015 2014 2015 2014 Revenues Program revenues: Charges for services 20.1 28.1 93.5 84.0 113.6 112.1 Operating contributions and grants 33.3 33.1 0.4 33.7 33.1 Capital contributions and grants 2.0 2.4 2.0 2.4 Total program revenues 55.4 63.6 93.9 84.0 149.3 147.6 General revenues Taxes: Property taxes For general purposes 73.7 70.3 73.7 70.3 For debt service 7.8 7.7 7.8 7.7 For special purposes 33.3 32.3 33.3 32.3 Sales taxes 17.1 16.6 17.1 16.6 Utility users taxes 14.4 14.4 14.4 14.4 Transient occupancy taxes 7.1 6.3 7.1 6.3 Business license tax 16.1 15.4 16.1 15.4 Other taxes 3.9 3.1 3.9 3.1 Investment income 2.5 4.1 0.0 0.4 2.5 4.5 Miscellaneous 5.1 9.7 5.1 9.7

Total general revenues 181.0 179.9 0.0 0.4 181.0 180.3 Total revenues 236.4 243.5 93.9 84.4 330.3 327.9 Expenses General government 31.5 30.1 31.5 30.1 Public safety 106.8 95.5 106.8 95.5 Highways and streets 19.7 14.7 19.7 14.7 Health and welfare 19.4 20.0 19.4 20.0 Culture and recreation 35.5 36.8 35.5 36.8 Community development/housing 17.7 17.8 17.7 17.8 Economic development 3.9 3.1 3.9 3.1 Interest on long-term debt 3.8 5.5 3.8 5.5 Parking related 8.9 8.4 8.9 8.4 Marina operations and maintenance 5.1 5.6 5.1 5.6 Sewer services 13.5 13.2 13.5 13.2 Clean storm water 2.9 3.1 2.9 3.1 Refuse services 32.6 32.0 32.6 32.0 Permit service center 12.0 10.2 12.0 10.2 Building purchase and management 2.7 2.9 2.7 2.9 Total expenses 238.3 223.5 77.7 75.4 316.0 298.9

Increase in net position before transfers (1.9) 20.0 16.0 8.9 14.2 28.9 Transfers {0.1} 1.2 0.1 _Qll_ {0.1) Increase (decrease) in net position (2.0) 21.2 16.1 7.6 14.2 28.8

Net position, July 1 (restated) 015.6) 036.8) 107.3 99.7 {8.3) {37.1) Net position, June 30 017.6) 015.6) (a)(i) & (ii) 123.4 107.3 (a)(iii) 5.9 {8.3)

(a) FY2014 totals of Governmental Activities net position have been restated due to GASB68 for a decrease of $388,829, 796 as followings: (i) Decrease ofCALPERS net pension asset (other assets) by $2,722,905 (ii) Increase of deferred outflows by $32,284, 733 (ii) Increase of long term debt(Net pension liability) by $418,391,624 (b) FY2014 totals ofBusiness Activities net position have been restated due to GASB68 for a decrease of $64,22 3,429 as followings: (i) Increase ofdeferred outflows by $6,753,162 (ii) Increase of long term debt(Net pension liability) by $70,976,591

37 Total governmental activities revenues decreased approximately $7.1 million. Key factors in that increase were the following: • Charges for services decreased by $8.0 million or 28.5%, which was attributable to: • A decrease of ($.9) million in regular parking fines revenue, due to reduction of the tickets issued by 14,830 from 159,067 in FY 2014 down to 144,237 in FY 2015. • A net decrease of ($6) million in ambulance fee as a result of an increase in allowance for bad debts of $7.6 million and an increase in receivable of $1.9 million. • Capital grants and contributions decreased by $.4 million. The 4th Bore Caldecott Tunnel and EEM Program grants decreased from $.4 million in FY2014 to almost zero in FY2015.

• Property transfer tax revenue increased by $0.9 million from $14.2 million in FY 2014 to $15 .1 million in FY 2015. The increase was due to an increase in the dollar value of property sales for FY2015, which totaled $1,011,882,867 or $77,375,734 8.28% more than the $934,507,133 in FY 2014. • Secured Property tax revenue increased by $1.8 million from $42.3 million in FY 2014 to $44.1 million in FY 2015. The increase was due to assessed value growth of about 4%. • Sales Tax revenue increased by $.5 million from $16.6 million in FY 2014 to $17.1 million in FY 2015. There were strong sales in Restaurants; Food markets; Furniture/Appliances; Recreation Products. • Transient Occupancy Tax revenue increased by $.9 million. This increase was due to double-digit growth at 6 of the 12 major hotels tracked by City staff, as hotel operators reported high occupancy rates and increases in average room rates. • Investment income decreased ($1.1) million or 31.5% in FY 2015. Investment income is the total interest income earned plus or minus the change in the market value of investments during the fiscal year. GASB Statement No. 31 requires governments to mark investments to market value, whether or not the intent is to hold them to maturity. Interest income during FY 2015 actually totaled $2.6 million. That total was decreased by a $.2 million in the market value of the City's investments in FY 2015, the decrease is mainly due to the city's corporate Bond holdings. There has been some volatility in the market for the past several months which contributed to this decline. In any case, it is the city's intention to hold its investments to maturity.

General Government expenses increased by $1.4 million for the following reasons:

• An increase of license and maintenance contracts of $.5 million for computer software from New World System, SunGard system; Eplus Technology and SBS Security; • An increase of $.4 million for fees and taxes due to Alameda County registrar of voters; • An increase of $.2 million for staff increase from 5 to 8 full time equivalent under Finance counter division; • An increase of $.1 million for insurance premium from Bay Cities Joint Power.

38 Public Safety expenses increased by $11.3 million for the following reasons: • An increase in OPEB expenses of $1.4 million; • An increase in retiree medical expenses of $7 .1 million; • An increase of$. 7 million of overtime expense for police patrol division; • An increase of $.2 million of temporary disability payments for fire suppression division. • An increase in pension expenses due to Net Pension Liability of $.4 million; • An increase in compensated absence expenses of $.3 million; • An increase of CALPERS pension rates for both police and fire employees of 2.249% and 2.892% respectively, which translates into approximately $1 million; Highway and streets expenses increased by $5.0 million in FY 2015. Contributing factors were as follows: • An increase of $2.6 million for LED street light conversion project, which will benefit the City for lower energy cost in the long run. • An increase of $2.2 million for both the Shattuck Reconfiguration and Measure M watershed improvement project;

Culture and recreation expenses decreased $1.3 million for the following reasons: • A decrease of $.5 million for Tuolumne Camp Fire Assessment project; • A decrease of $.2 million for grocery purchased; • A decrease of $.2 million for Measure FF library fund; • A decrease of $.1 million for Echo Lake Camp Pool pro

Economic development expenses increased $.8 million for the following reasons: • An increase of $.8 million for Downtown Berkeley Association for miscellaneous professional fee. Interest on long-term debt expenses decreased by $1. 7 million in FY 2015. Contributing factors were as follows: • Accrued interest expense decreased by $.2 million; • A reduction of $.8 million of interest expenses due to the adjustment of interest payable balance.

The following charts illustrate the City's governmental expenses by function and revenues by source. As shown, General revenues such as property, sales, utility users and business license taxes are not shown by function but are effectively used to support citywide programs. Taxes are by far the largest segment ofrevenues (73.35%) followed by grants and subventions (14.93%) and charges for services (8.50%). Public safety is the largest function in terms of expenses (44.80%), followed by culture and recreation (14.88%), general government (13.21 %), and highway and streets (8.28%).

39 Fiscal Year 2015 Governmental Activities

Sources of Revenue

a Investment Income 1.06%

Other 2.16%

• Functional Expenses ___ • Interest 1.63%

~ ----~ • General Government 13.21% • Culture & Recreatio 14.88%

• Health & Welfar 8.15% • Public Safety 44.80%

• Highways & Streets 8.28%

40 Business-type activities.

The City's Business-type activities provide the same type of information found in the proprietary fund financial statements, but in less detail. During FY 2015, Business-type activities increased the City's net position by $16.1 million. Key elements of this increase are as follows:

• Refuse revenue increased by $4.8 million due to a rate increase of 3%. • Marina operations saw an increase in operational income of$.7 million. • Permit fees increased by $3.1 million. The increase was accounted for by the value of both residential ($65.9 million) and commercial building permits ($16.3 million) issued. There was a significant increase from FY 2014 to FY 2015. • Parking meter fees increased by $1 .3 million. The increase was due to the successful implementation of GoBerkeley Pilot program for the differential parking rates for different areas. • Clean Storm Water saw an increase in transfer in of$1.l million. • An increase in operating grant of $.4 million in Marina operations.

Sources of Revenue • Grants & Business - type Activites Subvention • Investment Income ~~ Q~

41 Program Revenue and Expense Business - type Activities amounts expressed in dollars

$45,000,000

$40,000,000

$35,000,000

$30,000,000 • Revenue $25,000,000 ;Ji ~ a Expense ("') <'!. . N $20,000,000 •N ("') ,...... ("') ("') .... $15,000,000 .... .oco C') $10,000,000 .~-m ,..... '. $5,000,000 NN

$0 O> ro ...... c c Q) E Q) Q) ·.:::: (5 .... "'(.) ~ ~ ~ :x .... Q) ~ Q) .... ro ~ (/) ..., Q) ro (/) -~ l) u E Cl. ~ (/) .... 5 Q) Cl. · O> Q)~ ~ E O> ~ <3 ~ Q) c ro .2 Cl. Q) '6 ~ 0:: =s Ol5 al

Financial Analysis of the City's F unds

As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements.

Governmental funds. The focus of the City's governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City's financing requirements. In particular, Assigned to and unassigned fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year.

As of June 30, 2015, the City's governmental funds reported combined fund balances of $198.9 million, an increase of $10.6 million from the prior fiscal year.

The General Fund is the chief operating fund of the City. As of June 30, 2015 fund balance for "assigned to" and "unassigned" of the General Funds are $3.8 and $45.8 million respectively, and total fund balance was $53.3 million. As a measure of the General Fund's liquidity, it may be useful to compare both assigned to and unassigned fund balance and total fund balance to total expenditures. Assigned and unassigned fund balance represents 3 3 .1% of total General Fund expenditures and transfer out of $149.9 million, while total fund balance represents 35.5% of that same amount.

42 • The fund balance of the City's General Fund increased by $7.6 million, due to a revenue increase of $4.7 million and a decline in expenditures of ($3.7 million). The increase in operations was accounted for by the following: o The General Fund generated an excess of revenues over expenditures in FY 2015 of $18.1 million, as revenues totaled $153.0 million and expenditures totaled $135.0 million; and, o General Fund transfers out in FY 2015 totaled ($14.9 million), which exceeded transfers in of $4.5 million, for net transfers out of ($10.5 million).

• The fund balance of the City's Grants Fund increased by $2.5 million. The increase in operations was primarily accounted for by the following:

o The Grants Fund generated an excess of revenues over expenditures in FY 2015 of $1.6 million, as revenue totaled $19 .3 million and expenditures totaled $17. 7 million. o Intergovernmental revenue decreased by $. 7 million due to some billing issues. o Highway and street saw $1.2 million net decrease in expenditures: o Caltrans Safe Route 2SHC cost decreased by $.7 million, o MTC cost decreased by $.3 million, o CALTRANS Grants cost decreased by $.2 million. o Community development and housing expenditures saw a net decrease of $.5 million. o Grants Fund transfers in of $.9 million, which exceeded transfers out of ($.0 million), for net transfers in of $.9 million.

• The fund balance of the Library Fund increased by $0.6 million. The increase was accounted for by an increase of $.5 million in Library tax revenue.

• The fund balance of the City's Capital Improvement Fund increased by $1.7 million. The increase in operations was primarily accounted for by the following: o Expenditure in the CIP fund was $4.3 million over revenue creating an operating deficit. However, this deficit is reversed as transfer in totaling $7. 7 million exceeded transfer out of $1. 7 million

• The fund balance of the Non-Major Governmental Funds decreased by $1.8 million. The decrease in operations was primarily accounted for by the following:

o The Non-major funds generated an decrease ofrevenues over expenditures in FY 2015 of $5.0 million, as revenues totaled $50.5 million and expenditures totaled $55.5 million. This decrease was mainly due to an insurance reimbursement of $5.6 million for fire damage to the Tuolumne Camp under miscellaneous revenue in FY 14 but no such occurrence in FY 15. General Fund Budgetary Highlights:

The City Council approved an original annual appropriation ordinance of $323,370,010 and made supplementary budget appropriations totaling $71,215, 733 during the year. The supplementary budget appropriations consisted of the following: ( 1) FY 2014 outstanding encumbrances of $22,620,820; (2) unencumbered carryovers of $14,219,893; and (3) other budget adjustments of $34,375,020.

43 General fund expenditures were $4.8 million less than the approved budget, and the following functions accounted for most of this total:

• General government - $3 .1 million under budget due to personnel savings from vacancies and lower benefit costs and non-personnel savings. • Highway and Streets- $.2 million under budget due to personnel savings from vacancies and lower benefit costs and non-personnel savings • Health and welfare- $.3 million under budget due to personnel savings from vacancies and lower benefit costs and non-personnel savings. • Culture and recreation- $.2 million under budget due to personnel savings from vacancies and lower benefit costs and non-personnel savings. • Community Development & Housing- $.8 million under budget due to personnel savings from vacancies and lower benefit costs and non-personnel savings.

Proprietary funds. The City's proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. Please refer to Statement of Net Position and Statement of Revenues, Expenses, and Changes in Net Assets of Proprietary Funds for the below information:

Total net position of the enterprise funds as of June 30, 2015 and the changes in net position are summarized below:

Net Position as of Net Position as of (a) Changes - Increase Fund June 30, 2015 June 30, 2014 (ii) {Decrease} Zero Waste $ (16,583,665) $ (22,202,895) $ 5,619,227 Marina Operations 1, 113,295 (373,457) 1,486,750 Sanitary Sewer 112,393,108 113,086,209 (693,101) Clean Storm Water 15,799,347 15,280,214 519,132 Permit Center (2, 198,807) (7 ,496,221) 5,297,414 Off-street Parking 16,193,994 14,870,439 1,323,554 Parking Meter (1,240,157) (3,281,079) 2,040,920 Building Purchase and Management (3,874,048) (3 ,326, 861) (547,186) Total $ 121,603,068 $ 106,556,357 $ 15,046,710

(a) FY2014 totals have been restated due to GASB68 of Accounting and Financial Reporting for Pensions (ii) Business-type Activities decreased net position by $64,233.429

• The net increase of $5.6 million in net position in the Zero Waste resulted from the following: o Key factors for the increase in Zero Waste Fund: Operating revenues $38.9 million exceeded operating expenses $33.1 million by $5.8 million. The non-operating expenses totaled $.03 million and net transfers-out totaled $.1 million.

• The net increase of $1.5 million in net position in the Marina operations was primary due to the following reasons:

44 o Key factors for the increase in Marina operations Fund: Operating revenues $6.2 million exceeded operating expenses $4.7 million by $1.5 million. The non-operating revenues totaled $.03 million and net transfers-out totaled $.02 million.

• The net decrease of$. 7 million in net position in the Sanitary sewer was primary due to the following reason:

o Key factors for the decrease in Sanitary sewer Fund: Operating expenses $13. 7 million exceeded operating revenues $13.1 million by $.6 million. The non-operating revenues totaled $.04 million and net transfers-out totaled $.2 million.

• The net increase of $.5 million in the Clean Storm Water Fund was primarily due to the following: o Operating expenses of $3.0 million exceeded operating revenues $2.1 million by $.9 million ; and o Net transfers-in totaled $1.4 million.

• The net increase of $5 .3 million in the Permit Service Center Fund net position was primarily due to the following: o Operating revenues of $17.9 million exceeded operating expenses $12.1 million by $5.8 million, and o Net transfers-out totaled $.5 million.

• The net increase in the net position of $3.3 million for the Parking-related Operation consisted of a $1.3 million increase for Off-Street Parking Operations and an increase of $2.0 million in net assets for Parking Meter operations. This compared to an increase in net position of $2.5 million in FY 2014: $1.1 million for the Off-Street Parking Fund and $1.4 million for the Parking Meter Fund. o Key factors for the Off-Street Parking Operations were: Operating revenues of $3 .9 million exceeded operating expenses of $2. 7 million by $1.2 million. However, it was offset by $.1 million of non-operating expenses and net transfers-out totaled $.2 million, which resulted in net increase of net position of $1.3 million. o Key factors for the increase in Parking Meter Operations: Operating revenues of $9 .2 million exceeded operating expenses of $6.3 million by $2.9 million. However, it was offset by net transfer-out of$.9 million, resulting in a net increase of net position of$2.0 million.

• The net decrease of $.5 million in the Building Purchases and Management Fund net position was primarily due to the following: o There was an operating income of $.2 million, as operating revenues of $2.2 million exceeded operating expenses of $2.0 million. However, it was offset by $.7 million of non­ operating expenses, which resulted in net decrease of net position of $.5 million.

45 CAPITAL ASSETS AND DEBT ADMINISTRATION

Capital assets The City's investment in capital assets for its governmental and business-type activities as of June 30, 2015 totaled $388.6 million (net of accumulated depreciation), which is $2.9 million less than the total as of June 30, 2014. This investment in capital assets includes land, buildings, improvements, machinery and equipment, infrastructure and construction in progress (See Table 3 below.).

• Capital assets for governmental activities decreased by $6.4 million. The decrease was due to the fact that total capital assets added was $8.8 million but the total depreciation expenses was $15 .2 million. • Capital assets for business type activities increased by $3.5 million. The increase was due to the fact that total capital assets added was $.9 million in new garage and $6.8 million in infrastructure for sanitary sewer and clean storm projects but the total deprecation expenses was $5.0 million.

Table 3 City of Berkeley Capital Assets at Year-End (Net of Depreciation, in Millions)

Government Business-Type Activities Activities Total 2015 2014 2015 2014 2015 2014

Land $ 21.8 $ 21.8 $ 3.0 $ 3.0 $ 24.7 $ 24.7 Buildings and improvements 86.0 90.3 22.9 24.0 108.9 114.3 Improvements other than building 10.4 10.6 11.0 10.9 21.4 21.5 Machinery and equipment 16.0 18.7 1.5 1.7 17.5 20.3 Infrastructure 81.9 81.4 132.7 129.0 214.6 210.5 Construction in progress 0.4 0.0 1.1 0.2 1.5 0.2

$216.4 $ 222.8 $172.2 $168.7 $388.6 $ 391.5

Additional information on the City's capital assets can be found in note III C on page 78-80 of this report.

Long-term debt. At year-end, the City had total long-term obligations from governmental activities of $552.0 million, a decrease of $52.5 million or 8. 7% from the previous year (as shown in table 4). The June 30, 2015 total included: $84.6 million in general obligation bonds, $5 .8 million in Certificates of Participation including a premium of $.4 million, $6.0 million in lease revenue bonds including a premium of $2.5 million , $.8 million in pension refunding bonds, $2.0 million in capital lease obligations, loans and notes payable of $10.3 million, $10. 7 million in compensated absences - other, $.5 million in compensated absences - PORAC, and $31.2 million in workers' compensation and public liability judgments and claims. A net OPEB Obligation and Net Pension Obligation of $16.9 million and $383.4 million, respectively, were added. Please refer to Note 1.D to the Financial Statements for more detail.

46 Table 4 City of Berkeley Outstanding Debt, at Year-End (In Millions)

Government Business-Type Activities Activities Total 2015 2014 2015 2014 2015 2014

General obligation bonds -- including $0.4M premium $ 84.6 $ 88.3 $84.6 $ 88.3 Lease revenue bonds -- including $2.5M premium 5.7 6.0 $22.0 $25.9 27.7 32.0 Pension refunding bonds 0.8 1.1 0.8 1.1 Certificates of participation -- including $.4M premium 5.8 5.9 5.8 5.9 Capital leases 2.0 2.5 2.0 2.5 Loans and notes payable 10.3 11.3 8.5 9.2 18.9 20.5 Compensated absences - PORAC 0.5 1.1 0.5 1.1 Compensated absences - Other 10.7 11.7 2.4 3.0 13.2 14.7 Landfill liabilities 2.1 2.2 2.1 2.2 Judgments and claims 31.2 30.4 31.2 30.4 Net OPEB Obligation 16.9 9.4 1.6 1.2 18.5 10.6 Net Pension Liabilities 383.4 (a) (i) 436.6 58.1 (a) (ii) 71.0 441.5 507.6

$552.0 $604.5 $94.8 $ 112.5 $ 646.8 $717.0

(a) FY20l4 totals have been restated due to GASB68 of Accounting and Financial Reporting for Pensions (i) Governmental Activities increased long term debt (net pension liability) by $418.391,624 (ii) Business-type Activities increased long term debt (net pension liability) by $70.976,591

Standard & Poor' s Corporation and Moody's Investors Service have assigned the general obligation bonds ratings of AA+/Aa2.

Additional information on the City's long-term debt can be found in note III D of this report.

ECONOMIC FACTORS AND ADDRESSING LONG-TERM UNCERTAINTIES

The City's current economic base consists of approximately 12,674 licensed businesses operating in the City. These businesses include private manufacturing, technology research, retail and service businesses, along with several state, federal, and non-profit organizations. The City is home to the main campus of the University of California, with 37,581 students and approximately 14,540 employees. The University provides a high degree of economic stability for the City and has spurred growing high technology and biotechnology sectors. The economic base generates slightly more than $4.56 billion in gross business receipts in fourth quarter of calendar year 2014 (up from $4.4 billion in first quarter of calendar year 2014) and about $1.54 billion in taxable sales in 2015 (down from $1.65 billion in 2014). Taxable property values growth increased 4.0% to $14.1 billion in FY 2015. The job picture also improved slightly in Berkeley according to the State Economic Development Department, with the City's unemployment rate declining to 4.0% in June 2015 from 5.8% in June 2014.

While the City has established a stability budget for FY 2016 and FY 201 7, the City still needs to continue to develop solutions that resolve the long-term challenges presented by expenditures growing faster than revenues. The Council has adopted budget development policies which have served the City well over the long term, and has also established several budget policies that begin to address some of the long-term problems.

47 The fiscal policies adopted by the Council include:

•!• Focusing on the long-term fiscal health of the City by adopting a two-year budget and conducting multi-year planning; •!• Building a prudent reserve; •!• Developing long-term strategies to reduce unfunded liabilities; •!• Controlling labor costs while minimizing layoffs; •!• Allocating one-time revenue for one-time expenses; •!• Requiring enterprise and grant funds to balance and new programs to pay for themselves; and •!• Any new expenditure requires revenue or expenditure reductions. •!• Transfer Tax in excess of $10.5 million dollars will be treated as one-time revenue to be used for the City's capital infrastructure needs (fund 610).

•!• As the General Fund subsidy to the Safety Members Pension Fund declines over the next several years, the amount of the annual decrease will be used to help fund the new Police Employee Retiree Health Plan (fund 903).

Also, used as a guide to developing the budget is the "fix it first" approach in which we fund current capital improvements before funding new projects.

The proposed budget provides a plan to control costs and maximize the use of City resources. It is a balanced budget and thus does not require further General Fund expenditure reductions. The General Fund, however, is less than half of the City's total budget. Many of the special funds that were struggling are starting to become healthy again due to the City Council and City staff actions over the last several years that have allowed the City to effectively manage and balance its budget as we begin to recover from some very difficult times.

REQUESTS FOR INFORMATION

This financial report is designed to provide our citizens, taxpayers, customers, investors, and creditors with a general overview of the City's finances and to show the City's accountability for the money it receives. If you have questions about this report or need additional financial information, contact the City's Finance Department, at the City of Berkeley, 2180 Milvia Street, Third Floor, California 94 704.

48 BASIC FINANCIAL STATEMENTS

49 Units 10,100 22,932 163,159 212,964 260,384 260,384 565,051 565,051 260,384 260,384 1,088,279 1,088,279 5,356,907 4,628,803 3,301,661 9,067,723 4,368,419 (5,222,532) {4,962,148} Rent Stabilization Comeonent $ $ 129 2,383 87,834 448,082 713,313 1,958,496 1,460,219 Total 5,860,663 4,226,618 4,346,413 6,879,326 5,560,330 9,537,379 4,409,557 12,221,204 14,034,699 17,549,343 10,252,532 11,955,810 15,275,834 21,091,097 72,439,719 42,897,502 24,995,000 21,416,184 24,729,182 38,745,618 38,745,618 25,408,027 83,657,489 108,854,692 292,957,647 632,743,810 698,967,454 362,448,424 388,629, 738,522,217 240,024,043 214,628,206 {412,423,437} $ $ 187} 238,584 529,943 427,970 1,258,663 1,544,036 1,085,103 1,451,523 2,790,487 2,979,050 6,464,740 6,464,740 3,308,839 1,888,639 3,460,860 12,450,973 12,450,973 72,439,719 11,040,327 91,475,811 22,890,479 51,920,305 {25,344, 100,030,300 123,491,705 148,835,892 168,174,279 172,238,432 132,699,438 229,508,236 Activities Government Business-Type $ $ Prima!}'. Position 2,383 87,834 448,082 366,420 713,313 2015 1,428,553 1,032,249 3,988,033 9,430,717 5,620,663 5,560,330 9,537,379 4,409,557 4,346,413 Net (1,888,639) 10,725,860 10,252,532 11,955,810 15,275,834 10,375,857 16,005,307 24,995,000 21,091,097 32,280,879 59,988,746 59,988,746 32,280,879 42,897,502 25,408,027 21,750,132 85,964,213 81,928,768 80,196,629 Berkeley 144,121,755 194,274,145 541,267,999 598,937,155 188,103,738 216,390,696 509,013,982 {117,631,042} {387,079,250) 30, of of Activities statements. Governmental June City $ $ financial Statement net these actual of assets and part contribution capital RESOURCES depreciated, RESOURCES for integral OF projected OF being an empployer depreciation: are uncollectibles) Subtotal Housing between for RESOURCES assets, plan notes notes RESOURCES buildings Ill): INFLOWS OUTFLOWS OF and assets investments depreciated: OF year education capital than wages pension (Note accumulated plan difference allowance one and Fire POSITION being of on - Capital progress anticipation year of and Total resale equipment Payable on streets other registration in in not net than welfare NET DEFERRED LIABILITIES DEFERRED ASSETS for development INFLOWS one OUTFLOWS (net accompanying and and pension investments rent liabilities assets for: assets: revenues - and investments Redevelopment payable inflows purposes outflows on more recreation held Interest salaries revenue service Held The balances enforcement assets assets and in within TOTAL TOTAL TOTAL Liabilities TOTAL TOTAL and POSITION and Investment OPES Other Law Park, Debt Highway Urban Economic Health Capital projects Due Due Improvements Infrastructure Machinery Land Cash Construction Buildings Noncurrent Deferred Net Unrestricted Other Deposit Net DEFERRED Deferred LIABILITIES DEFERRED NET Unearned Restricted earnings Property Inventories Internal Accrued Advances Accounts Accrued Tax Capital Capital Restricted Receivables Cash ASSETS

50 Units (171,006) (171,006) (171,006) Rent (4,791,142) (4,962,148) Stabilization $ $ Component 146) 928) 970) (6,939) 90,971 102,328 158, 389,343 988,313 221,637 (833,441) (455,400) (532,926) 1,558,301 9,951,462 3,860,198 3,445,882 5,860,663 5,842,471 2,534,316 2,665,478 7,822,325 7,131,568 6,311,974 4,147,105 4,201,668 Total (8,289,732) (3,886,382) (8,575,438) (7,921,269) (3, 14,150,393 16,454,651 17,111,938 14,337,343 16, 16,038,085 73,726,035 (33,218,649) (98,252, (27,902,572) 181,035,458 (182,923, (166,885,061) $ $ and Assets Revenue Net 85,691 27,918 113,610 in (532,926) (833,441) (455,400) 1,558,301 6,311,974 5,842,471 4,147,105 Government 16,038,085 16,151,695 16,038,085 107,340,009 123,491,705 Activities Business-Type $ $ (Expense) Changes Primary Net 146) 146) 928) (6,939) 90,971 (85,691) 158, 131,568 389,343 988,313 221,637 9,951,462 3,860,198 3,445,882 2,665,478 2,506,398 7,822,325 7, 4,201,668 (2,001,301) (3,886,382) (8,575,438) (7,921,269) (3, 16,454,651 17,111,938 14,337,343 16,102,328 73,726,035 (33,218,649) (98,252,970) (27,902,572) 180,921,848 Activities (117,631,042} (115,629,741) (182,923, (182,923, Governmental $ $ and 2015 Capital 2,000,063 2,000,063 2,000,063 Grants 30, $ $ $ June Activities 116 and of 74,563 Revenues Berkeley 116,108 383,930 383,930 1, 6,858,149 7,496,756 of 33,763, 17,833,609 33,379,186 Operating Grants Ended $ $ Contributions Contributions $ Program City Year for Statement the 691,350 3,930,623 2,216,349 3,930,623 2,068,847 1,582,411 6,242,357 2,320,608 2,182,771 2,319,125 7,440,233 3,584,077 Services 13,062,773 13,090,534 17,911,716 38,923,942 93,516,518 20,120,575 For Charges $ $113,637,093 $ programs purposes service specific 78,051 transfers purposes: to 188,635 994,138 138,061 354,791 893,163 debt general Indirect 1,892,667 4,323,393 Position (4,323,393) (4,539,505) restated)* Expenses Allocation assets subventions and for for $ $ taxes Net (as special statements. tax in state restricted levied levied capital 107 (Loss) for of revenues not taxes occupancy earnings license financial 4,101,629 4,101,629 2,749,275 3,886,382 8,915,668 2,713,653 3,850,278 Gain/ 4,713,196 taxes, taxes taxes, 11,075, 19,422,959 17,614,651 12,652,771 30,719,301 19,660,644 73,538,971 35,475,983 36,026,155 Changes sales 316,285,334 106,809,311 242,746,363 taxes taxes users government unrestricted Expenses general on revenues: these Library Parks Paramedic Fire of Business Property Property Utility Property Sales Other Transient $ $ Position-beginning $ Position-ending Gain Total Investment Other Contributions Miscellaneous Taxes: Primary part Extraorindary General Net Net Transfers: housing integral an and maintenance management are activities debt and and notes center Units streets water recreation development activities: activities: welfare long-term government development and units: purchase government related on and services business-type governmental activities operations service and services safety storm Government: Stabilization Component primary Total Total accompanying Building Refuse Permit Rent Marina Parking Public Highways Health Economic Interest Sewer Culture Community Clean General Component Business-type Total Total Primary Functions/Programs Governmental The

51 City of Berkeley Balance Sheet Governmental Funds June 30, 2015

S12ecial Revenue Ca12ital Project Other Total General Capital Governmental Governmental Fund Grants Libra!Y lm12rovement Funds Funds

ASSETS Cash and investments in treasury $ 49,537,312 $ 17,509,523 $ 6,480,455 $ 11,685,482 $ 64,862,777 $ 150,075,549 Restricted Cash and investments 24,995,000 413,027 25,408,027 Receivables (net of allowance where applicable): Accounts 6,309,676 156,082 3,556 2,203,527 8,672,842 Interest 506,531 41,225 385,078 932,834 Taxes 6,328,978 160,339 173,892 6,663,208 Special assessments 155,669 155,669 Subventions/grants 6,755,341 1,649,891 8,405,232 Due from other funds 4,465,438 1,567,576 6,033,014 Notes receivable 3,648,330 26,389,120 7,955,852 16,772,463 54,765,765 Other 477,281 7,777 17,279 45,201 547,539 Property held for resale 713,313 713,313 Total Assets 96,268,545 50,817,844 6,661,630 21,250,134 87,374,837 262,372,991

LIABILITIES Accounts payable 5,499,728 777,361 164,984 554,581 2,054,559 9,051,213 Accrued salaries _an.d wages 3,530,500 307,807 389,211 31,674 1,075,370 5,334,562 Due to other funds 4,338,440 1,666,791 6,005,231 Deposits held 882,692 12,933 136,624 1,032,249 Unearned revenues 357,037 30,000 61,045 448,082 Tax and revenue anticipation note 24,995,000 24,995,000 Other liabilities 3,578 334 148,568 3,726,902 Total Liabilities 38,486,253 5,780,644 584,194 599,188 5,142,958 50,593,236

DEFERRED INFLOWS OF RESOURCES Unavailable revenue 4,493,241 5,839,414 3,556 554,285 1,954,146 12,844,642 Total Deferred Inflows of Resources 4,493,241 5,839,414 3,556 554 285 1,954,146 12,844,642

FUND BALANCES

Nonspendable 3,024,783 3,024,783 Restricted 3,648,330 43,397,509 6,073,880 7,955,852 78,165,195 139,240, 766 Assigned 3,830,670 12,140,810 15,971,480 Unassigned 45,810,050 (4,199,723) (912,245) 40,698,082

Total Fund Balances 53,289,050 $39, 197,787 $6,073,880 20,096,662 80,277,733 1981935, 113 Total liabilities, Deferred Inflows of Resources, and Fund Balances $ 96,268,544 $ 50,817,844 $ 6 661 630 $ 21,2501134 $ 87,374,837 $ 262,372,991

The accompanying notes are an integral part of these financial statements. 52 City of Berkeley Reconciliation of the Balance Sheet of Governmental Funds To the Statement of Net Position June 30, 2015

Fund balances - total governmental funds (Page 54) $ 198,935, 113

Amounts reported for governmental activities in the Statement of net assets are different because:

Capital assets used in governmental activities are not financial resources and, therefore, not reported in the funds. Land 21,750,132 Construction in progress 366,420 Buildings 85,964,213 Improvements other than buildings 10,375,857 Machinery and equipment 16,005,306 Infrastructure ____8 __l ,_92_8 ___ , 7_6_7_ Governmental activties capital assets, net 216,390,696 less: capital assets for Internal service funds __~(_l2 __ ,_62_5 ___ ,0_0_7 ___ ) Net 203, 765,689

Net OPEB (obligations) and assets and Net pension liability in governmental activities are not due and payable and therefore, are not reported in the funds. Net pension liability - Berkeley Police Retirement Income Benefit (55,111,597) Net pension liability - Safety Member Pension Plan (3,574, 170) Net pension liability - CALPERS miscellaneous plan (134,457,790) Net pension liability - CALPERS Police Plan (123 ,977 ,970) Net pension liability - CALPERS Fire Plan (55,274,833) Net OPEB obligation - Police Retiree Premium Assistance Plan (11, 158,502) Net OPEB obligation - Misc Retiree (5,382,729) Net OPEB assets - Fire 2,383

Other long-term assets are not availble to pay for current period expenditures and, therefore, are deferred in the funds. Unavailable revenue 12,844,642 Deferred outflows on pension plan empoyer contribution 31,056,959

Internal service funds are used by management to charge the costs of public liability, equipment maintenance, building maintenance, supply warehouse, workers compensation, electrical warehouse and catastrophic loss services to individual funds. The assets and liabilities of the internal services funds are included in governmental activities in the statement of net assets. 1,923,672

Long-term liabilities, including bonds payable, are not due and payable in the current period and, therefore, are not reported in the funds. Accrued Interest Payable on long-term debt (1,392,328) Bonds, certificates of participation, notes and loans (107,302,361) Compensated absences - Porac (538,459) Compensated absences - Other (10,357,256)

Other long-term liabilties and deferred outflows are not availble to pay for current period therefore, are deferred in the funds. Deferred inflows on differences between projected & actual earnings on pension plan investments (57,631,498)

Net position of governmental activities (Page 50) $ (117,631,042)

The accompanying notes are an integral part of these financial statements.

53 City of Berkeley Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds For the Fiscal Year ended June 30, 2015 Special Revenue Capital Project

Other Total Capital Governmental Governmental General Grants Library Improvement Funds Funds

Revenues: Taxes $ 120,868,690 $ $ 16,455,991 $ $ 30,602,243 $ 167,926,924 Licenses and permits 494,438 252,970 747,408 Intergovernmental 10,685,874 19,261,332 65,848 13,532,750 43,545,804 Charges for service 9,898,475 3(514 11,250 3,517,827 13,462,066 Fines and penalties 5,943,279 215,902 299,510 6,458,690 Rents and royalties 537,140 253,142 790,282 Franchise 1,820,785 1,820,785 Private contributions and donations 8,107 127,250 86,281 221 ,637 Investment income 2,348,867 28,423 458 8,340 160,760 2,546,848 Miscellaneous 430,826 3,866 40,908 383,692 1,796,309 2,655,600

Total revenues 153,036,479 19,328,135 16,906,356 403,282 50,501,792 240, 176,045

Expenditures: Current: General government 27,953,175 203,630 14,261 367,372 1,524,229 30,062,668 Public safety 84,925,360 185,060 7,649,455 92,759,875 Highway and streets 1,193,388 1,227,354 14,557,798 16,978,540 Health and welfare 6,761,072 11,292,765 1,344,512 19,398,349 Culture-recreation 5,452,413 320,763 16,368,992 480,127 11,120,656 33,742,951 Community development and housing 6,647,159 4,468,481 4,358,491 15,474,131 Econon:iic development 1,949,114 28,638 1,871,346 3,849,097 Debt service: Principal repayment 8,370,956 8,370,956 Interest and fiscal charges 27,800 4,433,472 4,461,272 Cost of issuance 57,500 57,500 Capital outlay: Highway and streets 3,173,282 3,173,282 Community development and housing 700,791 249,906 950,696

Total expenditures 134,966,982 17,698,053 16,383,253 4,750,210 55,480,821 229,279,318

Excess(deficiency) of revenues over(under) expenditures 18,069,497 1,630,082 523,103 (4,346,927) (4,979,029) 10,896,727

Other financing sources(uses): Transfers in 4,466,841 882,479 7,734,837 5,399,348 18,483,505 Transfers out (14,938,828) (1,720,413) (5,867,976) (22,527,217) Issuance of notes payable 2,700,000 2,700,000 Sale of capital assets · 45,000 45,000

Total other financing sources(uses) (10,471 ,987) 882,479 45,000 6,014,424 2,231,372 (1,298,712)

988,313 988,313

Net change in fund balances 7,597,510 2,512,561 568,103 1,667,497 (1,759,344) 10,586,328

Fund Balance, July 1, 2014 45,691,539 36,685,227 5,505,777 18,429,165 82,037,077 188,348,785

Fund Balance, June 30, 2015 $ 53,289,050 $ 39,197,787 $ 6,073,880 $ 20,096,662 $ 80,277,733 $ 198,935,113

The accompanying notes are an integral part of these financial statements.

54 City of Berkeley Reconciliation of the Statement of Revenues, Expenditure, and Change in Fund Balances of Governmental Funds to the Statement of Activities For the Year Ended June 30, 2015

Net change in fund balances -total governmental funds (Page 54) $ 10,586,328

Amounts reported for governmental activities in the Statement of Activities are different because:

Governmental funds report capital outlays as expenditures. However, in the Statement of Activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. The capital outlay expenditures are therefore added back to fund balance. 7,027,752 Depreciation expense is therefore deducted from fund balance. (12,432,661)

Revenues in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds. Tax receivable ( 6,222,817) Grant receivable 1,839,109 Accounts receivable (323,808)

Issuance of long term debt provides current financial resources to governmental funds but incurring debt increases long-term liabilities in the Statement of Net Position. Repayment of principal on long-term debts is an expenditures in the governmental funds, but in the Statement of Net Position the repayment reduces long-term liabilities. Issuance of notes payable (3,000,000) Principal payments 8,370,956 Issuance of notes payable 300,000

Some expenses reported in the Statement of Activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. Compensated absences 788,806 Amortization of premium on debt 96,926 Net Pension expense - Berkeley Police Retirement Income Benefit Plan (6,665,466) Net Pension expense - Satety Members Pension Fund (8,283) Net Pension expense - CALPERS misc plan 335,262 Net Pension expense - CALPERS police plan (1,043,734) Net Pension expense - CALPERS fire plan 565,625 Net OPEB expense - Police Retiree Premium Assistance Plan (5,663,096) Net OPEB expense - Misc Retiree (1,701,579) Net OPEB assets - Fire (2,563) Net Police sick leave program (PORAC) 550,011 Accrued Interest Payable 572,702

Internal service funds are used by management to charge the costs of certain activates to individual funds. The net revenue (expense) of the internal service funds is reported with governmental activities. Loss 71,213 Transfers in 3,958,019

Change in net position of governmental activities (Page 51) $ (2,001,301)

The accompanying notes are an integral part of these financial statements.

55 Service 27,784 36,225 28,173 53,541 87,834 286,101 379,503 343,177 324,641 261,129 470,177 2,357,248 3,812,311 1,223,920 1,223,920 1,539,174 5,651,758 1,106,128 4,162,666 (6,803,345) 10,615,656 12,625,007 12,625,007 12,625,007 10,998,182 50,794,571 45,848,932 40,197,174 26,992,000 36,922,061 $ $ Internal ~248 ~564 2,481 529,943 593,850 236,105 298,041 388,386 823,133 379,072 427,970 967,062 1,888,639 Total 1,622,673 1,258,663 1,276,278 2,037,774 8,554,489 1,085,103 2,790,487 6,464,740 6,464,740 7,277,820 2,979,050 2,045,758 3,460,860 12,450,973 12,450,973 58,092,346 21,028,215 91,475,811 55,381,165 49,874,547 (27,232,826) 148,835,892 121,603,065 100,030,300 172,238,433 172,238,434 168,174,280 227,619,598 $123,491,705 $ 101) 474 4,048) 2,485 12,552 25,012 83,002 84,516 83,002 58,646 68,256 159,861 159,861 133,731 195,823 745,860 967,062 1,498,053 1,394,158 Purchases 1,946,905 (5,372, (3,87 17,324,734 17,324,734 19,398,541 17,324,734 21,801,572 23,195,730 21,028,215 Management $ $ & Bldg. 157) 1,030 71,192 29,587 71,192 71,192 71,192 117,516 177,859 155,237 140,745 162,233 324,962 629,484 629,484 funds. Meter 1,212,374 1,212,374 5,952,542 5,656,560 5,620,237 6,277,504 5,549,045 2,073,807 5,385,782 Parking (1,240, (1,311,349) $ $ enterprise 553 Funds Activities-- to 7,189 2,900 5,566 16,335 78,192 78,192 150,596 150,596 330.100 343,408 721,867 702,632 158,798 314,085 1,065,275 6,431,836 9,762,157 1,291,709 1,085,103 6,431,836 6,431,836 4,055,024 Parking 16,193,994 17,331,672 10,899,836 10,426,953 Off-Street related $ $ Entererise Position Business-type activities Funds 2015 Net 15,140 15,140 15,140 15,140 53,873 61,830 84,404 Service Berkeley 184,115 198,807) 282,661 562,874 350,975 263,056 398,290 fund 30, of 2,859,924 2,859,924 1,484,917 1,484,917 Center (2,213,947) (2, of 13,977,147 14,540,021 13,343,511 13,716,221 13,218,387 13,701,081 $ $ Permit June service City Proprietary 187) Statement 9,385 2,481 internal Storm 36,416 92,155 61,866 49,242 43,873 27,635 23,109 783, 495,116 495,116 257,072 257,072 917,433 968,177 of 2,421,165 2,513,320 2,310,057 Water (1, 17,582,534 15,799,347 17,582,534 17,582,534 17,582,534 18,550,711 Clean $ $ activities 108 consolidation 63,389 40,426 the 332,585 306,666 218,109 978,020 248,845 1,379,343 1,097,845 2,359,942 2,359,942 1,225,318 1,225,318 8,261,125 (4,675,977) 13,029,343 11,010,749 Sewer Sanitary 117,069,085 112,393, 117,069,085 117,069,085 126,557,075 117,028,659 reflect business-type $ $ to of Assets 7,379 20,609 108,131 132,492 126,939 120,206 317,846 828,289 828,289 275,843 298,041 107,857 170,358 430,061 430,061 557,386 Net Adjustment 1,179,149 1,113,295 2,626,669 3,864,537 7,277,820 9,645,144 3,580,622 3,858,837 9,487,990 Marina (1,513,374) 11,370,694 11,650,000 12,549,843 14,061,366 10,202,530 10,202,530 Oeerations $ $ 215 16,274 823,133 593,850 210,516 379,072 600,868 476,886 228,726 690,472 728,167 Zero 1,276,278 1,104,533 3,541,383 3,278,439 4,384,871 4,384,871 1,089,529 2,451,854 2,276,694 3,541,383 2,276,694 3,541,383 1,976,885 6,137,340 8,842,392 Waste 23,580,824 26,859,263 20,458,440 12,383,775 (16,583,665) (20,125,048) $ $ actual net statements. and financial contribution projected infrastructure, these investments of and employer between plan part plan RESOURCES equivalents RESOURCES net pension OF resources integral payable payable equipment, net assets resources wages penion differences OF assets of cash on liabilities an of Progress on on and payable liabilities payable payable in assets and are assets, equivalents capital absences absences payable payable property, current funds Liability in inflows judgments outflows judgments carts obligation earnings cash inflows carts cash INFLOWS payable notes OUTFLOWS (deficit) receivables, bonds bonds held outflows interest salaries current noncurrent non liabilities: capital current Liabilities assets: Liabilities lease for: lease and and assets: other Position payable payable liabilities and liabilities: assets: to Service Pension OPEB Total Total Buildings, Construction Land Total Total Net Total Deferred liabilities Deferred assets POSITION Deferred investment Landfill Recycling Notes Revenue Capital Landfill Due Deposits Recycling Notes Revenue Net Net Compensated Other Claims Compensated Claims Capital Deferred Accrued Accrued Accounts Restricted Investments Inventory Capital Cash Others Accounts Debt NET Net Restricted DEFERRED Unrestricted Noncurrent Total Total LIABILITIES: DEFERRED Total Current Total Total Noncurrent Current ASSETS accompanying The

56 Funds 12,665 45,971 55,528 (40,450) (94,736) {89,215} 695,938 230,014 1,176,196 1,265,411 1,229,638 1,219,564 3,812,311 3,958,019 8,218,450 5,134,215 1,181,631 2,777,748 2,830,326 6,372,559 3,632,869 2,856,414 3,402,931 5,082,273 {1,321,904) 10,308,793 24,420,965 25,686,376 Service $ $ _ _!!!ternal 27,918 45,928 92,164 383,930 {776,821} 1,104,985 1,618,417 Total 2,163,094 1,330,107 4,323,393 4,993,702 2,216,349 2,319,042 2,068,847 6,049,461 6,125,491 3,603,969 5,863,214 4,986,393 6,242,357 {2,077,402} (1,188,669) 14,961,018 15,737,839 14,110,344 15,046,710 16,872,012 77,778,679 13,062,773 13,090,534 23,356,758 38,923,942 $ __j______j_§_,_151,695 ~516,511!_ 384 3,443 (8,524) 58,488 180,258 164,709 197,962 317,640 155,636 265,034 872,795 (547,186) (718,920) (727,444) (547,186) Purchases 2,036,091 2,216,349 2,216,349 p,874,048} {3,326,861} Manaflement $ $ & Bldg. funds. 8,356 4,988 (1,512) {1,512} 27,366 406,970 653,239 734,000 400,771 478,044 Meter 2,040,920 2,888,821 1,757,016 2,890,333 6,261,027 2,197,247 9,151,360 9,151,360 {1,240,157} (1,254,871} {3,281,079} Parking Position $ $ enterprise Net to in Funds Activities- 2,856 (7,920} 22,942 (13,627) (82,654) {96,281} related 239,544 146,691 197,815 200,361 303,756 211,376 451,635 2015 1,091,930 1,323,554 1,188,211 1,185,770 2,723,202 3,911,413 3,911,413 Parking 16,193,994 14,870,439 Off-Street $ $ 30, Changes Entererise activities Business-type and June Funds fund 9,406 {2,894} 17,231 51,679 Service Berkeley 118,260 147,451 994,137 764,635 {463,130) 1,675,049 5,760,544 5,297,414 5,763,438 Center 3,226,585 5,143,845 3,603,969 2,319,042 6,125,491 5,863,214 {2,198,807} {7,496,221} of 12,148,278 17,911,716 Ended service $ $ Permit Expenses, City Proprietary Year internal activities the of 1,436 4,585 (1,399) (2,894) {1,399} Storm {25,092} 188,635 168,205 519,132 203,503 623,653 579,865 301,486 877,935 (881,855) {880,456} For Water 1,426,079 2,949,303 2,068,847 2,068,847 15,799,347 15,280,214 Revenues, Clean $ $ of business-type consolidation of the 19,712 15,413 12,365 90,501 43,850 43,850 893,163 415,547 {195,737) (587,865) {631,715) (693,101) 1,003,631 1,537,977 2,564,352 3,061,153 4,198,936 Sewer Statement Sanitary 13,722,249 13,0!:10,534 13,090,534 position reflect 113,086,209 $112,393,108 $ to net in 1,308 35,710 45,928 51,384 {19,772} 383,930 119,525 173,900 228,315 354,791 Change 461,527 437,565 Adjustment (349,528) {373,457} 1,506,522 1,113,295 1,470,812 1,486,750 1,727,867 1,154,514 4,771,545 Marina 6,242,357 6,242,357 Oeerations $ $ 10,716 10,482 16,229 {26,851) (37,567) 142,262 174,635 578,519 989,640 {110,880} statements. Zero 5,730,107 1,892,667 5,619,227 9,137,647 5,756,958 4,788,615 6,704,438 8,748,079 Waste 33,166,984 38,923,942 38,923,942 (16,583,665} {22,202,895} $ $ financial these of assets part contributions (expenses) services (restated) charge capital (loss) before fees integral of maintenance revenue position charge (expenses): an fees expenses service revenues and (loss) net ( ) ( are professional income claims revenues fees in fees fees supplies disposal transfers service maintenance water and earnings and rentals revenues () on services benefits grants notes Income compensation and nonoperating operating administration operating maintenance and permits expense related store service expenses: operations revenues: in out position--beginning service position--ending storm Net Change Operating revenues permits fees checking net Total Total Total net Operating Utilities Interest Investment Specialized General Gain(loss) Materials and Depreciation Personnel Employee Repairs Insurance Communication Transportation Judgments Other Central Other Building Plan Building Workers' Sewer Other Contract Parking Marina Refuse Equipment Clean Nonoperating Transfers Transfers Total Total Operating Operating accompanying The

57 Funds (67,715) 106,292 (188,913) (102,853) (450,241) (757,217) 1,295,041 1,106,128 3,890,304 3,958,019 4,650,416 (6,456,372) (1,826,461) (5,699,154) (6,830,932) (9,883,805) (4,345,472) (2,273,262) 25,710,625 Service $ $ Internal a I 76,166 152,675) 355,000 440,692 5,609,630 2,045,758 4,728,425 2,163,094 (3,563,873) (1,336,954) (1,757,157) (6,749,870) (4,503,253) (2,077,402) 20,852,219 92,967,914 Tot (15,314,145) (10,509,553) (14,347,235) (32, (39,963,021) $ $ 58,646 (70,648) 129,294 885,427 (808,751) (650,539) (827,044) (749,689) (489,114) Purchases 1,330,259 1,330,259 2,124,230 (2,286,334) Management $ $ & Bldg. 32,446 (23,379) (23,379) 162,233 129,787 406,970 (847,901) Meter 2,992,783 9,150,330 (2,089,057) (2,089,057) (1,254,871) (2,216,605) (3,940,943) Parking $ $ 62 054) (7,920) 314,085 231,624 235,318 239,544 (123,144) (916,404) (370,648) 1,466, 3,927,075 1,450,607 3,849,597 (3,612,990) (1,230,674) (4,064,548) ( (3,025,000) (2,028,343) Parking Off-Street $ $ Funds (6,782) (6,782) 88,064 398,290 310,226 (463,130) (463,130) 5,898,658 (5,340,683) (5,340,683) (3,800,254) (8,183,784) Center 17,882,695 Enterprise Permit Service $ $ 845 42,621 27,635 Water (14,986) (25,092) 164,274 163,429 (914,885) (338,434) 1,426,079 1,400,987 2,069,044 Clean (1,241,813) (1,241,813) (1,492,592) Storm $ $ 69,837 90,501 (16,358) 443,496 248,845 (194,650) (105,236) (195,737) 3,053,113 2,983,276 2,381,887 (5,524,415) (5,508,057) Sewer (3,489,289) (7,253,343) 13,124,520 Sanitary $ $ ------2,104 (5,123) 84,135 16,143 23,722 (19,772) 107,857 335,228 355,000 (651,555) (361,368) (285,064) 1,781,304 6,130,167 (1,459,501) (1,441,254) Marina (1,469,921) (2,878,942) Operations $ $ ------statements. 3,318 financial (43,691) 185,169 542,998 728,167 (548,408) (138,572) (366,145) (110,880) (110,880) Zero 5,799,988 (4,958,850) (4,955,532) Waste 38,637,331 (17,483,688) (15,353,655) these $ $ of ------part integral an related 2015 are activities activities activities: 2015 assets and 30, 2014 Flows 30, 1, capital notes Funds June assets capital capital non operating July June Cash services related financing services cash of activities: BERKELEY activities by by investing by Paid of by in and assets ended and OF customers capital (used) (used) (used) (used) Proprietary year accompanying disposal from CITY investing capital non operating goods employees' lnfrastucture capital equivalents, equivalents, Statement the Judgments purchases sales of of The (decrease) for for in from out equivalents activities activities: activities advance repayments from from from from paid received For cash cash received and provided provided provided provided paid paid received repayment cash and and flows flows flows flows increase cash cash cash cash Investment Investment Interest and Purchases Purchases Debt Proceeds Interest financing Grants lnterfund lnterfund financing financing Transfers Claims Ca~h Cash Transfers Cash Cash Cash Net Net Cash Net Net Cash Cash Net Cash 58 Funds 14,665 33,894 23,350 24,314 81,765 (84,458) (40,451) 737,700 (196,550) 1,265,411 2,357,248 2,777,748 4,650,416 (1,160,751) (1,223,920) Service $ $ $ Internal (300) (4,249) 52,279 (30,533) (48,248) 131,082) 420,619 (205,136) 4,993,702 (6, (6,464,740) 12,450,972 15,737,839 20,852,220 Total $ $ 5,705 (8,524) (4,071) (92,119) (43,679) (31,602) (78,718) (83,002) 159,861 180,258 872,795 885,427 Purchases Management $ $ $ & Bldg. 56 512) (1 (1,030) 27,366 41,646 (57,586) 106,102 (596,995) (629,484) Meter 1,212,374 2,890,333 2,992,783 Parking $ $ $ (300) 5,011 (4,249) 52,279 (13,689) (30,533) (61,816) (78,192) (74,156) 150,596 303,756 1,450,607 1,188,211 Parking Off-Street $ $ $ Funds 3,403 9,406 (2,894) 97,446 67,787 66,953 (29,021) (47,484) Service 5,898,658 5,763,438 (1,484,917) (1,408,278) Center Enteq:>rise Permit $ $ $ 197 (4,613) (2,244) 16,488 Water (14,806) (29,348) 579,865 495,116 2,859,924 (338,434) (243,804) (880,456) (257,072) Clean Storm $ $ $ 31,897 33,987 80,773 (25,987) 490,084 (160,035) (631,715) 2,381,887 2,564,352 2,359,941 Sewer (1,162,077) (1,225,318) Sanitary $ $ $ 7,169 27,750 (51,433) (36,086) (796.00) 828,289 231,277 461,527 (430,061) (320,077) (407,864) 1,781,304 1,470,812 Marina Operations $ $ $ statements. 189) 7,398 58,335 financial (31,511) 159, 174,635 145,800 244,296 (210,902) (286,611) Zero 5,799,988 4,384,871 5,756,958 Waste (2,276,694) (2, these $ $ $ of part integral an activities: 2015 are investments 30, of (loss) Flows notes (loss) financing payables provided Funds June Wages value operating Cash Assets and income BERKELEY by of fair Assets and of income cash ended in of OF activities: Absences net Liabilities capital, judgement operations (used) cash: Proprietary to Obligation year accompanying Receivable Payable operating CITY Outflow Salaries Inflow reconcile and Statement of the from Liabilities in: The to operating (decrease) Pension OPES For investing, provided by operating (loss) Compensated Other Claims Deferred Net Net Inventories Accrued Accounts Accounts operations Deferred Depreciation Change net cash activities (used) from to Increase/ Net Noncash Income Adjustments Reconciliation 59 CITY OF BERKELEY Statement of Fiduciary Net Position Fiduciary Funds June 30, 2015

Private Trust Pension and Other Funds - Post-employment Successor Benefit Agency of Trust Funds Former RDA Agency Funds

Assets Cash and cash equivalents $ 7,354,954 $ 312,763 $ 4,349,673 Restricted cash and cash equivalents 953,312 Investments, at fair value - Corporate Notes 26,714,123 Interest receivable 604,759 Taxes receivable 20,563 Notes receivable Other accounts receivable 364,264 Capital assets: Land Building,property,equipment, net Property held for resale Total assets 35,627,149 312,763 4,734,501

Deferred Outflows of Resources Deferred outflows of pension plan employer contributio_n ______32,998 Total Deferred Outflows of resources 32,998

Liabilities Accounts payable 126 Pension benefits payable 48,945 Interest payable 52,345 Other liabilities 13,680 Bonds payable 1,074,829 Other agency obligations 4,734,501 Net Pension Liabilities (Calpers Misc Plan) 296,525 Total liabilities 48,945 1,437,505 4,734,501

Deferred Inflows of Resources Deferred inflows on differences between projected and actual earnings on pension plan investments 63,554 Total Deferred Inflows of resources 63,554

Net Position Held in trust for pension benefits 7,452,775 Held in trust for OPEB benefits 28,125,429

Held in trust for City of Berkeley Successor Agency (1 I 155,298) Total net position $ 35,578,204 $ (1, 155,298)

The accompanying notes are an integral part of these financial statements.

60 Updated 10/27/2015

CITY OF BERKELEY Statement of Changes in Fiduciary Net Position Fiduciary Funds For the Year Ended June 30, 2015

Private Trust Pension and Other Funds - Post-employment Successor Benefit Agency of Trust Funds Former RDA

ADDITIONS: Grants revenue Tax increment income $ 486,367 Contributions: Employer $ 5,119,399 Investment income 1, 176,615 115 Operating transfer in 1,425,907 Total Additions 6,296,015 1,912,389

DEDUCTIONS: General government 309,279 Highway and streets Community development 173,468 Benefits payment for service 3,313,525 Benefits payment for disability 335,961 Administrative expenses 188,387 Interest payment 73,073 Pass through to COB 329,480 Payment to the County Operating transfer out 637,868 Extraordinary loss 1,567,878 Total Deductions 3,837,873 3,091,047

Change in net position 2,458,142 (1, 178,658)

Net Position - beginning (Restated) 33,120,062 23,360

Net Position - ending $ 35,578,204 $ (1,155,298)

The accompanying notes are an integral part of these financial statements.

61 THIS PAGE LEFT INTENTIONALLY BLANK

62 CITY OF BERKELEY

Notes to the Basic Financial Statements

June 30, 2015

I) Summary of Significant Accounting Policies

A. Description ofthe Reporting Entity The City of Berkeley (the City) is a municipal corporation created under the laws of the State of California. The City operates under its own charter. The current charter provides for a Council-Manager form of government and the City is governed by an elected mayor and eight-member council. The City provides the following services: public safety (police and fire); sanitation and sewer; housing; leisure (parks, recreation, and marina); health and human services, including City funded health clinics; animal control; public improvements; planning and zoning; library services; and general and administrative services.

As required by generally accepted accounting principles, these financial statements present the City of Berkeley and its component units, entities for which the City is considered to be financially accountable. Blended component units, although legally separate entities, are, in substance, part of the City's operations. The City is considered to be financially accountable for an organization if the City appoints a voting majority of that organization or there is a potential for that organization to provide specific financial benefits to or impose specific financial burdens on the City. The City is also considered to be financially accountable for an organization if that organization is fiscally dependent (i.e., it is unable to adopt its budget, levy taxes, set rates or charges, or issue bonded debt without approval from the City). In certain cases, other organizations are included as component units if the nature and significance of their relationship with the City are such that their exclusion would cause the City's financial statements to be misleading or incomplete. Each discretely presented component unit is reported in a separate column in the government-wide financial statements (see note below for description) to emphasize that it is legally separate from the City.

Successor Agency Trust for Assets of Former Redevelopment Agency. On December 29, 2011, the California Supreme Court upheld Assembly Bill IX 26 ("the Bill") that provides for the dissolution of all redevelopment agencies in the State of California. This action impacted the reporting entity of the City of Berkeley that previously had reported Berkeley redevelopment agency (BRA) within the reporting entity of the City as a blended component unit.

The Bill provides that upon dissolution of a redevelopment agency, either the city or another unit of local government will agree to serve as the "successor agency" to hold the assets until they are distributed to other units of state and local government. On January 17, 2012, the City Council elected the City to become the Successor Agency for the former redevelopment agency in accordance with the Bill as part of City resolution number 65.574-N.S. As a result, BRA will no longer be reported as a component unit of the City. Please refer to more details under "Notes to the Successor Agency" section.

63 (I) Summary of Significant Accounting Policies (Continued)

Discretely Presented Component Units. The Rent Stabilization Board (Rent Board) is responsible for the proper administration of programs to regulate residential rents; protecting tenants from unwarranted rent increases and arbitrary, discriminatory or retaliation evictions; helping maintain the diversity of the Berkeley community; and to ensure compliance with legal obligations relating to the rental of housing. The nine member Board of Commissioners is elected by the citizens. However, the Rent Board is fiscally dependent upon the City because the City Council authorizes any bonded debt, and provides support services such as accounting, human resources, payroll, information technology and finance.

Complete financial statements for each of the individual component units may be obtained at the entity's administrative offices:

Rent Stabilization Board 2125 Milvia Street Berkeley, California

B. 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 non-fiduciary activities of the primary government and its component units. For the most part, the effect of interfund activity has been removed from these statements except in the case of interfund services provided and used, which are not eliminated in the consolidation process. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. Likewise, the primary government is reported separately from certain legally separate component units for which the primary government is financially accountable.

The statement of activities demonstrates the degree to which the direct expenses of a given function are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function. Program revenues include I) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function. Taxes and other items not properly included among program revenues are reported instead as general revenues.

Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements.

C. Measurement Focus, Basis ofAccounting, and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary and fiduciary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing ofrelated cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants are recognized as revenues as soon as all eligibility requirements imposed by the grantor have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis ofaccounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within

64 (I) Summary of Significant Accounting Policies (Continued)

the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the City considers revenues to be available if they are collected within 60 days of the end of the current fiscal year. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due.

Property taxes, utility users taxes, transient occupancy taxes, ambulance fees, interest, and sales taxes associated with the current fiscal year are all considered susceptible to accrual and so have been recognized as revenues of the current fiscal year. All other revenue items are considered to be measurable and available only when the City receives cash.

The City reports the following major governmental funds:

The General Fund is the City's primary operating fund. It accounts for all financial resources of the City, except those required to be accounted for in another fund.

The Grants Fund accounts for grant monies received from other governments and private sources to be used to cover expenditures for providing public services and improving public safety.

The Library Fund accounts for all monies received and expended for the operation of the City's main and branch libraries, the major source ofrevenues are special taxes approved by two thirds of the voters.

The Capital Improvement Fund accounts for expenditures for land, buildings, major reconstruction and renovation of structures, and for major landscaping or park improvements financed by local revenues.

The government reports the following major proprietary funds:

The Zero Waste Fund accounts for the monies received and expended from refuse collection services, including the surcharge to provide for expenses incurred in the collection and disposal of solid waste materials as well as for plans, surveys, engineering expenses, property acquisition and construction costs of facilities for future refuse disposal.

The Marina Operations Fund accounts for the day-to-day operations of the Berkeley Marina.

The Sanitary Sewer Fund accounts for the collection of revenues from sanitary sewer charges, and the expenses related to the operation, maintenance, replacement, reconstruction, and repair of sanitary facilities.

The Clean Storm Water Fund accounts for the fees collected to improve the quality of storm water discharged from the City's storm drainage system.

The Permit Service Center Fund accounts for revenues from customers processing development permit application (i.e., building and zoning permits) and the funds expended to operate the permit review functions of the Permit Service Center.

The Off Street Parking Fund accounts for the operations of the City's Center Street garage, Sather Gate garage, Sather Gate Mall leases, and Oxford/Fulton parking lot.

The Parking Meter Fund accounts for the collection of coins from the City's parking meters and for the purchasing, leasing, installing, repairing, maintaining, operating, removing, and policing of the meters.

65 (I) Summary of Significant Accounting Policies (Continued)

The Building Purchases & Management Fund accounts for the purchase and management of the building at 194 7 Center Street.

Additionally, the City reports the following fund types:

Internal Service Funds account for equipment maintenance replacement, building maintenance, central services, computer replacement, workers' compensation, sick and vacation payouts, public liability, and catastrophic loss services to other departments of the City on a cost reimbursement basis.

The Pension Trust Funds accounts for the activities of the Safety Members Pension Fund, police retirement and pension annuity fund, which provides pension benefits on a pay-as-you-go basis for fire and police employees hired on or before February 28, 1973; and the Police Retirement Income Benefit Plan. It also accounts for the Other Post-employment Benefits Trust Funds, including the Retiree Medical Benefit Trust, Berkeley Police Employees Retiree Health Plan Trust Fund and Fire Medical Trust funds and allocated sources to provide medical benefits for retirees.

The Private Trust Funds accounts for Successor Agency activities of the former Berkeley Redevelopment Agency, which was dissolved on January 31, 2012 under AB IX 26. Please refer to more details above in Section 1 under "Successor Agency Trust for Assets ofFormer Redevelopment Agency".

The Agency Funds account for the District 47 Underground/Miller, Sustainable Energy, Thousand Oaks Heights Applicant Funded Utility Undergrounding special assessment tax monies, Measure H School Tax, Community Facilities District No. 1 Disaster Fire Protection special assessment tax monies, Sick Leave Entitlement, Berkeley Tourism BID, and Elmwood Business Improvement District.

The effect of interfund activity has been eliminated from the government-wide financial statements. Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions, including special assessments. General revenues include all taxes.

Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues for all the enterprise funds and internal service funds are charges to customers for sales and services. Operating expenses for enterprise funds and internal service funds include personnel services, employee benefits, repairs and maintenance, professional services, transportation, materials and supplies, claims and judgments, rent, insurance, utilities, communications, general administration and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses.

When both restricted and unrestricted resources are available for use, it is the City's policy to use restricted resources first, and then unrestricted resources as they are needed.

D. Implementation ofAccounting Principles During fiscal year 2015, the City adopted the following GASB Statements:

In June 2012, GASB issued Statement No. 68, Accounting and Financial Reporting for Pensions. This Statement amends GASB Statement No.27. This Statement is to improve the usefulness of information for

66 (I) Summary of Significant Accounting Policies (Continued)

decisions made by the various users of the general purpose external financial reports (financial reports) of governments whose employees, both active and inactive are provided with pensions. One aspect of that objective is to provide information about the effects of pensions-related transactions and other events on the elements of the basic financial statements of state and local governmental employers. This information will assist users in assessing the relationship between a government's inflows of resources and its total cost (including pension expense) of providing government services each period. Another aspect of that objective is to provide users with information about the government's pension obligations and the resources available to satisfy those obligations. GASB Statement No.68 differs from GASB Statement No.27 in that (1) All the affected agencies will recognize pension liability (assets); (2) Net pension liability drives pension expense; (3) Pension expense is no longer equal to the ARC and has shorter amortization periods; and (4) Additional note disclosures and RSI. Whereas, GASB Statement No.27 recognized that (1) Net pension obligation (NPO) if plan sponsor (employer) did not contribute Annual Required Contribution (ARC); and (2) Pension Expense are based on ARC/Contribution. GASB Statement No.67, Financial Reporting for Pension Plans, establishes standards of financial reporting for defined benefit pension plans and defined contribution pension plans that are used to provide pensions that are within the scope of this Statement. The two Statements (GASB Statement No.67 and GASB Statement No.68) are closely related in some areas, and certain provisions of this Statement refer to GASB Statement 67. The provision of this Statement is effective for reporting period beginning after June 15, 2014. This standard has a tremendous impact on the City's financial statements. The City restated beginning net position as a result of implementation of this standard.

In January 2013, GASB issued Statement No.69, Government Combinations and Disposal of Government Operations. This Statement establishes accounting and financial reporting standards related to government combinations and disposals of government operations. This Statement requires the use of carrying values to measure the assets and liabilities in a government merger. Conversely, government acquisitions are transactions in which a government acquires another entity, or its operations, in exchange for significant consideration. This Statement requires measurements of assets acquired and liabilities assumed generally to be based upon their acquisition values. It also provides guidance for transfers of operations that do not constitute entire legally separate entities and in which no significant consideration is exchanged. The requirements of this Statement are effective for government combinations and disposals of government operations occurring in financial reporting periods beginning after December 15, 2013, and should be applied on a prospective basis. This standard does not have any impact on the City's financial statements.

In November 2013, GASB issued Statement No.71, Pension Transition for Contribution Made Subsequent to the Measurement Date. The objective of this Statement is to address an issue regarding application of the transition provisions of GASB Statement No. 68, Accounting and Financial Reporting for Pensions. The issue relates to amounts associated with contributions, if any, made by a state or local government employer or non-employer contributing entity to a defined benefit pension plan after the measurement date of the government's beginning net pension liability. GASB Statement 68 requires a state or local government employer ( or non-employer contributing entity in a special funding situation) to recognize a net pension liability measured as of a date (the measurement date) no earlier than the end of its prior fiscal year. If a state or local government employer or nonemployer contributing entity makes a contribution to a defined benefit pension plan between the measurement date of the reported net pension liability and the end of the government's reporting period, GASB Statement 68 requires that the government recognize its contribution as a deferred outflows of resources and deferred inflows of resources for changes in the net pension liability of a state or local government employer or nonemployer contributing entity that arise from other types of events. This Statement amends paragraph 137 of GASB Statement No. 68 to require that, at transition, a

67 (I) Summary of Significant Accounting Policies (Continued)

government recognize a beginning deferred outflow of resources for its pension contribution, if any, made subsequent to the measurement date of the beginning net pension liability. GASB Statement No.68, as amended, continues to require that beginning for other deferred outflows of resources and deferred inflows of resources related to pensions be reported at transition only if it is practical to determine all such amounts. The provisions of this Statement are required to be applied simultaneously with the provisions of GASB Statement No.68. The City restated beginning net position and record the deferred outflow due to subsequent contributions after the measurement date, as a result of implementation of this standard.

1. Deposits and Investments The City's cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term investments with original maturities of three months or less from the date of acquisition.

State of California statutes authorize the City to invest in obligations of the U.S. Treasury, its agencies and instrumentalities, certificates of deposits, commercial paper rated A-1 /P-1, medium term corporate notes rated A or its equivalent or better by Moody's or Standard & Poor's, asset backed corporate notes, negotiable certificates of deposits, bankers' acceptances, mutual funds, guaranteed investment contracts, repurchase agreements, reverse repurchase agreements when authorized by the City Council, and the State Treasurer's investment pool (Local Agency Investment Fund).

The City does not utilize the Local Agency Investment Fund, as this fund is not in compliance with the City's nuclear free ordinance.

Investments for the City, as well as for its component units, are reported at fair value. The value is determined based upon market closing prices. The fair value of mutual funds is stated at share value. Income from pooled investments is allocated to the individual funds based on the fund average monthly balance in relation to the total pooled investments. .

2. Receivables and Payables Transactions between funds that are representative of long-term lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as "advances to/advances from other funds". All other outstanding balances between funds are reported as "due to/from other funds". The latter transactions are typically loans from the General Fund to cover cash shortages in other funds that result from the pooled cash arrangement. The loans are short-term in nature and generally result from the time lag in receiving grant reimbursements. The amounts are repaid to the General Fund when the grant reimbursements are made. Any residual balances between the governmental activities and business type activities are reported in the government-wide financial statements as internal balances.

All trade accounts receivable are presented net of allowance for doubtful accounts. No allowances for doubtful accounts have been provided for taxes or rental registration fees. Property taxes are levied as of July 1 on property assessed on the same date. Alameda County assesses properties, bills for, collects and distributes property taxes as follows:

68 (I) Summary of Significant Accounting Policies (Continued)

Secured Unsecured Valuation/lien dates January 1 January 1 Levy dates July 1 July 1 Due dates 50% on Nov. I July I 50% on Feb. I Delinquent as of Dec. 10 (for Nov.) August 31 Apr. 10 (for Feb)

The term "unsecured" refers to taxes on businesses' machinery, furniture and equipment. Property taxes are secured by liens on the property being taxed.

Property taxes are recorded as revenue when they become both measurable and available to finance expenditures in the fiscal year. Deferred inflows of resources is recorded for the amount included in taxes receivable, which is not collected within 60 days after fiscal year-end.

3. Inventories All inventories are valued at the lower of cost or market on a first-in-first-out basis. Inventory in the Supplies Warehouse Fund consists of postage supplies held for consumption by all departments of the City. The cost is recorded as an expense in the appropriate fund at the time inventory items are withdrawn for use ( consumption method).

4. Restricted Assets Certain proceeds of the City's Off-Street Parking enterprise fund revenue bonds, Animal Shelter fund Certificates of Participation, and pension refunding bonds, as well as certain resources set aside for their repayment, are classified as restricted assets on the statement of net position because they are maintained in separate bank accounts and their use is limited by applicable bond covenants.

The debt service account is used to segregate resources accumulated for principal payments; the construction account is used to report those proceeds of the revenue bond issuance that are restricted for use in construction; the interest account is used to segregate resources accumulated for interest payments; the debt service reserve account is used to segregate resources set aside to make up potential future deficiencies in the interest account and the debt service account; and the cost of issuance account is used to segregate proceeds of the revenue bond issuance that are to be used to pay the cost of issuance.

5. Capital Assets Capital assets, which include land, buildings, machinery, construction in progress and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items) are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets are defined by the City as assets with an initial, individual cost of more than $1,000 for non-infrastructure assets and $100,000 for infrastructure assets, and an estimate useful life in excess of two years. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation.

The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed.

69 (I) Summary of Significant Accounting Policies (Continued)

Property, buildings, machinery and equipment, furniture and fixtures, vehicles and infrastructure of the primary government, as well as the component units, is depreciated using the straight-line method over the following estimated useful lives:

Assets Years Buildings 30 Building improvements 30 Improvements other than building 15 Machinery and equipment 4-5 Furniture and fixtures 7 Infrastructure: Roadway/Street: Pavement 30 Sidewalk, curb and gutter 15 Traffic signals/devices 40 Street lights 10 Street trees 25 Guard rails 50 Retaining walls 50 Paths (Residential) 60 Sanitary sewer system: Pipelines 50 Structures 50 Storm drain system: Pipelines 50 Structures 50 Vehicles 5-10 Other 5

6. Compensated Absences - Other It is the City's policy to permit employees to accumulate earned but unused vacation and sick pay benefits. Vacation pay is accrued when incurred in proprietary funds and is reported as a fund liability. In governmental funds, compensated absences are recorded as expenditures in the year paid, as it is the City's policy to liquidate any unpaid compensated absences at June 30 from future resources, rather than currently available financial resources. The City has established an Internal Service Fund (Sick and Vacation Payout Fund) to pay for compensated absences when a worker leaves the City or retires. The City uses the vested method for calculating compensated absences.

The personnel policies of the City do not allow employees to accrue vacation in excess of eight weeks (320 hours). For example, when a miscellaneous employee (Police and Fire sworn employees have different formulas) is terminated or retires, with a vested pension with twenty years of service, an employee is entitled to be paid 38% of the accrued sick leave balance and 62% of the balance can be used for CALPERS credit. Employees with at least twenty-eight (28) years of benefited City service or an employee retiring on permanent disability arising out of and incurred in the course and scope of their employment with the City with at least twenty-eight (28) years of benefited service shall be entitled to

70 (I) Summary of Significant Accounting Policies (Continued)

receive payment in an amount equal to fifty percent (50%) of their accrued sick leave days up to a maximum of (200) unused sick leave days. The employee has the option ofusing the payout entitlement for retiree medical insurance premium payments. The liability for retirees who do not choose the payout option is paid from the medical sick leave entitlement trust fund.

7. Compensated Absences-New Sick Leave Program/or Police (PORAC) Effective December 23, 2012, Section 24.6 Maximum Sick Leave Accrual, of the Police MOU in its entirety has been abolished and the following New Sick Leave Program is in effect:

Initial Implementation with Existing Sick Leave Balances

If a sworn member of the Berkeley Police Department has an accrued sick leave balance on December 23, 2012, one half of those hours in excess of 200 it has been converted and will be deposited into the employee's retiree Peace Officers Research Association of California (PORAC) medical trust account over five successive years in installments commencing on January 1, 2013. The conversion rate is the employee's rate of pay on December 23, 2012. The remaining fifty percent of the sick leave balance in excess of 200 hours was credited into the employee's separate "catastrophic/service time" bank no later than February 1, 2013 up to a maximum of 500 hours.

After initial implementation and Going Forward

Beginning January 1, 2013, at the end of each calendar year, if an employee has an accrued sick leave balance of 200 hours or more of sick leave, fifty percent of all hours accrued in excess of 200 hours is converted into a cash equivalent at the end of each calendar year. The annual cash conversation is calculated at the employee's hourly rate including additional pay such as POST pay, Bilingual Pay and Longevity Pay then in effect at the end of the calendar year. The annual cash conversion is limited to 50% of the hours an employee has accrued in excess of 200 hours as of December 31st of each year. The City pays the annual cash equivalent into an employee's retiree PORAC medical trust account on behalf of the employee member. Upon retirement, any sick leave hours that have not been converted into an employee's PORAC medical trust account, used for the purposes of additional retirement service credit as provided in PERL Section 20965, or "catastrophic/service time" bank is forfeited.

8. Deferred Outflows ofResources Deferred outflows of resources represent a consumption of net assets by the government that is applicable to a future reporting period. The government has only one type of item, which arises only under accrual basis of accounting that qualifies for reporting in this category. GASB Statement No.68 requires recognition of deferred outflows of resources for changes in the net pension liability of employers that arise from several types of events. Accordingly, the item, deferred outflows of resources, is reported only in the Statement of Net Position under the government-wide financial statements. Those requirements include recognition by an employer of a deferred outflow of resources for its contributions made to a defined benefit pension plan between the measurement date of the report net pension liability and the end of the employers reporting period.

9. Deferred Inflows ofResources Deferred inflows ofresources represent an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The government has two items, which arises only under modified accrual basis of accounting that qualifies for reporting in

71 (I) Summary of Significant Accounting Policies (Continued)

this category. Accordingly, the item, unavailable revenue, is reported only in the governmental fund balance sheet. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available. GASB Statement No.68 requires the recognition of differences between projected and actual earnings on pension plan investment as an increase (decrease) in pension expense for current portion. For the future portion, it is treated as deferred inflows of resource, and is reported only in the Statement ofNet Position in the Government-wide financial statements, and is be amortized for the next four years.

10. Long-term Obligations In the government-wide financial statements, and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net position. Bond premiums and discounts are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs with the exception of bond insurance are expensed at time of issuance.

In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures.

11. Fund Balances The City follows the provisions of GASB Statement No. 54 Fund Balance and Governmental Fund Type Definitions. GASB Statement No.54 established Fund Balance classifications based largely upon the extent to which a government is bound to observe constraints imposed upon the use of resources reported in governmental funds.

GASB Statement No.54 distinguishes fund balance between amounts that are considered non-spendable, such as fund balance associated with inventories, and other amounts that are classified based on the relative strength of the constraints that controls the purposes for which specific amounts can be spent. Beginning with the most binding constraints, fund balance amounts will be reported in the following classifications:

• Nonspendable - assets that will never convert to cash or soon enough to affect the current period, assets that will not convert to cash soon enough to affect the current period, or resources that must be maintained intact pursuant to legal or contractual requirements.

• Restricted - amounts constrained by external parties, constitutional provision, or enabling legislation.

• Committed - includes amounts that can only be used for the specific purposes determined by a formal action, adopting a resolution, of the City's highest level of decision-making authority, the City Council. Commitments may be changed or lifted only by the City adopting a resolution that imposed the constraint originally.

72 (I) Summary of Significant Accounting Policies (Continued)

• Assigned - comprises amounts intended to be used by the City for specific purposes that are neither restricted nor committed. Intent is expressed by the City Council or City manager, to which the City Council has delegated the authority, to assign amounts to be used for specific purposes.

• Unassigned - amounts that are not constrained at all will be reported in the general fund. This classification represents fund balance that has not been assigned to other funds and that has not been restricted, committed, or assigned to specific purposes within the general fund.

The commitment of fund balance requires formal action by a government's highest level of decision-making authority, the City Council. The assignment of fund balance must be based on an authorization policy established the governing body and then applied by a body or official authorized to assign amounts to specific purposes pursuant to that policy.

12. Spending Policy

The City's policy is to spend restricted fund balances first, before spending unrestricted fund balances, for expenditures incurred for purposes for which both restricted and unrestricted fund balances are available, except for instances wherein a City's ordinance or resolution specifies the fund balance.

The City's policy is that committed and assigned fund balances are considered to have been spent first before unassigned fund balances have been spent, when expenditure are incurred for purposes for which amounts in any of those unrestricted fund balance classifications could be used, except for instances where in a City ordinance specifies the fund balance. For committed fund balance, the City Council is the highest level of decision making authority. Commitments may be changed or lifted only by the City adopting a resolution that imposed the constraint originally. For assigned fund balance, it comprises amounts intended to be used by the City for specific purposes that are neither restricted nor committed. Intent is expressed by the City Council or City manager, to which the City Council has delegated the authority, to assign amounts to be used for specific purposes.

73 (I) Summary of Significant Accounting Policies (Continued)

Schedule of ending fund balances, June 30, 2015:

Capital Non-Major Improvement Governmental General Fund Grants Funds Libray Fund Fund Funds Total Fund Balances:

Nonspendable* Noncurrent receivables $ $ $ $ $ 3,024,783 $ 3,024,783

Subtotal of Nonspendable: 3,024,783 3,024,783

Restricted for* Other purposes 6,717 549,213 56,861 612,792

Operating reserved 3,957,094 3,957,094

Public Safety -(Emergemcy call network and police equipment) 245,945 5,623,656 5,869,601

Street maintenance -(Bolivar paving, Hearst streets and Measure M street and watershed improvement) 178,908 5,599,160 20,295,471 26,073,539

Health and welfare -(Youth engagement adovocacy housing, Berkeley food and housing project) 16,122,472 5,357,510 21,479,982

Park and recreation - (library central planning and book fair, Echo Lake and Tulomne Camp planning) 102,152 6,073,880 717,779 11,646,147 18,539,958

Community development and housing loan 3,648,330 25,746,862 1,046,886 17,623,965 48,066,044

Economic development - (LED street light conversion) 994,453 42,813 3,351,959 4,389,226

Debt service reserve 10,252,532 10,252,532

Subtotal of Restricted for: 3,648,330 43,397,510 6,073,880 7,955,852 78,165,196 139,240,768

Assigned to* Operating reserved 2,862,047 2,862,047

Capital Projects 808,965 808,965

Public Safety -(Emergemcy call network and police equipment) 609,788 609,788

Street maintenance -(Bolivar paving, Hearst streets and Measure M street and watershed improvement) 16,810 9,196,102 9,212,913

Health and welfare -(Youth engagement adovocacy housing, Berkeley food and housing project) 47,517 47,517

Park and recreation - (library central planning and book fair, Echo Lake and Tulomne Camp planning) 188,598 1,026,089 1,214,688

Community development and housing loan 51,821 1,051,326 1,103,147

Economic development - (LED street light conversion) 54,088 58,328 112,416

Subtotal of Assigned to: 3,830,670 12,140,810 15,971,480

Unassigned* 45,810,050 (4,199,723) (912,245) 40,698,082

Subtotal of Restricted for: 45,810,050 (4,199,723) (912,245) 40,698,082

TOTAL FUND BALANCE: $ 53,289,050 $ 39,197,787 $ 6,073,880 $ 20,096,662 $ 80,277,734 =$==1=9==8,=93=5==,1=13=

• Please refer to the previous page under item 11. Fund balance for the definition and type of action needed in order to qualify such category.

74 (I) Summary of Significant Accounting Policies (Continued)

Schedule for the trend offund balances for General Fund, June 30, 2015:

Beginning Ending Fund Fund Balances: (General Fund) Fund Balance Addition Deletion Balance

Nonspendable Noncurrent receivables $ $ $ $

Restricted for Community development and housing loan 3,648,330 3,648,330

Assigned to Operating reserved 2,039,645 7,414,688 (6,592,286) 2,862,047 Public Safety 354,301 1,287,983 (1,032,496) 609,788 Street maintenance 16,810 16,810 Health and welfare 85,686 311,493 (349,663) 47,517 Park and recreation 117,368 426,666 (355,436) 188,598 Community development and housing loan 75,615 274,881 (298,674) 51,821 Economic development 156,897 570,364 (673,173) 54,088

Unassigned 39,213,698 142,552,946 (135,956,594) 45,810,050

TOTAL FUND BALANCE: $ 45,691,539 $ 152,839,022 $ (145,241,511) $ 53,289,050

Schedule for the trend offund balances for Grants Fund, June 30, 2015:

Beginning Fund Ending Fund Fund Balances: (Grants Fund) Balance Addition Deletion Balance

Restricted for Other purposes $ 6,717 $ 4,309 $ (4,309) $ 6,717 Public Safety 281,759 180,735 (216,549) 245,945 Street maintenance 200,256 128,454 (149,802) 178,908 Health and welfare 11,840,012 7,594,785 (3,312,326) 16,122,472 Park and recreation 45,420 47,639 9,093 102,152 Community development and housing loan 25,751,446 16,518,286 (16,522,871) 25,746,861 Economic development 1,759,247 1,128,470 (1,893,264) 994,453

Unassigned (3,199,630) (2,052,405.29) 1,052,312 (4,199,723)

TOTAL FUND BALANCE: $ 36,685,227 $ 23,550,273 $ (21,037,713) $ 39,197,787

75 (I) Summary of Significant Accounting Policies (Continued)

Schedule for the trend offund balances/or Library Fund, June 30, 2015:

Beginning Fund Ending Fund Fund Balances: Library Fund Balance Addition Deletion Balance

Restricted for Park and recreation $ 5,505,777 $ 17,469,877 $ (16,901,774) $ 6,073,880

TOTAL FUND BALANCE: $ 5,505,777 17,469,877 (16,901,774) $ 6,073,880

Schedule for the trend offund balances/or Capital Improvement Fund, June 30, 2015:

Beginning Fund Ending Fund Balance Addition Deletion Balance

Fund Balances: (Capital Improvement)

Restricted for Other purposes $ 637,357 $ 282,572 $ (370,715) $ 549,213 Street maintenance 4,500,835 2,001,069 (902,744) 5,599,160 Park and recreation 522,713 232,398 (37,332) 717,779 Community development and housing loan 2,293,079 1,019,502 (2,265,695) 1,046,886 Economic development 2,261 2,193 38,359 42,813

Assigned to Capital projects 1,026,969 456,590 (674,594) 808,965 Street maintenance 6,308,016 3,027,185 (139,099) 9,196,102 Park and recreation 870,937 437,989 (282,836) 1,026,089 Community development and housing loan 2,293,602 1,019,734 (2,262,011) 1,051,326 Economic development 25,376 20,382 12,570 58,328

Unassigned (51,981) 51,981

TOTAL FUND BALANCE: $ 18,429,165 8,551,594 (6,884,097) $ 20,096,662

76 (I) Summary of Significant Accounting Policies (Continued) Schedules/or the trend offund balances/or Other Governmental Funds, June 30, 2015:

Beginning Ending Fund Fund Balance Addition Deletion Balance

Fund Balances: (Other Governmental Funds)

Nonspendable Noncurrent receivables $ 1,991,263 $ 1,422,409 $ (388,889) $ 3,024,783

Restricted for Other purposes 60,092 42,925 (46,155.95) 56,861 Operating reserved 3,665,016 2,618,013 (2,325,935) 3,957,094 Public Safety 5,102,477 3,644,827 (3,123,648) 5,623,656 Street maintenance 23,227,858 16,592,241 (19,524,628) 20,295,471 Health and welfare 3,437,023 2,455,152 (534,665) 5,357,510 Park and recreation 14,511,375 10,365,839 ( 13,231,067) 11,646,147 Community development and housing loa 21,669,305 15,478,928 ( 19,524,268) 17,623,965 Economic development 2,930,191 2,093,109 ( 1,671,341) 3,351,959 Debt service reserve 9,879,916 7,057,472 (6,684,855) 10,252,532

Committed for Other purposes 2,761,737 ( 2, 761, 737)

Unassigned (4,437,438) (1,179,184) 4,704,377 (912,245)

TOTAL FUND BALANCE: $ 82,037,077 $ 63,353,467 $ (65, 112,811) $ 80,277,733

13. Net Position Net position of the government-wide and proprietary funds is categorized as net investment in capital assets; restricted or unrestricted. Net investment in capital assets is that portion of net position that relates to the City's capital assets reduced by accumulated depreciation and by any outstanding debt incurred to acquire, construct or improve those assets, excluding unexpended proceeds.

Restricted net position is that portion of net position that has been restricted for general use by external parties (creditors, grantors, contributors, or laws or regulations of other governments) or imposed by law through constitutional provisions or enabling legislation. Unrestricted net position consists of all net position that does not meet the definition of either of the other two components.

14. Use ofEstimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumption that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Estimates also affect the reported amounts of revenues and expenditures/expenses during the reporting period. Actual results could differ from those estimates.

77 CITY OF BERKELEY

Notes to the Basic Financial Statements (Continued) June 30, 2015

II) Stewardship, Compliance, and Accountability

a) Excess of Expenditures I Over Appropriations The following non-major governmental funds expenditures exceeded appropriations at the legal level of budgetary control (the fund level):

Amount

2 Special Disabled Tax (525) < ) Workforce Investment Act (348) (l) 3 Section 108 HUD GTY Assistance (4,001,967) ( ) 2 Measure B Local Street & Roads (2,525) < ) 2 97 GO Bond Measure S Downtown Area (8,484) < ) Park Acquisition Development (110)(2) Animal Shelter Land/Bldg ( 4) (2) 2 Pension Refunding Bonds (126) < ) 2 09 Measure FF Library (259) < ) 2 2010 COP Animal Shelter (35) < )

(l) An amendment to the appropriations ordinance was not prepared. A transfer from the General Fund will be needed to cover the excess.

2 ( ) An amendment to the appropriations ordinance was not prepared. The fund balance was used to cover the excess.

3 ( ) Grantee returned the unused amount of loan, which the department did not anticipate. As a result, the department returned the exactly same amount to the grantor without set amount of budget. In fact, both revenue and expenditure exceeded budget in the same extent during the fiscal year.

b) Deficit Fund Balances/Net Position The following funds had deficit fund balances I net position on June 30, 2015:

(1) Special Revenue Funds

Amount

Workforce Investment Act Fund $ (2,323) (l) 2 California Energy Commission (300,000) < ) 3 North Shattuck B.I.D. (3,237) ( ) 4 UC Settlement (97 ,368) ( )

(l) Fund balance deficit will be eliminated by a transfer from the General Fund.

2 ( ) Fund balance deficit will be eliminated when the loan will be paid back to the City.

78 (II) Stewardship, Compliance, and Accountability (Continued)

3 C ) Fund balance deficit will be eliminated by reducing expenditures in FY 2016.

4 C ) Fund balance deficit will be eliminated when Public Works bills UC for project expenditures.

(2) Debt Service Funds

Amount

Berkeley Repertory Theatre $ (397) (l)

CI) Fund balance deficit will be eliminated by a transfer from the Capital Improvement Fund.

(3) Internal Service Funds

Amount

Building Maintenance Fund $ (3,747,640) (l) 2 Central Services $ ( 44,202) ( ) 3 Workers Compensation Fund (9,105,844) ( )

Cl) Deficit net position will be eliminated by a revised allocation of costs to City departments.

2 C ) Deficit net position will be eliminated by reducing expenditures in FY 2016 to not exceed revenues.

3 C ) Deficit net position will be eliminated by charging the full cost of service.

79 CITY OF BERKELEY

Notes to the Basic Financial Statements (Continued) June 30, 2015

III. Detailed Notes on All Funds

A. Cash and Investments

Cash and investments as of June 30, 2015 are classified in the accompanying financial statements at fair value as follows:

Unrestricted Restricted Total Primary Government ( except Fiduciary funds) $ 240,024,048 $ 25,408,027 $ 265,432,075 Fiduciary Funds 38,731,513 953,312 39,684,825 Subtotal Primary Government 278,755,561 26,361,339 305, 116,900 Component Units Rent Stabilization Board 4,368,419 4,368,419 Subtotal Component Units 4,368,419 4,368,419 Total cash and investments $ 283, 123,980 $ 26,361,339 $ 309,485,319

Cash and investments as of June 30, 2015 consist of the following:

Cash and deposits: Cash on hand $ 23,019 Deposits with financial institutions 6,829,028 Deposits with fiscal cash 413,027 Total cash and deposits 7,265,074 Investments: Investments for City government, excluding trust funds 274,552,810 Investments held in trust and the Successor Agency 27,667,435 Total investments 302,220,245

Total cash, deposits and investments $ 309,485,319

Equity in pooled cash and investments held by treasury $ 269,387,467 Cash and investments held by fiscal agent 413,027 Cash and investments of retirement plans 35,022,389 Cash and investments of other trust funds 274,049 Cash and investments of Agency funds 4,388,387

Total cash, deposits and investments $ 309,485,319

80 (III) Detailed Notes on All Funds (Continued) Pooled Cash and Investments - The City maintains a cash and investment pool that is available for use by all funds and component units. Each fund's portion of this pool is displayed on the governmental fund balance sheets and proprietary fund statement of net assets as "cash and investments."

Restricted Cash and Investments-The City has other investments, not held by the City Treasury, that are invested pursuant to governing bond covenants. These amounts are reflected as restricted cash in the financial statements.

Investments in Retirement Plans - The funds of the retirement plans and retiree medical plans are invested pursuant to City investment policies established specifically for those plans by the City Council., which are pursuant to Sections 2.44.040 and 2.44.060 of the Berkeley Municipal Code, Resolution No. 45,087-N.S., and Sections 53601, 53607, 53636 and 53648 of the State Government Code, the Director of Finance, the Treasurer of the City, is authorized to make investments of the City's idle funds. The Code also directs the City to present an annual investment policy to the City Council for approval. The objective of the investment policies is to maximize the expected return of the plans at the acceptable level of risk.

1. Investments Investments Authorized by the California Government Code and the City of Berkeley Investment Policies: The table below identifies the investment types that are authorized for the City of Berkeley's pooled investment policies. The table also identifies certain provisions of the California Government Code and/or the City's investment policies that address interest rate risk, and concentration of credit risk. This table does not address investments of debt proceeds held by bond trustees that are governed by the provisions of debt agreements of the City, rather than the general provisions of the California Government Code.

Maximum Maximum Maximum Percentage/Dollar Investment Authorized Investment Type Maturity of Portfolio in one issuer Local Agency bonds 5 years 100% N/A U.S. Treasury Securities 5 years 100% N/A U.S. Agency Securities 5 years 100% N/A Banker's Acceptances 7 days 40% 30% Commercial Paper 180 days 25% $SM or 2% Negotiable Certificates of Deposit 5 years 30% N/A Repurchase Agreements 1 year 10% N/A Medium-Term Notes 5 years 30% N/A Guaranteed Investment Contracts 5 years 25% N/A Money Market funds N/A 100% N/A Mortgage pass-Through Securities 5 years 20% N/A County Pooled Investment Funds N/A N/A N/A JPA Pools (other investment pools} N/A N/A N/A

81 (Ill) Detailed Notes on All Funds (Continued) Investments Authorized by Debt Agreements Investments of debt proceeds held by bond trustees are governed by provisions of the debt agreements, rather than the general provisions of the California Government Code or the City's investment policies. The table below identifies the investment types that are authorized for investments held by bond trustees. The table also identifies certain provisions of these debt agreements that address interest rate risk, and concentration of credit risk.

Maximum Maximum Maximum Percentage/Dollar Investment Authorized Investment Type Maturity Of Portfolio In One Issuer U.S. Treasury Securities 5 years 100% NIA U.S. Agency Securities 5 years 100% NIA Money Market Mutual Funds NIA 100% NIA Guaranteed Investment Contracts 5 years 25% NIA

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 changes in market interest rates. One of the ways that the City manages its exposure to interest rate risk is by purchasing a combination of shorter term and longer term investments and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time as necessary to provide the cash flow and liquidity needed for operations.

• The City has the intention of holding all investments to maturity. The average maturity of the City's pooled investments governed by the Investment Policies was approximately 15.7 months as of June 30, 2015.

City's Investments

Information about the sensitivity of the fair values of the City's investments (excluding investments held in trust for retiree medical plans) to market interest rate fluctuations is provided by the following table that shows the distribution of the City's investments by maturity:

Investment Maturities (in years)

Total Less than 1 1-2 2-3 3-4 4-5

U.S. Agency Securities 90,037,200 $ 24,997,800 $ $ 45,004,750 $ 20,034,650 $

Municipal Bonds 15,143,001 1,389,202 4,670,789 1,085,790 3,001,620 4,995,600

Medium Term Notes 36,681,270 30,442,000 5,241,150 998,120

Money Market Funds 132,033,510 132,033,510

Other 657,829 657,829

Total investments $ 274,552,810 $ 189 ,520,341 $ 9,911,939 $ 47,088,660 $ 23,036,270 $ 4,995,600

82 (III) Detailed Notes on All Funds (Continued)

Trust Fund Investments

In accordance with Government Code Sections 53620-53622, the assets of the City of Berkeley retiree medical plan trusts may be invested in any form or type of investments deemed prudent by the City Council. These plans are authorized by investment policies approved by the City Council to invest in various types of investments, up to a maturity of 30 years. These OPEB and pension investments are reported at fair value, as follows:

Investment Maturities (in years)

Total Less than I 1- 2 2-3 3-4 5 or more Medium Term Notes $ 17,840,248 $ 613,698 $ 3,165,210 $ 2,223,760 $ 3,523,830 $ 8,313,750 Municipal Bond 8,456,875 8,456,875 Savo Island Loan 417,000 417,000 Guaranteed Investment Contract 953,312 953,312

Total investments 27,667,435 $ 613,698 $ 3,165,210 $ 3,177,072 $ 3,523,830 $ 17,187,625

Credit Risk Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Presented below is the minimum rating required by the California Government Code, the City's investment policies, or debt agreements and the actual rating as ofyearend for each investment type.

City's Investments

Minimum Legal Amount Rating Investment Rating Held at June 30, 2015 U.S. Agency Securities AAA $ 90,037,200 AAA Municipal Bonds A 15,143,001 AllA2 Medium Term Notes A 36,681,270 A2IA3 Money Market Funds NIA 132,033,510 Not rated Other NIA 657,829 Not rated Total Investments $ 274,552,810

83 (Ill) Detailed Notes on All Funds (Continued)

Trust Fund Investments

Minimum Legal Amount Rating Investment Rating Held at June 30, 2015 Medium Term Notes A $ 17,840,248 A3 Municipal Bonds A 8,456,875 Al/BAA2 Savo Isalnad Loan 417,000 Not rated Guaranteed Investment Contracts NIA 953,312 Not rated Total Investments $ 27,667,435

• The issuer of commercial paper must have the highest rating from two nationally recognized rating agencies, not one ( as required by the State).

• Purchases of corporate notes shall be limited to securities rated "A" or higher by Moody's or Standard and Poor's.

• Purchases of long-term (i.e., beyond five years) corporate bonds are limited to the Retiree Medical Plan Trust Fund and debt service reserve funds. Issuers must have a Moody's credit rating of"A3" or higher and Standard and Poor's rating of"A-"or higher.

Concentration of Credit Risk The investment policies of the City contain no limitations on the amount that can be invested in any one issuer beyond that stipulated by the California Government Code. Investments in any one issuer ( other than U.S. Treasury securities, mutual funds, and external investment pools) that represent 5% or more of total City investments are as follows:

Issuer Investment Type Reported Amount FNMA Federal Agency Securities $ 19,984,900 Federal Home Loan Bank Federal Agency Securities 50,056,100 Federal Home Loan Mortgage Corp. Federal Agency Securities 10,009,100 Federal Farm Credit Bonds Federal Agency Securities 9,987,100 Municipal Bonds 15,143,001 Total $ 105,180,201

Custodial Credit Risk For an investment, custodial credit risk is the risk that the City will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party if the counter party fails. All of the City's investments except money market mutual funds and guaranteed investment contracts are subject to custodial risk. However, the California Government Code and the City's investment policies do not contain legal or policy requirements that would limit the exposure to custodial risk for investments. The City's investments, OPEB trust fund investments and pension fund investments are held by Wells Fargo, in the Trust and Custody Department, which is separate from the operations of the bank. In addition, Wells Fargo maintains a Financial Institution Bond of at least $100 million which provides protection from losses sustained by employee dishonesty, burglary, robbery, check forgery, securities forgery, computer crime, safe deposit, etc.

84 (III) Detailed Notes on All Funds (Continued) 2. Deposits Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, the City will not be able to recover its deposits. Included as deposits are bank deposits. In accordance with the California Government Code, demand deposits that aren't insured must be collateralized with governmental securities at 110 percent of all such deposits or pledging of first deed mortgage notes equal to 150% of the City's deposits. The collateral must be held by the bank in the City's name. The following chart presents bank deposit balances for the primary government, its component units, and fiduciary funds as of June 30, 2015. Deposits are listed in terms of whether they are exposed to custodial credit risk (i.e., the risk that in the event of a bank failure, the City's deposits may not be returned). Deposits are exposed to custodial credit risk if they are either, (1) insured and collateralized, (2) uninsured and collateralized with securities held by the pledging financial institution, or (3) uninsured and collateralized with securities held by the pledging financial institution's trust department or agent, but not in the name of the City.

Bank Deposit Balances Deposits Exposed to Custodial Credit Risk Total Primary Component Units Fiduciary Funds Bank Description Government Rent Board OPEB Funds Others Balances ~~--'--~~~~~~~~~~~~~- Insured and/or collateralized $ 467,984 $ 8,535 $ 14,371 $ 9,110 $ 500,000

Uninsured and collateralized with securities held by pledging institution's trust department or agent, but not in City's name 5,858,233 119,662 201,471 127, 716 6,307,083

Total bank balance - all deposits $ 6,326,218 $ 128, 197 $ 215,842 $ 136,826 $ 6,807,083

The City applies the provision ofGASB 31, Accounting and Financial Reporting/or Certain Investments and for External Investment Pools, which requires governments to present investments at fair value. For the fiscal year ended June 30, 2015, the City had a decrease in the fair value of investments based on quoted market prices for the securities held, which are included as investment income in the General Fund, as follows:

Interest income $ 2,548,671 Net decrease in the fair value of investments (199,804) Total investment income $ 2,348,867

85 (Ill) Detailed Notes on All Funds (Continued) B. Receivables Receivables as of year-end for the City's individual governmental major funds, non-major governmental funds, and internal service fund, including the applicable allowance for uncollectible accounts, are as follows:

S(!ecial Revenue Caeital Project Other Internal Capital Governmental Service Receivables: General Grant Library Improvement Funds Fund Total

Accounts $37,936,250 $ 156,082 $ 3,556 $ 2,206,044 $ 54,836 $40,356,768

Interest 506,531 41,225 385,078 932,833

Taxes 6,328,978 160,339 173,892 6,663,208

Special assessments 155,669 155,669

Subventions/grants 6,755,341 1,649,891 8,405,233

Notes 3,648,330 26,389,120 7,955,852 16,949,838 54,943,139

Other 477,281 7,777 $17,279 45,201 547,539 Propety Held for Sale 713,313

Gross receivables 48,897,370 33,308,320 $181,174 7,997,077 22,278,925 54,836 112,004,389

Less: allowance for

uncollectibles {31,626,574} {179,892} {l,295) (31,807,761)

Net total receivable~ $ 17,270,796 $ 33,308,320 $ 181,174 $ 7,997,077 $ 22,099,033 $ 53,541 $ 80,196,629

Details of Notes Receivable as of June 30, 2015 are as follows:

Capital Nonmajor Total General Grant Improvement Governmental Notes Notes Receivables : Fund Fund Fund Funds receivable Development Loans: $ 3,335,304 $ 25,068,475 $ 7,751,086 $ 14,725,354 $ 50,880,220 S. B. Rental Rehabilitation 260,000 403,875 663,875 CALHOME_Senior Home Repair 1,120,645 204,765 1,021,394 2,346,804 Rehabilitation-Emergency Repair 31,748 31,748 Rehabilitation-Senior Disabled 20,000 20,000 1st Time Homebuyer home loans 200,000 200,000 OED-Citywide Loans 53,026 411,449 464,475 OED-Mortgage Loan 77,000 77,000 OED- Revolving Loan 259,017 259,017 Gross notes receivable 3,648,330 26,389,120 7,955,852 16,949,838 54,943,140 Less: allowance for uncollectibles (177,375) (177,375)

Total receivables, net $ 3,648,330 $ 26,389,120 $ 7,955,852 $ 16,772,463 $ 54,765,765

86 (Ill) Detailed Notes on All Funds (Continued) Receivables as of year-end for the City's major enterprise funds, including the applicable allowance for uncollectible accounts, are as follows:

Pennit Zero Marina Sanitary Clean Storm Service Off-Street Parking Bldg. Waste Oeerations Sewer Water Center Parking Meter Purchases Total

Accounts Receivable $2,553,997 $440,110 $978,020 $23,109 $89,701 $198,097 1,030 $68,256 $4,352,320 Less: allowance for uncollectibles {577,112} {269,753} {5,297} {39,299} {$891,461}

Total receivables $1,976,885 $170,358 $978,020 $23,109 $84,404 $158,798 $1,030 $68,256 $3,460,860

Development Loans This loan program began in 1991, in which the City awards loans to developers every year. The first year of maturity for loans starts in 2046, but most of the loans may be forgiven. Development loans normally are charged 6% simple interest per annum, with a range of 3% to 6%. The agreements require the borrower to pay annual interest only, at the lesser of 5 0% of the property's net cash flow or the amount of interest calculated at 6%. The loans may be forgiven after 55 years from the loan date, if the terms of the agreement are satisfied.

Senior Rehabilitation Loans This loan program began in 1980. The City is unable to predict the maturity dates of the loans because most of them are only due upon sale of the property. 90% of these loans are deferred with no monthly payments required. Interest rates range between 0% and 6%.

CALHOME Senior home repair loans

Cal Home funds are additional resources to existing Senior and Disabled Home Rehabilitation Loan Programs. Financial assistance from the Cal Home is in the form of a deferred payment loan that is due and payable upon sale or transfer of title to the property. The interest rate is zero. Cal Home has been in existence since 2002 and it targets seniors and disabled homeowners who are very low income and are unable to undertake rehabilitation of their homes because of limited income.

OED Citywide Loans

OED loans are revolving loans funds that can provide access to capital for businesses and entrepreneurs who seek to grow, retain or create jobs, but do not qualify for a traditional bank loan. The OED program serves all commercial areas in the City. The interest rate is based on Prime Rate plus 2 percent at the time of loan approval. Loan terms are up to 7 years.

87 (III) Detailed Notes on All Funds (Continued) Capital Assets

Capital asset activity for the year ended June 30, 2015 was as follows:

Primary Government Beginning Ending Balance Additions Deletions Transfer Balance Governmental activities: Capital assets, not being depreciated: Land $ 21,750,132 $ 21,750,132 Construction in progress 3,789 $ 366,420 $ {3,7892 366,420 Total capital assets, not being depreciated 21,753,921 366,420 (3,7892 22,116,552

Capital assets, being depreciated: Buildings 163,098,691 207,041 163,305,732 Improvements other than buildings 13,452,707 300,238 13,752,945 Machinery and equipment 70,453,658 2,360,193 (2,614,922) 3,789 70,202,718 Infrastructure 185,099,238 5,620,322 190,719,560 Total capital assets being depreciated 432,104,294 8,487,794 (2,614,9222 3,789 437 ,980,955

Less accumulated depreciation for: Buildings (72,760,668) (4,580,850) (77,341,518) Improvements other than buildings (2,838,296) (538,793) (3,377,089) Machinery and equipment (51,802,715) (4,981,309) 2,586,613 (54,197,411) Infrastructure (103,681,3352 (5,109,4582 (108,790,7932 Total accumulated depreciation {231,083,014} (15,210,4092 2,586,613 (243,706,8102

Total capital assets, being depreciated, net 201,021,280 (6,722,6152 (28,3092 3,789 194,274,145

Governmental activities capital assets, net $222,775,201 $ {6,356,1952 $ (28,309} $ $ 216,390,696

Beginning Ending Balance Additions Deletions Transfer Balance Business-type activities: Capital assets, not being depreciated: Land $ 2,979,050 $ $ $ 2,979,050 Construction in progress 168,698 $ 916,405 1,085,103 Total capital assets, not being depreciated 3,147,748 916,405 4,064,153

Capital assets, being depreciated: Buildings 40,356,151 40,356,151 Improvements other than buildings 14,078,333 650,539 14,728,872 Machinery and equipment 8,961,889 190,211 (70,782) 9,081,318 Infrastructure 183,189,105 6,749,870 189,938,975 Total capital assets being depreciated 246,585,478 7,590,620 (70,782} 254, 105,316

Less accumulated depreciation for: Buildings (16,383,344) (1,082,328) (17,465,672) Improvements other than buildings (3,168,807) (519,738) (3,688,545) Machinery and equipment (7 ,308,846) (299,219) 70,782 (7,537,283) Infrastructure (54,147,122} (3 ,092,415} (57 ,239,5372 Total accumulated depreciation (81,008,1192 (4,993,702} 70,782 {85,931,0372

Total capital assets, being depreciated, net 165,577 ,358 2,596,918 168,174,279

Business-type activities capital assets, net $168,725,106 $ 3,513,323 $ $ $ 172,238,432

88 (IIl)Detailed Notes on All Funds (Continued)

C. Capital Assets.

Depreciation expense was charged to functions/programs of the primary government as follows:

Government activities: General government $ 1,445,682 Public safety 1,600,577 Highways and streets 5,222,569 Health and human services 98,068 Culture and recreation 2,520,103 Community development/housing economic development 1,545,664 Amount reported in the internal service funds 2,777,748

Total depreciation expense - governmental activities $ 15,210,409

Business-type activities: Parking-related 331, 122 Marina operations and maintenance 461,526 Sewer services 2,564,352 Clean storm water 579,865 Refuse services 174,635 Permit service center 9,406 Building Purchases 872,795

Total depreciation expense - business-type activities $ 4,993,702

Discretely Presented Component Units Capital asset activity for the Rent Stabilization Board for the fiscal year ended June 30, 2015 was as follows:

Beginning Ending Balance Increase Decrease Balance Capital assets, being depreciated: Machinery and equipment $ 683,770 $ (3, 171) _$__ 68_0 ____ ,5_99_ Total capital assets being depreciated 683,770 (3,171) 680,599

Less accumulated depreciation for: Machinery and equipment (339,950) (83,436) 3,171 (420,215)

Rent Board activities capital assets, net $ 343,820 $ (83,436) =$=== $ 260,384

89 (III) Detailed Notes on All Funds (Continued) The Composition oflnterfund Balances as of June 30, 2015, is as follows:

Due Due Fund To From Primary Government: General Fund 4,465,438 Grants Funds 4,338,440 Capital Improvement Funds 1,567,576 Nonmajor Governmental Funds 1,666,791 Internal Service Funds 27,784

TOTAL $ 6,033,014 $ 6,033,014

(i) The "Due to Other Funds" are Joans from the General Fund to cover cash shortages in other funds that result from the pooled cash arrangement. The Joans are short-term in nature and generally result from the delay in grant reimbursements. The amounts are repaid to the General Fund as the grant reimbursements are made.

Special Capital Project Proprietary Fund Interfund transfers: Revenue Fund Fund

Priwte Off Street Nonmajor Capital Parking Clean Storm Sewer Internal Go Total Transfer- General Fund Grant Fund parking vernmenta I Improvement Meter Fund Water Lateral Service Funds O Fund Fund ut Fund

General Fund $38,601 $7,731,607 $3,562,950 $3,605,670 $14,938,828

Capital Projects Fund: Capital Improvement 574,736 1,145,677 1,720,413

Fnterprise Fund: Refuse Fund 110,880 110,880 Marina Operations/Maint 15,084 4,688 19,772 Sanitary Sewer Operation 2,708 90,501 102,528 195,737 Clean Storm Water 25,092 25,092 Off Street Parking Fund 7,920 7,920 Parking Meter Fund 1,006,675 239,544 8,652 1,254,871 Permit Service Fund 523 406,970 50,555 458,048 Unified Program (CUPA) 5,082 5,082 Building Purchase Fund

Grant Fund:

Nonmajor Governmental Fund: 3,460,166 843,878 851,343 69,276 643,313 5,867,976 Total Transfer-In $4,466,841 $882,479 $7,734,837 $406,970 $239,544 $1,426,079 $90,501 $3,958,019 $5,399,348 $24,604,619

The $14,938,828 General Fund transfers out include (1) subsidy of $204,324 to Paramedic Fund; (2) $7,731,607 to pay for capital improvement projects; (3) transfer of $376,750 to pay debt service for the refunding pension bonds; (4) $1,695,888 to the Public Liability Fund and $250,000 to the Catastrophic Loss Fund; (5) $1,953,018 in matching funds for public health programs; (6) $671,529 subsidy to Street Lighting Assessment District; (7) $403,592 to the Equipment Replacement Fund and $1,213,470 to Sick and Vacation Payouts Fund. Other significant transfers out from other funds included ( 1) Realignment Fund transfer to General Fund for public health programs, required by the State ($2,604,024); (2) Parking Meter Fund transfer to General Fund ($1,006,675).

The General Fund received transfers in of $2,604,024 from the Health State Realignment Fund, $1,006,67 5 from the Parking Meter Fund, and $856, 142 from the UC Settlement Fund.

90 (III) Detailed Notes on All Funds (Continued) D. Leases

Operating Leases The government leases building and office facilities and other equipment under non-cancelable operating leases. Total costs for such leases were $828,005 for the year ended June 30, 2015. The future minimum lease payments for these leases are as follows:

Year Ending June 3 0 Amount 2016 $960,489 2017 980,057 2018 999,761 Total $2,940,307

Capital Leases The City has entered into leases for financing the acquisition of fire equipment. These lease agreements qualify as capital leases for accounting purposes and therefore, have been recorded at the present value of their future minimum lease payments as of the inception date. The assets acquired through capital leases include four engines and two trucks which are allocated among four fire stations. The Acquisition amount for the equipment described in this schedule to be paid to the vendor is $4,439,584 (excluding sales tax of $386,276 to be payable to the State Board of Equalization) and the contract rate is 4.38%. The capital leases are as follows:

Governmental Activities Asset: Machinery and Equipment $ 4,825,860 Less: Accumulated depreciation (3,656, 738) Total ----'-"'"'---$ 1, 169, 122

The future minimum lease obligations and the net present value of these minimum lease payments as of June 30, 2015, were as follows: Fiscal Year Interest Principal Total 2016 $ 82,917 $ 470,177 $ 553,094 2017 62,098 490,996 553,094 2018 40,357 512,737 553,094 2019 17,653 535,442 553,094 Totals ======$ 203,024 $ 2,009,352 $ 2,212,376

91 (III) Detailed Notes on All Funds (Continued) D. Bonds, Capital Leases, Notes, Loans and Other Long-Term Obligations Changes in Long-Term Liabilities

Long-term liability activity for the year ended June 30, 2015 was as follows:

Beginning Prior Period Restated Ending Due within Balance Adjustment(a) Beg. Balance Additions Reductions Balance One Year Governmental Activities Bonds payable: General obligation bonds 87,565,000 87,565,000 (3,665,000) 83,900,000 3,945,000 GO bonds - premium 770,589 770,589 (62,678) 707,912 69,262 Pension refunding bonds 1,135,000 1,135,000 (320,000) 815,000 295,000 Revenue bonds 5,490,082 5,490,082 (252,956) 5,237,126 262,325 Revenue bonds - premium 529,745 529,745 (22,110) 507,635 28,885 Total bonds payable 95,490,417 95,490,417 (4,322,744) 91,167,673 4,600,472

Capital leases 2,459,593 2,459,593 (450,241) 2,009,352 470,177 Certificates of Participation 5,550,000 5,550,000 (105,000) 5,445,000 100,000 Premium on COP 389,832 389,832 (12,140) 377,692 12,140 Notes and loans payable 11,340,000 11,340,000 3,000,000 (4,028,000) 10,312,000 28,000 claims and judgements 30,432,732 30,432,732 31,154,666 (30,432,732) 31,154,666 4,162,666 Compensated absences (PORAC) 1,088,470 1,088,470 279,394 (829,405) 538,459 538,459 Compensated absences - Other 11,713,961 11,713,961 8,294,270 (9,279,626) 10,728,605 813,947

Net pension liability: CalPERS Miscellaneous Plan* 177,716,509 177,716,509 (32,260,537) 145,455,972 CalPERS Fire Plan* 68,153,979 68,153,979 (12,879,146) 55,274,833 CalPERS Police Plan* 138,904,584 138,904,584 (14,926,614) 123,977,970 Police Retirement Income Benefit* 17,607,844 30,685,301 48,293,145 8,286,449 (1,467,997) 55,111,597 Safety Member Pension Fund* 598,501 2,931,251 3,529,752 613,038 (568,620) 3,574,170

Net OPES obligation: Miscellaneous Employees Retiree Health Plan* 3,924,027 3,924,027 1,783,345 5,707,372 Police retiree Premium Assistance Plan* 5,495,406 5,495,406 6,038,996 (375,900) 11,158,502

Governmental Activties Long-term Liabilities 186,090,781 $ 418,391,624 (i) $ 604,482,406 $ 59,450,158 $ (111,938,701) $ 551,993,859 $ 10,725,860

Business-type Activities Refunding lease revenue bonds 20,899,920 20,899,920 (827,044) 20,072,875 857,675 Refunding lease revenue bonds - premium 2,006,132 2,006,132 (83,730) 1,922,402 109,387 Refunding revenue bonds 3,025,000 3,025,000 (3,025,000) Notes payable 9,199,991 9,199,991 (651,209) 8,548,785 677,113 Landfill liabilities 2,151,651 2,151,651 (52,240) 2,099,411 1,276,278 Compensated absences 3,030,540 3,030,540 1,804,334 (2,408,716) 2,426,158 388,384 Net pension liability (Miscellaneous Employees)* 70,976,591 70,976,591 (12,884,244) 58,092,346 Net OPES obligations (Miscellaneous Employees)* 1,202,055 1,202,055 420,619 1,622,674

Business-type Activities Long-term Liabilities 41,515,289 $ 70,976,591 (ii) $ 112,491,880 2,224,953 $ (19,932,183) $ 94,784,650 $ 3,308,839

* General Fund and Enterprises Funds typically have been used in prior years to liquidate the net pension liability (a) FY2014 totals have been restated due to GASB68 of Accounting and Financial Reporting/or Pensions (i) Governmental Activities increased long term debt (net pension liability) by $418,391,624 (ii) Business-type Activities increased long term debt (net pension liability) by $70,976,591

92 (III) Detailed Notes on All Funds (Continued) The following is a summary of Long-term obligations of the City as of June 30, 2015:

Governmental Activities Tyee of Obligation and Pu!:Eose: Final Maturity FY Interest Rates Princieal Amount Governmental Activities Long-Term Obligations General Obligation Bonds: GO 2007 Refunding bonds,Series A, Fire Safety (Measure G) 2027 3.90%-5.00% $ 3,350,000 GO 2002 Refunding bonds, Fire Safety (Measure G) 2020 1.35%-4.50% 6,485,000 GO 2007 Refunding bonds, Series B (Measure S): 2029 3.50%-4.40% 28,645,000 GO bonds 2008 Animal shelter 2037 3.50%-4.30% 6,460,000 09 Measure FF library 2040 1.25%-5.30% 9,355,000 10 Measure FF library, including premium of$286,350 2040 3.00%-5.00% 15,051,350 GO bonds 2014 (Measure M), including premium of$421,562 2044 3.00%-5.00% 15,261,562 General obligation bonds 84,607,912 Revenue Bonds: Berkeley Repertory Theatre, including premium of $507,635 2030 2.00%-3.375% 5,744,760 Refunding Pension Bonds 2018 3.80%-5.25% 815,000 Revenue bonds 6,559,760

2010 COP -Animal Shelter, including premium of$377,692 2041 3.00%-5.75% 5,822,692 Capital Lease Payable: Fire Engines and Trucks 2019 4.38% 2,009,352

Capital lease payable 2,009,352 Loans Payable: CHFA 2012 3.00% 500,000 HUD 108 - Adeline Street 2023 4.25% 214,000 HUD 108- UNA 2025 4.25% 598,000 Ed Roberts Campus 2029 Variable 6,000,000 California Energy Resources Conservation 2024 1.00% 3,000,000 Loans payable 10,312,000 Other Long-Term Obligations Accrued Vacation and Sick Leave 10,728,605 Accrued Police sick leave program liability (PORAC) 538,459 Accrued Workers' Compensation Claims and Judgments 30,892,000 Accrued Public Liability Claims and Judgments 262,666 Net Pension Liability- CalPers Miscellaneous Plan 145,455,972 Net Pension Liability- CalPers Fire Plan 55,274,833 Net Pension Liability- CalPers Police Plan 123,977,970 Net Pension Liability-Police Retirement Income Benefit 55,111,597 Net Pension Liability-Safety memember Pension Fund 3,574, 170 Net OPEB Obligation-Miscellaneous Employees Retiree health Plan 5,707,372 Net OPEB Obligation-Police Retiree Premium Assistance Plan 11,158,502 Other payables 442,682, 146

Governmental Activites Total Long-Term Obligations $ 551,993,859

93 (III) Detailed Notes on All Funds (Continued)

Governmental-type Activities

General Obligation Bonds The City issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. General obligation bonds have been issued for governmental activities. The original amount of general obligation bonds issued in prior years was $87,565,000. General obligation bonds are direct obligations and pledge the full faith and credit of the government. These bonds generally are issued as 25-30 year serial bonds with amounts of principal maturing each year. General obligation bonds currently outstanding are as follows:

Purpose Interest Rates Amount Governmental Activities - Measure G (2002 & 2007 Series A) 2.00%-7.5% $ 9,835,000 Governmental Activities - Measure S (2007 Series B) 4.04%-5.6% 28,645,000 Governmental Activities - Animal Shelter 2008 3.50%-4.30% 6,460,000 Governmental Activities - Neighborhood Branch Library 2009 1.25%-5.30% 9,355,000 Governmental Activities - Neighborhood Branch Library 2010 3.00%-5.00% 14,765,000 Governmental Activities - Measure M (2014) 3.00%-5.00% 14,840,000 $ 83,900,000

Annual debt service requirements to maturity for general obligations bonds are as follows:

Year Ending June 30 Principal Interest

2016 $ 3,945,000 $ 3,542,488 2017 4,120,000 3,375,963 2018 4,295,000 3,204,582 2019 3,955,000 3,034,147 2020 4,120,000 2,864,101 2021-2025 19,235,000 11,798,655 2026-2030 18,995,000 7,561,582 2031-2035 10,190,000 4,588,737 2036-2040 11,800,000 2,067,275 2041-2044 3,245,000 300,038

$ 83,900,000 $ 42,337,566

On November 1, 2002, the City issued $17,865,000 in General Obligation Refunding bonds to refund its 1996 Measure G (Series A) and 1995 Measure G (Series B) General Obligation bonds. The interest rates on the Refunding bonds range between 1.35%-4.50% and the final maturity is September 1, 2020. This bond has a rating of Aa2 from Moody's and AA+ from S&P. The 2002 General Obligation bonds were issued to finance facilities to increase the level of fire protection in the City, including the construction of a jointly funded, multi-jurisdictional fire station,

94 (III) Detailed Notes on All Funds (Continued) the seismic retrofitting of City buildings which house public safety personnel and equipment, the replacement of water mains and the seismic retrofitting of other City buildings. The amount of outstanding balance was $6,485,000 of June 30, 2015. This bonds was refunded by 2015 General Obligation and it was anticipated that the Refunding Bonds, in book entry form, will be available for delivery through the facilities ofDTC in New York, on or about July 15, 2015, and therefore will be legally defeased.

Advance Refunding of General Obligation Bonds: The 2007 Series A Bonds were issued by the City to ( 1) refund its City of Berkeley 1997 General Obligation Bonds (Election of 1992, Series C), dated July 1, 1997, in the principal amount of $10,500,000, and (2) and to pay for costs of issuance of the Series A Bonds. On June 07, 2007, the City of Berkeley issued $4,340,000 of General Obligation Bonds with interest rates ranging from 3.9% to 5.0% to advance refund prior General Obligation Bonds with interest rates ranging from 4.800% to 5.625% and a par value of $8,975,000. This bond has a rating of Aa2 from Moody's and AA+ from S&P.

The net proceeds from the issuance of the Refunding General Obligation 2007 Series A Bonds were used to purchase U.S. government securities and those securities were deposited in an irrevocable trust with an escrow agent to provide debt service payments until the bonds were called on July 9, 2007. The advance refunding met the requirements of an in-substance defeasance and the term bonds were removed from the City's government-wide financial statements. The amount of the outstanding in-substance defeased debt was $3,350, 000 as of June 30, 2015. This bonds was refunded by 2015 General Obligation and it was anticipated that the Refunding Bonds, in book entry form, will be available for delivery through the facilities of DTC in New York, on or about July 15, 2015, and therefore will be legally defeased.

The 2007 Series B Bonds were issued by the City to (1) refund its City of Berkeley 1997 General Obligation Bonds (Election of 1996, Series A), dated June 1, 1997, in the principal amount of $10,000,000; (2) its City of Berkeley 1998 General Obligation Bonds (Election of 1996, Series B), dated December 1, 1998, in the principal amount of $25,000,000; (3) its City of Berkeley 1999 General Obligation Bonds (Election of 1996, Series C), dated August 1, 1999, in the principal amount of $14,000,000, and, with the 1996A Bonds and the 19968 Bonds, the "1996 Bonds", and (4) and to pay for costs of issuance of Bonds. The 1996 Bonds were issued to acquire property, expand and retrofit the Main Library, internally retrofit ( as the most cost-effective means to achieve earthquake safety) and improve the Martin Luther King, Jr. Civic Center building, and revitalize the downtown/ Civic Center area. On June 7, 2007, the City of Berkeley issued $41,245,000 of General Obligation Bonds with interest rates ranging from 3.5% to 4.4% to advance refund prior General Obligation Bonds with an interest rate of 5.375% and a par value of $42,425,000. This bond has a rating of Aa2 from Moody's and AA+ from S&P.

The net proceeds from the issuance of the General Obligation Bonds were used to purchase U.S. government securities and those securities were deposited in an irrevocable trust with an escrow agent to provide debt service payments until the bonds were called on July 9, 2007 and September 9, 2007. The advance refunding met the requirements of an in-substance defeasance and the term bonds were removed from the City's government-wide financial statements. The amount of the outstanding in-substance defeased debt was $28,645,000 as of June 30, 2015. This bonds was refunded by 2015

95 (III) Detailed Notes on All Funds (Continued) General Obligation and it was anticipated that the Refunding Bonds, in book entry fonn, will be available for delivery through the facilities of DTC in New York, on or about July 15, 2015, and therefore will be legally defeased.

2008 Animal Shelter Bonds On January 9, 2008, the City of Berkeley issued $7 ,200,000 of General Obligation Bonds with interest rates ranging from 3.50% to 4.30%. Interest is payable semi-annually on March 1 and September 1, and principal is payable annually on September 1, with the 1st principal payment on September 1, 2010. The bonds were issued to finance a new Animal Shelter to replace the existing shelter in the City of Berkeley, and to pay for costs of issuing the bonds. The General Obligation bonds mature on September 1, 203 7, but are callable on or after September 1, 201 7. This bond has a rating of Aa2 from Moody's and AA+ from S&P. The amount of outstanding balance was $6,460,000 of June 30, 2015. This bonds was refunded by 2015 General Obligation and it was anticipated that the Refunding Bonds, in book entry form, will be available for delivery through the facilities ofDTC in New York, on or about July 15, 2015, and therefore will be legally defeased.

2009 Neighborhood Branch Library Improvement Project Bonds On April 14, 2009, the City of Berkeley issued the first series of bonds for $10,000,000 from an aggregate authorized amount of $26,000,000 of General Obligation Bonds duly approved by at least two-thirds of the voters voting on Measure FF at an election held on November 4, 2008, to provide funds to finance renovations, construction, seismic and access improvements, and expansion of program areas at four neighborhood branch libraries in the City. The interest rates on the bonds range from 1.25% to 5 .30%. Interest is payable semi-annually on March 1 and September 1, and principal is payable annually on September 1. The General Obligation bonds mature on September 1, 2039, but are callable on or after September 1, 2019. This bond has a rating of Aa2 from Moody's and AA+ from S&P.

2010 Neighborhood Branch Library Improvement Project Bonds

On August 3, 2010, the City of Berkeley issued the second series of bonds for $16,000,000 from an aggregate authorized amount of $26,000,000 of general Obligation Bonds indicated above. The interest rates on the bonds range from 3.00% to 5.00%. Interest is payable semi-annually on March 1 and September 1, and principal is payable annually on September 1. The General Obligation bonds mature on September 1, 2039, but are callable on or after September 1, 2019. This bond has a rating of Aa2 from Moody's and AA+ from S&P.

2014 Street and Integrated Watershed Improvements Bonds

On November 19, 2013, the City ofBerkeley issued the first series ofbonds for $15,000,000 from an aggregate authorized amount of not to exceed $30,000,000 of General Obligation Bonds duly approved by at least two-thirds of the voters voting on Measure Wat an election held on November 6, 2012, to provide funds to finance improvements to streets, with integrated watershed improvements within the City. The interest rates on the bonds range from 3.00% to 5.00%. Interest is payable semi-annually on March 1 and September 1, and the principal is payable annually on September 1. The General Obligation bonds mature on September 1, 2043. This bond has a rating of Aa2 from Moody's and AA+ from S&P.

96 (III) Detailed Notes on All Funds (Continued) Revenue Bonds The government also issues bonds where the government pledges income derived from the acquired or constructed assets or tax increment or the General Fund to pay debt service.

Revenue bond debt service requirements to maturity for the Berkeley Repertory Theatre and Refunding Pension Bonds are as follows:

Refunding of Lease Revenue Bonds Berkeley Repertory Theatre: On October 1, 1999, BJPFA issued $9,125,000 in lease revenue bonds, on behalf of the City, to acquire a new theatre facility and a 6.4 acre park and park facilities. Interest rates ranging from 4.1 %-5.7% are payable semi-annually on April 1st. and October 1st. Principal is due annually on October 1st.

On October 24, 2012, the Berkeley Joint Powers Financing Authority issued $5,693,851 of Refunding Lease Revenue Bonds, to refund the 1999 BJPF A Lease Revenue Bonds, with interest rates ranging from 2.000% to 5.000% to current refund prior Lease Revenue Bonds with interest rates ranging from 5.200% to 5.700% and a par value of $6,770,000. The prior Lease Revenue Bonds mature annually on October 1 between 2013 and 2029. The prior Lease Revenue Bonds were called on November 9, 2012. The current Refunding Lease Revenue Bonds were issued at a premium of $542,791 and, after paying issuance costs of $58,095 and underwriter's discount of $18,247, the net proceeds were $6,160,299. The net proceeds from the issuance of the Refunding Lease Revenue Bonds were used to purchase U.S. government securities and those securities were deposited in an irrevocable trust with an escrow agent to provide debt service payments until the bonds were called on November 9, 2012. The current refunding met the requirements of an in-substance defeasance and the term bonds were removed from the City's government-wide financial statements. As a result of the current refunding, Berkeley Joint Powers Financing Authority reduced its total debt service requirements by $1,661,3 50, which resulted in an economic gain ( difference between the present value of the debt service payments on the old and new debt) of $1,214,306. The revenue bonds has principal balance as of June 30, 2015 for $5,237,126.

Annual debt service requirements to maturity for general obligations bonds are as follows:

Year Ending June 30 Principal Interest

2016 $ 262,325 $ 238,320 2017 271,693 227,640 2018 283,404 216,538 2019 293,944 204,991 2020 306,826 192,976 2021-2025 1,763,665 730,571 2026-2030 2,055,267 273,750

$ 5,237,126 $ 2,084,786

97 (III) Detailed Notes on All Funds (Continued)

Refunding Pension Bonds The City has an obligation pursuant to an ordinance to make payments, on behalf of the Safety Members Pension Board, to certain retired City police and fire personnel. On May 1, 1998, the City issued debenture bonds in the amount of $12,415,000 to refund certificates of participation, which were issued to purchase a funding and risk agreement that provides payments to the Safety Members Pension fund to assist in funding the City's pension obligation. Interest rates range from 3.8%-5.25% and are payable semi-annually on June 1st. and December 1st. Principal is payable annually on June 1st. This revenue bonds has principal balance as of June 30, 2015 for $815,000.

Annual debt service requirements to maturity for general obligations bonds are as follows:

Year Ending June 30 Principal Interest

2016 $ 295,000 $ 40,750 2017 270,000 26,000 2018 250,000 12,500

$ 815,000 ------$ 79,250 Certificates of Participation (COP)-Animal Shelter On May 19, 2010, the Berkeley Joint Powers Financing Authority issued $5,750,000 of Certificates of Participation to provide funds to the City to finance a portion of the acquisition and construction of an animal shelter. Annual principal payments on the debt will range from $100,000 in FY2013 to $385,000 in FY2041. Interest rates will range from 3.0% in FY2013 to 5.75% in FY2041. The Certificates of Participation will be repaid from a transfer from the Capital Improvement Fund. The face value of the Certificates of Participation was deposited into two separate funds: $4,896,625 was recorded in the Capital Projects - 2010 COP Animal Shelter Fund for project construction; and $853,375 was recorded in the Debt Service Funds - 2010 Animal Shelter for capitalized interest. This COP has a rating of Aa3 from Moody's and AA from S&P.

COP debt service requirements to maturity are as follows:

98 (III) Detailed Notes on All Funds (Continued) Year Ending June 30 Principal Interest

2016 $ 100,000 $ 302,063 2017 110,000 297,638 2018 110,000 292,963 2019 115,000 287,913 2020 120,000 282,613 2021-2025 705,000 1,308,063 2026-2030 930,000 1,075,825 2031-2035 1,235,000 766,044 2036-2040 1,635,000 356,356 2041 385,000 11,069 $ 5,445,000 $ 4,980,544

Loans Payable • CHFA On January 2002, the City of Berkeley received $500,000 from California Housing Finance Agency. Loan funds will be used exclusively to provide for a revolving source of funds from which to make loans to nonprofit developers for the purpose of financing the acquisition of sites for development, for existing single-family and multifamily properties. There is no amortization table available as it is simple interest at 3% per annum. This program is no longer active as of 6/30/2015, as a result, the loan amount will be fully paid off at the end of September 2015 with interest.

• HUD 108 - Adeline Street

In August 7, 2003, the City of Berkeley borrowed $500,000 from the U.S. Housing and Urban Development (HUD) Section 108 Loan Guarantee Program to bridge a funding gap that resulted from a 30% increase in construction costs of 3222 Adeline Street Apartments and anticipated increases for monthly utility costs. The apartments consist of a 19-unit mixed-use project for persons with disabilities and their families. Though the City as the grantee is required to make the loan payments, the funds for the repayment are the obligation and responsibility of the project developer as with any conventional loan a developer may secure. The 108 Loan is secured by a first or second lien on the property and by a pledge of an income stream, such as monthly rents. The interest rate is 4.25%, and interest is payable semiannually on February 1 and August 1 of each year. This loan will mature on August 1, 2022.

99 (III) Detailed Notes on All Funds (Continued) Year Ending June 30 Principal Interest

2016 $ 26,000 $ 10,898 2017 26,000 9,565 2018 26,000 8,202 2019 26,000 6,815 2020 26,000 5,406 2021-2024 84,000 7,411

$ 214,000 $ 48,297

• HUD 108- University Avenue Neighborhood Apartments (UNA) As of June 30, 2012, the City of Berkeley made a total drawdown of $604,000 of the $705,000 loan commitment from the U.S. Housing and Urban Development (HUD) Section 108 Loan Guarantee Program. The purpose of this loan is to help finance the costs associated with the development of certain real property located at 1719 and 1725 University A venue, Berkeley, California.

The interest rate is variable until the date HUD converts it into a permanent loan or the redemption date, whichever is earlier. These dates have not been determined. During the interim period, interest will be billed by HUD on the first day of February, May, August and November. A schedule of principal and interest will be provided by HUD after the conversion of the loan.

• HUD 108- David Brower In December, 2007, the City of Berkeley borrowed $4,000,000 from the U.S. Housing and Urban Development (HUD) Section 108 Loan Guarantee Program. The loan is for the development of the Oxford Plaza and David Brower Center which is expected to create jobs for low and moderate income persons. The interest rates ranged from 3.6460% to 6.320%. Interest is payable quarterly. This loan will mature on August 1, 2015 but it was paid off on June 2015.

• HUD 108- Ed Roberts Campus In August 2009, the City of Berkeley accepted a $6,000,000 loan from the U.S. Department of Housing and Urban Development (HUD) Section 108 Loan Guarantee Program and executed a loan agreement with The Ed Roberts Campus, Inc. to construct a public facility that will operate primarily as a one-stop service center for people with disabilities. The interest rate is variable and is payable quarterly. The loan will mature on August 15, 2028.

This loan is currently interest only until the date HUD converts it into a permanent loan or the redemption date, whichever is earlier. These dates have not been determined. During the interim period, interest will be billed by HUD on the first day of February, May, August and November. A schedule of principal and interest will be provided by HUD after the conversion of the loan.

100 (III) Detailed Notes on All Funds (Continued) • California Energy Resources Conservation and Development In February 2014, the City of Berkeley accepted a $3,000,000 loan from the California Energy Resources Conservation and Development Commission (the "Energy Commission) with loan number 005-13-ECD. This loan is made to the City for an energy savings project, which consists of retrofitting 7,975 street lights to LED technology to be installed. It is estimated that the annual energy cost savings to be $387,021 for the City with this implementation. This loan consists of 1.00% interest rate, and interest is payable semiannually on December 22 and June 22 of each year. This loan will mature on June 22, 2023.

Year Ending June 30 Principal Interest

2017 299,578 70,873 2018 344,303 26,148 2019 347,754 22,697 2020 351,190 19,261 2021 354,761 15,690 2022-2025 1,302,413 26,846

0.00 3,000,000 181,514

Business-Type Activities Final Maturity Interest Principal Type of Obligation and Purpose: FY Rates Amount Business-Type Activities Long-Term Obligations Refunding Lease Revenue Bonds (includes premium of$1,922,402) 2032 2.00%-3.375% 21,995,277 Notes Payable - Harbor Construction 4 2016 4.50%-7.90% 300,956 Notes Payable - Harbor Construction 5 until paid 4.50% 7,274,907 Loan Payable - Recycling Carts 2017 3.50% 972,922 Landfill Liabilities 2,099,411 Compensated absences 2,426,158 Net pension liability (Miscellaneous Employee) 58,092,346 Net OPEB Obligation - MRHP 1,622,674 Busines-Type Activities, total Long-Term Obligations 94,784,650

101 (III) Detailed Notes on All Funds (Continued) Business-type Activities

Revenue Bonds

Garage improvements: On July 19, 2005, BJPF A issued $5,620,000 in lease revenue bonds, on behalf of the City, to refund, at a lower interest rate, the outstanding bonds that were issued to finance improvements to the Center Street and Sather Gate garages, and to finance certain new improvements to the garages. Interest rates ranging from 3 .25%-4.25% are payable semi-annually on March 1st. and September 1st. Principal is due annually on October 1st. The bonds mature March 1, 2022 and are collateralized solely by the City's pledge of the net revenues of the City's Off Street Parking Fund. This bond has a rating of A2 from Moody's and BBB+ from S&P. The City elected to pay off the balance of the bonds on March 2015 for $3,025,000, by using the existing cash available in bank accounts.

Refunding of Certificates of Participation

On April 1, 2003, Berkeley Joint Powers Financing Authority issued $27 ,950,000 in Certificates of Participation on behalf of the City to purchase and renovate the building at 1947 Center Street. Annual principal payments on the debt will range from $265,000 in FY 2007 to $1,795,000 in FY 2033. Interest rates will range from 2.5% in FY 2005 to 5.00% in FY 2033. The Certificates of Participation were being repaid from the income derived from leasing floors in the acquired building and the leasing costs saved by housing some City departments' staff in the building.

On October 24, 2012, the Berkeley Joint Powers Financing Authority issued $21,566, 149 of Refunding Lease Revenue Bonds with interest rates ranging from 2.000% to 5.000% to current refund prior Certificates of Participation with interest rates ranging from 3.625% to 5.000% and a par value of $24,665,000. The prior Certificates of Participation mature annually on February 1 between 2013 and 2032. The prior Certificates of Participation were called on November 9, 2012. The current Refunding Lease Revenue Bonds were issued at a premium of $2,055,885 and, after paying issuance costs of $220,043 and underwriter's discount of $69, 114, the net proceeds were $23,332,876. The net proceeds from the issuance of the Refunding Lease Revenue Bonds were used to purchase U.S. government securities and those securities were deposited in an irrevocable trust with an escrow agent to provide debt service payments until the bonds were called on November 9, 2012. The current refunding met the requirements of an in-substance defeasance and the term bonds were removed from the City's government-wide financial statements. As a result of the current refunding, Berkeley Joint Powers Financing Authority reduced its total debt service requirements by $6,627,294, which resulted in an economic gain ( difference between the present value of the debt service payments on the old and new debt) of $4,818,892.

Refunding Lease Revenue Bonds debt service requirements to maturity are provided below:

102 (III) Detailed Notes on All Funds (Continued) Year Ending June 30 Principal Interest 2016 $ 857,675 $ 779,192 2017 888,307 744,273 2018 926,596 707,975 2019 961,056 670,222 2020 1,003,174 630,937 2021-2025 5,766,335 2,388,616 2026-2030 6,719,733 943,906 2031-2032 2,950,000 99,500 $ 20,072,875 $ 6,964,620

Notes Payable

• Harbor Construction 4 For the period October 30, 1986 to March 31, 1999, the City of Berkeley borrowed a total of $2 million from the California State Department of Boating and Waterways for the development of the Berkeley Marina Rehabilitation project. The loan is payable on August 1 of each year at an interest rate of 4.5%. This loan will mature on August 1, 2016.

Year Ending June 30 Principal Interest

2016 $ 147,170 $ 19,880 2017 153,786 6,920

$ 300,956 $ 26,800

• Harbor Construction 5 The City of Berkeley borrowed a total of $7 ,687 ,894 of the $9 .0 million maximum loan amount from the California State Department of Boating and Waterways. The purpose of this loan is financing for the demolition and replacement of wooden docks and wood piles into a new marina berthing system and concrete piles. New utilities, including electrical power and water are to be installed. The new docks and gangways were to be designed and built for barrier-free access. In addition, existing restroom buildings were to be replaced. The loan is payable on August 1 of each year with an interest of 4.50%. The amortization schedule will not be available until the final draw down reaches $9.0 million. Currently, the California State Department of Boating and Waterways provides an annual statement of the amount of interest the City is required to pay.

103 (III) Detailed Notes on All Funds (Continued)

Loans Payable In FY2011, the City entered into an agreement for financing the acquisition of recycle carts. The assets acquired through agreement include 24,200 of 64-gallon split carts, 5,000 of 64 gallon standard carts, and 1,800 of 96 gallon standard carts. The acquisition amount for the carts to be paid to the vendor is $2,525,000 (including sales tax of $196,320 to be payable to the State Board of Equalization) with the contract rate is 3.50%. This loan will mature on July 8, 2017.

Year Ending June 30 Principal Interest Total

2016 $ 379,072 $ 30,764 $ 409,836 2017 392,455 17,381 409,836 2018 201,394 3,524 204,918 $ 972,921 $ 51,669 $ 1,024,590

Landfill Liabilities In July 13, 2010, the City council adopted an amendment with SCS Field Services for Cesar Chavez Park Landfill post-closure monitoring and maintenance under contract No. 71988. The City began to record the landfill liabilities in FY2011 based on the requirements of GASB 18. This Statement is based on the October 9, 1991, U.S. Environmental Protection Agency (EPA) rule, "Solid Waste Disposal Facility Criteria," which establishes closure requirements for all municipal solid waste landfills (MSWLFs) that receive solid waste after October 9, 1991. The EPA rule also establishes thirty-year post closure care requirements for MSWLFs that accept solid waste after October 9, 1993. The effect of the EPA rule and similar state and local laws or regulations is to obligate MSWLF owners and operators to perform certain closing functions and post closure monitoring and maintenance functions as a condition of the right to operate the MSWLF in the current period. For MSWLFs that use proprietary fund accounting and reporting, a portion of the estimated total current cost of MSWLF closure and post closure care is required to be recognized as an expense and as a liability in each period that the MSWLF accepts solid waste. Recognition should begin on the date the MS WLF begins accepting solid waste, continue in each period that it accepts waste, and be completed by the time it stops accepting waste. Estimated total current cost should be assigned to periods based on MSWLF use rather than on the passage of time, using a formula provided in this Statement. MS WLF capital assets excluded from the calculation of the estimated total cost of MS WLF closure and post closure care should be fully depreciated by the date that the MS WLF stops accepting solid waste. Capital assets used for a single cell should be fully depreciated by the date that each cell is closed

In accordance with requirements established by the California Integrated Waste Management Board, the City has recognized a portion of the landfill's closure and post closure care (closure) costs. These cost estimates are based on the amount of landfill used to date. The estimated closure and corrective

104 (III) Detailed Notes on All Funds (Continued) action costs are current estimates based on data provided by SCS Field Services, an independent consultant and are subject to changes in inflation, technological advancements, or regulatory changes. The total estimated costs are as follows:

Total estimated closure costs $ 0

Total estimated post-closure costs $2,099,411

The City last accepted waste in 1983 and closed the landfill in phases over the period 1981 through 1990 in accordance with closure regulations contained in California Code of Regulations Title 14, Chapter 15 and the San Francisco Regional Water Quality Control Board requirements which were then in effect. At June 30, 2015, the estimated landfill closure cost liabilities totaled $2,099,411 and estimated annual landfill closure cost adjustment of $52,240 was calculated as follows:

Total estimated closure and post-closure costs $2,099,411

Percent of used capacity to total capacity 100.00 % $2,099,241

Revised estimated total closure and post-closure costs liablity $2,099,241

Previous closure costs accrued 2,151,651

FY2015 expense for closure and post-closure costs $52,240

The landfill has an estimated remaining capacity of zero cubic yards and closure construction was completed in 1990.

Debt Compliance There are a number of limitations and restrictions contained in the bonds' indentures. The City believes it is in compliance with all significant limitations and restrictions, except as follows:

The City currently has outstanding parking revenue bonds which require a net revenue pledge. The bond covenants require the City to maintain 125% of debt service from net revenues. At the time of the financing, the city anticipated taking one of the three parking facilities off line for development of a new parking structure for a period of time which would reduce the amount of net revenues and therefore prevent the covenant from being met. The City maintains significant fund balances which are available for debt service and can be used in the event net revenues do not equal the debt service payments. As of June 30, 2015, the City was able to pay its debt service from net revenues without the need to draw on fund balances.

Arbitrage The Tax Reform Act of 1986 instituted arbitrage restrictions related to the issuance of tax-exempt bonds issued after August 31, 1986. Those regulations relate to the investment of tax-exempt bond proceeds at an interest yield greater than the interest yield paid to bondholders. An independent firm performs arbitrage rebate calculations to determine the applicability of federal arbitrage regulations. There were no bond issues with a positive arbitrage rebate liability during the fiscal year.

105 (III) Detailed Notes on All Funds (Continued) Compensated Absences

It is the policy of the City to record the cost of vested vacation and sick leave as earned. Earned vacation and sick leave that is taken during the year is payable from the fund(s) the employee's salary or wage is chargeable to. The vested compensated absences balances for employees who retire or otherwise leave the City are paid from the Sick Leave and Vacation Payouts Internal Service Fund at the time of departure. Please refer to Section ID6 and ID7 under Notes to the Basic Financial Statements for details.

Internal Service Funds These funds predominantly serve the governmental funds. Accordingly, long-term liabilities for them are included as part of the totals above for governmental activities. At June 30, 2015, $371,350 in compensated absences, $31, 154,666 in claims and judgments payables, $324,641 in Net OPEB Obligation, and $10,998, 182 in Net Pension Liability are included in the above amounts. The liabilities for workers' compensation are paid from the Workers' Compensation Internal Service Fund and the liabilities for public liability claims are paid from the Public Liability Internal Service Fund.

Special Assessment Debt without City Commitment On September 2, 2004, the City issued $1,490,000 in Thousand Oaks Heights Applicant Funded Utility Undergrounding Assessment District Limited Obligation Improvement Bonds pursuant to the provision of the Improvement Bond Act of 1915 (Division 10 of the California Streets and Highways Code) for the purpose of financing the construction and acquisition of certain public improvement within the City's Thousand Oaks Heights Applicant Funded Utility Undergrounding Assessment District. Interest on the Bonds is payable March 2, 2005, and thereafter semiannually on September 2 and March 2 of each year. The bonds were issued to improve to 105 parcel district are briefly summarized as the undergrounding of existing overhead utility facilities, removal of existing poles and related above ground facilities, replacement of street lighting, with appurtenant work and improvements and including incidental costs and expenses of project design and construction supervision, legal proceedings, and bond financing. The Bonds were issued upon and secured by the unpaid special assessment levied on parcels within the Districts. The Bonds are special limited obligations of the City and are not payable from the City's general fund and is not obligated in any way to repay the debt in the event of a default. The Bonds are due in annual installments ranging from $50,525 to $100,255, and have an interest rate ranging between 4.6 to 5.25%. The total principal outstanding as of June 30, 2015 was $1,205,000.

On June 1, 2002, the City issued $9,750,000 in Community Facilities District No. 1 bonds (for disaster fire protection), pursuant to the Mello-Roos Community Facilities Act of 1982 (being section 53311 et seq. of the California Government Code and City Council Resolution #66,615-N.S). The bonds were issued to finance a mobile disaster fire protection system for the delivery of auxiliary firefighting water, including transportation pumping units, ultra large diameter hose, transport and support vehicles, portable hydrants, accessory fittings, hose bridges, and a storage site or sites, together with incidental expenses related thereto. These bonds will be repaid from amounts levied against property owners benefited by the disaster fire protection system. The amounts levied against property owners to repay the bonds are accounted for in an agency fund. The faith and credit or taxing power of the City is not pledged to the payment of the bonds. Accordingly, the debt has not been

106 (Ill) Detailed Notes on All Funds (Continued) included in the basic financial statements. The bonds are due in annual installments ranging from $270,000 to $760,000, and have an interest rate ranging between 3.0% and 4.75%. The City is not obligated in any way to repay the debt in the event of a default. The total principal outstanding as of June 30, 2015 was $4,500,000. This bond has had a rating of Aa3 from Moody's since April 16, 2010 and A (Stable) from S&P since March 8, 2011.

Conduit Bond Issues On June 1, 1993, the City issued variable rate revenue bonds on behalf of the Berkeley Young Men's Christian Association in the amount of $10,755,000. The bonds were re-offered on June 1, 1998. The amount outstanding at June 30, 2008 totaled $8,515,000 but it was fully paid in July 2008 by a re-offering of bonds in July 2008. The amount outstanding at June 30, 2014 totaled $11, 500,000 and was fully paid on November 2014. These bonds are not included in the accompanying financial statements as neither the faith and credit nor the taxing power of the City of Berkeley have been pledged to the payment of these obligations.

Tax Revenue Anticipation Notes Payable The City issued $24,995,000 of tax revenue anticipation notes with a coupon rate of 1.0% and a yield of 0.11 % in July 23 2014, in order to alleviate the strain on working capital prior to the receipt of property tax revenues in December. The notes are recorded in the General Fund. Interest and principal on these notes are payable on July 22, 2015 by the General Fund. The City has maintained a MIG-I rating on its short-term issues. A schedule of changes in the Tax Revenue Anticipation Note follows:

July 1, 2014 Increases Decreases June 30, 2015 $ 24,995,000 $ $ $ 24,995,000

Pledged Revenue

• City Pledge to Berkeley Joint Powers Financing Authority: On July 19, 2005, the City issued $5,620,000 of bonds called the Revenue Bonds, 2005 Series A (City of Berkeley Parking System Financing Project), which were collateralized solely by the City's pledge of the net revenues of the City's Off Street Parking Fund. The bonds were issued to refund, at a lower interest rate, the outstanding bonds that were issued to finance improvements to the Center Street and Sather Gate garages, and to finance certain new improvements to the garages. The City payments pledged as of June 30, 2014 total $3,615,394, and the pledged City payments are scheduled from fiscal years 2012 to 2022. The City has pledged and assigned to Berkeley Joint Powers Financing Authority approximately I 00 percent of the City's rights to the net revenues of the Off Street Parking Fund. The City elected to pay off the balance ofthe bonds on March 2015 for $3,025,000, by using the existing cash available in bank accounts.

• City Pledge to The Bank of New York Trust Company: On October 6, 1999, the City of Berkeley issued $9,125,000 of bonds called the Berkeley Joint Powers Financing Authority Lease Revenue Bonds, Series 1999. The bonds were issued for the acquisition of a theatre and park facilities. All of the revenues and fund balance are pledged in their entirety to the payment of principal and interest on the bonds. The City has pledged and assigned to

107 (III) Detailed Notes on All Funds (Continued) Berkeley Joint Powers Financing Authority approximately 100 percent of the City's rights to the revenues and 100% of the fund balance of the Berkeley Repertory Theatre Fund. On October 2012, The Berkeley Joint Powers Financing Authority issued its 2012 Refunding Lease Revenue Bonds (1999 and 2003 Refinancing). The Bonds were being issued to provide funds to (i) refinance three outstanding lease obligations of the City and related outstanding 1999 Lease Revenue Bonds of the Authority and 2003 Certificates of Participation of the City and (ii) pay the costs of issuing the Bonds. As a result of the refinancing of the Original Theater Lease and the Original Park Lease, the Authority will concurrently defease and provide for redemption of the Authority's outstanding $9,125,000 Berkeley Joint Powers Financing Authority Lease Revenue Bonds, Series 1999, which the Authority issued pursuant to a Trust Indenture, dated as of October 1, 1999, by and among the Authority, the City and The Bank ofNew York Mellon Trust Company, N.A., as trustee. The total original principal of 2012 Refunding Lease Revenue Bonds as of October 24, 2012 was $5,693,852. For FY2015, the pledged revenues were the fund transfer of $289,232 from General Fund and $500,317 from Capital Project, totaled $789,549, compared with debt service of $500, 714.

• City Pledge to Depository Trust Company (DTC): On July 23, 2014, the City ofBerkeley issued $24,995,000 ofFY2015 Tax and Revenue Anticipation Notes. The Notes were issued to provide moneys to meet the City's General Fund cash flow requirements during the 2014-15 fiscal year commencing July 1, 2014 and ending June 30, 2015, including current expenditures and capital expenditures. The City pledges to deposit in a special fund (a) an amount equal to 50% of the principal amount of the Notes in January 2015; (b) an amount equal to 50% of the principal amount of the Notes in the month of May 2015; and (c) an amount sufficient to pay interest as due on the Notes at their maturity, in the month of July 2015. The City pledges $24,995,000 in General Fund taxes and other revenue received in 2014-15. Pledged City payments are scheduled from fiscal years 2015 to 2016. The City has pledged and assigned to DTC (on behalf of the note holders) approximately $24,995,000 or 16.3 percent of the City's rights to the General Fund annual revenues. For FY2015, the pledged revenues totaled $153,036,479 compared with debt service of $24,995,000.

Restricted assets The balance of the restricted asset accounts in the governmental funds are as follows:

Governmental Funds:

2014-15 Tax and Revenue Anticipation Notes $ 24,995,000 COP 2010 Reserve fund account (2010 COP Animal shelter Lease payment fund) 22 COP 2010 Reserve fund account (2010 COP Animal shelter debt service fund) 412,992 Pension Refunding Bond regular account 14 Total Governmental Funds: $ 25,408,027

108 (III) Detailed Notes on All Funds (Continued)

IV. Other Information

A. Restatement ofFund Balance and Net Position

Balance Sheet Statement of Governmental Funds Net Position Non-major Other General Grants Library Capital Governmental Adjustment on Governmental Fund Fund Fund Improvement Funds Activities Activities

Fund balances I Net Assets, at June 30, 2014, as previously reported $ 45,691,539 $ 36,685,227 $ 5,505,777 $ 18,429,165 $ 82,037,077 $ 84,851,271 $ 273,200,055

Restatements:

Adjustments due to the implementation of GASB68 Deferred Employer Pension Contribution 32,284,733 32,284,733

Net Pension Liability (418,391,624) (418,391,624)

Decrease of CALPERS net pension asset ( other asset) (2,722,905) (2,722,905)

Fund balances/Net Assets, at June 30, 2014, as restated $ 45,691,539 $ 36,685,227 $ 5,505,777 $ 18,429,165 $ 82,037,077 $ (303,978,525) $ (115,629,741)

Statement of Net Position Statement of Enterprises Funds Adjustment to Net Position reflect the consolidation Refuse Marina Sanitary Clean Storm Permit Service Off-Street Parking Bid. Purchases & oflnternal Service Fund Business Collection Ooerations Sewer Water Center Parking Meter Management activities related to EF Activities Net Position, at June 30, 2014, as previously reported $ 414,735 $ 3,898,944 $ 125,259,035 $ 17,834,075 $ 7,255,568 $ 15,647,225 $ 2,972,476 $ (2,502,283) $ 783,656 $ 171,563,438

Restatements:

Adjustments due to the implementation of GASB68 Deferred Employer Contributions 2,378,268 449,248 1,279,986 268,541 1,551,166 81,680 657,568 86,705 6,753,162

Net Pension Liability (24,995,898) (4,721,649) (13,452,813) (2,822,402) ( 16,302,956) (858,468) (6,911,123) (911,283) (70,976,591)

Net Position, at June 30, 2014. as restated $ (22,202,895) $ (373,457) $ 113,086,208 $ 15,280,214 $ (7,496,222) $ 14,870,437 $ (3,281,079) $ (3,326,861) $ 783,656 $ 107,340,009

B. Risk Management The City is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions; injuries to employees; and natural disasters.

109 (III) Detailed Notes on All Funds (Continued) 1. Public Liability The City has excess coverage for Public Liability claims between $350,000 and $1,000,000 through Bay Cities Joint Powers Insurance Authority (BCJPIA). The California Affiliated Risk Management Authority (CARMA) provides additional coverage to BCJPIA and its member entities from claims in excess of $1 million to $29 million. The program is administered through the Public Liability Internal Service Fund which is funded through transfers from the General Fund totaling $1,695,888 in FY2015. Disbursements from the Public Liability Internal Service Fund are restricted to the payment of liability claims, personnel and other investigation costs.

The City is a member of the Bay Cities Joint Powers Insurance Authority (BCJPIA) for its liability coverage. BCJPIA was created in 1986 to develop effective risk management programs to reduce the amount and frequency of losses; to provide for pooled self-insurance among member agencies, to share the risk of self-insured losses; and to jointly purchase and provide administrative and other services including, but not limited to claims adjusting, data processing, risk management, loss prevention, accounting services, actuarial services, and legal services in connection with the program. BCJPIA consists of 14 cities, three towns, and one police authority all located within the metropolitan Bay Area.

BCJPIA provides General Liability, Auto Liability, and Errors & Omissions coverage for its members in excess of the member's retained limit, or Self-Insured Retention (SIR), up to $1,000,000 per occurrence.

Each Member retains the portion of every loss that falls within their SIR, ranging from $5,000 to $500,000. The City's SIR is $350,000. BCJPIA is also a member of the California Affiliated Risk Management Authorities (CARMA), a risk-sharing joint powers authority. When losses exceed the $1,000,000 per occurrence limit, CARMA provides coverage up to $25,000,000. BCJPIA is governed by a Board of Directors, which is comprised of appointed officials from the member entities. To the extent that allocated losses and administrative expenses exceed contributions previously paid and other income, the BCJPIA may assess its member's additional premiums. Complete financial statements ofBCJPIA can be obtained from: Bay Cities Joint Powers Insurance Authority, 6371 Auburn Blvd., Suite B, Citrus Heights, CA 95621-0488. Condensed unaudited accrual basis financial information of BCJPIA as of and for the year ended June 30, 2015 is as follows ( amounts expressed in thousands):

Total assets $ 30,839

Total liabilties (22,932)

Net position $ 7,907

Total revenues $ 11,695

Total expenses 14,179

Net income/(loss) $ (2,484)

2. Workers' Compensation The City is self-insured for workers' compensation. Payments are made to the Workers' Compensation Self-Insurance Internal Service Fund by transfers from all City funds. Funds are available to pay claims and administrative costs of the program.

110 (III) Detailed Notes on All Funds (Continued) At June 30, 2015, $262,666 and $30,892,000 have been accrued for public liability, and workers' compensation claims, respectively. These accruals represent estimates of amounts to ultimately be paid for reported claims and, upon past experience, recent claim settlement trends and other information. It is the City's practice to obtain an actuarial study on an annual basis. Although the amount of actual losses incurred through June 30, 2015 are dependent on future developments, based upon information from the administrators and others involved with the administration of the programs, the City's management believes that the aggregate accrual is adequate to cover such losses.

Changes in the balance of claim liabilities during the fiscal year for all self-insurance funds are as follows:

Public Worker's Liability Com:eensation Total Balance, July 1, 2013 $ 1,141,588 $ 29,844,000 $ 30,985,588 Incurred claims and changes in estimates 574,036 2,625,378 3,199,414 Claims paid {886,8921 {2,865,3781 {3,752,2701 Balance, June, 30,2014 828,732 29,604,000 30,432,732 Incurred claims and changes in estimates (272,342) 5,080,904 4,808,562 Claims paid {293,7241 {3,792,9041 {4,086,6281 Balance, June, 30, 2015 $ 262,666 $ 30,892,000 $ 31,154,666

There were no significant reductions in insurance coverage from the prior year in public liability and there were no settlements exceeding the limits of the City's excess coverage for the past three years.

3. Construction Commitments As June 30, 2015, of the $26 million Measure FF Branch Libraries Improvement Program remaining unspent funds total $1, 142, 773. All major construction activities have been completed, including the closing of the general contractor's contract for each of the four branch library sites. Minor activities are ongoing consisting primarily of warrant items as well as commissioning work at the West branch Library.

C. Contingent Liabilities

Grants Amounts received or receivable from grant agencies are subject to audit and adjustment by grantor agencies, principally the federal government. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures which may be disallowed by the grantor cannot be determined at this time although City management expects such amounts, if any, to be immaterial.

Lawsuits and Claims There are a number oflawsuits and claims pending against the City. Included in these are a number of property damage, civil suits, and personal injury seeking damages in excess of the City's insurance limits. The aggregate amount of the uninsured liabilities of the City which may result from all suits and claims will not, in the opinion of City management, materially affect the City's finances, or impair its ability to otherwise meet its obligations.

111 (III) Detailed Notes on All Funds (Continued)

D. Defined Benefit Pension Plans

Summary of Pension Plan balances

Pension related balances presented on the Statement of Net Position as of June 30, 2015 are described in the following table:

(a) By individual plan Other Deferred Deferred Net Deferred Employer Outflows- Pension Inflows- Pension Contribution Pension Liability Pension Expense

CALPERS Miscellaneous Plan $ 23,252,447 $ $ (208,947,194) $ (44,783,794) $ 22,731,450 CALPERS Public Safety - Fire Plan 5,237,775 (55,375,857) (12,818,889) 4,671,116 CALPERS Public Safety- Police Plan 10,108,019 (123,977,970) (16,017,566) 11,151,753 Berkeley Retirement Income Benefit Plan 152,986 (55,111,597) 8,133,463 Safety members Pension Plan 604,755 (3,574,170) 613,038 Total $ 39,202,995 $ 152,986 $ (446,986,788) $ (73,620,249) $ 47,300,820

(b) By individua I fund Other Deferred Deferred Net Deferred Employer Outflows- Pension Inflows- Pension Contribution Pension Liability Pension Expense

Governmental Fund $ 30,903,973 $ 152,986 $ (372,396,360) $ (57,631,498) $ 39,188,566 Internal Service Fund 1,223,920 (10,998,182) (2,357,248) 1,196,497 Subtotal Governmental Activities 32,127,893 152,986 (383,394,542) (59,988,746) 40,385,062

Enterprise Fund 6,464,740 (58,092,346) (12,450,972) 6,319,890

Rent Stabilization Board fund 565,051 (5,077,570) (1,088,279) 552,391

Trust fund - the Successor Agency 32,998 (296,525) (63,554) 32,259

Agency fund 12,313 (125,805) (28,697) 11,218

Total $ 39,202,995 $ 152,986 $ (446,986,788) $ (73,620,249) $ 47,300,820

112 (Ill) Detailed Notes on All Funds (Continued) ! California Public Employees' Retirement System under GASB68

1. General Information about the Pension Plans

Plan Description All qualified permanent and probationary employees are eligible to participate in the Local Government's separate Safety (police and fire) and Miscellaneous (all other) Plans, agent multiple-employer defined benefit pension plans administered by the California Public Employees' Retirement System (CalPERS), which acts as a common investment and administrative agent for its participating member employers. Benefit provisions under the Plans are established by State statute and Local Government resolution. CalPERS issues publicly available reports that include a full description of the pension plans regarding benefit provisions, assumptions and membership information that can be found on the CalPERS website

Benefits Provided

CalPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of full time employment. Members with five years of total service are eligible to retire at age 50 with statutorily reduced benefits. All members are eligible for non-duty disability benefits after 10 years of service. The death benefit is one of the following: the Basic Death Benefit, the 1957 Survivor Benefit, or the Optional Settlement 2W Death Benefit. The cost of living adjustments for each plan are applied as specified by the Public Employees' Retirement Law.

The Plan's provisions and benefits in effect at June 30, 2015, are summarized as follows:

Public Safety- Public Safety- Miscellaneous Fire Police

5 years service 5 years service 5 years service Benefit payment monthly for life monthly for life monthly for life Earliest retirement age 55 50 50 Benefit factor for each year of service, as a % of annual salary 2. 7% at age 55 3% at age 50 3% at age 50 Required employee contribution rates 8% 9% 9% Required employer contribution rates 21.912% 33.156% 46.573%

On January 1, 2013, the Public Employee Pension Reform Act (PEPRA) went into effect. This State law applies to employees hired after January 1, 2013 who are new to PERS. These employees are termed PEPRA members and employees that were enrolled in PERS (without significant separation) prior to January 1, 2013 are now referred to as classic members. PEPRA miscellaneous members will be enrolled in a 2% at 62 plan and PEPRA safety members (Fire and Police) will be enrolled in a 2.7% at 57 plan. PEPRA members will be required to pay half the normal cost of their plans.

113 (III) Detailed Notes on All Funds (Continued)

1. General Information about the Pension Plans, Continued

Employees Covered

At June 30, 2015, the following employees were covered by the benefit terms for each plan:

Public Saftety Public Saftety Miscellaneous Fire Police Inactive employees or beneficiaries currently 1,343 208 290 receiving benefits Inactive employees entitled to but not yet receiving benefits (Transferred and 970 29 57 Terminated) Active employees 1,006 118 168 Total 3,319 355 515

Contribution

Section 20814(C) of the California Public Employees' Retirement Law (PERL) requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. The Total plan contributions are determined through CalPERS' annual actuarial valuation process. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with additional amount to finance any unfunded accrued liability. The employer is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. For the measurement period ended June 30, 2014 (the measurement date), the average active employee contribution rate is 7.985 percent of annual pay for the Miscellaneous Plan and 9.000 percent of annual pay for the Safety Plan (Fire and Police), and employer contribution rate is 20.945 percent of annual payroll for the Miscellaneous Plan, 31.462 percent of annual payroll for the Public Safety Fire Plan, and 45. 710 percent of annual payroll for the Public Safety Police Plan.

2. Net Pension Liability

The City's net pension liability for each Plan is measured as the total pension liability, less the pension plan's fiduciary net position. The net pension liability of each of the Plans is measured as of June 30, 2014, using an annual actuarial valuation as of June 30, 2013 rolled forward to June 30, 2014 using standard update procedures. A summary of principal assumptions and methods used to determine the net pension liability is shown below.

Actuarial Assumptions

The total pension liabilities in the June 30, 2013 and the June 30, 2014 actuarial valuations were determined using the following assumptions:

114 (Ill) Detailed Notes on All Funds (Continued)

2. Net Pension Liability, Continued

Public Safety Public Safety Miscellaneous Fire Police Valuation Date June 30, 2013 June 30, 2013 June 30, 2013 Measurement Date June 30, 2014 June 30, 2014 June 30, 2014 Actuarial Cost Method Entry-Age Normal Cost Method Actuarial Assumptions: Discount Rate 7.50% 7.50% 7.50% Inflation 2.75% 2.75% 2.75% Salary Increases Varies by Entry Age and Service Investment Rate of Return (1) 7.50% 7.50% 7.50% Derived using CalPERS1 Membership Data for all Funds Mortality (2)

Post Retirement Benefit Increase Protection Allowance Floor on Purchasing Power applies, 2.75% thereafter

(1) Net of pension plan investment expenses, including inflation (2) The mortality table used was developed based on CalPERS1 specific data. The table includes 20 years of mortality improvements using Society of Actuaries Scale BB.

The underlying mortality assumptions and all other actuarial assumptions used in the June 30, 2013 valuation were based on the results of a January 2014 actuarial experience study for the period 1997 to 2011. Further details of the Experience Study can found on the CalPERS website.

Discount Rate

The discount rate used to measure the total pension liability was 7 .50% for each Plan. To determine whether the municipal bond rate should be used in the calculation of a discount rate for each plan, CalPERS stress tested plans that would most likely result in a discount rate that would be different from the actuarially assumed discount rate. Based on the testing, none of the tested plans will run out of assets. Therefore, the current 7 .50 percent discount rate is adequate and the use of the municipal bond rate calculation is not necessary. The long term expected discount rate of7.50 percent will be applied to all plans in the Public Employees Retirement Fund (According to Paragraph 30 of GASB Statement No. 68, the long-term discount rate should be determined without reduction for pension plan administrative expense. The 7 .50 percent investment return assumption used in this accounting valuation is net of administrative expenses. Administrative expenses are assumed to be 15 basis points. An investment return excluding administrative expenses would have been 7 .65 percent. Using this lower discount rate has resulted in a slightly higher Total Pension Liability and Net Pension Liability. CalPERS checked the materiality threshold for the difference in calculation and did not find it to be a material difference. PERF). The stress test results are presented in a detailed report that can be obtained from the CalPERS website.

CalPERS is scheduled to review all actuarial assumptions as part of its regular Asset Liability Management (ALM) review cycle that is scheduled to be completed in February 2018. Any changes to the discount rate will require Board action and proper stakeholder outreach. For these reasons, CalPERS expects to continue using a discount rate net of administrative expenses for GASB Statement No.67 and 68 calculations through at least the 2017-18 fiscal year. CalPERS will continue to check the materiality of the difference in calculation until such time as we have changed our methodology.

115 (III) Detailed Notes on All Funds (Continued) 2. Net Pension Liability, Continued

The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return ( expected returns, net of pension plan investment expense and inflation) are developed for each major asset class.

In determining the long-term expected rate of return, CalPERS took into account both short-term and long-term market return expectations as well as the expected pension fund cash flows. Using historical returns of all the funds' asset classes, expected compound returns were calculated over the short-term (first 10 years) and the long-term (11-60 years) using a building-block approach. Using the expected nominal returns for both short-term and long-term, the present value of benefits was calculated for each fund. The expected rate of return was set by calculating the single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated using both short-term and long-term returns. The expected rate of return was then set equivalent to the single equivalent rate calculated above and rounded down to the nearest one quarter of one percent.

The table below reflects the long-term expected real rate of return by asset class. The rate of return was calculated using the capital market assumptions applied to determine the discount rate and asset allocation. These rates of return are net of administrative expenses.

New Strategic Real Return Real Return Asset Class Allocation Years 1- lO(al Years 11 +(b) Global Equity 47.00% 5.25% 5.71% Global Fixed Income 19.00% 0.99% 2.43% Inflation Sensitive 6.00% 0.45% 3.36% Private Equity 12.00% 6.83% 6.95% Real Estate 11.00% 4.50% 5.13% Infrastructure and Forestland 3.00% 4.50% 5.09% Liquidity 2.00% -0.55% -1.05% Total 100%

(a) An expected inflation of 2.5% used for this period. (b) An expected inflation of 3.0% used for this period.

116 (III) Detailed Notes on All Funds (Continued)

3. Changes in the Net Pension Liability

The changes in the Net Pension Liability for each Plan follow:

Miscellaneous Plan: Increase (Decrease) Total Pension Plan Fiduciary Net Pension Liability Net Position Liability/ (Asset)

Balance at June 30, 2014 $ 822,654,845 $ 567,365,458 $ 255 ,289 ,387 Changes in the year: Service cost 17,671,893 17,671,893 Interest on the total pension liability 60,962,710 60,962,710 Differences between actual and expected experience Changes in assumptions Changes in benefit terms Contribution - employer 24,289,849 (24,289,849) Contribution - employee 2,654,858 (2,654,858) Net investment income 98,032,089 (98,032,089) Benefit payments, including refunds of employee contributions (37,309,302) (37,309,302) Net changes 41,325,301 87,667,494 (46,342,193)

Balance at June 30, 2015 $ 863,980,146 $ 655,032,952 $ 208,947,194

117 (III) Detailed Notes on All Funds (Continued) 3. Changes in the Net Pension Liability, Continued

Public Safety - Fire Plan: Increase (Decrease) Total Pension Plan Fiduciary Net Pension Liability Net Position Liabilicy/ (Asset)

Balance at June 30, 2014 $ 233,300,081 $ 165,021,539 $ 68,278,542 Changes in the year: ------Service cost 4,183,753 4,183,753 Interest on the total pension liability 17,150,102 17,150,102 Differences between actual and expected experience Changes in assumptions Changes in benefit terms Contribution - employer 4,754,912 (4,754,912) Contribution - employee 1,410,383 (1,410,383) Net investment income 28,071,245 (28,071,245) Benefit payments, including refunds of employee contributions (13,447,853) (13,447,853) Net changes 7,886,002 20,788,687 (12, 902,685)

Balance at June 30, 2015 $ 241,186,083 $ 185,810,226 ------$ 55,375,857

Public Safety - Police Plan: Increase (Decrease) Total Pension Plan Fiduciary Net Pension Liabilicy Net Position Liabilicy/ (Asset)

Balance at June 30, 2014 $ 343,226,088 $ 204,321,504 $ 138,904,584 Changes in the year: Service cost 6,933,491 6,933,491 Interest on the total pension liability 25,322,913 25,322,913 Differences between actual and expected experience Changes in assumptions Changes in benefit terms Contribution - employer 10,060,801 (10 ,060 ,801) Contribution - employee 2,037,428 (2,037,428) Net investment income 35,084,789 (35 ,084, 789) Benefit payments, including refunds of employee contributions (18,107,995) (18,107,995) Net changes 14,148,409 29,075,023 (14,926,614)

Balance at June 30, 2015 $ 357,374,497 $ 233,396,527 $ 123,977,970

118 (Ill) Detailed Notes on All Funds (Continued) 3. Changes in the Net Pension Liability, Continued

Sensitivity of the Net Pension Liability to Changes in the Discount Rate

The following presents the net pension liability of the City for each Plan, calculated using the discount rate for each Plan, as well as what the City's net pension liability would be ifit were calculated using a discount rate that is I-percentage point lower or I-percentage point higher than the current rate:

Public Safety Public Safety Miscellaneous Fire Police 1 % Decrease 6.50% 6.50% 6.50% Net Pension Liability $ 318,598,308 $ 84,796,694 $ 170,476,419 Current Discount Rate 7.50% 7.50% 7.50% Net Pension Liability $ 208,947,194 $ 55,375,857 $ 123,977,970 1 % Increase 8.50% 8.50% 8.50% Net Pension Liability $ 117,536,487 $ 30,923,996 $ 85,641,901

Pension Plan Fiduciary Net Position

Detailed information about each pension plan's fiduciary net position is available in the separately issued CalPERS financial reports.

4. Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions

Miscellaneous Plan

For the year ended June 30, 2015, the City recognized pension expense of$(520,997). At June 30, 2015, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Deferred Outflows of Deferred Inflows of Resources Resources Pension contributions subsequent to measurement date $ 23,252,447 Net differences between projected and actual earnings on plan investments $ (44,783,794)

T~~ $ 23,252,447 $ (44,783,794)

$23,252,447 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2016. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows:

119 (Ill) Detailed Notes on All Funds (Continued) 4. Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions, Continued

Deferred Measurement Period Outflows/ (Inflows) Ended June 30: of Resources 2016 $ (11,195,949) 2017 (11,195,949) 2018 (11,195,949) 2019 (11,195,947) 2020 Thereafter

Public Safety - Fire Plan

For the year ended June 30, 2015, the City recognized pension expense of$(566,659). At June 30, 2015, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Deferred Outflows of Deferred Inflows of Resources Resources Pension contributions subsequent to measurement date $ 5,237,775 Net differences between projected and actual earnings on plan investments $ (12,818,889)

Total $ 5,237,775 $ (12,818,889)

$5,237,775 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2016. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows:

Deferred Measurement Period Outflows/ (Inflows) Ended June 30: of Resources 2016 $ (3,204,722) 2017 (3,204,722) 2018 (3 ,204, 722) 2019 (3,204,723) 2020 Thereafter

120 (Ill) Detailed Notes on All Funds (Continued) 4. Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions, Continued

Public Safety - Police Plan

For the year ended June 30, 2015, the City recognized pension expense of $11,151,753. At June 30, 2015, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Deferred Outflows of Deferred Inflows of Resources Resources Pension contributions subsequent to measurement date $ 10,108,019 Net differences between projected and actual earnings on plan investments $ (16,017,566)

Total $ 10,108,019 $ (16,017,566)

$10, 108,019 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2016. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows:

Deferred Measurement Period Outflows/ (Inflows) Ended June 30: of Resources 2016 $ (4,004,391) 2017 (4,004,391) 2018 (4,004,391) 2019 (4,004,393) 2020 Thereafter

121 (IV) Other Information (Continued)

~- Berkeley Police Retirement Income Benefit Plan!

Plan Description (GASB68 Disclosure Information for Year Ended June 30, 2015) The City sponsors a Retiree Income Benefit Plan for its Police retirees. To be eligible for benefits, Police employees must retire from the City on or after July 1, 1989 and before September 19, 2012, be vested in a CalPERS pension, have ten years of service with the Berkeley Police department, and retire from the City on or after age 50 or with a disability benefit. Benefits commence 10 years after retirement for retirements before July 6, 1997, 5 years after retirement for retirements before July 1, 2007, and 2 years after retirement for retirements on or after July 1, 2007.

Benefit Provided Benefits are payable for the retiree's lifetime and continue for the life of the surviving spouse. For employees retiring before September 19, 2012, the City pays a monthly income benefit equal to the City's Active 2-party Kaiser premium regardless of marital status. The monthly benefit is pro-rated by service according to the schedule shown in Appendix A, if the employee has less than 20 years of service with the City at retirement. Appendix A provides a more detailed summary of benefits. Benefits are paid from a Section 401(a) trust; therefore, benefits are taxable to the retiree when paid.

Berkeley Police Retirement Income Benefit Plan 30-Jun-15 30-Jun-14 Retirees 151 150 Active employees 0 0 Total 151 150

Contribution

The City (employer) contributes $1,467,997 in FY2015 and $1,489,304 in FY2014, which are correspond to the 7.34% and 7.48% of covered employee payroll respectively. The police employee payroll for the plan year ending on the measurement date is $20,002,000 as of June 30, 2015 and $19,920,000 as of June 30, 2014.

Net Pension Liability

Investment Rate of Return. We have assumed an investment rate of return of 5 .5%, net of investment expenses.

Discount Rate. 4.03% that produces a total actuarial present value equal to the sum of the actuarial present value of projected "funded" (discounted using the Investment Rate of Return of 5.5%) and "unfunded" (discounted using the 20 year Municipal Bond Rate of 3.85%) benefit payments. For the prior valuation, a 4.5% discount rate was used based on a "funded" interest rate of 5.5% and an "unfunded" interest rate of 4.3%.

122 (IV) Other Information (Continued) Total Payroll Growth. We have assumed that total payroll for all plan participants will increase 3.0% per year, which includes assumed inflation of 2.5%.

Inflation. We have assumed future inflation of 2.5% per year.

Mortality. Mortality Rates adopted by California PERS board from the 2014 experience study. Rates included a projection to year 2028 with Scale BB to reflect the anticipation of improvement in future mortality. For the prior valuation, mortality rates were based on the previous CalPERS pension experience study and projected to year 2025 with scale AA.

The Total Pension Liability was determined by an actuarial valuation as of the valuation date, calculated based on the discount rate and actuarial assumptions listed below and shown in "Required Supplementary Information section, and was then projected forward to the measurement date taking into account any significant changes between the valuation date and the fiscal year end as prescribed by GASB 67. The liabilities are calculated using a discount rate that is a blend of the expected investment rate of return and a high quality bond index rate. The expected investment rate of return applies for as long as the plan assets (including future contributions) are projected to be sufficient to make the projected benefit payments. If plan assets are projected to be depleted at some point in the future, the rate of return of a high quality bond index is used for the period after the depletion date.

Berkeley Police Retirement Income benefit Plan For the Fiscal year Ending June 30, 2015 June 30, 2014

Total Pension Liability $ 61,611,058 $ 54,881,084 Fiduciary Net Position 6,499,461 6,587,939 Net Pension Liability $ 55,111,597 $ 48,293,145 Fiduciary Net Position as a % of Total Pension Liabilit 10.55% 12.00% Police Employee Payroll $ 20,002,000 $ 19,920,000 Net Pension Liability as a% of Police Employee payroll 275.53% 242.44% Covered employee Payroll $ $ Valuation Date 7/1/2014 7/1/2013 Measurement date 6/30/2015 6/30/2014 GASB Statement No.67 and No.68 Reporting date 6/30/2015 6/30/2014 Depletion date 7/1/2028 7/1/2029 Discount rate 4.03% 4.50% Expected rate of return, net of investment expenses 4.50% 5.50% Muncipal bond rate 3.85% 4.30%

123 (IV) Other Information (Continued) The changes in the Net Pension Liability are as follow:

Berkeley Police Retirement Income Benefit Plan Increase (Decrease) Total Pension Plan Fiduciary Net Pension Liability Net Position Liability/ (Asset)

Balance at June 30, 2014 $ 54,881,084 $ 6,587,939 $ 48,293,145 Changes in the year: Service cost Interest on the total pension liability 2,503,642 2,503,642 Differences between actual and expected experience with regard to economic or demographic factors 1,501,596 1,501,596 Changes in assumptions Changes in benefit terms 4,403,685 4,403,685 Contribution - employer 1,467,997 (1,467,997) Contribution - employee Net investment income 164,247 (164,247) Administrative expense (41,773) 41,773 Benefit payments , including refunds of employee contributions (1,678,949) (1,678,949) Net changes 6,729,974 (88,478) 6,818,452

Balance at June 30, 2015 $ 61,611,058 $ 6,499,461 $ 55,111,597

Sensitivity of the Net Pension Liability to Changes ·in the Discount Rate

The following presents the net pension liability of the City for each Plan, calculated using the discount rate for each Plan, as well as what the City's net pension liability would be if it were calculated using a discount rate that is I-percentage point lower or I-percentage point higher than the current rate:

1 % Decrease 3.03% Net Pension Liability $ 66,014,392 Current Discount Rate 4.03% Net Pension Liability $ 5,511,597 1 % Increase 5.03% Net Pension Liability $ 46,434,556

Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions

For the year ended June 30, 2015, the City recognized pension expense of $6,665,466. At June 30, 2015, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

124 (IV) Other Information (Continued) Deferred Outflows of Deferred Inflows of Resources Resources Pension contributions subsequent to measurement date $ $ Changes in assumptions

~ A Net differences between projected and actual earnings 152,986 Total $ 152,986 ------$ $152,986 reported as deferred outflows of resources related to the net difference between projected and actual earnings will be recognized as an addition to the net pension liability in the year ended June 30, 2015. These deferred outflows of resources related to pensions will be recognized as pension expense as follows:

Deferred Measurement Period Outflows/ (Inflows) Ended June 30: of Resources 2016 $ 38,247 2017 38,247 2018 38,247 2019 38,245 2020 Thereafter

Plan Description (GASB Statement No.67 Disclosure Information for Year Ended June 30, 2015)

The City sponsors a Retiree Income Benefit Plan for its Police retirees.

Plan Membership At July 1, 2015, pension plan membership consisted of the 151 retirees. The pension plan is not open to new entrants. Eligibility Retirees are eligible if they:

Retired directly from the City ofBerkeley on or after July 1, 1989 and before September 19, 2012 are vested in CalPERS; and Retired on or after age 50, with 10 years of sworn service with the Berkeley Police Department; or Retire disabled with 10 or more years of sworn service with the Berkeley Police Department

Benefits Period Retirees who retired between January 1, 1989 and July 5, 1997, receive benefits beginning 10 years after retirement. Retirees who retire between July 6, 1997 and June 30, 2007, receive benefits beginning 5 years after retirement. Retirees who retired on or after July 1, 2007 receive benefits beginning 2 years after retirement. The benefit is payable for the life of the retiree. Upon death, the benefit is payable until the death of the surviving spouse.

125 (IV) Other Information (Continued) Effective July 1, 2007, the City's portion of the benefit is based on the years of service of the retiree as shown in the table below. Prior to July 1, 2007, the vesting schedule was the same as before, except the City percentage was 7 5% for 20-24 years of service, and 100% for 25 or more years of service.

For retirees retiring before September 19, 2012, the City pays a monthly income benefit equal to the City's Active 2-party Kaiser Rate ($1,121.44 for 2014 and $1,153.34 for 2015) regardless of marital status. The income benefit is pro-rated by service according to the schedule shown above, if the employee has less than 20 years of service with the City at retirement. Benefits are payable for the retiree's lifetime, and continue to the retiree's surviving spouse for his or her lifetime.

Employee contributions

No employee contributions are required or permitted

Employer Contributions For fiscal year ended June 30, 2015, the contribution was $1,467,997 which was computed by the contribution rate of 7 .34% times the total police employee payroll of $20,002,000.

Investment

As of June 30, 2015, the composition of the plan investment is shown as follows:

Cash equivalents of $1,384,849, Investments in corporate notes of $5,027,265, and interest receivable of $87,347. The total plan assets is $6,499,461.

Also, for the year ended June 30, 2015, the annual money-wighted rate ofreturn on plan investments, net of investment expense, was 2.55%. The money-wighted rate of return considers the changing amounts actualy invested during a period and weights the amount of the plan investments by the porportion of time they are available to earn a return during the period.

Investment policy and other investment disclosure

The funds of the retirement plans and retiree medical plans are invested pursuant to City investment policis established specifically for those plans by the City Council. The objective of the investment policies is to maximize the expected return of the plans at the acceptable level of risk. Please refer to Notes under section III Al for more details on investment policy and other investment disclosure.

126 (IV) Other Information (Continued) Net Pension Liability

The components of the net pension liability of the City at June 30, 2015 and June 30, 2014, were as follows: Berkeley Police Retirement Income benefit Plan For the Fiscal year Ending June 30, 2015 June 30, 2014

Total Pension Liability $ 61,611,058 $ 54,881,084 Fiduciary Net Position 6,499,461 6,587,939 Net Pension Liability $ 55,111,597 $ 48,293,145 Fiduciary Net Position as a% of Total Pension Liability 10.55% 12.00% Police Employee Payroll $ 20,002,000 $ 19,920,000 Net Pension Liability as a % of Police Employee payroll 275.53% 242.44% Covered employee Payroll $ $ Valuation Date 7/1/2014 7/1/2013 Measurement date 6/30/2015 6/30/2014 GASB Statement No.67 and No.68 Reporting date 6/30/2015 6/30/2014 Depletion date 7/1/2028 7/1/2029 Discount rate 4.03% 4.50% Expected rate of return, net of investment expenses 4.50% 5.50% Muncipal bond rate 3.85% 4.30%

Actuarial Assumptions Investment Rate ofReturn. 5.5%, net of investment expenses and including inflation of 2.5%

Discount Rate. 4.03% that produces a total actuarial present value equal to the sum of the actuarial present value of projected "funded" and "unfunded" benefit payments

Total Payroll Growth. We have assumed that total payroll for all plan participants will increase 3.0% per year, which includes assumed inflation of 2.5%.

Inflation. We have assumed future inflation of 2.5% per year.

Mortality. Mortality rates adopted by California PERS board from the 2014 experience study. Rates included a projection to year 2028 with scale BB.

Sensitivity of the Net Pension Liability to Changes in the Discount Rate

The following presents the net pension liability of the City, calculated using the discount rate of 4.03 percent as of June 30, 2015, as well as what the City's net pension liability would be ifit were calculated using a discount rate that is I-percentage point lower (3.03 percent) or I-percentage point higher (5.03 percent) than the current rate:

127 (IV) Other Information (Continued)

1 % Decrease 3.03% Net Pension Liability $ 66,014,392

Current Discount Rate 4.03% Net Pension Liability $ 55,111,597 1 % Increase 5.03% Net Pension Liability $ 46,434,556

I 3. Safety Members Pension Fund

Plan Description (GASB Statement No.68 Disclosure Information for Year Ended June 30, 2015) The City maintains the Safety Members Pension Fund (SMPF). This plan is a single-employer defined benefit pension plan for fire and police officers that retired before March 1973. In March 1973, all active fire and police officers were transferred from SMPF to CalPERS. The Safety Members Pension Board administers the plan. The authority under which benefit provisions are established or may be amended is the Berkeley Municipal Code chapters 4.20, 4.24, 4.28 and 4.32.

Benefit Provided At July 1, 2015, the date of the most recent actuarial valuation, there were 18 retired members and surviving spouses.

Service and disability retirement benefits are based on a percentage of salary at retirement, multiplied by years of service. Benefits are adjusted annually by either:

(a) Current active salary increases (based on the same rank at retirement) or

The increase in the California Consumer Price Index (with a 1% minimum and a 3% cap). SMPF also provides surviving spouse benefits. Contribution

The City pays SMPF benefits on a pay-as-you-go basis. In February 1989, the Berkeley Civic Improvement Corporation (BCIC) purchased, on behalf of the City, a Guaranteed Income Contract (GIC) from Massachusetts Mutual. This contract provides annual payments through 2018 and an annual guaranteed 9 .68% rate of return (net of expenses). The City pays the difference between actual benefit payments and contract provided annual payments, from the General Fund. Additional amounts may be paid, through 201 7, under a Risk Agreement to compensate the City for the difference between the amounts paid by the City to its pensioners and the actuarially determined amounts.

128 (IV) Other Information (Continued) Net Pension Liability

Please note: In order to allow GASB 68 expense information to be available before the end of the applicable reporting period, a measurement date one year prior to the end of the reporting period is used (e.g. June 30, 2014 measurement date for Fiscal Year Ending June 30, 2015). As a result, the GASB 68 information shown below for Fiscal Year Ending June 30, 2015 is the same as the information shown for GASB 67 for Fiscal Year Ending June 30, 2014.

GASB 68 Net Pension Liability as of June 30, 2015

1. Net Pension Liability at July 1, 2014 $3,529,752 2. Employer Contributions, FYE June 30, 20151 (568,620) 3. Annual Pension Expense, FYE June 30, 2015 613,038 4. Deferred Inflow of Resources 0 5. Deferred Outflow of Resources 0 6. Net Pension Liability at June 30, 2015 (1 )+(2)+(3)+(4 )+(5) $3,574,170

Changes in the Net Pension Liability

Safety Members Pension Fund Increase (Decrease) Total Pension Plan Fiduciary Net Pension Liability Net Position Liability/ (Asset)

Balance at June 30, 2014 $ 5,094,747 $ 1,564,995 $ 3,529,752 Changes in the year: Service cost Interest on the total pension liability 218,441 218,441 Differences between actual and expected experience 518,607 518,607 Changes in assumptions Changes in benefit terms Contribution - employer 568,620 (568,620) Contribution - employee Net investment income 124,010 (124,010) Benefit payments, including refunds of employee contributions (1,003,620) (1,003,620) Net changes (266,572) (310,990) 44,418

Balance at June 30, 2015 $ 4,828,175 $ 1,254,005 $ 3,574,170

1 Due to one year lag in GASS Statement No.68, contributions shown are actually for the period ending June 30, 2014

129 (IV) Other Information (Continued)

Sensitivity to Discount Rate

The following presents the net pension liability of the City, calculated using the discount rate of 4.75% as of June 30, 2015, as well as what the County's net pension liability would be if it were calculated using a discount rate that is 1-percentage point lower (3.75%) or 1-percentage point higher (5.75%) than the current rate:

1% Decrease Current Rate 1% Increase (3.75%) (4.75%) (5.75%) Total Pension Liability $5,022,449 $4,828,175 $4,648,659 Plan Fiduciary Net Position (~112541005} (~112541005} (~112541005} Net Pension Liability $3,768,444 $3,574,170 $3,394,654

Deferred Outflows and Inflows of Resources

For the year ended June 30, 2015, the City recognized pension expense of $8,283. At June 30, 2015, the City reported Deferred Outflows of Resources and Deferred Inflows of Resources related to pensions from the following sources:

Deferred Deferred Outflows of Inflows of Resources Resources Pension contributions subsequent to measurement date $604,755 $0 Change of Assumptions 0 0 Net difference between projected and actual earnings on 0 0 pension plan investments Total $0 $0

Amounts reported as Deferred Outflows of Resources and Deferred Inflows of Resources related to pensions will be recognized in pension expense as follows:

Year Ending June 30 2016 $0 2017 $0 2018 $0 2019 $0 2020 $0 Thereafter $0

130 (IV) Other Information (Continued)

Plan Description (GASB67 Disclosure Information for Year Ended June 30, 2015) The City maintains the Safety Members Pension Fund (SMPF). This plan is a single-employer defined benefit pension plan for fire and police officers who retired before March 1973. In March 1973, all active fire and police officers were transferred from SMPF to CalPERS.

Plan Membership At July 1, 2014, pension plan membership consisted of the following:

Actives 0 Inactive not Yet Receiving Benefits 0 Retirees 18 Total 18

The pension plan is not open to new entrants. Benefits Provided Service and disability retirement benefits are based on a percentage of salary at retirement, multiplied by years of service. Benefits are adjusted annually by either:

(1) Current active salary increases (based on the same rank at retirement) or

(2) The increase in the California Consumer Price Index (with a 1% minimum and a 3% cap). SMPF also provides surviving spouse benefits.

Contributions The City has Plan assets in a Guaranteed Income Contract (GIC). The City will pay any benefit payments not paid from the GIC. Investment policy and other investment disclosure

The funds of the retirement plans and retiree medical plans are invested pursuant to City investment policis established specifically for those plans by the City Council. The objective of the investment policies is to maximize the expected return of the plans at the acceptable level of risk. Please refer to Notes under section III Al for more details on investment policy and other investment disclosure.

Net Pension Liability The components of the net pension liability of the City at June 30, 2015, were as follows:

Total Pension Liability $4,070,183 Plan Fiduciary Net Position ($953,312) City's Net Pension Liability $3, 116,871 Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 23.42%

131 (IV) Other Information (Continued)

Actuarial Assumptions The total pension liability was determined by an actuarial valuation as of July 1, 2014, using the following actuarial assumptions, applied to all periods included in the measurement: General Inflation 2.75% Investment Rate of Return 4.75%, net of pension plan investment expense, including inflation

Mortality assumptions based on the 1997-2011 CalPERS experience study with projected improvement using scale MP-2014.

The benefit terms included ad hoc postemployment benefit changes. Cost-of-living adjustments (COLA) are provided at the discretion of the City- a 2.75% annual average increase is assumed in the valuation for retirees eligible for the Full Fluctuating COLA and 2.75% for other retirees.

The long-term expected rate of return on pension plan investments of 9.68% was determined based on the terms of the GIC from MassMutual.

Discount Rate The discount rate used to measure the total pension liability was 4.50%. The projection of cash flows used to determine the discount rate assumed that payments in excess of the income from the GIC will be made by the City. Based on those assumptions, the pension plan's fiduciary net position was projected to be available to make projected future benefit payments of current plan members through 2018. Therefore, the long-term expected rate of return on pension plan investments of 9.68% was applied to periods of projected benefit payments covered by annual income distributions from the GIC to determine the total pension liability through 2018. A municipal bond rate of 4.00% was applied to all projected cash flows not expected to be covered by the GIC. Municipal bond rates are based on rates provided by the Bond Buyer Index, general obligation, 20 years to maturity. Sensitivity of the Net Pension Liability to Changes in the Discount Rate The following presents the net pension liability of the City, calculated using the discount rate of 4.50 percent as of June 30, 2015, as well as what the City's net pension liability would be if it were calculated using a discount rate that is I-percentage point lower (3.50 percent) or I-percentage point higher (5.50 percent) than the current rate:

1% Decrease Current Rate 1% Increase (3.50%) (4.50%) (5.50%) Total Pension Liability $4,277,327 $4,070,183 $3,878,890 Plan Fiduciary Net Position ($953,312) ($953,312) ($953,312) Net Pension Liability $3,324,015 $3, 116,871 $2,925,578

132 (IV) Other Information (Continued)

GASB 67 Disclosure Information for Year Ended June 30, 2015 (Cont.)

Changes in the Net Pension Liability

Increase !Decreasel Plan Total Pension Fiduciary Net Net Pension Liability Position Liability

!al !bl !al- !bl Balances at 06/30/2014 $4,828,175 $1,254,005 $3,574,170 Changes for the year: Service Cost $0 $0 Interest Cost $205,818 $205,818 Differences between expected and actual experience $0 $0 Contributions - Employer $604,755 ($604,755) Contributions - Employee $0 $0 Net Investment Income $96,509 ($96,509) Benefit Payments, including refunds of employee contributions ($1,001,957) ($1,001,957) $0 Administrative Expenses $0 $0 Other Changes $38, 147 $0 $38, 147 Net Changes (~7571992) (~3001693) (~4571299) Balances at 06/30/2015 $4,070,183 $953,312 $3, 116,871

A. Other Post-Employment Benefits The City has adopted the provisions of GASB Statement No. 45 (GASB 45), Accounting and Financial Reporting for Post-employment Bene.fits Other Than Pensions. The Statement establishes standards for the measurement, recognition, and display of OPEB costs/contributions and related liabilities (assets), note disclosures, and if applicable, required supplementary information in the financial reports of state and local government employers. The City has also adopted GASB Statement No. 43 (GASB 43), Financial Reporting for Post-employment Bene.fit Plans Other Than Pension Plans. GASE 43 applies to the City's post-employment healthcare plans and requires additional disclosures with respect to the healthcare plans.

133 (IV) Other Information (Continued) 1. !Berkeley Fire Employees Retiree Health Plan! Plan Description The City of Berkeley Fire Employees Retiree Health Plan (FRHF) is a single-employer defined benefit medical plan administered by The Lipman Company (TLC). It is reported in an Other Employee Benefit Trust Fund of the City. To be eligible for benefits, sworn Fire employees must retire from the City on or after July 1, 1997, be vested in a CalPERS pension, and retire from the City on or after age 50. Benefits commence immediately upon retirement. Benefits are payable for the retiree's lifetime and continue for his or her covered spouse's/domestic partner's lifetime. The amount the City contributes toward the Fire Employees Retiree Health Plan is increased by 4.5% per year regardless of the amount of increase in the underlying premium rate. The establishment and amendments of benefit provisions are negotiated between the employee bargaining units and the City Labor Negotiating Team, and are approved by the City Manager and City Council. The FRHF does not issue a publicly available financial report that includes financial statements and required supplementary information. The City's portion of the benefit is based on the following years of service of the retiree:

Years of Service City Percentage Less than 10 0% 10 to 14 25% 15 to 19 50% 20 to 24 75% 25 or more 100%

The City makes a contribution towards the medical premium. For all Medicare eligible retirees of retirement age, the maximum payment is equal to the City's percentage of the 2001 single or 2-party Health Net Senior Plus rate (depending on whether retiree has a covered dependent) increased by 4.5% per year.

The City's maximum contribution for Fire retirees for FY 2015 is shown in the following table for employees who retired between July 1, 1997 to June 30, 2006:

City's Contribution For Non- City's Contribution For Medicare Eligible Retirees Medicare Eligible Retirees

Single Party Two Party Single Party Two Party

July 1, 2013- $345 $687 $279 $559 Dec 31, 2013 -

Jan 1, 2014- 360 718 292 584 Jun 30, 2014-

The City's maximum contribution for Fire retirees for FY 2015 is shown in the following table for employees who retired on or after July 1, 2006:

134 (IV) Other Information (Continued)

City's Contribution For Non- City's Contribution For Medicare Eligible Retirees Medicare Eligible Retirees

Single Party Two Party Single Party Two Party

July 1, 2013- $466 $930 $279 $559 Dec 31, 2013 -

Jan 1, 2014- 487 972 292 584 Jun 30, 2014-

As of July 1, 2014, there were 122 active employees, 21 retirees deferred, and 60 retirees receiving benefits.

Summary of significant accounting policies - basis of accounting and valuation of investments The financial statements of the Berkeley Fire Employees Retiree Health Plan are prepared using the accrual basis of accounting. The City's contributions are recognized in the period in which the contributions are due. There are no plan member contributions. Benefits and refunds are recognized when due and payable in accordance with the terms of the plan. All plan investments are reported at fair value. The fair value of the investments is based on the market value on the date of the actuarial report.

Funding Policy FRHF plan members are not required to contribute to the plan. The City's targeted funding policy is to provide amount equal to the service cost for active employees plus an amount to amortize unfunded liabilities over 30 years (rolling 30 year amortization) as a level percentage of payrolls. The employer contribution rate for the year ended June 30, 2014 was 5.7 % of covered payroll for Fire employees. The City strives to contribute the annual required contribution of the employer (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 exceed 30 years. The current ARC rate is 6.43% of annual covered payroll as of July 1, 2014. For FY2015 the City contributed $862,411, which was $2,513 less than the ARC of $864,924 for this plan. Any changes to the contribution requirements of the plan are negotiated by the bargaining units and City Labor Negotiating team, and approved by the City Manager and City Council.

Annual OPEB Cost and Net OPEB Obligation (Asset) The City's annual OPEB cost (expense) is calculated based on the ARC of the City, an amount that was actuarially determined by using the Projected Unit Benefit Cost method ( one of the actuarial cost methods in accordance with the parameters of GASB Statement No. 45). Under this method, the actuarial present value of projected benefits is the value of benefits expected to be paid for current active employees and retirees and is calculated based on certain assumptions and census data. The following tables show the components of the City's annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the City's net OPEB asset to FRHF:

135 (IV) Other Information (Continued) Determination of Net OPEB Obligation (Asset) Annual Required Contribution $ 864,924 Interest on prior year Net OPEB Obligation (272) Adjustment to ARC 323 Annual OPEB Cost 864,975 Contributions Made (862,411) Decrease Net OPEB Asset 2,564 Net OPEB Asset - beginning of year (4,947) Net OPEB Asset - end of year $ (2,383)

The following table shows the calculation of the Annual Required Contributions and employers' schedule of contributions for FY2015:

Amount Normal Cost at Year End $ 459,449 Amortization ofUAAL 405,475 Annual Required Contribution (ARC) $ 864,924

The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB asset for FY2015 and the two preceding years were as follows:

Annual Percentage Net Fiscal Year OPEB of Annual OPEB Ended Cost Contributed {Asset} 6/30/2013 729,963 95% (38,397) 6/30/2014 829,699 96% (4,948) 6/30/2015 864,975 100% (2,383)

Funded Status and Funding Progress As of July 1, 2014, the date of the most recent actuarial report, the plan was 57 .5% funded. The actuarial accrued liability for benefits was $13.9 million, and the actuarial value of the assets was $8.0 million, resulting in an unfunded actuarial accrued liability (UAAL) of $5.9 million. The covered payroll (annual payroll of active employees covered by the plan) was approximately $13.5 million.

Funded Status of the Plan as of July 1, 2014 Actuarial Accrued Liability (AAL) $ 13,870,802 Actuarial Value of Plan Assets 7,977,731 Unfunded Actuarial Accrued Liability (UAAL) $ 5,893,071 Funded Ratio (Actuarial Value of Plan Assets/UAAL) 57.5% Covered payroll (Payroll of Active Plan Members) $ 13,460,000 UAAL as of Percentage of Covered Payroll 43.8%

136 (IV) Other Information (Continued) Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trends. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits.

Actuarial Methods and Assumptions Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations.

In the July 1, 2014 actuarial valuation, the actuarial cost method used for determining the benefit obligations is the Projected Unit Benefit Cost Method. Under this method, the actuarial present value of projected benefits is the value of benefits expected to be paid for current actives and retirees and is calculated based on certain assumptions and census data. The Actuarial Accrued Liability (AAL) is the actuarial present value of benefits attributed to employee service rendered prior to the valuation date. The AAL equals the present value of benefits multiplied by a fraction equal to service-to-date over service at expected retirement. The Normal Cost is the actuarial present value of benefits attributed to one year of service. This equals the present value of benefits divided by service at expected retirement. Since retirees are not accruing any more service, their normal cost is zero. In determining the Annual Required Contribution (ARC), the unfunded AAL is amortized as a level percentage of payrolls over 30 years on an open basis.

With any valuation of future benefits, assumptions of anticipated future events are required. If actual events differ from the assumptions made, the actual cost of the plan will vary as well. The following assumptions should be reviewed for appropriateness.

Discount Rate. To discount future benefit payments back to the present, we have used an interest rate of 5 .5%. This rate would be the expected rate of return on any investments set aside to pay for these benefits and should represent the long term expected return on assets held in the retiree health benefit trust.

Health Cost Trend. Since the City's portion of retiree payments is capped below the current health premiums and health premiums are assumed to rise at least as fast as the City's cap ( 4.5% per year), the health cost trend does not apply.

Increase to City Share ofRetiree Premium. Increases to City maximums are assumed to be 4.5% per year (as defined under the bargaining agreement) for future premiums.

Retirement. Withdrawal. and Mortality Rates. Demographic assumptions regarding retirement and withdrawal are based on statistics taken from the latest California PERS Pension report for Fire employees. These assumptions were updated to reflect a margin for future improvement in mortality in accordance with actuarial standard of practice. The new assumption is based on the current mortality rates from the latest CalPERS pension report projected to 2025 with scale AA.

137 (IV) Other Information (Continued) Spouse/Domestic Partner Coverage. We have assumed 70% of future retirees will have a covered spouse or domestic partner.

Election Assumption. We assumed 80% of future retirees will elect coverage at retirement. Of those who defer coverage, we assumed 80% will elect coverage once they reach Medicare eligibility age (age 65).

Amortization of Unfunded Actuarial Liability. The ARC shown in this report is based on a "rolling" 30 year level dollar amortization.

2. !Berkeley Miscellaneous Employees Retiree Health Plan! Plan Description The City of Berkeley Retiree Health Premium Assistance Plan (RHP AP) is a single-employer defined benefit medical plan administered by The Lipman Company (TLC). It is an Other Employee Benefit Trust Fund of the City, which provides retiree health benefits to eligible retirees and his/her spouse or domestic partner. The establishment and amendments of benefit provisions are negotiated between the employee bargaining units and the City, and are approved by the City Council. The RHP AP does not issue a publicly available financial report that includes financial statements and required supplementary information.

Employees are eligible for retiree health benefits if they satisfy the following requirements:

• Retirees who are at least age 50, with at least 8 years of service with the City at the time of separation from service are eligible to receive retiree health benefits commencing at age 55.

• Benefits are payable for the retiree's lifetime and continue for his or her covered spouse's/domestic partner's lifetime. The City pays the monthly cost of the monthly premiums up to a participant's applicable percentage of the base dollar amount and subject to annual 4.5% increases as specified in the Retiree Health Premium Assistance Plan document regardless of the amount of increase in the underlying premium rate. The base monthly dollar amount paid by the City for FY2015 was as follows:

SEIU Local SEIU Local 1021 CSU 1021 CSU IBEW Local IBEW Local IBEW Local IBEW Local IBEW Local IBEW Local SEIU Local (Local 535) (Local 535) 1245 1245 1245 1245 1245 1245 1021 C&M Retired on or Retired Retired on or Retired on or Retired on or Retired on or Retired on or (Local 790 & Retired before after June 29, before June after June 28, after June 27, after June 26, after June 24, after June 23, Rl) June 29, 2008 2008 28,2009 2009 2010 2011 2012 2013 Less than Age 65 Single $336 $336 $467 $336 $467 $529 $559 $644 $696 Two Party 672 672 803 672 933 1,058 1,117 1,287 1,392

Age 65 and Over Single 33 131 131 33 33 33 33 30 30 Two Party 65 261 261 65 65 65 65 60 60

138 (IV) Other Information (Continued) U npresented in Unpresented in Unpresented in Unpresented in Units, Z-1, Z-5 and Z- Units, Z-1, Z-5 and Units, E-1, Z-2, Z-3, Units, E-1, Z-2, Z-3, Z PEU Local One PEU Local One 7 Z-7 Z-6 and Z-8 6 and Z-8 Retired before Retired after July Retired before July Retired after July Retired before June Retired on or after July 1, 2008 1,2008 1,2008 1,2008 29,2008 June 29, 2008 Less than Age 65 Single $336 $573 $336 $403 $336 $467 Two Party 672 1,147 672 806 672 803

Age 65 and Over Single 33 481 173 240 173 173 Two Party 65 962 346 479 346 346

The City's portion of the benefit is based on the following years of service of the retiree:

Fully Completed Years of Service City Percentage 8 30% 9 40% 10 50% 11 58% 12 66% 13 74% 14 82% 15 90% 16 92% 17 94% 18 96% 19 98% 20+ 100%

As of July 1, 2014, there were 1,017 active employees, 245* terminated participants and 213 retirees. (*Former employees who are already age 70 or older at the valuation date are assumed to decline coverage. Former retirees who have since dropped medical coverage are assumed not to enroll in the future.)

Summary of significant accounting policies - basis of accounting and valuation of investments The financial statements of the Berkeley Miscellaneous Employees Retiree Health Plan are prepared using the accrual basis of accounting. The City's contributions are recognized in the period in which the contributions are due. There are no plan member contributions. Benefits and refunds are recognized when due and payable in accordance with the terms of the plan. All plan investments are reported at fair value. The fair value of the investments are based on the market value on the date of the actuarial report.

Funding Policy RHPAP plan members are not required to contribute to the plan. The City's targeted funding policy is equal to the normal cost for active employees plus an amount to amortize unfunded liabilities over 30 years as a level percentage of payrolls. The employer contribution rate for the year ended June 30, 2014 was 3.5% of covered payroll for IBEW Local 1245, 4.76% for Local 1, 3.13% for Unrepresented Units E-1, Z-2, Z-3, and Z-6, 2.57% for Unrepresented United Zl and ZS, 1.00% for

139 (IV) Other Information (Continued) Miscellaneous Local 1021 Maintenance and Clerical employees and 2.00% for Miscellaneous Local 1021 Community Services and career benefited unrepresented employees. The City is required to contribute the annual required contribution of the employer (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 30 years. The current ARC rate is 4.42% of annual expected payroll. For FY2015, the City contributed$ 1,544,211 which was $2,325,172 less than the ARC of $3,869,383 for this plan. Any changes to the contribution requirements of the plan are negotiated by the bargaining units and City negotiating staff, and approved by the City Council.

Annual OPEB Cost and Net OPEB Obligation The City's annual OPEB cost (expense) is calculated based on the ARC of the City, an amount that was actuarially determined by using the Projected Unit Benefit Cost method ( one of the actuarial cost methods in accordance with the parameters of GASB Statement No. 45). Under this method, the actuarial present value of projected benefits is the value of benefits expected to be paid for current active employees and retirees and is calculated based on certain assumptions and census data.

The following table shows the components of the City's annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the City's net OPEB obligation to RHPAP:

Determination of Net OPEB Obligation Annual Required Contribution $3,869,383 Interest on prior year Net OPEB Obligation 230,674 Adjustment to ARC (314,698) Annual OPEB Cost 3,785,359 Contributions Made (1,544,211)

Increase in Net OPEB Obligation 2,241,148 Net OPEB Obligation - beginning of year 5,126,082 Net OPEB Obligation - end of year $7,367,230

The following shows the calculation of the Annual Required Contributions and schedule of employer contributions for FY2015:

Amount Normal Cost at Year End $ 2,175,717 Amortization ofUAAL 1,693,666 Annual Required Contribution (ARC) $ 3,869,383

The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for FY2015 and the two preceding years were as follows:

140 (IV) Other Information (Continued) Annual Percenta2e Net Fiscal Year OPEB of Annual OPEB Ended Cost Contributed Obligation 6/30/2013 3,122,564 63% 3,375,598 6/30/2014 3,574,421 51% 5,126,082 6/30/2015 3,785,359 41% 7,367,230

Funded Status and Funding Progress As of July 1, 2014, the date of the most recent actuarial report, the plan was 3 7 .5% funded. The actuarial accrued liability for benefits was $44.2 million, and the actuarial value of the assets was $16.6 million, resulting in an unfunded actuarial accrued liability (UAAL) of $27.6 million. The covered payroll (annual payroll of active employees covered by the plan) was approximately $87.6 million.

Funded Status of the Plan as of July 1, 2014 Actuarial Accrued Liability (AAL) $ 44,160,386 Actuarial Value of Plan Assets 16,572,443 Unfunded Actuarial Accrued Liability (UAAL) $ 27,587,943 Funded Ratio (Actuarial Value ofPlanAssets/AAL) 37.5% Covered payroll (Payroll of Active Plan Members) $ 87,604,000 UAAL as of Percentage of Covered Payroll 31.5%

Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trends. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits.

Actuarial Methods and Assumptions Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations.

In the July 1, 2014 actuarial valuation, the actuarial cost method used for determining the benefit obligations is the Projected Unit Benefit Cost Method. Under this method, the actuarial present value of projected benefits is the value of benefits expected to be paid for current actives and retirees and is calculated based on certain assumptions and census data. The Actuarial Accrued Liability (AAL) is the actuarial present value of benefits attributed to employee service rendered prior to the valuation date. The AAL equals the present value of benefits multiplied by a fraction equal to service-to-date over service at expected retirement. The Normal Cost is the actuarial present value of benefits

141 (IV) Other Information (Continued) attributed to one year of service. This equals the present value of benefits divided by service at expected retirement. Since retirees are not accruing any more service, their normal cost is zero. In determining the Annual Required Contribution (ARC), the unfunded AAL is amortized as a level percentage of payrolls over 30 years on an open basis.

With any valuation of future benefits, assumptions of anticipated future events are required. If actual events differ from the assumptions made, the actual cost of the plan will vary as well. The following assumptions should be reviewed for appropriateness.

Discount Rate. A discount rate of 4.5% was used to discount benefit payments back to the present. This rate represents a "blended" rate assuming the City's budgeted contribution amount would partially fund the ARC each year. The City is currently funding the OPEB Trust based on a percentage of payroll which varies by bargaining unit. GASB 45 states that the discount rate used to calculate the present value of future benefits be derived based on the fund's investment policy and includes a 2.50% long-term inflation assumption. We assumed an average return over the next 30 years is expected to be 5.5% which would be an appropriate discount rate if the City's annual contribution is equal to the ARC. If the City were to elect not to fund any amount to a Trust, the discount rate would be based on the expected return of the City's general fund (we have assumed a long term return of 3.50% for the City's general fund). Since the City is partially funding the Trust (approximately 50% of the ARC for 2013-2014), we used a blended discount rate of 4.5%. The discount rate used in the prior valuation as of July 1, 2012, was 6.0%.

Health Cost Trend. For most bargaining groups, the City's portion of retiree payments is capped below the current health premiums and health premiums are assumed to rise at least as fast as the City's cap (4.5% per year). Therefore the health cost trend does not apply.

Increase to City Share of Retiree Premium. Increases to City maximums are specified as 4.5% per year by the retiree health plan document.

Retirement. Withdrawal. and Mortality Rates. Demographic assumptions regarding retirement and withdrawal are based on statistics taken from the latest California PERS Pension Valuation for Miscellaneous employees. The mortality assumption was updated to reflect a margin for future improvement in mortality in accordance with actuarial standards of practice. The new assumption is based on the current mortality rates from the latest CalPERS pension report projected to 2025 with scale AA.

Spouse/Domestic Partner Coverage. We have assumed 50% of future retirees will have a covered spouse or domestic partner except Local 1 (for which we have assumed 70%).

Retirement Election. The assumption for future retirees who will elect coverage varies by age and bargaining unit.

Amortization of Unfunded Actuarial Liability. The ARC shown in this report is based on a "rolling" 30 year level dollar amortization.

142 (IV) Other Information (Continued) 3. [Police Retiree Premium Assistance Plan! Plan Description

Effective September 19, 2012, the City replaced the "Berkeley Police Retirement Income benefit Plan" with the "Retiree Health Premium Assistance Coverage Plan" for any police employees hired on or after that date, as well as any current employees who retire on or after such date. Under the newly established retiree health premium assistance plan, benefits will be the paid by the City directly to the provider who is providing retiree health coverage to the retiree or his or her surviving spouse. The maximum amount will be equal in value to the City sponsored health plan.

In order to be eligible for the Retiree health Premium Assistance Coverage a "Retiree" must meet all of the following criteria:

(a) A Person who is vested in Ca/PERS, and (b) Has reached the age of 50, and, (c) Has retired from the City at age 50 or thereafter, and (d) Has applied for and is receiving a pension from Ca/PERS at the time of retirement.

The maximum amount the City will contribute toward the payment of medical insurance premiums is based on the employee's years of service as a sworn member of the Berkeley Police Department at time of retirement. The retiree must have at least 10 years of service as a sworn member of the Berkeley Police Department to qualify for this benefit.

Years of Service City Percentage 10 to 14 25% either the single party or two party amount 15 to 19 50% either the single party or two party amount 20 or more 100% either the single party or two party amount

Beginning September 19, 2012, each month after the employee retires, the City will pay the health care service provider an appropriate percentage based on years of service above an amount equal to $1,200 per month for two party coverage for the retiree and a qualifying spouse/domestic partner or $600 per month for single party coverage. Upon death of either the retiree or the retiree's spouse, the City will only pay the appropriate percentage of the single party rate to the provider on behalf of the surviving retiree or spouse/domestic partner. If there is no spouse/domestic partner at the time of retirement, the City shall only pay the single party rate. The retiree and/or surviving spouse/domestic partner will be responsible for payment of the difference between the amount the City contributes toward payment of the premium and the actual premium cost. The funds for this difference will come from the retirees CalPERS retirement account and the retiree must authorize such withdrawal of funds.

Beginning July 1, 2013 and effective each July 1 thereafter, the base rates the City contributes toward payment of the premium amount described in the preceding paragraph will be increased by either the amount Kaiser increases the retiree medical premium for that year, or 6%, whichever is less. The retiree and/or surviving spouse/domestic partner shall pay the difference between the amount the City

143 (IV) Other Information (Continued) contributes toward payment of the premium and the actual premium cost. As of July 1, 2014, there were 166 active employees and 5 retirees.

The base monthly dollar amount paid by the City for FY2015 was as follows:

Berkeley Police Berkeley Police Association Association

Retired on or after Retired on or after September 19, 2012 September 19, 2012

Less than Age 65 Age 65 and Over Single $674 Single $401 Two Party 1,348 Two Party 803

Determination of Net OPEB Obligation FY 2015 Annual Required Contribution $ 6,130,002 Interest on prior year Net Pension Obligation 206,078 Adjustment to ARC (297,084) Annual Pension Cost 6,038,996 Contributions Made (375,900) Increase in Net Pension Obligation 5,663,096 Net Pension Obligation - beginning of year 5,495,406 Net Pension Obligation - end of year $ 11,158,502

Percentage of the annual contributions made 6.22%

The following shows the calculation of the Annual Required Contribution for FY2015:

Amount Normal Cost at Year End $ 3,623,511 Amortization of UAAL 2,506,491 Annual Required Contribution (ARC) $ 6,130,002

The actuarial cost method used for determining the benefit obligations is the Projected Unit Credit Cost Method. Under this method, the actuarial present value of projected benefits is the value of benefits expected to be paid for current actives and retirees and is calculated based on the assumptions and census data described this report. The Actuarial Accrued Liability (AAL) is the actuarial present value of benefits attributed to employee service rendered prior to the valuation date. The AAL equals the present value of benefits multiplied by a fraction equal to service to data over service at expected retirement. The Normal Cost is the actuarial present value of benefits attributed to one year of service. This equals the present value of benefits divided by service at expected retirement. In determining the Annual Required Contribution, the Unfunded AAL is amortized as a level percentage of payrolls over 30 years.

144 (IV) Other Information (Continued) Funded Status and Funding Progress

As of July 1, 2014, the most recent actuarial valuation date, the plan was 1.32% funded. The actuarial accrued liability for benefit was $45.3 million, and the actuarial value of assets was $.6 million, resulting in an unfunded accrued liability of $44. 7 million. The fair value of the assets was determined using market values as of the date of the actuarial report. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. Funded stats of the plan as of July 1, 2014, the most recent actuarial valuation date is as follows:

Unfunded UAAL Acturial Actuarial as Actuarial Actuarial Accrued Accrued Percentage Valuation Asset Liability- Liability- Funded Covered of covered Date Value Entry Age UAAL Ratio Payroll Payroll

Berkeley Police Employees Retiree Premium Assistance Plan 7/1/2014 $ 599,675 $ 45,288,424 $ 44,688,748 0.00% $ 20,002,000 223.42%

Actuarial Methods and Assumptions Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations.

In the July 1, 2014 actuarial valuation, the actuarial cost method used for determining the benefit obligations is the Projected Unit Benefit Cost Method. Under this method, the actuarial present value of projected benefits is the value of benefits expected to be paid for current actives and retirees and is calculated based on certain assumptions and census data. The Actuarial Accrued Liability (AAL) is the actuarial present value of benefits attributed to employee service rendered prior to the valuation date. The AAL equals the present value of benefits multiplied by a fraction equal to service-to-date over service at expected retirement. The Normal Cost is the actuarial present value of benefits attributed to one year of service. This equals the present value of benefits divided by service at expected retirement. Since retirees are not accruing any more service, their normal cost is zero. In determining the Annual Required Contribution (ARC), the unfunded AAL is amortized as a level percentage of payrolls over 30 years on an open basis.

With any valuation of future benefits, assumptions of anticipated future events are required. If actual events differ from the assumptions made, the actual cost of the plan will vary as well. The following assumptions should be reviewed for appropriateness. Discount Rate. To discount future benefit payments back to the present, the City has selected an interest rate of 5.5%. This rate should represent the long term expected return on assets held in the trust to pay for benefits if the City funds at least the ARC each year. A lower discount rate may be appropriate if the ARC is not funded each year or if the trust's investment policy does not support a 5.5% investment return assumption. A lower discount rate would result in a higher liability and ARC due to a lesser portion of benefits being funded by expected future investment returns.

145 (IV) Other Information (Continued) Annual Benefit Increases. We have assumed that the City's share of Medicare and non-Medicare premiums will increase by 6% per year. Retirement. Withdrawal. and Mortality Rates. Demographic assumptions regarding retirement and withdrawal are based on statistics taken from the latest California PERS Pension Valuation for Police employees. The mortality assumption was updated to reflect a margin for future improvement in mortality in accordance with actuarial standards of practice. The new assumption is based on the current mortality rates from the latest CalPERS pension report projected to 2025 with AA scale. Amortization of Unfunded Actuarial Liability. The ARC shown in this report is based on a "rolling" 30 year level dollar amortization.

Financial Statements for OPEB Plans The Statement of OPEB Net Assets and Statement of Changes in OPEB Net Assets as of and for the year ended June 30, 2015, using the accrual basis of accounting, are as follows:

Statement of OPEB Net Position June 30, 2015 Miscellaneous Police Retiree Fire Retiree Retiree Premium Medical Plan Medical Plan Assistance Plan

Assets Cash and cash equivalents $ 2,664,921 $ 2,324,761 $ 931,478 Investments, at fair value Corporate notes 15,556,245 6,159,575 Interest receivable 406,893 81,556 Total assets 18,628,059 8,565,892 931,478 Liabilities Other accounts payable

Total liabilities

Net Position Held in trust for OPEB benefits 18,628,059 8,565,892 931,478 Total net position $ 18,628,059 $ 8,565,892 $ 931,478

146 (IV) Other Information (Continued) Statement of Changes in OPEB Net Position For the Year Ended June 30, 2015

Miscellaneous Fire Retiree Police Retiree Medical Plan Retiree Premium Medical Plan Assistance Plan

ADDITIONS:

Contributions: Employer $ 1,844,671 $ 826,076 $ 375,900 Investment income 744,694 171, 166 Total Additions 2,589,365 997,242 375,900 DEDUCTIONS:

Benefits: Service 557,782 386,345 42,103 Administrative expenses 104,231 22,738 1,995 Total Deductions 662,013 409,083 44,098

Change in net position 1,927,350 588,161 331,802 Net Position - beginning 16,700,709 7,977,731 599,676

Net Position- ending $ 18,628,059 $ 8,565,892 $ 931,478

B. Defined Contribution Plans

11. Supplemental Retirement and Income Plans (SRIP) There are three separate Supplemental Retirement and Income Plans (SRIP) that were enacted by Ordinance at different times and are set forth in the Berkeley Municipal Code as follows: Supplementary Retirement and Income Plan I - Berkeley Municipal Code Chapter 4.36.101 et seq. Supplementary Retirement and Income Plan II - Berkeley Municipal Code Chapter 4.38.101 et seq. Supplementary Retirement and Income Plan III-Berkeley Municipal Code Chapter 4.39.101 et seq. SRIP I and SRIP II cover non-sworn employees. SRIP III covers sworn Police personnel except for the Police Chief who is included in SRIP II. SRIPI On January 1, 1983, Ordinance No. 5450-N.S., which was codified in the Berkeley Municipal Code under Chapter 4.36.101 et seq., established SRIP I. The SRIP I plan consists of two components: 1) a defined contribution money purchase pension plan adopted in accordance with Sections 401(a) and 501(a) of the Internal Revenue Code, and 2) an employer paid disability benefit. Money Purchase Pension Plan: The administrators of the money purchase pension plan are Hartford Life Insurance Company and Prudential Retirement Services. The plan is a defined contribution plan whereby the City contributes 5.7% of salary up to a salary of $32,400 into a tax deferred and self-directed investment account and 1% of salary up to a salary of $32,400 into a disability reserve account for each covered employee (all permanent City employees). The total

147 (IV) Other Information (Continued) assets of SRIP I available for benefits at June 30, 2015, was $8,110,862, which was comprised of participant accounts, in the amount of $8, 110,862. These assets are the property of the individual account holders and not the property of the City. These assets cannot be used to pay disability benefits. Disability Benefit: Employees hired after January 1, 1983 but prior to July 22, 1988, who became disabled in their own occupation are entitled to receive a disability income benefit equal to 60% of their highest compensation, reduced by any disability payments they receive from Social Security, State Disability Insurance, or Workers' Compensation. Employees hired after July 21, 1988 are not eligible for benefits under this plan which was closed to new enrollees. Benefits are payable for the disabled participant's lifetime or until recovery from disability. The third party administrator is Cigna. Currently, the City pays the monthly cost of the monthly disability benefits on a pay-as-you-go basis. There were a total of 98 closed groups of participants, 25 active employees and 73 disabled participants receiving benefits. The unfunded liability for SRIP I at July 1, 2014, the date of the last actuarial study, was $13,244,000. For FY2015, the City paid total SRIP 1 disability payments of $1,628, 734. With the inception of SRIP II, the City contracted with Standard Insurance Company of Oregon to provide a portion of disability benefits through a Long Term Disability plan for those active employees remaining in SRIP I on or after July 22, 1988. Subsequently, the City prospectively dropped the Long Term Disability plan provided by Standard Insurance Company of Oregon and purchased a Long Term Disability plan from Hartford Life Insurance Company. Later, the City dropped the Long Term Disability plan provided by Hartford Life and purchased a Long Term Disability Plan from UNUM Provident. Ultimately, the City chose to delete the Long Term Disability plan and self fund the benefit. The disability benefits of all those in SRIP I disabled prior to July 22, 1988 as well as the self-insured portion of SRIP I disability benefits arising on or after July 22, 1988 applicable to SRIP I coverage, are paid from City contributions. SRIP II On July 22, 1988, Ordinance No. 5900-N.S., which was codified in the Berkeley Municipal Code under Chapter 4.38.101 et seq., established SRIP II, a defined contribution money purchase pension plan adopted in accordance with Sections 401(a) and 501(a) of the Internal Revenue Code. The plan is a defined contribution money purchase pension plan, whereby the City contributes 6. 7% of salary up to a salary of $32,400 into a tax deferred and self-directed investment account for each eligible employee. Enrollment in the plan is mandatory for all eligible persons hired on or after July 22, 1988, and elective for those eligible and hired prior to July 22, 1988. SRIP III Effective January 1, 1989, the City established SRIP III, which was codified in the Berkeley Municipal Code under Chapter 4.39.101 et seq., a defined contribution money purchase pension plan adopted in accordance with Sections 401(a) and 501(a) of the Internal Revenue Code. The plan is a defined contribution plan, whereby the City contributes 2% of salary up to a salary of $32,400 into a tax deferred and self-directed investment account for all sworn police officers except the Police Chief. The total assets of SRIP II and SRIP III available for benefits at June 30, 2015 were $62,468,689, and there were 2,067 participants.

148 (IV) Other Information (Continued) The City Council is responsible for establishing or amending (through changes in the Berkeley Municipal Code) retirement provisions and contribution requirement for all SRIP plans. These investments are held by trustees for the benefit of the participants and are not included in the City's basic financial statements. The City's contributions (required and actual) and covered payroll for the year ended June 30, 2015 were as follows:

City's City's Covered 0/o of Covered Plan Contributions Pairoll Pairoll SRIP I $ 43,054 $ 755,325 5.7% SRIP II 2,273,904 33,936,422 6.7% SRIP III 107,827 5,391,345 2.0%

J 2. Public Agency Retirement System (PARS)

On September 14, 1993, the City Council adopted Resolution# 57,141- N.S. authorizing a contract with the Public Agency Retirement System (PARS) to administer a 40l(a) retirement plan for the City's hourly and daily employees, effective October 1, 1993. This retirement plan is an alternative to participation in Social Security. The plan is a defined contribution plan whereby the City and employee each contribute 3. 7 5% of salary into a tax deferred savings account. These benefits are non-forfeitable at all times, meaning that the benefit may be distributed to the employee only upon retirement or separation from service or death (with certain restrictions). All temporary and hourly employees are eligible and enrolled in the plan. There were a total of 995 active and 107 4 inactive participants in this plan as of June 30, 2015. The total asset of PARS available for benefits at June 30, 2015 was $2,4 71,420, which was comprised of participant accounts. The City Council is responsible for establishing or amending (through changes in the Berkeley Municipal Code) retirement provisions and contribution requirements for the PARS plan. These investments are held by trustees for the benefit of the participants and are not included in the City's basic financial statements. The City's contribution (required and actual) and covered payroll for the year ended June 30, 2015 were as follows:

Contributions i Fiscal City's Covered a % of Coveret Year Contributions Payroll Payroll 2015 $174,663 $4,657,580 3.75%

149 (IV) Other Information (Continued)

G. Related Party Transaction

In June 2010, The City recruited a new Chief of Police. Included as part of the compensation package was a $500,000, 15 year or due- on- sale, 3% interest only housing assistance loan made to the Chief of Police. The loan is secured by a note signed by the Chief of Police and his spouse, and a deed of trust on the residence that was purchased. The payments may be deferred and there is no prepayment penalty. The loan and accrued interest must be repaid in full within 12 months of the Chief of Police's separation with the City.

H. Subsequent Events

FY2015 Tax and Revenue Anticipation Notes (TRANS) The City issued $24,995,000 of tax revenue anticipation notes in order to alleviate the strain on working capital prior to the receipt of property tax revenues in December. The notes were issued with a coupon rate of 1.0% and a yield of .11 %., and are recorded in the General Fund. Interest and principal on these notes are payable on July 22, 2015 by the General Fund. The City has maintained a MIG-1 rating on this short-term issue. The TRANS were paid off on July 22, 2015.

FY2015 General Obligation Refunding Bonds

The general obligation refunding bonds are being issued to refinance the City's outstanding (i) 2002 General Obligation Refunding Bonds, (ii) 2007 Series A General Obligation Refunding Bonds, (iii) City of Berkeley 2007 General Obligation Refunding Bonds, 2007 Series B, and (iv) General Obligation Bonds, Series 2008 (Measure I - Animal Shelter Project). The Refunding Bonds were sold and awarded by competitive bid held on June 25, 2015, subject to the conditions set forth in the Official Notice of Sales. However, certain legal matters are being passed upon for the City by the City Attorney. Therefore, it is anticipated that the Refunding Bonds, in book entry form, will be available for delivery through the facilities of DTC in New York, on or about July 15, 2015.

150 CITY OF BERKELEY

Notes to the Private Trust Funds of the Successor Agency June 30, 2015

A. Description ofthe Reporting Entity. The City of Berkeley is the Successor Agency and the Successor Housing Agency to the former Berkeley Redevelopment Agency and is responsible for compliance with the Dissolution Act. As the Successor Agency, the City is required to make payments and perform other obligations of the former Redevelopment Agency, to dispose of assets or properties, and to wind down all other Redevelopment affairs.

As part of the 2011 Budget Act, and in order to protect funding for core public services at the local level, the Legislature approved the dissolution of the state's 400 plus Redevelopment Agencies. After a period of litigation, RDAs were officially dissolved as of February 1, 2012. As a result of the elimination of the RDAs, property tax revenues are now being used to pay required payments on existing bonds, other obligations, and pass-through payments to local governments. The remaining property tax revenues that exceed the enforceable obligations are now being allocated to cities, counties, special districts, and school and community college districts, thereby providing critical resources to preserve core public services.

On January 17, 2012, the City Council adopted Resolution No. 65,574-N.S., electing to serve as the Successor Agency to the Berkeley Redevelopment Agency to take over redevelopment responsibilities in accordance with the Dissolution Act. To help facilitate the winding down process at the local level, Successor Agencies have been established to manage redevelopment projects currently underway, make payments on enforceable obligations, and dispose of redevelopment assets and properties. Each Successor Agency has an oversight board that supervises its work. The oversight board is comprised of representatives of the local agencies that serve the redevelopment project area: the city, county, special districts, and K-14 educational agencies. Oversight Board members have a fiduciary responsibility to holders of enforceable obligations, as well as to the local agencies that would benefit from property tax distributions from the former redevelopment project area.

Low and Moderate Income Housing Fund

It was determined that the $1 Million Bond obliges the Former RDA to pay principal and interest to the City, as Bondholder. The accumulated interest on the remaining principal amount of the $ I Million Bond was recalculated from origination at the interest rate earned by funds deposited into the Local Agency Investment Fund. Pursuant to Health and Safety Code 34191.4 (2)( c) twenty percent of any loan repayment shall be deducted from the loan repayment amount and shall be transferred to the Low and Moderate Income Housing Asset Fund.

In FY 2016, the recalculated principal on the $ 1 M i 11 ion B on d w i 11 include an additional amount of $208,245 for the purpose of making payments to the Low and Moderate Income Housing Asset Fund (LMIHAF).

B. Assets, Liabilities, and Net Assets or Equity 1. All the Notes Receivable were transferred to Housing Trust Funds of the City and therefore no more outstanding items as of June 30, 2015.

151 2. Capital Assets Capital assets, which include land, buildings, machinery, construction in progress and infrastructure assets ( e.g., roads, bridges, sidewalks, and similar items) are reported in the applicable governmental or business­ type activities columns in the government-wide financial statements. Capital assets are defined by the City as assets with an initial, individual cost of more than $1,000 for non-infrastructure assets and $100,000 for infrastructure assets, and an estimate useful life in excess of two years. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation.

The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Property, buildings, machinery and equipment, furniture and fixtures, vehicles and infrastructure of the primary governmerit, as well as the component units, is depreciated using the straight­ line method over the following estimated useful lives:

Assets Years Buildings 30 Building improvements 30 Improvements other than building 15 Machinery and equipment 4-5 Furniture and fixtures 7 Infrastructure: Roadway/Street: Pavement 30 Sidewalk, curb and gutter 15 Traffic signals/devices 40 Street lights 10 Street trees 25 Guard rails 50 Retaining walls 50 Paths (Residential) 60 Sanitary sewer system: Pipelines 50 Structures 50 Storm drain system: Pipelines 50 Structures 50 Vehicles 5-10 Other 5

152 Capital asset activity for the year ended June 30, 2015 was as follows

Beginning Ending Balance Balance Private Trust Fund (Successor Agency) 7/1/2014 Addition Deletion 6/30/2015

Capital assets, not being depreciated Land $ 501,966 $ 501,966 *

Total capital assets, not being depreciated 501,966 501,966

Capital assets, being depreciated Machinery and equipment 4,596 4,596 Total capital assets being depreciated 4,596 4,596

Less accumulated depreciation for: Machinery and equipment (4,596) 0 , (4,596) Total accumulated depreciation (4,596) 0 (4,596)

Total capital assets, being depreciated, net (O) 0

Successor Agency, capital assets net $ 501,966 0 $ 501,966

* Land at 4th Street and ocean was transferred to the Housing trust fund of the City per Department of Finance

3. Long-term Obligations In the government-wide financial statements, and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net assets. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount.

In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditure.

153 The following is a summary of Long-term obligations of the Successor Agency as of June 30, 2015:

Original Issue Balance Restated Balance Due Within Amount July 1, 2014 Balance Additions Deletions June 30, 2015 One Year

Loan payable, Savo Island $ 600,000 $ 462,000 $ $ (45,000) $ 417,000 $ 35,000 Allocation Bonds: 1997 Bonds, WBRP 1,000,000 $ 1,000,000 (a) (342,171) 657,829 2005 Bonds, WBRP 7,880,000 905,000 (905,000) Net Pension Liability 362,291 (b) (65,766) ,. 296,525 Compensated absences 8,568 2,579 (2,854) 8,293 1,328

Total $9,480,000 $1,375,568 $ 1,362,291 $ 2,579 $ (1,360,791) $ 1,379,647 $ 36,328

(a) Restated balance previously written off due to DOF and reversed due to the final verdict from the Court (b) Implement of GASB68 of Accounting and Finandal Reporting for Pension in FY2015

4. Subsequent Event

a) The Successor Agency will transfer the remaining 2005 Refunding Tax Allocation Bonds to the City of Berkeley for the following projects:

• Pedestrian Bridge - Bicycle Crossing Improvement Project connecting Virginia and Channing bike boulevards to bike bridge by designating 5th Street (between Virginia and Hearst), 4th Street (between Hearst and Channing) and Hearst (between 4th and 5th Streets) as bike boulevards and apply bike intersection treatment 1 (signage and striping) to 3 key arterials crossing the 9th Street Bike Boulevard.

• Pave sidewalks (full block) adjacent to James Kenney Park on 7th and 8th (between Virginia and Delaware), along 9th between Cedar and Page, along the west side of 8th between Camelia and Gilman, along the east side of 7th between Camelia and Harrison and along Harrison between 7th and gth.

• The Gilman Interchange - Conduct Gilman overcrossing preliminary study

b) The Successor Agency will transfer the remaining housing assets to the City Acting as Successor Agency for Housing for disposition and monitoring compliance.

c) The Successor Agency will also transfer the long-term ground lease located at 1817-1819 Fourth Street that runs through October 15, 2051 to the City of Berkeley that will be held for the remaining term of the lease, and sold when the City has the opportunity to do so (Property held for resale at 1631 5th street and land at 4th Street and Ocean were transferred in October 2015).

154 REQUIRED SUPPLEMENTARY INFORMATION (Other than MD&A)

155 (IV) Other Information (Continued) CITY OF BERKELEY Required Supplementary lnformaiton Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual General Fund - Budgetary Basis For the Fiscal Year Ended June 30, 2015

Variance 'Nith Final Budget Original Final Actual Positive Budget Budget Amount {Negative} Revenues: Taxes $ 114,499,398 $ 114,499,398 $ 120,687,945 $ 6,188,547 Licenses and permits 519, 176 519,176 494,438 (24,738) Intergovernmental 10,177,502 10,177,502 10,924,715 747,213 Charges for service 8,251,837 8,251,837 9,556,323 1,304,486 Fines and penalties 7,456, 100 7,456,100 6,941,881 (514,219) Rents and royalties 130,720 130,720 537, 140 406,420 Franchise 1,841,403 1,841,403 1,864,892 23,489 Private contributions and donation 15,000 15,000 8,108 (6,892) Indirect cost reimbursement 4,419,604 4,419,604 4,560,279 140,675 Investment income 2,600,000 2,600,000 2,650,103 50,103 Miscellaneous 100,000 225,000 430,825 205,825 Total revenues 150,010,740 150,135,740 158,656,646 8,520,906 Expenditures: Current General government 33,664,761 35,465,787 32,370,878 3,094,909 Public safety 84,315,740 84,901,184 84,817,826 83,358 Highv,,,ay and streets 1,508,028 1,347,463 1,193,388 154,075 Health and v.elfare 6,901,952 7,023,490 6,734,598 288,892 Culture-recreation 5,562,004 5,621,206 5,452,413 168,793 Community development/housing 6,796,486 7,424,138 6,647,159 776,979 Economic development 2,027,532 2,153,639 2,027,451 126,188 Debt service: Principal repayment Interest and fiscal charges 200,000 200,000 27,800 172,200 Cost of issuance 57,500 (57,500) Total expenditures 140,976,503 144, 136,907 139,329,013 4,807,894 Excess (deficiency) of revenues over (under) expenditures 9,034,237 5,998,833 19,327,633 13,328,800 Other financing sources (uses): Transfers in 4,370,761 4,466,841 4,466,841 Transfers out (13,404,981) (18,165,034) (14,938,828) (3,226,206) lnterfund repayments 796,483.56 (796,484) lnterfund advances (2,779,658) 2,779,658

Total other financing inflom (outflom) (9,034,220} (13,698,193} (12,455,161} (1,243,032} Net change in fund balance 17 (7,699,360) 6,872,472 14,571,832 Fund balance, beginning of year 29,813,413 29,813,413 29,813,413 Fund balance, end of year $ 29,813,430 $ 22,114,053 $ 36,685,885 $ 14,571,832

Explanation of differences between budgetary basis to modified accrual basis:

Net change in fund balances - budgetary basis 6,872,472 Receivable accruals (1,059,888) Due to/from advances 2,779,658 Due to/from repayments (796,484) Liability accruals (198,249)

Net change in fund balances - GAAP basis $ 7,597,510

156 (IV) Other Information (Continued) CITY OF BERKELEY Required Supplementary Infonnaiton Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and actual Special Revenue Funds Grants Fund- Budgetary Basis For the Fiscal Year Ended June 30, 2015

Original Budget Final Budget Actual Fav/{Unfav}

Revenues: Taxes $ $ $ $ Intergovernmental revenue 16,449,239 16,854,479 21,536,842 4,682,363 Charges for service 40,000 40,000 34,514 (5,486) Interest 17,000 17,000 28,423 11,423 Miscellaneous revenue 3,000 3,000 226,793 223,793

Total revenues 16,509,239 16,914,479 21,826,572 4,912,093

Expenditures: Current: General government 195,911 217,909 203,630 14,279 Public Safety 124,054 240,503 176,656 63,847 Highway and Streets 380,951 2,183,948 1,215,056 968,892 Health and Welfare 14, 197,877 14,659,625 11,238,675 3,420,950 Culture-Recreation 115,000 1,570,796 336,200 1,234,596 Urban Redevelopment and Housing 4,530,204 5,878,685 4,548,463 1,330,222 Economic Development and Assistance 565,590 2,973,596 703,391 2,270,205

Total expenditures 20,109,587 27,725,062 18,422,071 9,302,991

Excess (deficiency) of Revenues Over(under) Expenditures (3,600,348) (10,810,583) 3,404,502 14,215,085

Other financing sources(uses): Operating transfers in 2,080,570 2,119,171 882,479 (1,236,692) Total other financing sources 2,080,570 2,119,171 882,479 {1,236,692}

Net change in fund balances (1,519,778) (8,691,412) 4,286,980 12,978,392

Fund balance, beginning of year 3,140,680 (3,715,309) 7,933,967

Fund balance, end of year $ 1,620,902 $ {12,406,721} $ 12,220, 947 =$======12===,9=7=8,===39=2=

Explanation of differences between budgetary basis to modified accrual basis:

Net change in fund balances- budgetary basis $ 4,286,980 Receivable Accrual (2,271,911) Notes receivable Accrual (226,527) Investment income Accrual 0 Payable Accrual 724,018 Net change in fund balances- GAAP basis $ 2,512,561

157 (IV) Other Information (Continued) CITY OF BERKELEY Required Supplementary Information Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Special Revenue Funds Library Fund - Budgetary Basis-Fund 301-307 For the Fiscal Year Ended June 30, 2015

Variance with Final Budget Original Final Actual Positive Budget Budget Amount (Negative} Revenues: Taxes $ 16,345,912 $ 16,345,912 $ 16,470,657 $ 124,745 Intergovernmental 30,000 49,011 49,011 Fines and penalties 273,000 273,000 215,902 (57,098) Rents and royalties 2,000 2,000 180 (1,820) Investment income 458 458 Private contributions and donation 80,000 80,000 127,250 47,250 Miscellaneous 28,500 28,500 40,728 12,228 Total revenues 16,759,412 16,778,423 16,904,186 125,763

Expenditures: Current: General government 13,736 13,736 14,261 (525) Culture-recreation 18,256,223 18,023,176 16,371,819 1,651,357 Total expenditures 18,269,959 18,036,912 16,386,080 1,650,832 Excess (deficiency) ofrevenues over (under) expenditures {1,510,547) {1,258,489) 518,106 1,776,595

Other financing sources(uses): Sale of fixed assets 45,000 45,000 Total other financing inflows(outflows) 45,000 45,000

Net Change in fund balance (1,510,547) (1,258,489) 563,106 1,821,595

Fund balances, beginning of year, as restated 5,394,330 5,394,330 5,394,330

Fund balance, end of year $ 2,373,236 $ 2,877,352 $ 5,957,436 $ 3,688,190

Explanation of differences between budgetary basis to modified accrual basis: Net change in fund balances - budgetary basis $ 563,106 Receivable accruals 2,170 Liability Accruals 2,827

Net change in fund balances - GAAP basis $ 568,103

158 CITY OF BERKELEY

Required Supplementary Information (Unaudited) Schedules of Funding Progress June 30, 2015

REQUIRED SUPPLEMENTARY INFORMATION

1. Defined Pension Benefit Plans - (a) CALPERS PLANS

(i).Schedule of Changes in Net Pension Liability and Related Ratios during the Measurement Period

Miscellaneous Plan

Measurement Period 2013-14 1 TOTAL PENSION LIABILITY Service Cost $ 17,671,893 Interest 60,962,710 Changes of Benefit Terms Difference Between Expected and Actual Experience Changes of Assumptions Benefit Payments, Including Refunds of Employee Contributions (37,309,302) Net Change in Total Pension Liability 41,325,301 Total Pension Liability - Beginning 822,654,845 Total Pension Liability- Ending (a) $ 863,980,146

PLAN FIDUCIARY NET POSITION Contributions - Employer $ 17,742,374 Contributions - Employee 9,202,333 Net Investment Income 98,032,089 Benefit Payments, Including Refunds of Employee Contributions (37,309,302) Other Changes in Fiduciary Net Position Net Change in Fiduciary Net Position 87,667,494 Plan Fiduciary Net Position- Beginning 567,365,458 Plan Fiduciary Net Position- Ending (b) $ 655,032,952

Plan Net Position Liability/(Asset) - Ending (a) - (b) $ 208,947,194

Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 75.82%

Covered-Employee Payroll $ 87,614,737

Plan Net Pension Liability/(Asset) as a Percentage of Covered-Employee Payroll 238.48%

1 - Historical information is required only for measurement periods for which GASE 68 is applicable.

159 CITY OF BERKELEY

Required Supplementary Information (Unaudited) Schedules of Funding Progress June 30, 2015

REQUIRED SUPPLEMENTARY INFORMATION (i). Schedule of Changes in Net Pension Liability and Related Ratios during the Measurement Period, Continued

Public Safety - Fire Plan

Measurement Period 2013-14 1 TOTAL PENSION LIABILITY Service Cost $ 4,183,753 Interest 17,150,102 Changes of Benefit Terms Difference Between Expected and Actual Experience Changes of Assumptions Benefit Payments, Including Refunds of Employee Contributions (13,447,853) Net Change in Total Pension Liability 7,886,002 Total Pension Liability- Beginning 233,300,081 Total Pension Liability - Ending (a) $ 241,186,083

PLAN FIDUCIARY NET POSITION Contributions - Employer $ 4,754,912 Contributions - Employee 1,410,383 Net Investment Income 28,071,245 Benefit Payments, Including Refunds of Employee Contributions (13,447,853) Other Changes in Fiduciary Net Position Net Change in Fiduciary Net Position 20,788,687 Plan Fiduciary Net Position - Beginning 165,021,539 Plan Fiduciary Net Position - Ending (b) $ 185,810,226

Plan Net Position Liability/(Asset) - Ending (a) - (b) $ 55,375,857 Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 77.04%

Covered-Employee Payroll $ 14,907,370 Plan Net Pension Liability/(Asset) as a Percentage of Covered-Employee Payroll 371.47%

1 - Historical information is required only for measurement periods for which GASE 68 is applicable.

160 CITY OF BERKELEY

Required Supplementary Information (Unaudited) Schedules of Funding Progress June 30, 2015

REQUIRED SUPPLEMENTARY INFORMATION (i). Schedule of Changes in Net Pension Liability and Related Ratios during the Measurement Period, Continued

Public Safety - Police Plan

Measurement Period 2013-14 1 TOTAL PENSION LIABILITY Service Cost $ 6,933,491 Interest 25,322,913 Changes of Benefit Terms Difference Between Expected and Actual Experience Changes of Assumptions Benefit Payments, Including Refunds of Employee Contributions (18,107,995) Net Change in Total Pension Liability 14,148,409 Total Pension Liability- Beginning 343,226,088 Total Pension Liability- Ending (a) $ 357,374,497

PLAN FIDUCIARY NET POSITION Contributions - Employer $ 10,060,801 Contributions - Employee 2,037,428 Net Investment Income 35,084,789 Benefit Payments, Including Refunds of Employee Contributions (18,107,995) Other Changes in Fiduciary Net Position Net Change in Fiduciary Net Position 29,075,023 Plan Fiduciary Net Position - Beginning 204,321,504 Plan Fiduciary Net Position- Ending (b) $ 233,396,527

Plan Net Position Liability/(Asset) - Ending (a) - (b) $ 123,977,970

Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 65.31%

Covered-Employee Payroll $ 22,471,207

Plan Net Pension Liability/(Asset) as a Percentage of Covered-Employee Payroll 551.72%

1 - Historical information is required only for measurement periods for which GASB 68 is applicable.

Notes to Schedules for all plans above:

Benefit Changes: The figures above do not include any liability impact that may have resulted from plan changes which occurred after June 30, 2013. This applies for voluntary benefit changes as well as any offers of Two Years Additional Service Credit (a.k.a Golden Handshakes).

Changes of Assumptions: There were no changes in assumptions.

161 CITY OF BERKELEY

Required Supplementary Information (Unaudited) Schedules of Funding Progress June 30, 2015

REQUIRED SUPPLEMENTARY INFORMATION

(ii) Schedule ofPlan Contributions for CALPERS Pension Plans

Miscellaneous Plan Fiscal Year 2015*

Actuarially determined contribution $ 18,304,791 Contribution in relation to the actuarially determined contributions (18,304,791) Contribtion deficiency (excess) $

Covered-emplyee payroll $ 83,878,144

Contributions as a percentage of covered-employee payroll 21.82%

* - Historical information is required only for measurement periods for which GASB 68 is applicable

Public Safety- Fire Plan Fiscal Year 2015*

Actuarially determined contribution $ 5,237,775 Contribution in relation to the actuarially determined contributions (5,237,775) Contribtion deficiency (excess) $

Covered-emplyee payroll $ 15,797,367

Contributions as a percentage of covered-employee payroll 33.16%

* - Historical information is required only for measurement periods for which GASB 68 is applicable

162 CITY OF BERKELEY

Required Supplementary Information (Unaudited) Schedules of Funding Progress June 30, 2015

REQUIRED SUPPLEMENTARY INFORMATION

(ii) Schedule ofPlan Contributions for CALPERS Pension Plans, Continued

Public Safety - Police Plan Fiscal Year 2015*

Actuarially determined contribution $ 10,108,019 Contribution in relation to the actuarially determined contributions (10,108,019) Contribtion deficiency (excess) $

Covered-emplyee payroll $ 21,753,381

Contributions as a percentage of covered-employee payroll 46.47%

* - Historical information is required only for measurement periods for which GASB 68 is applicable

Notes to Schedules for all plans (miscellaneous, fire and police) above:

The actuarial methods and assumptions used to set the actuarially determined contributions for Fiscal Year 2013-14 were from the June 30, 2011 public agency valuations.

Single and Agent Employers Example Entry age Amortization method Level percentage of payroll, closed Remaining amortization period 15 years Asset valuation method 5-year smoothed market Inflation 2.75% Salary increases Varies by Entry Age and Service Payroll Growth 3.00% Investment rate of return 7.75%, net of pension plan investment expense, including inflation Retirement age The probabilities of Retirement are based on the 2010 CalPERS Experience Study for the period from 1997 to 2007. Mortality The probabilities of mortality are based on the 2010 CalPERS Experience Study for the period from 1997 to 2007. Pre-retirement and Post-retirement mortality rates include 5 years of projected mortality improvement using Scale AA published by the Society of Actuaries.

163 CITY OF BERKELEY

Required Supplementary Information (Unaudited) Schedules of Funding Progress June 30, 2015

REQUIRED SUPPLEMENTARY INFORMATION (b ). Berkeley Retirement Income Benefit Plan (i). Schedule of Changes in Net Pension Liability and Related Ratios for Berkeley Public Retirement Income Benefit Plan under GASB68 Measurement Period 2014-15 1 TOTAL PENSION LIABILITY Service Cost $ Interest 2,503,642 Changes of Benefit Terms Difference Between Expected and Actual Experience with regard to economic or demographic factors 1,501,596 Changes of Assumptions 4,403,685 Benefit Payments, Including Refunds of Employee Contributions (1,678,949) Net Change in Total Pension Liability 6,729,974 Total Pension Liability- Beginning 54,881,084 Total Pension Liability- Ending (a) $ 61,611,058

PLAN FIDUCIARY NET POSITION Contributions - Employer $ 1,467,997 Contributions - Employee Net Investment Income 164,247 Benefit Payments, Including Refunds of Employee Contributions (1,678,949) Other Changes in Fiduciary Net Position (41,773) Net Change in Fiduciary Net Position (88,478) Plan Fiduciary Net Position - Beginning 6,587,939 Plan Fiduciary Net Position - Ending (b) $ 6,499,461

Plan Net Position Liability/(Asset) - Ending (a) - (b) $ 55,111,597

Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 10.55%

Covered-Employee Payroll $ 20,002,000

Plan Net Pension Liability/(Asset) as a Percentage of Covered-Employee Payroll 275.53%

(ii) Schedule ofPlan Contributions for Berkeley Retirement Income Benefit Plan

Contribution Plan Year Actuarially Actual Contribution as a% of Ending Determined Employer Deficiency Covered Covered 30-Jun Contribution Contribution (Excess) Payroll Payroll

2015 $ 2,977,443 $ 1,467,997 $ 1,509,446 $ 20,002,000 7.34% 2014 2,766,138 1,489,304 1,276,834 19,920,000 7.48%

164 CITY OF BERKELEY

Required Supplementary Information (Unaudited) Schedules of Funding Progress June 30, 2015

REQUIRED SUPPLEMENTARY INFORMATION

Notes to Schedules for Berkeley Retirement Income Benefit Plan

In order to calculate the Actuarially Determined Contribution (shown in Exhibit 7), the Unfunded Actuarial Accrued Liability (UAAL) as of July 1, 2014, is being amortized as a level dollar over a 30-year closed (i.e., decreasing each year) period commencing on July 1, 2013 and the number of years remaining as of 6/30/2015 is 29 years. Actuarial gains and losses for each subsequent year are also amortized over same amortization schedule following the year of the actuarial gain or loss.

Valuation Date July 1, 2014 Actuarial Cost Method Entry Age Normal Cost Method 29 year amortization of unfunded liability ( closed period) as a level dollar Investment Rate of Return 5 .5% net of investment expenses and including inflation of 2.5% Municipal Bond Rate 3.85% Discount Rate 4.03% that produces a total actuarial present value equal to the sum of the actuarial present value of projected "funded" and "unfunded" benefit payments Salary Scale NIA Total Payroll Growth 3.0% including inflation of 2.5% Inflation Rate 2.5% Administrative Expenses NIA Mortality Mortality Rates adopted by California PERS board from the 2014 experience study. Rates included a projection to year 2028 with Scale BB. Asset Valuation Method Market value

Medical Inflation (Cost of Living Increases)

Benefit increases for retirees retiring before September 19, 2012 are tied to the actual increases to the City's 2-party Kaiser premium. The medical cost inflation trend used in this valuation was derived from the "Getzen Model" published by the Society of Actuaries for developing long term medical cost trends. The "Getzen Model" was then updated to reflect the latest economic growth factors, and an adjustment was made to reflect the value of expected excise tax payable in 2018 and later.

(c). Safety Members Pension Fund

(i).Schedule of Changes in Net Pension Liability and Related Ratios for Safety Members Pension Fund under GASB68

GASB 68 is effective for fiscal year ending June 30, 2015. The follow exhibit is a 10 year history of change in Net Pension Liability.

Please note: In order to allow GASE 68 expense information to be available before the end ofthe applicable reporting period, a measurement date one prior to the end ofthe reporting period is used (e.g. June 30, 2014 measurement date for Fiscal Year Ending June 30, 2015). As a result, the GASE 68 information shown below

165 CITY OF BERKELEY

Required Supplementary Information (Unaudited) Schedules of Funding Progress June 30, 2015

REQUIRED SUPPLEMENTARY INFORMATION for Fiscal Year Ending June 30, 2015 is the same as the information shown for GASB 67 for Fiscal Year Ending June 3 0, 2014.

Year Ending June 30, 2015 Total Pension Liability Service Cost $0 Interest Cost $218,441 Changes of Benefit Terms $0 Differences Between Expected and Actual Experiences $518,607 Changes of Assumptions $0 Benefit Payments, Including Refunds of Member Contributions ($1,003,620) Net Change in Total Pension Liability ($266,572) Total Pension Liability (Beginning) $5,094,747 Total Pension Liability (Ending) $4,828,175 Plan Fiduciary Net Position Contributions-Employer $568,620 Contributions-Member $0 Net Investment Income $124,010 Benefit Payments, Including Refunds of Member Contributions ($1,003,620) Administrative Expense $0 Other $0 Net Change in Plan Fiduciary Net Position ($310,990) Plan Fiduciary Net Position (Beginning) $1,564,995 Plan Fiduciary Net Position (Ending) $1,254,005 Net Pension Liability (Ending) $3,574,170 Net Position as a % of Pension Liability 25.97% Covered-Employee Payroll N/A Net Pension Liability as a % of Payroll NIA Notes to Schedule:

• No changes have been made over the 10 year history since GASB 68 has become effective.

(ii) Schedule ofPlan Contributions for Safety Members Pension Fund under GASB68

Historically, the plan has been funded based on contributions necessary to pay benefits not provide by the MassMutual GIC. Funding is not based on actuarially determined contributions and contributions are neither statutorily nor contractually established.

166 CITY OF BERKELEY

Required Supplementary Information (Unaudited) Schedules of Funding Progress June 30, 2015

REQUIRED SUPPLEMENTARY INFORMATION

Notes to Schedules for Safety Members Pension Fund under GASB68

A. Actuarial Methods

Actuarial Accrued Liability: Actuarial accrued liability was determined by multiplying pension benefits accrued at the valuation date by present value cost factors, based on applicable actuarial assumptions shown below. Note that future cost of living increases are included in this calculation.

Actuarial Present Value of Benefits Being Paid: Actuarial present value of benefits being paid was determined by multiplying current pension benefit amounts at the valuation date by present value cost factors, based on applicable actuarial assumptions below. Future cost of living increases are not included in this calculation.

B. Actuarial Assumptions

• Interest rate 4.50% a year

• Cost of living increases: Full Fluctuating 2.75% a year CPI 2.75% a year

• Mortality 1997-2011 CalPERS Experience Study with projected improvement using scale MP-2014

C. Changes in Actuarial Assumptions

The following assumptions were changed from the prior valuation:

1) Interest Rate: 4.50% as of 06/30/2015 4.75% as of 06/30/2014

The interest rate was updated to reflect the most recent expected return on plan assets with an allowance for the MassMutual GIC fund to cease in November 2018.

167 CITY OF BERKELEY

Required Supplementary Information (Unaudited) Schedules of Funding Progress June 30, 2015 REQUIRED SUPPLEMENTARY INFORMATION

2. (a) Schedule of Required Supplementary Information for Berkeley Police Retirement Income Benefit Plan (GASB 67)

i. Net Pension Liability

The components of the net pension liability of the City, were as follows:

June 30, 2015 June 30, 2014 Total Pension Liability $ 61,611,058 $ 54,881,084 Plan Fiduciary Net Position 6,499,461 6,587,939 City's Net Pension Liability $ 55,111,597 $ 48,293,145 Plan Fiduciary Net Position as a Percentage of the 10.55% 12.00% Total Pension Liability

ii.. Schedule of Contributions for Berkeley Police Retirement Income Benefit Plan

Contribution Plan Year Actuarially Actual Contribution as a% of Ending Determined Employer Deficiency Covered Covered 30-Jun Contribution Contribution (Excess) Payroll Payroll

2015 $ 2,977,443 $ 1,467,997 $ 1,509,446 $ 20,002,000 7.34% 2014 2,766,138 1,489,304 1,276,834 19,920,000 7.48%

iii. Schedule ofInvestment Returns

La st 10 Fis ca I Yea rs

Year Ending June 30, 2014 2015

Annual Money-Weighted Rate of Return, Net of Investment Expense 6.53% 2.55%

These schedules are presented to illustrate the requirement to show information for 10 years. However, until a full ] 0-year trend is complied, pension plans should present information for those years for which information is available.

These schedules are presented to illustrate the requirement to show information for 10 years. However, until afull 10-year trend is compiled, pension plans should present information for those years for which information is available.

168 CITY OF BERKELEY

Required Supplementary Information (Unaudited) Schedules of Funding Progress June 30, 2015

REQUIRED SUPPLEMENTARY INFORMATION

2(b) Schedule of Required Supplementary Information for Safety Member Pension Fund (GASB 67 i. Schedule of Changes in the Net Pension Liability and Related Ratios Last 10 Fiscal Years Year Ending June 30, 2014 2015 Total Pension Liability Service Cost $0 $0 Interest Cost $218,441 $205,818 Changes of Benefit Terms $0 $0 Differences Between Expected and Actual Experiences $518,607 $0 Changes of Assumptions $0 $38,147 Benefit Payments, Including Refunds of Member Contributions ($1,003,620) ($1,001,957) Net Change in Total Pension Liability ($266,572) ($757,992) Total Pension Liability (Beginning) $5,094,747 $4,828,175 Total Pension Liability (Ending) $4,828,175 $4,070,183 Plan Fiduciary Net Position Contributions-Employer $568,620 $604,755 Contributions-Member $0 $0 Net Investment Income $124,010 $96,509 Benefit Payments, Including Refunds of Member Contributions ($1,003,620) ($1,001,957) Administrative Expense $0 $0 Other $0 $0 Net Change in Plan Fiduciary Net Position ($310,990) ($300,693) Plan Fiduciary Net Position (Beginning) $1,564,995 $1,254,005 Plan Fiduciary Net Position (Ending) $1,254,005 $953,312 Net Pension Liability (Ending) $3,574,170 $3, 116,871 Net Position as a % of Pension Liability 25.97% 23.42% Covered-Employee Payroll N/A N/A Net Pension Liabili~ as a % of Pa~roll N/A N/A Notes to Schedule:

• No changes have been made over the 10 year history since GASB 67 has become effective.

ii. Schedule of Contributions Historically, the plan has been funded based on contributions necessary to pay benefits not provided by the MassMutual GIC. Funding is not based on actuarially determined contributions and contributions are neither statutorily nor contractually established.

iii. Schedule ofInvestment Returns for Safety Member Pension Fund (GASB 67) Last 10 Fiscal Years

Year Ending June 30, 2014 2015 Annual Money-Weighted Rate of Return, Net of Investment Expense 9.68% 9.68%

These schedules are presented to illustrate the requirement to show information/or 10 years. However, until a full JO-year trend is compiled, pension plans should present information for those years for which information is available.

169 CITY OF BERKELEY

Required Supplementary Information (Unaudited) Schedules of Funding Progress June 30, 2015

REQUIRED SUPPLEMENTARY INFORMATION

3. Defined Other-Post Employment Benefits Plans-Schedules of Funding Progress and Schedules ofEmployer Contributions SCHEDULES OF FUNDING PROGRESS

Unfunded UAAL Actuarial Actuarial as Actuarial Actuarial Accrued Accrued Percentage Valuation Value of Liability (AAL)- Liability- Funded Covered of Covered Date Assets Unit Credit UAAL Ratio Pairoll Pairoll Berkeley Fire Employees Retiree Health Plan (FRHF) 7/1/2012 $ 6,348,008 $ 12,017,316 $ 5,669,308 52.8% $ 12,828,000 44.2% 7/1/2013 7,140,525 13,118,828 5,978,303 54.4% 12,897,000 46.4% 7/1/2014 7,977,731 13,870,802 5,893,071 57.5% 13,460,000 43.8%

Berkeley Police Retiree Premium Assistance Plan 7/1/2012 17,255,382 17,255,382 0.0% 19,760,000 87.3% 7/1/2013 25,173,242 25,173,242 0.0% 19,920,000 126.4% 7/1/2014 599,675 45,288,424 44,688,748 0.0% 20,002,000 223.4%

Berkeley Miscellaneous Employees Retiree Health Plan (RHP AP) 7/1/2012 12,655,994 36,543,741 23,887,747 34.6% 91,227,000 26.2% 7/1/2013 14,295,711 40,517,569 26,221,858 35.3% 84,745,000 30.9% 7/1/2014 16,572,443 44,160,386 27,587,943 37.5% 87,604,000 31.5%

170 CITY OF BERKELEY

Notes to Required Supplementary Information June 30, 2015

REQUIRED SUPPLEMENTARY INFORMATION (Continued}

Budgetary Information Prior to June 1, the City Manager submits to the City Council a proposed operating budget for the upcoming fiscal year. The proposed budget includes a summary of the proposed expenditures and forecasted revenues, and available cash balances (i.e. budget basis fund balance/net assets for the City's General Fund, Special Revenue Funds; Capital Project Funds; all Enterprise Funds, and all Internal Service Funds. The City of Berkeley adopts an annual appropriated budget for its General fund, special revenue funds, capital project funds, and debt service funds. The City Council adopts an annual budget by resolution prior to July 1 of each fiscal year. The annual budget indicates appropriations by fund. The Council may adopt supplemental appropriations during the year. At the fund level, expenditures may not legally exceed appropriations. The City Manager is authorized to transfer budgeted amounts between departments or programs within any fund. Any revisions or transfers that alter the total appropriations of any fund must be approved by the City Council. The City utilizes a five-year capital plan, which is updated annually. Capital Project Funds are appropriated annually as part of the regular budget process. Any unused funds are re-appropriated to the following fiscal year until the project is completed. The City Council approved an original annual appropriation ordinance of $323,370,010 and made supplementary budget appropriations totaling $71,215,733 during the year. The supplementary budget appropriations consisted of the following: (1) FY2014 outstanding encumbrances of $22,620,820; (2) unencumbered carryovers of $14,219,893; and (3) other budget adjustments of $34,375,020. Encumbrance accounting, under which purchase orders, contracts and other commitments for the expenditure of money are recorded in order to reserve that portion of the applicable appropriation, is employed as an extension of formal budgetary integration in governmental fund types. Encumbrances outstanding at year-end are reported in assigned fund balance unless the purchase order relates to restricted or committed resources. They do not constitute expenditures or liabilities because the commitments will be honored during the subsequent year. Budgetary Results Reconciled to Results in Accordance with GAAP The adopted budget and actual results reported in the governmental funds' budgetary schedules are on a modified cash basis, which is inconsistent with generally accepted accounting principles (GAAP). Under this budget basis, revenues are recorded when received, and interfund loans and repayments are recorded as other financing sources/uses, instead of increases and decreases in the due to/due from accounts.

171 THIS PAGE LEFT INTENTIONALLY BLANK

172 Combining and Individual Fund Statements and Schedules

173 CITY OF BERKELEY Budgetary Comparison Schedule Capital Projects Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual For the Fiscal Year Ended June 30, 2015

Variance with Final Budget Original Final Actual Positive Budget Budget Amount {Negative} Revenues: Charges for services $ 11,250 $ 11,250 Investment income 8,340 8,340 Miscellaneous 897,146 897,146 Total revenues 916,736 916,736 Expenditures: Capital outlay: General government 1,267,045 1,620,650 367,372 1,253,278 Highway and streets 3,308,413 4,862,869 3,745,311 1,117,558 Culture-recreation 392,499 586,270 507,356 78,914 Community development/housing 979,877 1,777,655 735,313 1,042,342 Total expenditures 5,947,834 8,847,444 5,355,352 3,492,092 Excess (deficiency) ofrevenues over (under) expenditures (5,947,834) {8,847,444) (4,438,615) 4,408,829 Other financing sources (uses): Transfers in 5,348,269 7,731,607 7,731,607 Transfers out (1,145,677) (2,145,677) (1,145,677) 1,000,000 Sale of fixed assets Total other financing inflows (outflows) 4,202,592 5,585,930 6,585,930 1,000,000 Net change in fund balance (1,745,242) (3,261,514) 2,147,315 5,408,829 Fund balances, beginning of year 10,555,830 10,555,830 10,555,830 Fund balance, end of year $ 8,810,588 $ 7,294,316 $ 12,703,145 $ 5,408,829

Explanation of differences between budgetary basis to modified accrual basis: Net change in fund balances - budgetary basis $ 2,147,315 Liability Accruals 33,636.06 Receivable Accrual (513,059.92) Other acliustment {394.13) Net change in fund balances - GAAP basis $ 1,667,497

174 Nonmajor Governmental Funds

SPECIAL REVENUE FUNDS

Special Revenue funds are used to account for proceeds of specific revenue sources (other than capital projects) that are legally restricted to expenditure for specific purposes. The use of special revenue funds is required if legally or otherwise mandated.

Asset Forfeiture Fund established to account for monies received from the seizure and forfeiture of assets acquired by the City as a result of narcotics related law enforcement.

Special Tax for Disabled Fund established to account for special tax, which is solely for providing emergency services and incidental case management for severely physically disabled persons.

Workforce Investment Act Fund established to account for funds provided by allocation of Workforce Investment Act grant funds

Community Workforce Fund Fund established to account for fund provided by allocation of adult employment workforce.

Sec 108 HUD Loan Grant Assistant Fund established to account for funds for Sec 108 HUD loan and its disbursement.

Fund Raising Activities Fund Fund established to account for funds donated for providing food meal program.

California Housing Finance Agency Fund established to account for funds for operating a local housing program.

Gilman Sports Field Fund established to account for funds for Gilman sports field.

Gilman Fields Reserve Fund established to reserve for funds for Gilman fields.

Animal Shelter Fund established to account for funds donated for providing animal shelter and related services.

Paramedic Assessment District Fund established to account for special tax assessed for paramedic service

California Energy Commission Fund established to account for street light maintenance and conversion to LED for energy savings.

175 Tieback Mitigation R-0-W Fund established for the collection of mitigation fees from developers for the future potential cost associated in removing tiebacks or any other cost associated in the Public right of way.

Domestic Violence Prevention Vital Statistics Fund established to account for the surcharge for birth and death certificates that are issued by the Berkeley Public Health Vital Statistics unit to be used in the administration and coordination of domestic violence and family violence prevention activities.

Affordable Child Care Fund established from fees collected from developers of large scale commercial development to assist low-income families with monthly child care payments. lnclusionary Housing Program Fund established to account for the administration of the lnclusionary Housing Program, whereby 20% of new units in apartment projects in the City of Berkeley must be offered at a rent or sale price that is affordable to low income households. The City charges fees for the administration and monitoring of this program.

Condo Conversion Program Fund established to account for the administration of the affordable housing. Housing department can charge 10% of the revenue for program delivery costs.

Playground Camp Fund received from registration and miscellaneous fees for the purpose of operating the City's vacation camp and day camps. Fund established to account for the money received under the state's SB300 program.

State Proposition 172 Fund established to receive monies from sales tax to be used for public safety.

State Transportation Tax Fund Fund established to consolidate Special Gas Tax Fund - Disc; State 2106; State 2107; and State Prop 111, which to receive monies from City's gasoline tax apportionment revenue per code sections, for the highway traffic congestion relief and spending.

CDBG Fund Established pursuant to Housing & Community Development Act of 1974 to consolidate monies for several Federal programs (Model Cities, Urban Renewal, Open Space & Water and Sewer) under a single block grant designed to allow the City to finance developmental activities (especially housing) on a minimally restricted basis.

Rental Housing Safety Program Fund established to receive monies by charging an annual per unit fee to the rental housing property owner, imposing fines to all related violations. The purpose of this fund is to provide and streamline the Rental Housing Safety Program (RHSP) while maintaining the overall goal of having owners, tenants, and the City work together to increase the safety of all residential rental units.

176 CA Endowment Foundation Fund established to receive monies from State to improve the health of Californians.

Measure B: Local Streets and Roads Fund established to account for the tax assessed for local streets and roads.

Measure B: Bike and Pedestrians Fund established to receive monies used for the maintenance of bike and pedestrian lanes.

Measure B: Paratransit Fund established to account for the revenue assessed from property tax to be used for expenses related for paratransit services.

Measure F Alameda County VRF Street and road Fund established to account for the revenue assessed from vehicle registration fee to be used for expenses related for road and street services

Measure BB: Local Streets and Roads Fund established to account for the tax assessed for local streets and roads, which has to separate from any other funds it receives from Alameda CTC per funding agreement article 11.B.2.

Measure BB: Bike and Pedestrians Fund established to receive monies used for the maintenance of bike and pedestrian lanes, which has to separate from any other funds it receives from Alameda CTC per funding agreement article 11.B.2.

Measure BB: Paratransit Fund established to account for the revenue assessed from property tax to be used for expenses related for paratransit services, , which has to separate from any other funds it receives from Alameda CTC per funding agreement article 11.B.2.

One Time Funding Fund established to account for the revenue in relating to Ed Roberts Campus.

Park Tax Fund Fund established to account for the receipt and expenditure of the special tax approved by two thirds of the voters on May 6, 1997 and re-authorized in November 2000 and November 2008. It is used for the direct cost of acquisition and maintenance of improvements related to parks and landscape in the city.

Downtown Berkeley Property and Improvement District Fund established to account for the revenue assessed from the Downtown Berkeley's business district to be used for expenses related for cleaning, repairing and advertising improvement for the district in order to general aggressive sales benefit as a long term goal.

Street and Open Space Improvement Fund Fund established to account for the SOSIP impact fee assessed to be used for the comprehensive design of significant positive alternations and additions to Downtown's parks, plazas, and streetscape.

177 Measure GG Fire Preparation Tax Fund established to account for fire and disaster tax passed in Bond Measure GG in 2009. The monies collected are for emergency responses.

1st Response Advanced Life Support (ALSFR) Fund established to account for fund to set up a minimum requirements, conduct and competency in the operation of ALSFR services.

Street Lighting Fund established to receive special assessment district monies used for maintenance and or servicing of existing and future public lighting facilities, and the installation or construction of public lighting for the maintenance of servicing thereof, including grading, clearing, removal of debris, the installation of curbs and gutters, walls, sidewalks or paving or water, irrigation, drainage or electrical facilities.

Solano Avenue Bid Fund established to account for the revenue assessed from the Solano Avenue's business district to be used for expenses related for cleaning, repairing and advertising improvement for the district in order to general aggressive sales benefit as a long term goal.

Underground District Fund established to account for Fire District Underground property assessments.

Telegraph Business Improvement District Fund established to receive special real property assessments monies, which is used to improve the commercial business district of Telegraph area. The management district provides maintenance, revitalization and marketing services above and beyond those provided by the City of Berkeley.

North Shattuck Business Improvement District Fund established for the purpose of collecting and accounting for bid revenues.

Business Economic Development Fund established to receive monies from a federal grant (Economic Development Administration) for the purpose of providing loans to eligible South Berkeley establishments under a program approved by the City Council.

Citywide RLF (Revolving Loan Fund) Fund established to account for Citywide Commercial revolving loan fund for revitalization of business enterprises and job stimulation.

Employee Computer Loan Fund established to account for interest free loans made to employees to purchase computers, and for the repayment of those loans.

Miles Lab Fund established to provide job training for Berkeley residents.

Employee Training Fund established to provide training to city employees

178 UC Settlement Fund established to account for agreed upon expenses to be shared between City of Berkeley and University of California, Berkeley.

Private Party Sidewalks Fund established to account for reimbursements from private parties, which were previously passed through Landscape Assessment District Fund, now a parks tax, and all sidewalk funding is to be removed from this fund.

Public Art Fund established to set aside funds for the development of visual art in public places, including art developed in conjunction with city construction projects.

Lillie B. Wall Memorial Fund established to provide day nursing care to needy children in the City of Berkeley

Vital and Health Statistics Fund established to account for monies held in trust for vital and health statistic program.

East Bay Public Utilities Commission Fund initiated to oversee expenses involved in the construction of certain public improvements in Assessment District No. 1960-1 in the City of Berkeley.

PERS Savings Fund Fund established to account for monies saving due to different rates applied.

Other Special Deposits Fund established to receive monies left in trust with the City of Berkeley for specific purposes from various sources.

Health State Aid Realignment Fund established to receive monies (Assembly Bill 1491) from vehicle license fees and state sales tax to support public health activities within the City's health jurisdiction. This fund provides for the ongoing fiscal relief measure in response to the local funding dilemma created by Proposition 13. These funds replace the Assembly Bill 8 allocations normally received by' the city for providing Public Health Services.

Tobacco Control Fund established to receive State monies from special tax on cigarettes to provide public health education and outreach on tobacco use prevention and cessation.

Mental Health State Aid Realignment Fund established to receive monies from State sales tax for the purpose of providing mental health services to the citizens of Berkeley and Albany.

179 City Opt. Public Safety Trust Fund established to receive monies from State as a result of Assembly Bill 3229 for the purpose of purchasing radio equipment for the Communications Center of the new public safety building.

Fund for Impounded and Unneutered Fund established to account for monies held in trust for impounded and unneutered animals.

Alameda County Abandoned Vehicle Abatement Authority Fund established to provide an interest bearing abandoned and inoperative vehicle fund in accordance with requirements mandated by the California Vehicle Code, section 22710.

180 CAPITAL PROJECT FUNDS

Capital projects funds are used to account for financial resources to be used for the acquisition or construction of major capital facilities (other than those financed by proprietary funds and trust funds).

Measure FF Branch Renovation Fund established to account for the receipt and expenditure of the proceeds from the General Obligation bonds approved by over two thirds of the voters on November 4, 2008, to finance renovations, construction, seismic and access improvements, and expansion of program area at four neighborhood libraries in the City.

Public, Education & Government Access Facilities Fund established to account for monies received from the Cable Television Franchise. These monies are to be used for capital expenditure for PEG studios, video production equipment, mobile production van(s), internal wiring connections, and related capital items.

Measure G: Fire Seismic Projects Fund established to account for fire seismic projects.

Measure M: Street and watershed improvements Fund established to account for street and watershed improvements

Measure G: Public Safety Building Fund established to account for the retrofit of public safety building.

Street Improvement Fund Fund established by Resolution 26,971 to receive shared County Gas Tax revenues from the City of Berkeley and County of Alameda for use on specific street improvement projects. Contract is for five years, fiscal year 1988-89 through fiscal year 1992-93.

97 General Obligation Bonds Measure S Fund established to account for capital improvements in Berkeley's Main Library, Civil Center, and downtown Berkeley area.

Park Acquisition Development Monies provided by an annual tax levy of $.20 for each $100 of assessed valuation. This levy ended after FY 1979-80. A minimum of 75% of the revenues are used for the acquisition and development of real property which are used for recreation and open space purposes determined by the Recreation and Parks Commission and Planning Commission. The balance of the Fund (up to 25%) may be used for the renovation of existing City park properties and for associated administrative expenses.

Animal Shelter Land/Bldg Fund established to receive monies for acquisition of facilities for animal shelter.

2010 COP Animal Shelter Fund established to account for 2010 municipal bond measure solely for the purpose of building a new animal shelter.

181 Income Housing Fund - West Berkeley Improvement Project Fund established to account for non cash portion transferred from former West Berkeley Low and Moderate Housing Fund due to AB 1X 26.

Income Housing Fund - Savo Island Project Fund established to account for non cash portion transferred from former Savo Island Low and Moderate Housing Fund due to AB 1X 26.

182 DEBT SERVICE FUNDS

Funds established to account for the accumulation of resources for, and the payment of, general long-term debt principal and interest.

Sale Lease Financing Fund established to receive monies and to make interest and debt service payments for the 96 Refunding Lease Revenue Bonds (BJPFA).

09 Measure FF - Library Fund established to account for a bond measure FF in 2009- the library's retrofitting projects, part of the monies received are for furniture and fixture.

GO 2007 Refunding Bonds Fund established to receive monies and to make interest and principal payment on the Berkeley 2007 General obligation refunding bonds replacing the old Measure S series A, B, C.

Berkeley Repertory Theatre Fund established to receive monies and to make interest and principal payment on the Berkeley Joint Powers Financing Authority Lease Revenue Bonds, Series 1999. The proceeds of the bonds are used to acquire a new theater facility with a park to be constructed by the Berkeley Repertory Theatre or other public facilities.

GO 2002 Refunding Bonds Fund established to receive monies and to make interest and principal payment on the Berkeley 2002 General Obligation bonds replacing the old Measure G series A and B.

GO 2007 Refunding Bonds Proceeds Fund established to receive Proceeds from the 2007 General Obligation Refunding bonds which replaced the old Measure G series C.

GO 2008 Animal Shelter - Measure I Fund established to receive monies and to make interest and principal payment on the Berkeley 2002 General Obligation bond for the animal shelter.

2010 COP Animal Shelter Fund established to receive funds to finance a portion of the acquisition and construction of an animal shelter

GO 2014 Measure M Street and Watershed Improvement Fund established to receive monies to make interest and principal payment on the Berkeley 2014 General Obligation bonds for improvements to street, with integrated watershed improvements.

183 12,704 12,704 98,895 25,146 98,895 86,191 98,895 61,045 Animal Shelter (continued) $ $ $ 678,000 678,000 678,000 678,000 678,000 Fields Reserve $ $ $ 32,966 32,966 216,615 216,615 183,648 183,648 216,615 Field Sport Gilman Gilman $ $ $ 96,218 678,619 678,619 678,619 678,619 582,401 Housing Agenc~ Finance Ca. $ $ $ 235 235 197,149 197,383 197,149 197,383 197,383 Fund Funds Raising Activities $ $ $ Revenue 25,495 85,495 60,000 Asst. 108 Loan 410,798 6,824,082 7,234,880 7,149,385 7,234,880 7,149,385 Special Sec Hud Grant $ $ $ 8,555 8,555 8,555 8,555 8,555 Fund Workforce Community $ $ $ 323 1,112 1,211 2 (2,323} {2,323} Act Workforce Investment $ $ $ 67 222 222 483 416 222 for 10,173 511,319 511,319 500,924 510,614 510,614 Tax Special Disabled $ $ $ 12,160 30,138 42,298 327,966 285,668 285,668 327,966 327,966 Asset Forfeiture $ $ $ for for for resources Restricted Committed Nonspendable Unassigned of Funds Sheet (deficits) (deficits) Resources inflows of 2015 (Deficits) treasury BERKELEY 30, Balance in Balances balances wages Inflows OF Resources Governmental investments allowance resale deferred June of of and (deficits) for fund and Fund balances CITY funds (net revenue Combining Liabilities assets Deferred and held and revenue cash fund assessments investments payable Inflows Nonmajor held applicable): receivable salaries liabilities, other liabilities balances and Total Total Total Total to Interest Accounts Total Notes Property Subventions/grants Other Special Taxes where Deferred Unavailable Other Liabilities Liabilities Unearned Deposits Fund Due Accounts Restricted Receivables Accrued Cash Assets 184 68 68 68 26,182 51,989 78,172 3,922,843 3,922,912 State 3,844,671 &Tax 3,922,912 3,844,671 Transport (continued) $ $ $ 426 172 19,315 29,112 48 61,165 216,978 216,978 265,404 204,240 265,404 State Prop $ $ $ 93,477 66,135 159,612 5,501,216 5,501,216 5,660,828 5,660,828 5,660,828 Camp Playground $ $ $ 178 178 1,614,483 1,614,483 1,614,305 1,614,305 12614,483 Condo Program Conversion $ $ $ 568,408 568,408 568,408 568,408 568,408 Housing Funds Program lnclusionary $ $ $ ---- Revenue 1,943 1,943 1,943 28,161 30,104 28,161 30,104 28,161 Child Care Special Affordable $ $ $ ------42 146 146 698 656 20, 20, 20,844 20,844 20,844 Stat Vi DomVio Prevention $ $ $ ------696,079 696,079 696,079 696,079 696,079 R-0-W Tieback Mitigation $ $ $ 300,000 300,000 300,000 300,000 300,000 300,000 300,000 {300,000} {300,000} Calif. Energy Commission $ $ $ 426 426 426 1,044 70,389 71,433 25,867 215,000 215,000 286,859 260,567 286,859 District Paramedic Assessment $ $ $ for for for spendable resources Restricted Committed Non Unassigned of Funds Sheet (deficits) (deficits) Resources inflows of 2015 (Deficits) treasury BERKELEY 30, Balance in balances Balances wages Inflows Resources OF Governmental investments allowance resale deferred June of of and (deficits) for fund and Fund balances CITY funds (net revenue Combining Liabilities assets Deferred held and and revenue cash fund assessments investments payable Inflows Nonmajor held applicable): salaries receivable liabilities, other balances liabilities and Total Total Total Total to Interest Accounts Total Notes Property Subventions/grants Other Special Taxes where Deferred Fund Unavailable Liabilities Due Deposits Unearned Other Liabilities Accrued Accounts Cash Receivables Restricted Assets 185 BB 58,141 58,141 58,141 15,482 58,141 42,659 (continued) Paratransit Measure $ $ BB 56,210 56,210 56,210 14,968 41,242 56,2~ Bike& Pedestrian Measure $ $ $ BB St 520,084 520,084 138,488 520,084 381,596 520,084 Roads Local & Measure $ $ $ F VRF 8,294 90,541 Road 102,702 110,996 & Co. 1,080,363 1,170,904 1,059,908 1,170,904 1,059,908 Measure ST Ala $ $ $ B 450 12,794 13,244 44,937 175,252 175,252 188,495 143,558 188!495 Funds Paratransit Measure $ $ $ Revenue B & 7,327 ecial 55,798 48,471 55,746 481,952 481,952 537i750 482,003 537i750 S Bike Pedestrian Measure $ $ $ B St 61,713 510,560 572,273 447,514 Roads 1,861,505 1,413,991 1,289,232 1,289,232 1,861,505 Local & Measure $ $ $ ------4!241 4,241 4,241 4,241 4,241 CA Foundation Endownment $ $ $ ------2,132 30,008 27,876 591,768 591,768 Program 563,574 620,544 1,184,118 1,184,118 Rental Housing $ $ $ Safett ------19,196 25,342 45,207 605,360 605,360 562,342 562,342 101,586 {463,713} 1,322,473 1,367,011 1,361,865 6,307,043 5,843,331 7,815,702 7,815,702 6,307,043 CDBG $ $ $ for for for spendable resources Restricted Committed Non Unassigned of Funds Sheet (deficits) (deficits) Resources inflows of 2015 (Deficits) treasury BERKELEY 30, Balance in Balances balances wages Inflows OF Resources Governmental investments allowance resale deferred June of of and (deficits) for fund and balances Fund CITY funds (net revenue Combining Liabilities assets Deferred and held and revenue cash fund assessments investments payable Inflows Nonmajor held applicable): salaries receivable liabilities, other liabilities balances and Total Total Total Total to Interest Accounts Total Notes Property Special Subventions/grants Other Taxes where Unearned Unavailable Fund Deferred Other Liabilities Due Liabilities Deposits Accrued Accounts Restricted Cash Receivables Assets 186 7,735 206,684 206,684 206,684 198,949 206,684 District Business Telegraph (continuted) Improvement $ $ $ Fund District Underground $ $ $ 2,370 2,370 Ave. 32,607 30,237 30,237 32,607 32,607 Bid Solano $ $ $ 7,575 11_,036 11,036 55,126 22,343 10,450 77,469 1,132,674 1,114,649 1,132,674 1,044,170 1,044,170 Street Lighting $ $ $ 9,545 9,545 Support 1,056,376 1,056,376 1,056,376 1,046,831 1,046,831 Response Funds Advanced Life 1st $ $ $ 911 911 Revenue GG 22,948 38,590 105,856 128,804 Prep. 3,210,671 3,340,386 3,210,671 3,340,386 3,301,797 Tax Seecial Fire Measure $ $ $ --- Open 200,000 200,000 & 200,000 200,000 200,000 Fund Space Improvement Street $ $ $ 7,522 7,522 7,521 Prop. 470,274 470,274 477,796 477,796 470,274 District Downtown Improvement Berk. $ $ $ & 2,688 2,688 2,376 Tax 96,798 465,438 238,607 226,831 3,061!845 3,061!845 2,593,719 2,593,719 2,962,671 Park $ $ $ Time 656,797 656,797 656,797 656,797 656,797 Funding One Non-Grant $ $ $ for for for resources Restricted Committed Nonspendable Unassigned of Funds Sheet (deficits) (deficits) Resources inflows of 2015 (Deficits) treasury BERKELEY 30, Balance in balances Balances wages Inflows Resources OF Governmental investments allowance resale deferred June of and of (deficits) fund for and balances Fund CITY funds (net revenue Combining Liabilities assets Deferred and held and revenue cash fund assessments investments payable Inflows held Nonmajor salaries applicable): receivable liabilities, other liabilities balances and Total Total Total Total to Interest Accounts Total Property Subventions/grants Special Other Notes Taxes where Deferred Unavailable Deposits Due Unearned Fund Other Liabilities Liabilities Accounts Accrued Receivables Restricted Cash Assets 187 9,523 9,523 9,523 9,523 9,523 B. Wall Lillie Memorial (continued) $ $ $ 1,122 1,122 149,799 149,799 149,799 148,678 148,678 Art Fund Public $ $ $ 28,751 28,751 28,751 308,025 308,025 308,025 336,776 336,776 Party Private Sidewalks $ $ $ 70 15,199 15,199 15,199 {97,368) {97,368} 112,567 112,496 UC Settlement $ $ $ 7,151 35,898 28,747 461,881 461,881 497,779 497,779 497,779 Funds Fund Training Employee $ $ $ Revenue ecial 143,219 143,219 143,219 143,219 143,219 S Lab Miles $ $ $ 31,059 31,059 31,059 31!059 31,059 Loan Employee Computer $ $ $ 731,677 731,677 731,677 488,449 243,228 731!677 RLF Citywide $ $ $ 27 27 691,745 691,745 691,772 259,017 432,755 691,772 Economic Develoement $ $ $ 3,237 3,237 {3,237} {3,237} District Business Business No.Shatek Improvement $ $ $ for for for spendable resources Restricted Committed Non Unassigned of Funds Sheet (deficits) (deficits) Resources inflows of 2015 (Deficits) treasury BERKELEY 30, Balance in balances Balances wages Inflows OF Resources Governmental investments allowance resale deferred June of of and (deficits) for fund and balances Fund CITY funds (net revenue Combining Liabilities assets Deferred and held and revenue cash fund assessments investments payable Inflows Nonmajor held applicable): salaries receivable liabilities, other liabilities balances and Total Total Total Total to Interest Accounts Total Special Subventions/grants Other Notes Property Taxes where Other Due Unearned Deposits Fund Deferred Unavailable Liabilities Liabilities Accounts Accrued Receivables Restricted Cash Assets 188 592 3,546 4,138 159,079 159,079 118,683 118,683 118,683 281,900 163,217 281,900 Ala.Cty. (continued) Abandoned $ $ $ Veh.Abate.Auth. 1,620 1,620 1,620 1,620 1,620 for Fund Unneutered Impounded & $ $ $ 2,965 2,965 Opt. 339,237 339,237 342,202 342,202 342,202 ---- Public Safet~ City $ $ $ Aid Health 100,212 4,499,803 4,399,591 4,499,803 4,499,803 4,499,803 State Realignment Mental $ $ $ 7,084 3,001 4,083 58,775 58,775 65,859 65,859 65,859 Funds Control Tobacco $ $ $ Revenue Aid ecial 15,033 57,345 42,312 27,188 388,885 388,885 446,230 419,042 446,230 S Health State $ $ $ 76,624 76,624 76,624 76,624 76,624 Other Special Deeosits $ $ $ Pers Fund 3,495,213 3,495,213 3,495,213 3,495,213 3,495,213 Savings $ $ $ 3,576 3,576 3,576 3,576 3,576 Bay Public Utilities East Commission $ $ $ 292 823 1,115 224,961 224,961 Health 226,076 226,076 226,076 Statistic Vital $ $ $ for for for resources Restricted Committed Nonspendable Unassigned of Funds Sheet (deficits) (deficits) Resources inflows of 2015 (Deficits) treasury BERKELEY 30, Balance in balances Balances wages Inflows Resources OF Governmental investments allowance resale deferred June of and of (deficits) for fund and balances Fund CITY funds (net revenue Combining Liabilities assets Deferred and held and cash fund assessments investments payable Inflows held Nonmajor salaries applicable): receivable other balances liabilities and Total Total Total Total to Interest Accounts Total liabilities, Total Notes Property Special Subventions/grants Other Taxes where Fund Deferred Due Deposits Unavailable Unearned revenue Other Liabilities Liabilities Accrued Accounts Cash Receivables Restricted Assets 189 3,794 3,794 3,794 3,794 3,794 Shelter Animal Land/Bldg (continued) $ $ $ 8,397 8,397 8,397 8,397 8,397 Park Acquisition Development $ $ $ S 8!196 8,196 8,196 8,196 8,196 Bonds GO Measure 97 $ $ $ 5,917 5,917 82,653 82,653 88,570 88,570 88,570 Street Improvement $ $ $ ------G 255 255 Funds Safety 200,601 200,601 200,856 200,856 200,856 Bldg. Measure Project Public $ $ $ Capital 092 M 471 227,706 243,386 10,854,349 10,854,349 11,325,441 11,325,441 11,325,441 Watershed Measure Improvement $ $ $ G 952 952 309,271 309,271 310,223 310,223 310,223 Seismic Projects Measure Fire $ $ $ Fae. 53,250 161,348 1,214,598 1,214,598 1,214,598 1,214,598 1, Public Access Education/ $ $ $ ------Govt FF Renov 1,331,747 1,331,747 1,331,747 1,331,747 1,331l47 Measure Branch $ $ $ Funds 61,045 45,207 61,165 136,624 847,409 155,669 (866,640} 1,632,429 1,632,429 4,513,860 1,804,304 1,664,477 2,150,277 1,609,891 Total 58,926,372 52,780,083 53,646,723 58!926!372 14,460,993 40,443,171 Special $ Revenue $ $ for for for resources Restricted Committed Nonspendable Unassigned of Funds Sheet (deficits) (deficits) Resources inflows of 2015 (Deficits) treasury BERKELEY 30, Balance in balances Balances wages Inflows Resources OF Governmental investments allowance resale deferred June of of and (deficits) for fund and Fund balances CITY funds (net revenue Combining Liabilities assets Deferred and held and revenue cash fund assessments investments payable Inflows held Nonmajor applicable): salaries receivable other balances liabilities and Total Total Total Total to Interest Accounts Total liabilities, Total Notes Property Special Subventions/grants Other Taxes where Unavailable Fund Due Deposits Deferred Unearned Other Liabilities Liabilities Accounts Accrued Cash Receivables Restricted Assets 190 5,142 A Bonds 2007 1,742,380 1,742,380 1,737,238 1,742,380 1,742,380 Series GO (continued) $ Refunding $ $ 22,760 2002 1,854,061 1,854,061 1,831,301 1,854!061 1,854,061 Bonds GO Refunding $ $ $ 397 397 {397} {397} Repertory Funds Theatre Berk $ $ $ Service Debt 42,413 2,985,946 2,943,533 2,985,946 2,985,946 2,985,946 Bonds G02007 Refunding $ $ $ 22,322 FF Measure 1,621,256 1,643,578 1,643,578 1,643,578 1,643!578 Libra!}'. 09 $ $ $ 14 132,338 132,338 132,324 132,338 132!338 Bonds Pension Refunding $ $ $ 40,000 53,250 Funds {45,208} 148,568 321,717 321,717 250,255 227,961 626,784 385,078 713,313 3,024,783 2,311,470 Total 17,245,518 14,690,910 18,194,019 14,265,942 18,194,019 Capital Project $ $ $ 141,827 582,967 441,140 141,827 441,140 582,967 582,967 Fund SAVO Funds $ $ $ Project Capital {45,208} 148,568 148,568 281,717 281,717 713,313 385,078 Fund 1,870,330 2,968,721 WBIP 2,968,721 2,538,436 2,583,643 Income Income Housing Housing $ $ $ 40,000 40,000 COP 40,000 110,510 110,510 150,510 110,510 150,510 Animal Shelter 2010 $ $ $ for for for resources Restricted Committed Nonspendable Unassigned of Funds Sheet (deficits) (deficits) Resources inflows 2015 of (Deficits) treasury BERKELEY 30, Balance in Balances balances wages Inflows OF Resources Governmental investments allowance resale deferred June of of and for fund and Fund balances CITY funds (net revenue Combining Liabilities assets Deferred and held and revenue cash fund assessments investments payable Inflows Nonmajor held applicable): receivable salaries liabilities, other balances (deficits) balances liabilities and Total Total Total Total to Interest Accounts Total Notes Property Special Subventions/grants Other Taxes where Unearned Deferred Due Unavailable Fund Other Liabilities Deposits Liabilities Restricted Receivables Accounts Accrued Cash Assets 191 195 146 61,045 45,201 165, 148,568 136,624 155,669 173,892 385,078 713,313 major 413,027 {912,245} 1,075,370 1,954,146 1,954, 1,666,791 1,649,891 2,054,559 5,142,958 3,024,783 Total 2,203,527 Funds (concluded) 80,277,733 16,772,463 87,374,837 78, 64,862,777 87,374!837 Non Governmental $ $ {397} 2,314 2,314 112,727 413,027 Funds 9,728,696 10,252,135 10,252,532 10,254,449 10!254,449 Debt Total Service $ $ $ M 15,626 958,443 958!443 958,443 958,443 942,817 Measue Watershed Improvement $ $ $ Funds 1,917 1,917 413,013 411,097 411,097 413,013 413,013 COP Animal Shelter Service 2010 $ $ $ Debt I 4,464 524,691 524,691 §24,691 524,691 520,227 Shelter 2008 GO Measure Animal $ $ $ for for resources Restricted Committed for Nonspendable Unassigned of Funds Sheet (deficits) (deficits) Resources inflows 2015 of (Deficits) treasury BERKELEY 30, Balance in Balances balances wages OF Inflows Resources Governmental investments allowance resale deferred June of of and (deficits) for fund and Fund balances CITY funds (net revenue Combining Liabilities assets Deferred and held and revenue cash fund assessments investments payable Inflows Nonmajor held applicable): receivable salaries liabilities, other balances liabilities and Total Total Total Total to Interest Accounts Total Subventions/grants Notes Property Special Other Taxes where Unavailable Unearned Deposits Fund Deferred Other Liabilities Liabilities Due Receivables Accrued Accounts Cash Restricted Assets 192 (3,994) {3,994} 16,698 12,704 57,648 53,654 5_3,654 57,648 Shelter Animal (continued) $ $ ___ 45,000 45,000 45,000 678,000 678,000 633,000 633,000 Fields Gilman Reserve $ $ 183,648 179,371 637,278 177,116 177,116 356,487 356,487 Field (453,629) (633,000) @_3,0PO) Sport Gilman $ $ __ - 50,000 50,000 50,000 50,000 678,619 678,619 Housing A9enc~ Finance CA $ $ 406 46,278 39,243 38,836 46,278 85,520 85,520 150,871 197,149 Fund Raising Activities $ $ Funds 1,815 Revenue Asst. 108 31,887 50,592 Loan 50,592 7,149,385 4,028,000 4,061,702 (4,011,110) {4,011,110} 11,160,496 SEC HUD Grant Special $ $ 5,043 8,555 3,512 5,043 5,043 5,043 Fund Workforce Community $ $ (1,146) (1,177) {2,323} 39,763 39,763 40,909 40,909 {40,909) Act Workforce Investment $ $ 9,427 9,427 for 14,261 510,614 501,187 1,038,386 1,052,647 1,062,074 1,062,074 Tax Special Disabled $ $ 121 105,194 180,473 285,668 148,599 105,194 148,478 253,793 253,793 Asset Forfeiture $ $ (Deficits) expenditures Balances agent (under) 2014 2015 (uses) housing housing Fund over 30, 30, escrow 2015 in and and donations 30, Funds Revenues, sources June June bond (uses): and of charges revenues June Changes balances of Asset streets streets financing fiscal bonds sources permits development development (deficits), (deficits), service bonds and refunded income fund welfare Gain/(Loss) royalties development penalties ended repayment of on out in to in and and Statement for and government Issuance and Governmental Capital other contributions expenditures revenues and safety and outlay: BERKELEY and of of year service: financing balances balances OF Total Total Total change the Interest Cost Principal Issuance Payment Premium Sale Community Community Economic Highway Culture-recreation General Public Health Highway Investment Charges Private License Miscellaneous Fines Rents Intergovernmental Taxes Transfers Transfers Capital Debt Current Extraordinary Fund Fund Net Excess(deficiency) Other Expenditures: Revenues: Expenditures, NonMajor For CITY Combining 193 367 3,695 233,185 233,185 261,068 State &Tax 3,844,671 3,611,486 2,473,750 2,968,002 2,963,941 Transport (continued} $ $ _____l.l_34,818 - Prop 30,822 216,978 186,156 7_90,736 790,736 821,558 821,558 172 State $ $ __ 0 1,225 @.1'§1) (6,751) 30,145 30,822 36,896 859,868 241,163 511,874 Camp 5,501,216 5,471,070 1,576,010 1,574,785 Playground $ $ ______1&1l._§l06 - 5,932 5,932 149,294 149,294 155,226 155,226 1,465,011 1,614,305 Condo Program $ $ Connversation Funds 568,408 568,408 Housing Program $ $ lnclusionary ------Revenue 28,161 34,260 62,420 34,260 (34,260) {34,260} Special Care Child $ Affordable $ 5,960 5,960 Stat 20,146 14,186 25,106 31,066 25,106 31,066 Vi DomVio $ Prevention $ 696,079 273,979 422,100 422,100 422,100 422,100 R-0-W Tieback Mitigation $ $ (182,394) {300,000} 2,700,000 Energy 2,700,000 2,817,606 2,817,606 {2,817,606} California $ Commission $ 176 14,261 (10,716) 215,000 193,608 408,047 204,324 (193,047) (117,606) {386,655} District 3,052,437 3,038, 2,665,782 Paramedic $ Assessment $ ~782 (Deficits) expenditures Balances agent (under) 2015 2014 (uses) housing housing Fund over 30, 30, escrow 2015 in and and donations 30, Funds Revenues, sources June June bond (uses): and of revenues charges June Changes balances of Asset streets streets financing fiscal bonds sources development development permits (deficits), (deficits), bonds service refunded and income fund welfare Gain/(Loss) royalties development penalties ended repayment of on to out in in and and Statement for and government Issuance and Capital other Governmental expenditures contributions revenues and safety outlay: and BERKELEY of and of service: financing balances balances OF Total Total Total change the year the Interest Cost Principal Sale Payment Issuance Premium Economic Highway Culture-recreation Community Community Public Highway Health Investment General Miscellaneous Private Fines Intergovernmental Charges License Rents Taxes Transfers Transfers Capital Debt Current Fund Net Extraordinary Fund Excess(deficiency) Other Expenditures: Revenues: Expenditures, For NonMajor CITY Combining 194 BB 58,141 58,141 58,141 58,141 58,141 (continued) Paratransit $ Measure $ BB 56,210 56,210 56,210 56,210 §6,210 Bike& Pedestrian $ Measure $ - ___ BB St. 520,084 520,084 520,084 520,084 520,084 Roads Local & $ Measure $ F :3_8 VRF 1,136 Road (55,691) {55,691} 568,129 & 568,129 511,302 Co. 1,059,908 1,115,599 Measure ST Ala $ $ ______§j__g,4 B 135 18,268 18,268 156,983 175,252 260,580 Funds 260,580 278,848 278,713 $ Paratransit Measure B Revenue 553 47,066 (41,895) {41,895} 523,848 388,207 481,952 341,141 346,311 345,758 Bike& Special $ Pedestrian Measure $ 7 B 267 St. 1,198 82,216 (592,630) (592,630} 1,881,862 1,289,232 3,287,530 2,777,116 2,775,644 Local &Roads Measure $ $ ~746 4,241 4,241 CA Foundation $ $ Endownment 127) 127} 47,554 45,624 (51, {51, 591,768 642,896 996,258 992,685 947,061 Program 1,043,812 Rental Housing $ $ Safett 13,768 (435,467) (435,467)_ CDBG 5,843,331 1,977,463- 6,278,797 1,977,463 1,528,228 $ $ __ ~996 (Deficits) expenditures Balances agent (under) 2015 2014 (uses) housing housing Fund over 30, 30, escrow 2015 in and and donations Funds 30, Revenues, sources June June bond (uses): and of revenues charges June Changes balances of Asset streets streets financing fiscal bonds sources development development permits (deficits), (deficits), bonds service refunded and income fund welfare Gain/(Loss) royalties development penalties ended repayment of on to in out in and and Statement for and government Issuance and Capital Governmental other expenditures contributions revenues and safety outlay: and BERKELEY of and of year service: financing balances balances OF Total Total Total change Interest the Cost Principal Payment Sale Premium Issuance Community Economic Highway Culture-recreation Community Health Public Highway Miscellaneous Investment General Private Fines Intergovernmental License Rents Charges Taxes Transfers Transfers Capital Debt Current Fund Net Extraordinary Fund Excess(deficiency) Other Expenditures: Revenues: Expenditures, NonMajor For CITY Combining

195 85,348 121,337 121,337 116,852 116,852 206,684 238,189 238,189 District Business Telegraph $ (continued) $ - Improvement 108,871 108,871 108,871 Fund (108,871) District $ $ Underground Ave. 4,889 4,889 30,237 25,349 29,312 Bid 29,312 34,200 34,200 $ $ Solano __ 874 306 3,770 (12,119) {70,815} 588,595 455,574 671,529 659,410 110,878 Street 1,044,170 1,451,115 Lighting 1,380,300 1,340,237 1,375,350 $ $ (60,694) {60,694} 343,008 343,008 282,314 Support -~82,314 Response 1,107,526 1,046,831 Advanced Funds st Life 1 $ $ Revenue 65,359 Prep. 631,407 631,407 134,942 260,160 Tax 3,210,671 2,579,264 3,635,620 3,240,519 4,267,027 4,201,668 Fire Seecial MeasureGG $ $ 200,000 200,000 200,000 200,000 200,000 Space Streets &Open $ lmerovement $ 7,522 Prop. 471,526 975,_418 975,418 (464,004) (464,004} District 1,439,422 1,439,422 Downtown Improvement Berk. $ $ & 1,880 Tax 56,669 10,166 39,554 (50,00-1)_ (50,002) 610,487 165,200 660,489 1,983,231 2,593,719 9,400,001 9,234,802 9,952,222 Park 10,060,491 $ $ 8,583 8,583 Time 125,575 531,222 531,222 656,797 539,805 Funding One Non-Grant $ $ ~805 (Deficits) expenditures Balances agent (under) 2015 2014 (uses) housing housing Fund over 30, 30, escrow in 2015 and and donations 30, Funds Revenues, sources June June bond (uses): and of revenues charges June Changes balances of Asset streets streets financing fiscal bonds sources development development (deficits), (deficits), permits bonds refunded service and income fund welfare Gain/(Loss) royalties development penalties ended of repayment on in to out in and and Statement for and government Issuance and Capital Governmental other expenditures contributions revenues and safety outlay: and BERKELEY and of of year service: financing balances balances OF Total Total Total change the Interest Cost Principal Payment Issuance Sale Premium Community Community Economic Highway Culture-recreation Public Highway Health Investment General Miscellaneous Fines Intergovernmental Charges License Private Rents Taxes Transfers Transfers Capital Debt Current Fund Net Extraordinary Fund Other Excess(deficiency) Expenditures: Revenues: NonMajor Expenditures, CITY Combining For 196 761 761 B. 761 761 9,523 8,762 Wall Lillie Memorial $ (continued) $ - 39,840 19,806 59,646 Art 19,806 59,646 148,678 108,838 Public $ $ ~15) (33,882) (33,882) Party 308,025 341,906 134,731 100,850 134,731 100,850 Private Sidewalks $ $ _ {97,368) UC 462,367 559,735 549,762 559,735 (559,735) 1,109,497 1,109,497 (1,109,497) (1,109,497) Settlement $ $ Funds 142,395 319,486 461,881 142,395 357,605 357,605 500,000 Training Employee $ $ ______§Q_Q,_QOQ . Revenue 215 215 8,500 8,500 8,715 8,715 ecial Lab 143,219 Miles 143,004 S $ $ Fund 31,059 31,059 Computer Employee $ Loan $ 22,240 22,240 22,240 .22,240 RLF 731,677 709,436 Citywide $ $ 92 2,542 5,395 2,542 5,395 7,845 7,937 691,745 689,204 Business Economic $ $ Develo~ment {3,237) 36,297 (39,534) (39,534) Shatek 208,744 169,210 District --208,744 Business No. $ $ Improvement ~210 (Deficits) expenditures Balances agent (under) 2015 2014 (uses) housing housing Fund over 30, 30, escrow 2015 in and and donations 30, Funds Revenues, sources June June bond (uses): and of revenues charges June Changes balances of Asset streets streets financing fiscal bonds sources development development (deficits), permits (deficits), bonds service refunded and income fund welfare Gain/(Loss) royalties development penalties ended repayment of on to out in in and and Statement for and government Issuance and Capital Governmental other expenditures contributions revenues and safety outlay: and BERKELEY of and of year service: financing balances balances OF Total Total Total change the Cost Principal Interest Payment Sale Premium Issuance Economic Highway Community Community Culture-recreation Public Highway Health General Miscellaneous Investment Private Fines Rents Intergovernmental Charges License Taxes Transfers Transfers Debt Capital Current Fund Net Extraordinary Fund Other Excess(deficiency) Expenditures: Revenues: For Expenditures, NonMajor CITY Combining 197 Funds 31,887 86,281 397,257 154,303 251,329 299,509 (852,5.fil)}_ 1,249,846 2,700,000 Total 3,819,834 1,426,350 1,344,512 1,871,346 7,649,455 1,796,309 4,358,364 4,028,000 3,517,827 (5,269,988) 52,780,080 52,382,824 11,531,441 11,029,462 43,270,816 13,532,750 42,418,227 22,779,918 Special (continued) $ $ Revenue - 7,086 Cty. (25,243) {25,243) 159,079 184,322 127,732 102,489 120,646 102,489 Ala. Abandoned $ $ Veh.Abate.Auth. 890 730 730 for 730 730 1,620 Fund Unneutered $ $ Impounded & 294 88,539 88,539 Opt. 109,544 339,237 229,693 109,544 198,083 197,789 Public Safet}'. $ $ City Aid Health {843,878) (843,878) Funds 1,666,494 2,833,308 4,499,803 2,510,372 2,510,372 2,510,372 State Realignment $ $ Mental Revenue 90 58,775 33,405 25,370 25,370 149,470 149,470 174,840 174,750 Control Tobacco Sepcial $ $ 222 Aid 160,543 388,885 228,342 898,728 879,348 898,728 {§!)_1,006) Health 1,953,018 1,778,075 1,777,854 (2,604,024) State $ $ 14_9,683_ 149,683 149,683 Pers Fund 3,345,530 3,495,213 Savings $ $ 3 3 3 3 Bay 3,573 3,576 Utilit}'. Public East $ $ Health 18,833 15,215 18,833 15,215 34,049 34,049 206,127 224,961 Statistic $ $ Vital (Deficits) expenditures Balances agent (under) 2014 2015 (uses) housing housing Fund over 30, 30, escrow 2015 in and and donations 30, Funds Revenues, sources June June bond (uses): and of revenues charges June Changes balances of Asset streets streets financing fiscal bonds sources permits development development (deficits), (deficits), bonds service and refunded income fund welfare Gain/(Loss) royalties development penalties ended of repayment on in to out in and and Statement for and government Issuance and Capital Governmental other contributions expenditures revenues and safety outlay: and BERKELEY and of of year service: financing balances balances OF Total Total Total change the Interest Cost Principal Issuance Sale Premium Payment Community Culture-recreation Community Highway Economic General Public Highway Health Miscellaneous Investment Intergovernmental Charges License Private Rents Fines Taxes Transfers Transfers Capital Debt Current Net Fund Fund Extraordinary Excess(deficiency) Other Expenditures: For Revenues: NonMajor Expenditures, CITY Combining 198 0 0 0 6,046 6,046 (6,046) COP _(6,Q§l 110,510 116,555 Animal Shelter 2010 (continued) $ $ - __ 5 5 --- 127 127 (122) (122) 3,794 3,916 Shelter Animal Land/Bldg $ $ 8 0 111 111 1,710 8,397 6,687 1,710 1,821 1,813 Park $ Acquisition $ DeveloQment 16 16 S 8,196 35,646 43,825 35,646 (35,630) Bonds 97GO Measure $ $ 111 111 82,653 18,769 18,769 (18,658) (18,658) (35,630) 101,311 Street $ Funds $ lmQrovement G Project 287 287 Safety 306,096 105,782 200,601 105,782 (105,495) (105,495) Bldg. Capital Measure Public $ $ - M (597,988) 3,007,588 3,007,588 (3,605,576) (3,007,588) 14,459,925 10,854,349 Watershed Measure _(5_97,988) Improvement $ $ G 385 385 309,271 411,318 102,432 Seismic (102,047) (102,047) Project Measure Fire $ $ ______!_Qg,432 Fae. 97,768 97,768 155,202 155,202 252,970 252,970 1,214,598 1,059,396 Public Access Education/ $ $ Govt 1,493 1,493 FF 91,194 91,194 (89,701) (89,701) Renov 1,331,747 1,421,448 $ Branch Measure (Deficits) expenditures Balances agent (under) 2014 2015 (uses) housing housing Fund over 30, 30, escrow 2015 in and and donations 30, Funds Revenues, sources June June bond (uses): and of revenues charges June balances Changes of Asset streets streets financing fiscal bonds sources development development (deficits), (deficits), permits bonds refunded service and fund income welfare Gain/(Loss) royalties development penalties ended of repayment on out in to in and and for Statement and government Issuance and Capital other Governmental expenditures contributions revenues and safety outlay: and BERKELEY of and of year service: financing balances balances OF Total Total Total change the Interest Cost Principal Sale Payment Issuance Premium Culture-recreation Community Community Economic Highway General Health Public Highway Miscellaneous Investment Charges License Private Rents Fines Intergovernmental Taxes Transfers Transfers Capital Debt Current Net Fund Fund Extraordinary Other Excess(deficiency) Expenditures: Revenues: NonMajor For Expenditures, CITY Combining

199 I Shelter 2008 524,691 655,396 160,000 280,500 440,500 309,795 (130,704) GO Measure (continued) $ $ Animal _(130,704) ~795 171 Bonds 27,209 2007 144,621 185,000 329,621 356,830 356,830 1,742,380 1,715, ~09 Series A GO $ $ Refunding 2002 123,350 123,350 311,038 1,854,061 1,730,711 Bonds 1,456,038 1,145,000 1,579,387 1,579,387 GO Refunding $ $ Fund {397} 288,835 500,714 789,549 789,549 247,758 252,956 (289,232) {500,714} Berk. Theatre Service Repertory $ $ Debt 146 2007 206,908 206,908 Bonds 1,236, 2,985,946 2,779,037 1,500,000 2,736,146 2,943,054 2,943,054 GO Refunding $ $ FF (60,342) {60,342} 515,000 09 1,643,578 1,703,920 1,609,318 1,094,318 1,548,976 Libra~ 1,548,976 Measure $ $ 42 42 (2,716) 59,508 132,338 135,054 376,750 379,508 376,750 320,000 {379,466) Bonds Pension Refunding $ $ 0 127 4,069 1,813 6,374 Funds 97,880 91,194 988,313 249,906 261,157 252,970 ,245,518 {597,988) (597,988) Total 3,469,533 3,026,357 (2,818,051) {3,208,376) Capital 17 20,063,569 $ $ Project - 582,967 307,967 275,000 275,000 Fund SAVO Income Housing $ $ Funds {O} 4,069 4,069 4,069 4,069 Project 713,313 713,313 Fund WBIP 1,825,123 2,538,436 Income Housing $ $ Caeital (Deficits) expenditures Balances agent (under) 2015 2014 (uses) housing housing Fund over 30, 30, escrow 2015 in and and donations 30, Funds Revenues, sources June June bond (uses): and of charges revenues June Changes balances of Asset streets streets fiscal financing bonds sources permits development development (deficits), (deficits), bonds service and refunded income fund welfare Gain/(Loss) royalties development penalties ended of repayment on in to out in and and Statement for and government Issuance and Capital Governmental other contributions expenditures revenues and safety and outlay: BERKELEY and of of year service: financing balances balances OF Total Total Total change the Interest Cost Principal Payment Sale Premium Issuance Highway Economic Culture-recreation Community Public Highway Health Community General Miscellaneous Investment Intergovernmental Private License Rents Fines Charges Taxes Transfers Transfers Capital Debt Current Fund Net Extraordinary Fund Other Excess(deficiency) Expenditures: Revenues: NonMajor For CITY Expenditures, Combining

200 ,976) 86,281 988,313 249,906 160,760 252,970 299,510 253,142 2,231,372 2,700,000 5,399,348 1,871,346 1,344,512 4,433,472 1,524,229 8,370,956 4,358,491 1,796,309 7,649,455 3,517,827 (1,759,344) (5,867 80,277,733 82,037,077 Total 55,480,821 11,120,656 14,557,798 50,501,792 13,532,750 30,602,243 _1~~79,029) Nonmajor (concluded) Governmental $ $ 84 Funds Funds 661,451 (~f!_,()63) 1,579,514 9,590,684 1,579,514 8,740,472 4,397,516 4,342,956 Total 7,822,409 Debt 7,822,325 10,252,135 $ $ Service Fund M 958,443 208,844 160,000 208,844 875,439 749,599 715,439 Services 1,084,283 1,084,283 Measue Watershed Improvement $ $ Debt 68 42 42 COP 411,097 308,189 411,029 413,215 413,189 105,000 413,215 (413,147) Animal Shelter 2010 $ $ __ (Deficits) expenditures Balances agent (under) 2015 2014 (uses) housing housing Fund over 30, 30, escrow 2015 in and and donations Funds 30, Revenues, sources June June bond (uses): and of charges revenues June Changes balances of Asset streets streets financing fiscal bonds sources development permits development (deficits), (deficits), bonds service refunded and income fund welfare Gain/(Loss) royalties development penalties ended repayment of on in to out in and and Statement for and government Issuance and Capital Governmental other expenditures contributions revenues and safety outlay: and BERKELEY and of of year service: financing balances balances OF Total Total Total change the Interest Cost Principal Sale Payment Issuance Premium Highway Community Economic Culture-recreation Community General Public Health Highway Investment Miscellaneous Intergovernmental License Private Fines Rents Charges Taxes Transfers Transfers Capital Debt Current Fund Net Fund Extraordinary Excess(deficiency) Other Expenditures: NonMajor Expenditures, Revenues: For CITY Combining

201 - _ .. 185 (9,033) (9,033) (2,152) (12,725) (12,725) 4,005,659 4,005,659 (4,001,967) (4,000,000) Variance Pos/(Neg) $ (continued) Asst...... ------======------...... ~692) ___ GTY 1,815 31,218 31,887 50,592 50,592 Loan 325,304 294,086 ______Actual 4,028,000 4,061,702 4,042,328 4,042,328 (4,011,110) HUD $ $ ------...... ------...... 108 _ - ...... - ...... Sec - 2,000 3,582 40,251 28,000 63,317 36,669 36,669 59,735 29,735 63,317 ...... 334,337 294,086 Final Budget $ $ ======------·------______------(348) (348) (348) (348) (348) ______.. Variance Pos/(Neg) $ $ ------______Act ------(1,146) (1,177) (2,323) 39,763 39,763 40,909 40,909 (40,909) Investment Actual ------$ $ ======------...... ------Workforce (798) (1,975) (1,177) ...... 39,763 39,763 40,561 40,561 - (40,561) Final Budget $ $ ------...... ------Funds (525) (525) 10,750 10,750 10,750 11,275 11,275 Revenue Variance Pos/(Neg) $ $ ======------Sp_ecial ...... - __ 10,750 10,750 14,261 ...... 500,442 489,692 - 1,052,647 1,063,397 1,063,397 ...... Disabled Tax Actual ...... $ $ ======____ ------·------·------Special 13,736 489,692 489,692 1,038,386 1,038,386 1,052,122 1,052,122 1,052,122 Final Budget $ $ ------======------...... ------·------·----- (121) 32,637 32,758 231,431 231,431 231,431 198,794 198,794 Variance Pos/(Neg) $ $ ======------195 121 285,669 105,195 105, 180,474 148,599 148,478 253,794 253,794 Forfeiture Actual $ Asset $ ======...... ------54,238 55,000 55,000 180,474 181,236 181,236 (126,236) (126,236) Final Budget $ ------· ------·------in Basis) Changes expenditures and (Budget 2015 2014 30, 30, Actual 2015 (outflows) housing over(under) June June Funds 30, donations and and Expenditures of of Charges inflows (uses): as as and June revenues Fiscal of balances Budget loan - repayment streets financing sources and loan permits of (deficits) (deficits) service development fund Ended Revenues, welfare royalties development penalties out in of Governmental in and for government and of other contributions expenditures revenues and BERKELEY safety and and Year (deficiency) Principal Interest Balance service: financing balances balances OF Total Total Total Change the Repayment Issuance Transfers Transfers Culture-recreation Community Public Highway Health Private Economic General Miscellaneous Rents Franchise Interest Taxes Charges License Fines Intergovernmental Debt Current: Fund Net Fund Excess Other Expenditures: Fund Revenues: Nonmajor For Schedule CITY 202 45,000 45,000 45,000 45,000 45,000 Variance Pos/(Neg) (continued) $ Fields Account 45,000 45,000 45,000 678,000 633,000 633,000 678,000 Actual Gilman Reserve 633,000 633,000 633,000 633,000 Final Budget $ $ (3,580) (3,580) 92,731 96,311 92,731 34,990 34,990 61,321 61,321 Variance Pos/(Neg) $ Oper) 183,648 179,371 637,278 177,116 177,116 (Vendor 356,487 356,487 (633,000) (453,629) (633,000) Actual $ Field Sport Funds 3,580 90,918 83,060 637,278 212,106 212,106 295,166 295,166 (633,000) (629,420) (546,360) Final Budget Revenue Sp_ecial Variance Pos/(Neg) $ $ Agency 50,000 96,218 96,218 50,000 50,000 50,000 Housing Actual $ CA Finance 50,000 96,218 96,218 50,000 50,000 50,000 Final Budget $ $ 9,409 85,670 76,262 85,520 85,520 171,191 171,191 171,191 Variance Pos/(Neg) 406 Activities 46,278 38,836 39,243 46,278 85,520 85,520 150,871 197,149 Actual Raising Fund 9,815 25,958 150,871 115,098 124,913 (124,913) (124,913) Final Budget in Basis) Changes expenditures and (Budget 2015 2014 30, 30, Actual 2015 (outflows) housing over(under) June June Funds 30, and donations and of Expenditures of Charges inflows (uses): as as and June revenues Fiscal of balances Budget loan - repayment streets financing sources and loan permits of (deficits) (deficits) service development fund Ended Revenues, welfare royalties development out in penalties of in Governmental and for government and of other contributions expenditures revenues and BERKELEY safety and Year (deficiency) Principal Interest Balance service: financing balances balances OF Total Total Total Change the Repayment Issuance Transfers Transfers Community Public Highway Health General Culture-recreation Miscellaneous Rents Economic Franchise Private License Fines and Fines Interest Intergovernmental Taxes Charges Debt Current: Fund Fund Fund Other Net Excess Expenditures: Revenues: Nonmajor For Schedule CITY 203 5,618 5,618 5,618 8,552 8,552 (2,934) (2,934) Variance Pos/(Neg) (continued) $ ------·------___ Stat 5,960 5,960 Prev-Vi 20,146 14,186 31,066 25,106 25,106 31,066 Actual $ Vio ------Dom 342 342 14,528 14,186 33,658 33,658 34,000 34,000 Final Budget ------·--- 2,700,000 2,700,000 Variance Pos/(Neg) $ ------·------Commission (300,000) (117,606) (182,394) Actual 2,817,606 2,700,000 2,700,000 2,817,606 (2,817,606) ------Energy Calif. (182,394) Final 2,817,606 2,817,606 Budget (3,000,000) (2,817,606) (2,817,606) $ Funds -·------(4) (4) (525) Revenue 87,261 58,225 87,261 58,750 87,265 29,041 29,041 Variance Pos/(Neg) $ $ ------·------··------District Special 14,261 (10,716) 189,134 378,891 193,608 204,324 (383,365) (189,757) Actual 3,038,176 3,052,437 2,669,073 2,669,073 Assessment $ ------Paramedic 13,736 (10,712) 378,891 101,873 204,324 193,612 (277,018) (470,630) Final 3,110,662 3,096,926 2,640,032 2,640,032 Budget $ ------8,654 36,558 66,212 66,212 36,558 66,212 29,654 21,000 Variance Pos/(Neg) $ ------·------Fund 56,743 17,006 73,749 17006 57,648 57,648 74,654 53,654 21,000 Shelter Actual $ ------·-····-····--·-·------Animal 7,537 56,743 94,206 94,206 45,000 45,000 (49,206) (49,206) Final Budget $ $ ------···-·-··--··· --·------·------... - ·- ·- in Basis) Changes expenditures and (Budget 2014 2015 30, 30, Actual 2015 (outflows) housing over(under) June June Funds 30, and donations and of of Expenditures Charges inflows (uses): as as and June revenues Fiscal of balances Budget loan - repayment streets financing sources and loan permits of (deficits) (deficits) service development fund Ended Revenues, welfare royalties development in penalties out of in Governmental and for government and of contributions other revenues expenditures and safety BERKELEY and and Year (deficiency) Principal Interest Balance service: financing balances balances OF Total Total Total Change the Repayment Issuance Transfers Transfers Culture-recreation Community Public Highway Health Economic General Miscellaneous Rents Fines Franchise Interest Charges License Private Intergovernmental Taxes Debt Current: Fund Net Fund Fund Excess Other Expenditures: Revenues: Nonmajor For Schedule CITY 204 2,655 6,312 6,312 43,171 (19,169) 580,571 604,574 416,732 419,387 1,030,273 1,023,961 Variance Pos/(Neg) $1,030,273 (continued) $ ------·------Camp 1,225 (6,751) (6,751) 36,896 30,145 241,163 870,571 501,171 Actual 1,574,785 5,471,070 5,501,215 1,612,906 1,576,010 $ $ ------...... ------Playground 3,880 (13,063) (13,063) 260,332 290,000 458,000 (987,065) 5,471,070 1,991,517 1,995,397 4,470,942 1,008,332 (1,000,128) Final Budget $ $ ------351 95,226 95,226 1,288,577 1,288,577 1,193,000 1,193,351 1,288,577 Variance Pos/(Neg) $ ------Program 5,933 5,933 149,293 149,293 155,226 155,226 Actual 1,465,011 1,614,305 $ $ ------Conversion Funds Condo 6,284 60,000 60,000 325,727 Final 1,465,011 1,193,000 1,199,284 Budget (1,139,284) (1,139,284) Revenue $ ------S_e_ecial (3,000) (3,000) (3,000) (3,000) (3,000) Variance Pos/(Neg) $ ------Program Housing 568,408 Actual $568,408 $ ------3,000 3,000 3,000 3,000 lnclusionary 571,408 568,408 Final Budget $ $ ------0 0 (11,851) (11,851) (11,851) $ Variance $ Pos/(Neg) ------~ Care Child 28,161 88,565 60,404 60,404 (60,404) (60,404) (11,851) Actual $ ------Affordable 40,012 88,565 60,404 11,851 60,404 11,851 (48,553) (48,553) Final Budget $ ------in Basis) Changes expenditures and (Budget 2015 2014 30, 30, Actual 2015 (outflows) housing over(under) June June Funds 30, donations and and of of Expenditures Charges inflows (uses): as as and June revenues Fiscal of balances Budget loan - repayment streets financing sources and loan permits of (deficits) (deficits) service development fund Ended Revenues, welfare royalties development out in penalties of in Governmental and for government and of other contributions expenditures revenues and safety BERKELEY and and Year (deficiency) Principal Interest Balance service: financing balances balances OF Total Total Total Change the Repayment Issuance Transfers Economic Transfers General Culture-recreation Community Public Highway Miscellaneous Health License Private Rents Fines Franchise Interest Taxes Charges Intergovernmental Debt Current: Fund Net Fund Fund Excess Other Expenditures: Revenues: Nonmajor Schedule CITY For 205 66 75,238 75,304 20,624 (21,451) (21,451) (96,754) (117,379) Variance $ Pos/(Neg) (continued) ------· ~) Safety 47,554 45,624 (40,431) (40,431) 630,967 590,536 996,258 957,757 Actual 1,043,812 1,003,382 Housing $ ======------·------· Rental 47,620 25,000 (18,980) (18,980) 630,967 611,987 1,071,496 1,100,136 1,119,116 Final 1,075,136 Budget $ ------...... 11,768 104,609 104,609 741,368 125,898) (237,305) (237,305) (341,914) 1,030,848 1,772,216 (2,114,130) (2, Variance Pos/(Neg) ...... $ ------·------___ ------13,768 162,609 162,609 684,549 670,781 (105,667) 2,108,502 ...... 2,108,502 (1,367,011) (1,261,344) (1,423,953) CDBG Actual - $ ------...... ------...... 2,000 58,000 58,000 (105,667) 2,849,870 3,880,718 1,030,848 2,798,679 Final 2,796,679 (1,024,039) (1,129,706) (1,082,039) Budget $ Funds ------Revenue 3,695 24,445 (34,177) 404,972 435,454 2,498,647 2,498,647 2,093,675 2,498,647 2,069,230 S_e_ecial Variance Pos/(Neg) $ ------Fund Tax 367 & 3,695 578,487 578,487 261,068 3,844,671 3,266,184 2,734,818 2,473,750 3,313,305 3,309,243 Actual Transport $ ======State 34,544 285,513 1,346,024 3,266,184 4,828,493 4,542,980 2,908,333 2,873,789 (1,920,160) Final (1,920,16_QJ Budget $ 4,950 452,076 452,076 562,614 452,076 557,664 (110,538) (110,538) Variance Pos/(Neg) $ $ ------Safety Public 29,953 29,953 125,860 155,813 790,736 790,736 820,689 820,689 172 Actual $ $ State-Prop 4,950 125,860 931,227 931,227 (296,263) (422,123) llli,!W Final 1,353,350 1,348,400 Budget ======in Basis) Changes expenditures and (Budget 2014 2015 30, 30, (outflows) Actual 2015 housing over(under) June June Funds 30, donations and and of of Expenditures Charges inflows (uses): as as and revenues June Fiscal of balances Budget loan - repayment streets financing sources and loan of permits (deficits) (deficits) service development fund Ended welfare Revenues, development royalties in out of penalties in Governmental and for government and of other contributions expenditures revenues and safety BERKELEY and and Year (deficiency) Principal Interest Balance service: financing balances balances OF Total Total Total Change Repayment Issuance the Transfers Transfers Economic Culture-recreation Community Public Highway Health General Miscellaneous Rents Private Fines Interest License Franchise Intergovernmental Taxes Charges Debt Current: Fund Net Fund Fund Excess Other Expenditures: Revenues: Nonmajor For Schedule CITY 206 135 53,329 34,529 34,529 53,329 53,329 18,665 18,800 Variance Pos/(Neg) $ (continued) B 135 15,616 15,616 130,315 114,699 260,580 260,580 276,061 276,196 Actual Measure Paratransit $ 76,986 (37,713) (37,713) Final 114,699 257,396 295,109 295,109 257,396 Budget $ 553 1,896 2,449 (7,731) 235,628 235,628 235,628 240,910 233,179 Variance Pos/(Neg) $ ======B 553 Funds 47,067 Pedestrian (43,904) (43,904) 388,208 426,205 341,141 470,109 343,751 344,304 Actual & $ ------Measure Bike Revenue 39,336 190,577 621,387 582,051 470,109 341,855 341,855 Final Special (279,532) Budget $ $ ------·------~532) 7 267 1,198 (2,525) 16,591 (19,116) 117,196 117,196 117,196 119,721 118,249 Variance Pos/(Neg) $ $ ======------·--- 7 _ .. 267 B 1,198 Roads 82,216 841,718 & (596,105) (596,105) 3,369,746 3,287,530 2,772,169 2,773,641 St. Actual Measure $ Local ======...... ------______98,807 724,522 Final (713dQ!l_ (713,301) Budget 1,437,823 1,437,823 3,367,221 2,653,920 3,268,414 2,653,920 $ $ ---- ======------in Basis) Changes expenditures and (Budget 2015 2014 30, 30, Actual 2015 (outflows) housing over(under) June June Funds 30, donations and and Expenditures of of Charges inflows (uses): as as and June revenues Fiscal of balances Budget loan - repayment streets financing sources and loan permits of (deficits) (deficits) service development Ended fund Revenues, welfare royalties development penalties out in of Governmental in and for government and of contributions other expenditures revenues and BERKELEY safety and and Year (deficiency) Principal Interest Balance service: financing balances balances OF Total Total Total Change the Repayment Issuance Transfers Transfers Culture-recreation Community Public Highway Health Economic Private General License Miscellaneous Rents Fines Franchise Intergovernmental Interest Charges Taxes Debt Current: Fund Fund Fund Excess Other Net Expenditures: Revenues: Nonmajor For Schedule CITY 207 613 380 (9,802) 98,524 56,055 48,463 (21,446) 124,325 1,358,906 1,358,906 1,234,591 1,358,916 1,186,128 Variance Pos/(Neg) (continued) $ $ ...... ------...... ------...... ------613 Tax 1,880 56,055 10,166 39,554 (50,002) (50,002) 659,739 709,741 165,200 2,534,212 1,874,473 9,197,824 9,363,023 9,964,495 Actual 10,072,764 Parks $ $ ------1,500 19,968 61,000 (49,992) (49,992) 213,663 (699,167) Final Funds 1,874,473 1,175,306 9,948,439 9,865,971 Budget 10,597,614 10,383,951 ...... $ $ ------.. ------~~~~(649,175) Revenue 66,429 66,429 612,985 612,985 606,234 539,805 539,805 Special Variance Pos/(Neg) ...... $ $ ------...... ------...... ------Non Grant 8,583 8,583 125,575 656,797 531,222 531,222 539,805 539,805 Actual $ $ ------...... ------Funding: Time 1 43,812 15,334 66,429 81,763 (81,763) (81,763) 125,575 Final Budget $ $ ------...... ------2,500 1,136 34,921 34,921 86,733 85,597 507,880 421,146 418,646 Variance Pos/(Neg) $ $ ------...... ------VRF Funds Co. 1,136 34,921 Ala 34,921 477,010 511,930 477,010 510,794 F Revenue Actual 1,060,486 1,025,565 $ $ ------...... ------...... ------...... Special Measure 2,500 898,156 895,656 425,197 425,197 (472,959) Final 1,025,565 1,025,565 Budget $ $ ------...... in ------...... Basis) Changes expenditures and 2015 (Budget Funds 30, 2014 2015 30, 30, (uses) Actual June housing over(under) June June donations and and BERKELEY of of Expenditures Charges sources Ended (uses): as as and OF Governmental revenues Fiscal of balances Budget Year - loan CITY repayment streets sources financing and permits (deficits) (deficits) service loan development of fund Revenues, welfare the royalties development penalties in out of and for government and of contributions Nonmajor other expenditures revenues and safety For and and (deficiency) Principal Interest Balance service: financing balances balances Total Total Total Change in Repayment Issuance Transfers Transfers Economic Public Highway Health General Culture-recreation Community Miscellaneous Franchise Private Rents Fines Interest Intergovernmental Charges License Taxes Debt Current: Fund Fund Net Fund Excess Other Expenditures: Revenues: Schedule

208 874 306 3,771 29,136 35,846 30,895 596,041 596,041 551,191 522,055 587,037 Variance Pos/(Neg) (continued) $ $ 874 306 9,004 3,771 (12,120) @:3,~5:3) 432,320 604,860 668,413 671,529 110,877 Lighting 1,037,180 1,451,114 1,340,237 1,387,561 1,382,610 Actual $ Street $ 8,819 (12,120) 441,139 432,320 659,409 671,529 140,013 (650,590) 2,002,305 1,351,715 1,862,292 1,351,715 Final Budget $ $ 17,576 97,329 86,947 21,588 65,359 404,644 404,644 317,697 404,644 202,791 Variance Pos/(Neg) $ $ Funds Tax Prep. Revenue Fire 65,359 637,525 637,525 134,942 260,160 3,172,993 2,535,468 Actual 3,635,620 3,240,519 4,273,145 4,207,786 GG $ $ Special Measure 232,881 232,881 277,736 232,271 Final 2,768,349 2,535,468 3,953,317 3,443,310 4,186,198 4,186,198 Budget $ $ 5,000 5,000 11,518 11,518 16,518 44,845 44,845 (28,327) (28,327) Variance Pos/(Neg) $ $ Dis 0 467,750 971,673 971,673 (467,749) (467',7'4_fil 1,439,422 1,439,422 Prop&lmprov Actual $ $ Berk Dwtn 5,000 5,000 (11,517) 467,750 (479,267) (484,267) Final 1,484,267 1,484,267 1,000,000 1,000,000 Budget $ $ Basis) Changes expenditures and 2015 (Budget Funds 30, 2015 2014 30, 30, (uses) Actual June housing over(under) June June donations and and BERKELEY of of Expenditures Charges sources as (uses): Ended as and OF Governmental revenues Fiscal of balances Budget Year - loan CITY repayment streets financing sources and (deficits) (deficits) permits loan service development of fund welfare Revenues, the royalties development penalties in out of in and for government and of other contributions expenditures Nonmajor revenues and safety For and (deficiency) Principal Interest Balance service: financing balances balances Total Total Total Change Repayment Issuance Transfers Economic Transfers Public Highway Health Culture-recreation Community General Miscellaneous Private Franchise Rents and Fines Interest Intergovernmental License Taxes Charges Debt Current: Fund Fund Net Fund Excess Other Expenditures: Revenues: Schedule

209 661 660 660 (149,339) (149,339) Variance Pos/(Neg) (continued) $ $ District ------·------...... (3,237) 36,297 Shatuck (39,534) 208,744 208,744 169,210 Actual $ $ Improvement ------No. 36,297 Business (40,195) (39,534) 146,102 150,000 150,000 109,805 208,745 208,745 168,550 169,210 168,550 Final Budget $ $ ------24,480 24,480 24,48_0 55,644 55,644 (31,164) (31,164) __ Variance Pos/(Neg) $ $ ------Funds District Business 3,100 198,949 228,736 231,836 231,836 Actual $ Revenue $ ------...... __ Telegraph Improvement Special (21,380) 3,100 {21,380) 174,469 195,849 195,849 284,380 284,380 228,736 263,000 263,000 Final Budget $ $ ------...... 329 329 (470) (470) (800) (800) Variance Pos/(Neg) $ $ ------...... --~ Bid 4,889 4,889 30,237 25,349 29,312 29,312 34,200 34,200 Avenue Actual $ $ ------Solano 5,35~ 5,359 30,708 25,349 29,641 29,641 35,000 35,000 Final Budget $ $ ------...... Basis) Changes expenditures and 2015 (Budget Funds 30, 2015 2014 30, 30, (uses) June housing over(under) June June donations and Actual and and BERKELEY of of Expenditures Charges sources Ended (uses): as as and OF Governmental revenues Fiscal of balances Budget Year - loan CITY repayment streets sources financing and permits (deficits) (deficits) service loan development of fund Revenues, welfare the royalties development penalties in out of in and for government and of contributions Nonmajor other expenditures revenues and safety For and and (deficiency) Principal Interest Balance service: financing balances balances Total Total Total Change Issuance Economic Repayment Transfers Transfers Culture-recreation Community Public Highway Health General Private Miscellaneous Charges License Rents Franchise Fines Interest Intergovernmental Taxes Debt Current: Fund Net Excess Fund Fund Other Expenditures: Revenues: Schedule

210 58,459 80,700 80,700 22,241 58,459 22,241 22,241 Variance Pos/(Neg) $ $ (continued) RLF 22,241 58,459 80,700 58,459 22,241 22,241 162,528 243,228 Actual $ $ Citywide 162,528 162,528 Final Budget Funds $ $ 92 Revenue 7,845 7,936 83,731 75,795 75,795 (37,382) (37,382) (121,114) (121,114) Special Variance Pos/(Neg) $ $ 92 7,845 7,936 Development 28,886 28,886 85,395 85,395 (48,572) (77,459) 481,300 432,728 Actual $ $ Business Economic (11,190) 150,000 481,300 470,110 161,190 161,190 150,000 (161,190) Final Budget $ $ Basis) Changes expenditures 2015 and (Budget Funds 30, 2015 2014 30, 30, (uses) Actual June housing over(under) June June donations and and BERKELEY of of Expenditures Charges sources Ended (uses): as as and OF Governmental revenues Fiscal of balances Budget Year - loan CITY repayment streets financing sources and permits (deficits) (deficits) service loan development of fund Revenues, welfare the royalties development penalties in out of in and for government and of contributions other Nonmajor expenditures revenues and safety For and and (deficiency) Principal Interest Balance service: financing balances balances Total Total Total Change Repayment Economic Issuance Transfers Transfers Community Public Highway Health Culture-recreation General Rents Private Miscellaneous Fines Interest License Franchise Intergovernmental Charges Taxes Debt Current: Fund Excess Net Fund Fund Other Expenditures: Revenues: Schedule

211 96,080 96,080 304,290 304,290 208,210 208,210 Variance Pos/(Neg) (Continued) $ $ ------· ------~290 (97,368) 109,497) 109,497) 559,735 462,367 549,762 559,735 (559,735) 1,109,497 1,109,497 (1, (1, Actual Settlement UC $ $ ...... ======------·------· ------109,497) 462,367 245,472 767,945 767,945 (864,025) (401,658) Final 1,013,417 1,013,417 (1, (1,109,497) Budget $ $ ...... ------371,476 371,476 371,476 371,476 371,476 Variance Pos/(Neg) $ ------...... ------·--- FD 143,388 462,874 319,486 143,388 356,612 500,000 356,612 500,000 Actual $ ------Employee Training Funds 91,398 319,486 500,000 728,088 728,088 500,000 (228,088) (228,088) Revenue Final Budget $ ------·------Special 215 215 215 215 215 Variance Pos/(Neg) $ $ ------·- 215 215 Lab 8,500 143,219 Actual Miles $ $ ------·------· ------· 8,500 8,500 8,500 8,500 8,715 8,500 8,715 Final 143,004 143,004 143,004 Budget $ ------··------·------_____ 43,000 43,000 43,000 43,000 43,000 Variance Pos/(Neg) $ $ ------...... ------Fund Loan 31,059 31,059 Actual $ $ ------Employee Computer 31,059 31,059 43,000 43,000 43,000 43,000 (43.,QQQ}__ Final Budget $ ------in Basis) Changes 2015 expenditures and (Budget Funds 30, 2015 2014 30, 30, Actual June (uses) housing housing over(under) and June June BERKELEY donations and and of of Expenditures Charges Ended sources Governmental (uses): as as and revenues Budget Fiscal Year of balances - CITY OF loan repayment streets streets financing sources and the permits (deficits) (deficits) service loan development development of fund welfare Revenues, development royalties in penalties out of in and and Nonmajor for government and For of other contributions expenditures revenues and safety outlay: and Balance (deficiency) Principal Interest service: financing balances balances Total Total Total Change Repayment Issuance Transfers Community Highway Transfers Culture-recreation Community Public Health Miscellaneous Highway Economic General Private Rents Franchise Interest Charges License Fines and Intergovernmental Taxes Fund Capital Debt Current: Fund Net Fund Excess Other Expenditures: Revenues: Schedule

212 Variance Pos/(Neg) (Continued) $ $ 149,683 149,683 149,683 Savings 3,345,530 3,495,213 Fund Actual Pers 149,683 149,683 149,683 3,345,530 3,495,213 Final Budget 4,049 4,049 18,833 16,803 14,785 14,785 18,833 Variance Pos/(Neg) 18,833 15,215 15,215 34,049 34,049 18,833 206,127 224,960 Statistic Vital Actual Health Funds 30,000 30,000 30,000 30,000 208,157 208,157 Final Budget Revenue $ ------Special 33,319 33,319 33,319 33,319 33,319 Variance Pos/(Neg) $ ------Art 39,840 59,646 59,646 19,806 19,806 (19,806) 108,838 148,678 Actual Public $ ------6,521 59,646 53,125 53,125 59,646 (53,125) 115,359 108,838 Final Budget $ ------851 851 46,900 46,900 46,900 46,050 46,050 Variance Pos/(Neg) $ ------(33,881) (33,881) 341,906 308,025 134,731 134,731 100,851 100,851 Sidewalks Actual Private $ Party ------(II_0,78_1J (80,781) 261,125 180,781 341,906 100,000 180,781 100,000 Final Budget ------in Basis) Changes 2015 expenditures and (Budget Funds 30, 2014 2015 30, 30, Actual June (uses) housing housing over(under) and June June BERKELEY donations and and Expenditures of of Charges Ended sources OF Governmental (uses): as as and revenues Budget Year Fiscal of balances - CITY loan repayment streets streets financing sources and the permits (deficits) (deficits) service loan development development of fund Revenues, welfare royalties development penalties in out of in Nonmajor and and for government and For of contributions other revenues expenditures and safety outlay: and Balance and (deficiency) Principal Interest service: financing balances balances Total Total Total Change Public Repayment Economic Highway Issuance Transfers Transfers Culture-recreation Community General Community Miscellaneous Highway Health Rents Private Fines Franchise Interest Charges License Intergovernmental Taxes Fund Capital Debt Current: Fund Net Fund Excess Other Expenditures: Revenues: Schedule

213 294 71,716 98,083 71,716 97,789 169,799 169,799 Variance Pos/(Neg) (continued) $ -----·------~799 294 Safety Opt. 88,539 88,539 229,693 339,237 109,544 109,544 197,789 Actual City $ $ Public ------(60,255) (60,255) 169,438 229,693 160,255 100,000 198,083 160,255 100,000 Final Budget $ ______$ ------., ------38,127 38,127 38,127 1,274,819 1,236,692 1,274,819 1,236,692 Variance Pos/(Neg) $ $ ------· -·--·------Health (843,878) (843,878) Realignment 4,399,592 2,733,097 1,666,494 2,510,372 2,510,372 2,510,372 Actual Aid Mental ------·-·------· ------State 391,675 3,124,772 Final 2,733,097 2,472,245 2,472,245 2,472,245 (2,080,570) (2,080,570) Budget Funds $ $ ------91 Revenue 621 621 621 14,495 14,495 (13,874) (13,965) Variance Pos/(Neg) Special $ $ ------···---·------91 621 621 Control 58,776 149,470 150,091 150,000 Actual $ $ -----·-----·------Tobacco - 58,155 58,155 58,155 163,965 149,470 163,965 163,965 163,965 Final Budget $ $ ------·---·------222 ______350,396 350,396 350,396 223,207 223,207 127,188 126,967 Variance Pos/(Neg) ----- $ $ --·------...... ------Aid 222 361,697 134,242 227,455 898,728 878,461 898,728 (651,006) State 1,953,018 1,777,188 1,776,967 (2,604,024) Actual $ Health ------·-·------11,301 134,242 528,065 (651,006) (122,941) 1,953,018 1,121,935 1,121,935 1,650,000 1,650,000 Final (2,604,024) Budget $ $ ------·------in Basis) Changes 2015 expenditures and (Budget Funds 30, 2015 2014 30, 30, Actual (uses) June housing housing over(under) and June June BERKELEY donations and and of of Expenditures Charges Ended sources OF Governmental (uses): as as and revenues Budget Fiscal Year of balances - CITY loan repayment streets streets financing sources and the permits (deficits) (deficits) service loan development development of fund Revenues, welfare development royalties out in penalties of in and and Nonmajor for government and For of other contributions expenditures revenues and safety outlay: and Balance and (deficiency) Principal Interest service: financing balances balances Total Total Total Change Transfers Repayment Issuance Transfers Public Health Highway Economic Highway Culture-recreation Community General Community Miscellaneous Private Fines Franchise Interest Taxes Charges License Rents Intergovernmental Fund Debt Capital Current: Fund Net Fund Excess Other Expenditures: Revenues: Schedule

214 (7,512) (7,512) 17,261 17,261 17,261 24,773 24,772 Variance Pos/(Neg) (continued) $ $ Abatement City 7,086 (25,244) (25,244) 159,078 184,322 127,732 120,646 102,488 102,488 Actual Vehicle Alameda Funds Abandoned 7,087 Revenue (42,505) (42,505) 184,322 141,817 152,505 145,418 110,000 110,000 Final Budget Special in Basis) Changes 2015 expenditures and (Budget Funds 30, 2014 2015 30, 30, Actual June (uses) housing housing over(under) and June June BERKELEY donations and and of of Expenditures Charges Ended sources OF Governmental as as (uses): and revenues Budget Fiscal Year of balances - CITY loan repayment streets streets financing sources and the permits (deficits) (deficits) loan service development development of fund welfare Revenues, development royalties out in penalties of in and Nonmajor and for government and For of other contributions expenditures revenues and safety outlay: and Balance (deficiency) Principal Interest service: financing balances balances Total Total Total Change Repayment Issuance Transfers Transfers Community Health Economic Highway Culture-recreation Community Public Highway Miscellaneous General Private Rents Franchise Charges License Fines and Fines Interest Intergovernmental Taxes Fund Debt Capital Current: Fund Fund Net Other Excess Expenditures: Revenues: Schedule

215 2,387,288 2,387,288 2,387,288 2,387,288 2,387,288 Variance Pos/(Neg) (continued) $ ------Imp. 706 MGO 3,380,219 3,380,219 Water Actual (3,380,219) (3,380,219) 11,079, 14,459,925 & Meas. $ ======St. Final 8,692,418 5,767,507 5,767,507 Budget (5,767,507) (5,767,507) 14,459,925 $ ======---- 385 385 309,272 309,272 308,887 308,887 309,272 Variance Pos/(Neg) $ ======385 385 G: Bond 309,272 411,318 102,432 102,432 (102,047) Actual Seis. Measure $ Fire ------·------(1) 411,318 411,319 411,319 Final (411,319) (102,047) (411,319) Budget $ ------funds Project 2,232 2,232 201,952 201,952 201,952 199,720 199,720 Variance Pos/(Neg) Ca_e_ital $ ------·------Gov't 97,768 97,768 101,952 199,720 101~ 199,720 & 1,059,396 1,161,348 Actual PEG-Public, Educ. $ ======------959,396 100,000 100,000 (100,000) (100,000) 1,059,396 Final Budget $ ======1,492 1,492 1,314,322 1,315,814 1,315,814 1,315,814 1,314,322 Variance Pos/(Neg) $ ======FF 1,492 1,492 91,194 91,194 Renov (89,702) (8jl~ 1,421,449 1,331,747 Measure Actual O $ Branch ======201 15,933 Final 1,421,449 1,405,516 1,405,516 (1,405,516) (1,405,516) Budget ======------=== in Basis) Changes 2015 expenditures and (Budget Funds 30, 2015 2014 30, 30, Actual (uses) June housing housing over(under) and June June BERKELEY donations and and of of Expenditures Charges Ended sources OF Governmental (uses): as as and revenues Budget Fiscal Year of balances • CITY loan repayment streets streets financing sources and the permits (deficits) (deficits) service loan development development of fund welfare Revenues, development royalties in penalties out of in and and Nonmajor for government and of For other expenditures contributions revenues and safety outlay: and Balance (deficiency) Principal Interest service: financing balances balances Total Total Total Change Repayment Highway Issuance Transfers Transfers Community Public Economic Culture-recreation Community Highway Health General Miscellaneous Fines and Fines Charges License Rents Private Franchise Intergovernmental Interest Taxes Fund Capital Debt Current: Fund Fund Net Excess Other Expenditures: Revenues: Schedule

216 14 14 (8,470) (8,470) (8,484) {8,470) (8,484) Variance Pos/(Neg) (continued) ------Area 14 14 BDS 5,026 40,298 35,286 35,286 (35,272) {35,272) Actual S (D'town ------97G.0. Meas 13,496 40,298 26,802 26,802 (26,802) {26,802) Final Budget $ ------2,615 2,618 2,618 2,615 2,618 Variance Pos/(Neg) $ ------======------360 360 BDS (357) {357) CivicCtr ------3,527 3,170 S Actual G.O. $ 97 ------...... ------·------Measure 552 3,527 2,975 2,975 (2,975) {2,975) Final Budget $ ------·------Funds ------111 111 73,446 73,446 73,335 73,446 73,335 Variance Cal)i!~_r_<>ject Pos/(Neg) $ ------·------Fund 111 111 82,653 18,769 18,769 {18,658) (18,658) 101,311 ------Street Actual $ ------...... Improvement ·-- ... 9,207 92,104 92,104 {92,104) (92,104) 101,311 Final Budget $ ------·------·-- 287 287 123,830 123,543 123,830 123,830 123,543 Variance Pos/(Neg) $ ------·------·------Bldg. G 287 287 323,194 200,600 122,881 122,881 {122,594) (122,594) Safety Actual Measure $ ------...... ------Public 76,770 323,194 246,424 246,424 Final (246,424) (246~ Budget ------...... ------in Basis) Changes 2015 expenditures and (Budget Funds 30, 2015 2014 30, 30, Actual June (uses) housing housing over(under) and June June BERKELEY donations and and of of Expenditures Charges Ended sources OF Governmental (uses): as as and revenues Budget Fiscal Year of balances - CITY loan repayment streets streets financing sources and the permits (deficits) (deficits) service loan development development of fund Revenues, welfare royalties development penalties out in of in Nonmajor and and for government and For of contributions other expenditures revenues and safety outlay: and Balance and (deficiency) Principal Interest service: financing balances balances Total Total Total Change Transfers Transfers Community Repayment Economic Highway Issuance Culture-recreation Community Public Health Miscellaneous Highway Private Franchise General License Rents Intergovernmental Interest Taxes Charges Fines Fund Debt Capital Current: Net Fund Other Fund Excess Expenditures: Revenues: Schedule

217 8 (110) (110) (192) 1,519 1,519 1,519 1,629 1,813 Variance Pos/(Neg) (Continued) Funds 8 0 110 110 8,398 1,711 6,687 Development 1,821 1,813 Project Park Actual $ $ $ -----1..Z.!!_ Capital 192 192 192 Acquisition 6,879 6,687 __:_19::..:2=- Final Budget $ $ __ in Basis) Changes 2015 expenditures and (Budget Funds 30, 2015 2014 30, 30, Actual (uses) June housing housing over(under) June June and BERKELEY donations and and of of Expenditures Charges sources Ended OF Governmental as (uses): as and revenues Budget Fiscal of Year balances - CITY loan repayment streets financing streets sources and the (deficits) (deficits) permits loan service development of development fund welfare Revenues, development royalties out in penalties of in and and Nonmajor for government and For of other expenditures contributions revenues and safety outlay: and Balance and Principal Interest service: financing balances balances Total Total Total Change Repayment Issuance Transfers Transfers Highway Community Economic Culture-recreation Community Public Highway Health General Private Miscellaneous Rents Franchise Fines Interest Charges License Intergovernmental Taxes Fund Capital Debt Current: Fund Net Fund Other Excess (deficiency) Excess Expenditures: Revenues: Schedule

218 0 0 0 0 0 Variance Pos/(Neg) (Continued) $ $ Shelter) 6,045 6,045 (6,045) (6!045) 110,511 116,555 (Animal Actual $ $ COP 2010 6,045 6,045 (6,045) (6!045) 116,555 110,510 Final Budget Funds $ $ Project 8 8 0 4 4 (4) (4) Capital Variance Pos/(Neg) $ $ 4 4 127 127 (123) (1J~l 3,793 3,916 Shelter Actual Land/Bldg $ $ Animal 131 131 (131) (131) 3,916 3,785 Final Budget $ $ in Basis) Changes 2015 (Budget Funds expenditures and 30, 2015 2014 Actual June 30, 30, (uses) housing housing over(under) and BERKELEY June June donations Ended and and of of Expenditures OF Governmental Charges sources (uses): as as and Budget revenues Year - CITY Fiscal of balances the loan repayment streets streets financing sources and (deficits) permits (deficits) loan service development development fund of mental Revenues, welfare Nonmajor royalties development penalties in out For of in and and for government and of Balance other contributions expenditures revenues and safety outlay: and (deficiency) Interest Principal service: financing balances balances Total Total Total Change Fund Repayment Issuance Transfers Transfers Community Highway Highway Economic Culture-recreation Community Miscellaneous Public Health General Rents and Fines Franchise Private Interest lntergovern Taxes Charges License Capital Debt Current: Fund Net Fund Excess Other Expenditures: Revenues: Schedule

219 (80) (380,755) (380,755) 2,219,165 2,219,165 2,600,000 2,599,920 Variance Pos/(Neg) $ $ (continued) ------~165 Bonds 192,963 192~ 2,750,570 2,943,533 1,500,000 1,236,146 2,736,146 2,929,109 2,929,109 Actual G02007 Refunding $ $ ------724,368 2,750,570 1,236,066 3,309,864 5,336,066 4,100,000 3,309,864 (2,026,202) {2,026,202} Final Budget $ $ ...... (259) (259) (62,205) 1,542,764 1,543,022 1,543,022 (1,604,969) (1,604,969) Variance Pos/(Neg) $ $ ------...... Funds FF Service (66,295) (62,205) {66,295} 515,000 1,621,255 1,687,551 1,094,318 1,609,318 1,543,022 1,543,022 Actual Library Debt Measure $ $ ...... 09 (4,090) 515,000 Final 1,683,461 1,604,969 1,687,551 1,094,059 1,609,059 1,604,969 {1,609,059} Budget $ $ ------42 42 (84) (84) {84} (126) (126) Variance Pos/(Neg) $ $ ------·------·------42 42 Bonds (2,716) 59,508 132,338 376,750 135,054 376,750 320,000 379,508 {379,466} Actual Pension $ $ ------Refunding ----- .. (2,632) 59,382 376,750 132,422 135,054 320,000 379,382 376,750 (379~ Final Budget $ $ ------·------in Basis) Changes 2015 (Budget Funds expenditures and 30, 2015 2014 agent Actual June 30, 30, (uses) housing and over(under) BERKELEY June June escrow Ended donations and of of OF Expenditures Governmental sources charges as as (uses): bond and Budget revenues Year - CITY of fiscal balances the repayment streets financing sources and bonds permits (deficits) (deficits) service loan development refunded fund Nonmajor welfare Revenues, development royalties For penalties in out of on in to and for Balance government and of other expenditures contributions revenues and safety and and (deficiency) Principal Interest service: financing balances balances Total Total Total Fund Change Premium Payment Economic Issuance Public Highway Health Transfers Transfers Culture-recreation Community General License Private Miscellaneous Franchise Rents Fines Interest Intergovernmental Taxes Charges Debt Current: Fund Fund Net Expenditures: Excess Other Revenues: Schedule

220 (80) 97,677 97,677 1,697,597 1,599,920 1,697,597 1,600,000 Variance Pos/(Neg) __1,697,597 $ _ $ (continued) ...... -----·------A Series 25,043 25,043 185,000 329,621 144,621 354,664 354,664 1,737,238 1,712,195 Bonds Actual G02007 $ $ ------·------Refunding 39,641 144,541 256,987 256,987 Final 1,785,000 1,712,195 1,929,541 Budget (1,672,554) {1,672,554) $ $ ------1,308 108,835 108,835 1,710,143 1,710,143 Variance Pos/(Neg) $1,710,143 $ ------Funds .. Bonds 116,119 116,119 311,038 Service Actual 1,715,182 1,831,301 1,145,000 1,600,000 1,456,038 1,601,308 1,572,156 1,572,156 G02002 $ $ -··------· Debt Refunding 121,158 312,345 Final Budget 2,745,000 1,715,182 1,463,321 3,057,345 (1,594,024) $ $1,463,321 ------· ~94~ 2,203 2,203 2,203 2,203 2,203 Variance Pos/(Neg) $ $ ------...... (398) Repertory 252,956 288,835 500,714 789,549 247,758 789,549 (289,232) {500,714) Actual Theatre $ $ ----·------...... Berkeley (2,600) 252,956 286,632 502,917 789,549 249,961 789,549 (289,232) (502,917) Final Budget $ $ ------...... in Basis) Changes 2015 (Budget Funds expenditures and 30, 2015 2014 agent Actual June 30, 30, (uses) housing and over(under) BERKELEY June June escrow Ended donations and OF of of Expenditures Governmental sources charges as as (uses): and bond Budget revenues Year - CITY of fiscal balances the repayment streets financing sources and permits bonds (deficits) (deficits) service loan development refunded fund Nonmajor Revenues, welfare development royalties For penalties in out of on in to and for Balance and government of other expenditures contributions revenues and safety and and (deficiency) Principal Interest service: financing Total Total Total Fund Change Premium Public Payment Economic Highway Health Issuance Culture-recreation Community General License Private Miscellaneous Rents Franchise Transfers Transfers Charges Fines Intergovernmental Interest Taxes Debt Current: Fund balances Net Fund balances Other Excess Revenues: Expenditures: Schedule

221 0 0 1,078,621 1,078,621 1,078,621 1,078,621 1,078,621 $ $ Pos/(Neg) Variance (Concluded) Imp. 203,182 942,817 160,000 875,439 715,439 739,635 203,182 1,078,621 1,078,621 Water Actual & MEASMGO $ St. $ $ 739,635 160,000 875,439 715,439 Final (135,804) (875,439) (875,439) Budget $ $ 7 7 7 42 42 (35) (35) $ $ Pos/(Neg) Variance ) 68 42 42 Funds (1,878) (1,946) COP Shelter 105,000 413,215 308,189 413,189 413,215 (413,147) Actual 2010 Service $ $ (Animal Debt 61 (1,885) (1,946) 413,215 308,154 105,000 413,154 413,215 i413,154) Final Budget $ $ 1 2,525 2,525 477,527 475,000 475,001 477,527 477,526 I $ $ Pos/(Neg) Variance measure 177 520,227 652,549 160,000 440,500 280,500 308,177 308, (132,322) (132,322) Actual G02008 Shelter $ $ Animal 700 42, 652,549 915,501 280,501 635,000 305,652 305,652 (609,849) (609,849) Final Budget $ $ in Basis) Changes 2015 (Budget Funds expenditures and 30, 2014 2015 agent Actual June 30, 30, (uses) housing and over(under) BERKELEY June June escrow donations Ended and of of OF Expenditures Governmental sources charges as as (uses): bond and Budget revenues Year - CITY of fiscal balances the repayment streets financing sources and bonds permits (deficits) (deficits) service loan development refunded fund Nonmajor Revenues, welfare development royalties For out penalties in of on to and for Balance government and of expenditures other contributions revenues and safety and and (deficiency) Principal Interest service: financing balances balances Total Total Total Fund Change in Premium Payment Economic Health Issuance Transfers Transfers General Public Highway Community Culture-recreation License Private Miscellaneous Rents Franchise Charges Fines Intergovernmental Interest Taxes Debt Current: Fund Net Fund Excess Other Expenditures: Revenues: Schedule

222 INTERNAL SERVICE FUNDS

Internal service funds used to account for the financing of goods or services provided by one department to other departments of the City, on a cost reimbursement basis.

Equipment Maintenance and Replacement Fund derived from rental rates are used to maintain and replace equipments for the Corporation yard.

Building Maintenance Fund established to account for charges for service by the Public Works Building Maintenance Division for the maintenance of City buildings.

Supply Warehouse Fund Fund established for maintaining an inventory of office materials and supplies in the City's warehouse facility. Departmental budgets are charged for this service.

Computer Replacement Fund established to systematically modernize our Citywide PC infrastructure and safeguard the efficiency of our network operations, each department is required to contribute based on annual budget times a fraction, which is the number of existing PCs within the department to the whole city. One twelfth of the annual budgeted amount was charged each month.

Workers' Compensation Self-Insurance Fund established to pay for expenditures made solely for the purpose of paying workers' compensation insurance claims costs, legal fees attendant thereto, disability benefits, related medical benefits, payment of any settled disability claims or judgments, administrative costs and all matters relating thereto; which departmental budgets are charged.

Sick Leave & Vacation Payouts Fund established as the sick leave and vacation leave accrual fund for the purpose of accounting for payouts of unused and terminal sick and vacation benefits.

Public Liability Each fiscal year monies from the General Fund are deposited in this fund to restore the balance of at least $175,000. Expenditures from this fund are made solely for the purpose of paying public liability claims investigation and adjustment costs, legal defense costs, and payment of any settled public liability claim or adjustment. The General Fund reimburses expenditures for this fund.

Catastrophic Loss Fund established to protect the City from severe financial hardship and disruption of ongoing service occasioned by the award of public liability judgment in excess of $250,000.

223 129 101 I 36,225 28,173 27,784 53,541 87,834 343,177 324,641 379,503 470,177 261, 286, 3,812,311 1,539,174 1,223,920 1,223,920 5,651,758 1,106,128 4,162,666 2,357,248 2,357,248 (6,803,345) 10,998,182 10,615,656 Tota 40,197,174 26,992,000 12,625,007 12,625,007 45,848,932 50,794,571 36,922,061 38,169,564 $ $ ------27,583 27,583 27,583 26,738 886,796 886,796 914,379 914,379 887,641 Loss Catastrophic $ $ ------139 139 674 1,047 8,213 1,047 1,047 18,154 11,092 58,224 32,835 16,389 58,224 70,628 112, 112, 523,204 549,571 8§_M~?- 307,268 262,666 Public 1,505,636 2,1_ Liability 2,344,714 2,415,342 $ $ ------__ ---- _ & 71,214 71,214 71,214 48,785 Leave 1,597,112 1,504,589 Payouts 1,668,326 1,619,542 1,668,326 Vacation $1,597,112 $ Sick ------__ 963 3,342 10,215 37,629 40,704 10,215 21,541 33,373 10,215 35,981 105,844) 116,058) 141,028 141,028 271,618 271,618 674,732 1,267,284 3,900,000 3,959,218 (9, (9, 32,296,835 28,337,617 26,992,000 23,321,581 23,311,367 22,600,654 Workers' $ Compensation $ ------1,732 1,732 _1_,?R 20,142 987,741 300,649 687,092 989,473 300,649 300,649 €58_§_,824 668,682 Computer $ $ Replacement ------__ _ 194 182 4,753 2,715 2,222 2,513 28,942 33, 12,188 12,188 23,474 27,784 28,942 28,942 87,834 87,834 (44,202) (73,144) 149,~~1 109,523 116,498 Central Services ____1_1§_,776 $ ------~474 _ _ 8,356 5,757 19,715 19,715 80,334 72,531 19,715 12,655 161,222 101,785 110,166 744,728 744,728 386,674 386,674 458,253 438,538 420,125 3,474,666 3,847,839 3,686,618 (3,747,640) (3,767,355) Building Maintenance $ $ ------15,619 36,225 11,803 190,253 153,939 107,210 470,177 260,167 200,930 625,805 625,805 252,447 1,205,290 1,205,290 1,477,624 1,090,327 1,539,174 5,623,505 8,597,198 7,506,871 8,644,955 8,380,705 11,732,712 10,255,088 12,264,440 12,264,440 Equipment Maintenance Replacement $ $ ------12.i909,395 contributior projected Position investments depreciation employer Net plan between of plan 2015 resources resources BERKELEY assets 30, Service Funds of pension of payable payable accumulated wages OF pension Resources on differences assets Statement June of Resources liabilities capital on Of and payable Internal on assets Of liabilities in CITY net equivalents current outflows absences absences outflows All - Funds liablities judgments judgments obligation earnings position cash payable receivable inflows liabilities outflows assets: Interest salaries noncurrent current current Combining assets, lease lease noncurrent and and Inflows assets: Outflows other net liabilities liablities deferred and liabilities deferred assets assets: to actual investment pension OPEB Total Total Total position Total Fixed Total Total Deferred Net Unrestricted Net Net and Due Total Other Compensated Claims Capital Claims Capital Compensated Deferred Accrued Accrued Total Capital Accounts Investments Inventory Total Cash Accounts Net Noncurrent Deferred Liabilities Current Noncurrent Deferred Current Assets

224 I 12,665 55,528 45,971 (89,215) (40,450) (94,736) 134,215 695,938 230,014 1,176,196 1,265,411 1,229,638 1,219,564 1,181,631 5, 3,812,311 3,958,019 2,777,748 3,632,869 8,218,450 5,082,273 3,402,931 2,856,414 2,830,326 6,372,559 {1,321,904) 10,308,793 24,420,965 25,686,376 Tota $ $ ------(22) (22) 503,149 886,796 383,647 Loss 1,608,539 1,224,870 1,224,870 {1,224,892) (1,224,870) Catastrophic $ $ ------131) 131) 2,267 (1, (1, 87,105 21,414 87,105 106,651 138,640 382,877 220,555 (296,903) (295,772) Public 1,695,888 1,398,985 1,505,636 Liability $ $ ------& 108 (432) (432) Leave 371,108 250,000 371,540 621, 976,004 202,047 1,597,112 2,359,382 2,730,921 2,157,335 2,730,921 Payouts Vacation $ $ Sick ------151 1,014 5,391 4,106 (28,422) (28,422) 105,844) 842,890 327,915 469,977 1,458,729 1,458,729 1,487, 5,080,006 8,218,450 6,731,299 8,218,450 (9, {10,564,573) Workers' Compensation $ $ ------{1,385) (1,385) 88,611 46,121 120,253 120,253 116,649 121,638 987,741 867,488 373,020 Computer Replacement $ $ ------278 5,880 7,589 65,619 38,254 65,619 65,619 30,126 20,089 (44,202) 155,083 257,299 251,382 322,918 322,918 373,020 (109,821) Central Services $ $ ------612 612 8,180 3,983 7,068 10,245 96,083 67,442 137,890) 162,597 390,250 390,250 496,870 3,253,475 1,342,773 3,632,869 3,643,114 (3,747,640) (4, Building Maintenance $ $ ------3,193 4,768 2,055 {9,669) 45,971 48,460 (58,434) (94,736) 350,466 389,638 154,328 292,032 126,342 695,624 403,592 678,880 1,635,723 1,068,480 9,960,382 2,681,049 2,465,808 2,161,830 11,732,712 11,037,088 10,310,848 10,308,793 Equipment Maintenance Replacement $ $ ------assets Expenses 2015 (expenses) 30, services capital Funds Position (Restated) charge of fees June Net revenues Revenues, (expenses) charge in of BERKELEY Service service transfers expenses revenues operations ending Ended disposal professional claims OF -beginning - supplies on position service maintenance revenues earnings and before and from rentals Year Internal Changes services benefits CITY and net compensation Statement expense maintenance in out and non-operating operating operating revenues: expenses: All store the in position position And revenues /(Loss) (loss) (loss) For net net Total Total Total Interest Investment Gain Utilities Communication Depreciation Personnel Repairs Employee Insurance Specialized Building Equipment Materials Judgments Central Other Transportation Workers' Change Transfers Transfers Combining Income Non-operating Income Total Total Operating Operating

225 128 I (67,715) 106, 106,292 710,625 (188,914) (757,217) (102,853) (450,241) 1, 1,295,041 3,890,304 3,958,019 4,650,416 (continued) (2,273,262) (5,699,154) (6,456,372) (1,826,461) (4,345,472) (6,830,932) (9,883,805) Tota 25, $ $ .90 7,688 19,050 737 197,287) (403,564) (403,564) loss 26, 1,608,539 1,608,539 (1,197,287) (1, Catastrophic $ 9,239 70,628 61,390 87,105 (50,332) (785,773) (785,773) (900,877) (385,082) (552,568) 1,695,888 1,695,888 Public Liability $ $ & 732) 9,994 38,791 48,785 250,000 250,000 394,189 (634,196) (634,196) 2,730,921 Leave (2,336, Payouts Vacation Sick $ $ (2,642) (2,642) 674,732 867,229 (192,497) (816,707) (803,919) 2,804,919 8,218,450 (2,994,774) (2,994,774) (3,792,905) Workers' Compensation $ $ (8,337) 20,142 28,479 53,664 53,664 210,185 373,020 (272,185) (272,185) (162,835) Computer $ Replacement $ 67,715 (67,715) (67,715) (72,146) 322,918 (183,057) Central Services $ $ 2,592 10,064 12,655 (11,872) (11,872) 375,589 (353,653) (353,653) (788,597) 3,641,416 (2,477,230) Building Maintenance $ $ 0 116) (25,064) 252,447 277,512 106,292 403,592 403,592 (102,853) (450,241) 2,895,982 (1,338,075) (1,986,563) (1,338,076) (1,539,762) (3,632, (3,808,696) 10,336,794 Equipment Maintenance Replacement $ $ assets 2015 activities activities Flows activities: 2014 2015 and 30, for 30, 30, capital capital Funds Cash of of June investing capital non operating related June June financing funds services cash services activities: activities by by by paid in BERKELEY Service and and other assets (used) disposal Ended capital OF activities by (used) (used) Statement (used) the from investing capital non operating goods employee Internal services equivalents, equivalents, Year capital CITY judgments (decrease) purchases for for sales All from of in out equivalents activities loan advances from from from the received paid cash cash financing and provided activities: provided provided provided paid paid received repayment Combining cash For and and flows from flows flows sales and flows increase cash cash cash cash Interest and related Purchase Debt Proceeds Interest lnterfund lnterfund financing Transfers Transfers Claims Grants Cash Cash Cash Investment Investment Cash Cash Net Net Cash Net Net Cash Cash Net financing Cash

226 I 14,665 24,314 33,894 81,765 23,350 (40,451) (84,458) 737,700 (196,550) 1,265,411 4,650,416 2,357,248 2,777,748 (1,160,751) (1,223,920) (concluded) Tota $ $ $ ------(23) 27,583 197,287) loss (1, (1,224,870) Catastrophic $ $ $ -----======------(174) 4,850 (1,132) (58,224) (28,918) (29,258) (55,219) 112,139 (900,877) (550,300) (295,772) Public Liability $ $ $ ------& ~ 22,650 394,189 Payouts 371,540 Leave Sick $ $ Vacation $ ===--======------(899) 9,198 4,106 (1,693) 32,588 (28,422) (10,372) 271,618 (141,028) (133,749) 2,804,919 1,288,000 1,487,151 Worker's Compensation $ $ $ ------(65) (1,385) 88,611 210,185 121,638 Computer $ $ Replacement $ ------188) 667 839 (287) 23,474 67,715 24,314 65,619 (23,164) (11,559) (12, Central Services $ $ $ ------611 2,087 3,983 (1,697) 25,250 49,642 (84,650) 375,589 744,728 389,638 (386,674) (366,717) Building Maintenance $ $ $ ------(9,669) 14,665 10,357 41,628 25,946 (49,106) 350,466 (593,506) (625,805) (165,001) 1,205,290 2,895,982 2,681,049 Equipment Maintenance Replacement $ $ $ ------activities: activities 2015 Flows investments retiree of 30, (loss) (loss) Funds Cash financing misc operating of value - June payables operating provided by and income by fair income BERKELEY Service in cash absences Ended OF (used) Liability activities: capital, operations (used) Statement net Obligation Judgment payable receivable operating Inflow Outflow salaries Internal to reconcile Year CITY of and from liabilities in: All to (decrease) Pension OPEB provided the operating provided investing, (loss) Net Net Inventory Other Compensated Claim Deferred Deferred Accounts Accounts Accrued Combining by For cash Change Depreciation cash activities net Increase/ Net Noncash Income (used) Reconciliation Adjustments from operations to

227 THIS PAGE LEFT INTENTIONALLY BLANK

228 Fiduciary Funds

Pension and Other Employee Benefit Trust Funds

Safety Member Pension Fund/Pension Annuity Fund This fund is used to account for the single-employer defined benefit pension plan for fire and police officers that retired before March 1973.

Police Retirement fund This fund is used to account for the single-employer income benefits pension plan for Berkeley police officers that retired on or after July 1, 1989 but before September 19, 2012.

Miscellaneous Retiree Medical This fund is used to account for the single-employer defined benefit medical plan for retirees and his/her spouse or domestic partner.

Fire Medical This fund is used to account for the single-employer defined benefit medical plan for sworn fire officers that retire on or after July 1, 1997.

Police Medical This fund is used to account for the single-employer defined benefit medical plan for sworn fire officers that retire on or after September 19, 2012

Successor Agency for former RDA This fund is used to account for the activities of the former Berkeley Redevelopment Agency in Private Trust Funds per AB 1X 26.

229 126 13,680 32,998 32,998 63,554 63,554 52,345 48,945 155,298) 953,312 296,525 604,759 1,486,450 1,074,829 7,452,775 7,667,718 (1, Total 35,939,912 34,422,906 26,714,123 28,125,429 $ $ of 126 RDA Trust 13,680 32,998 32,998 52,345 63,554 63,554 312,763 296,525 312,763 ,155,298~ Funds 1,437,505 1,074,829 f Agency Successor $1,155,298 $ Former Private Health 81,556 Empoyees 8,565,892 8,565,892 8,565,892 2,324,761 6,159,575 $ $ Retiree Fire Benefit Plan Plan Premiun 931,478 931,478 931,478 931,478 Funds Police Trust $ $ Retiree Assistance Post-Employment Plan Other Heath 406,893 2,664,921 18,628,059 18,628,059 18,628,059 15,556,245 Premium Retiree Miscellaneous $ $ Assistance Income Plan 116,310 6,499,462 6,499,462 1,384,849 4,998,303 6,499,462 Police Benefit $ $ Retirement Funds Pension Trust Fund 48,945 48,945 48,945 953,313 953,313 953,312 Members 1,002,258 Annuity $ $ Safety Pension/Pension and contribution Agency Position projected Net notes Plan) employer Successor Misc between net 2015 plan resources Fiduciary Corporate Funds resources of BERKELEY - of 30, benefits of Berkeley (Calpers benefits Resources OF Resources pension Trust of of differences June value of of payable resale on CITY OPEB pension City fair Outflows Inflows equivalents Statement for at Liabilities for for for cash position cash payable Inflows Outflows inflows outflows held benefits payable receivable trust trust trust assets: payable receivable net liabilities Deferred Deffered assets and liabilities in in in Position Pension Combining Total Land Building,property,equipment, Net Deferred Deferred Held Held Held Interest Net Liabilities Bonds Deferred Pension Deferred Other Property Investments, Interest Total Captial Accounts Notes Restricted Total Total Total Cash Assets

230 73,073 173,468 188,387 309,279 335,961 329,480 637,868 Total 1,176,731 1,425,907 1,279,485 1,567,878 3,313,525 5,119,399 8,208,404 6,928,919 34,422,906 33,143,422 $ ------of 115 RDA 23,360 73,073 155,298) 178,657) 173,468 309,279 637,868 329,480 486,367 486,367 1,567,878 1,425,907 1,912,389 3,091,047 (1, (1, Agency Successor $ $ ------· Former 160 166 Health 22,738 171, 588, 386,345 409,083 826,076 997,243 Plan 8,565,892 7,977,731 Empoyees ------$ Retiree $ ------· Fire Plan Funds 1,995 42,103 44,098 931,478 599,676 331,802 375,900 Premium 375,900 Trust Police Post-Employment ------$ $ ------· Assistance Retiree Benefit Other Plan Heath 104,231 557,782 662,013 744,694 1,927,351 1,844,671 2,589,365 18,628,059 16,700,709 Premium Retiree Miscellaneous $ $ $ ------· ------· Assistance Income 41,773 Plan (88,478) 164,247 1,720,722 1,678,949 1,632,244 6,499,462 6,587,939 1,467,997 Police Benefit $ $ Retirement Funds Pension Trust Fund 17,650 96,508 953,313 648,346 335,961 701,263 604,755 (300,694) Members 1,254,005 1,001,957 Annuity Safety $ $ Pension/Pension ------Position Net 2015 30, Fiduciary in June Funds BERKELEY ended Changes OF Trust of service disability year beginning ending CITY out in for - - for position the COB County expenses income Employer net to streets loss gains For the development in income Statement Assets Assets transfer transfer to and payment payment government payment Deductions Additions Adjustment Net Net through increment Change Total Total Interest DEDUCTIONS: Benefits Benefits Pass Payment General Operating Highway Investment Community Administrative Operating Contributions: ADDITIONS: Tax Extraordinary Extraordinary Combining

231 THIS PAGE LEFT INTENTIONALLY BLANK

232 Agency Funds

District 47 Underground/Miller This fund is used to account for property tax collected and bond proceeds for the District 4 7 residents for the underground utility.

Sustainable Energy This fund is used to account for property tax collected and bond proceeds for the renewable solar system for the Berkeley citizens.

Thousand Oaks Undergrounding This fund is used to account for property tax collected and bond proceeds for the Thousand Oaks District residents for the underground utility.

Measure H School Tax This fund is used to account for property tax collected under Measure H for the Berkeley Unified School District.

CFD No. 1 Disaster Fire Protection Mello-Roos This fund is used to account for property tax collected and bond proceeds for the Community Fire District Mello-Roos.

Sick Leave Entitlement This fund is used to account for unused sick leave balances for retirees.

Berkeley Tourism BID This fund is used to account for BID taxes collect for the purpose of business and economic development in the city.

Elmwood Business Improvement District This fund is used to account for assessment fee collected for the Elmwood Business District for the improvement purpose.

233 (5,000) 12,313 12,313 29,256 20,563 73,568 300,036 283,382 Total (308,728) 3,023,836 4,734,501 4,424,654 4,734,501 4,112,017 4,734,501 2,637,918 4,349,673 (2,713,990) (2,400,262) $ $ $ $ ------~951 Dist 17,296 23,201 23,201 43,550 14,796 23,201 23,201 41,050 (37,645) Imp. 2,500.00 2,500.00 (5,000.00) (32,644.53) Elmwood $ $ $ $ Bus. ------BID 148,895 204,623 204,623 571,440 148,895 204,623 571,440 204,623 (515,712) (515,712) Berkeley Tourism $ $ $ $ ------71,068 Leave 351,951 522,569 351,951 280,882 351,951 351,951 280,882 451,501 (451,501) (451,501) Sick Entitlement $ $ $ $ ------· 1 12,313 12,313 15,029 11,564 10,250 (16,343) Protection 123,352 (969,715) (953,372) No. 1, 3,729,167 3,729,167 3,575,530 3,729,167 1,096,010 3,706,604 3,563,967 Fire Liabilities 2015 CFO Mello-Roos 30, and $ $ $ $ ------Disaster June H Assets Funds 167) 177 191 Tax in BERKELEY 7,233 4,796 12,028 12,028 12,028 35,651 16,474 19, ended 564,117 281,926 282, (587,740) (291, OF Measure School $ $ $ $ ------Agency year - Changes CITY the of For 866 866 Oaks 150,285 254,587 205,401 254,587 254,587 149,419 253,721 205,401 (101,099) (101,099) (296,573) Statement $ $ $ $ Thousand Undergrounding ------· ------· 1,218 2,214 2,214 (1,218) 34,632 34,632 34,632 36,688 48,522 32,418 35,470 46,307 (50,578) (49,360) Energy Sustainable $ $ $ ------47 124,312 124,312 124,312 124,312 124,312 124,312 District $ $ $ $ ------· ------· Underground/Miller 201 2014 30, 1, 2015 2015 June July 2014 2015 2014 30, 30, 2014 1, 1, 30, Misc) Misc) 1, 2015 June July 2015 June July June July 2014 2015 2015 30, 30, 1, 2014 30, 30, 1, June (CALPERS (CALPERS July June June Receivable, Receivable, June July equivalents, equivalents, obligations, obligations, Outflow/ Outflow/ cash cash Liabilities, Assets, Receivable, Receivable, agency liabilities, liabilities, agency Accounts Accounts and and Deletions Total Deletions Deletions Total Deletions Additions Deletions Deletions Additions Additions Additions Additions Additions Defefered Defefered Liabilities Other Other Other Other Taxes Other Other Taxes Cash Cash Assets

234 235 THIS PAGE LEFT INTENTIONALLY BLANK

236 Index to Statistical Section

This part of the comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the City's overall financial health.

Contents

Financial Trends 238-244 These schedules contain trend information to help the reader understand how the City's financial performance and well-being have changed over time.

Revenue Capacity 245-248 These schedules contain information to help the reader assess the factors affecting the City's ability to generate its property tax.

Debt Capacity 249-253 These schedules present information to help the reader assess the affordability of the City's current levels of outstanding debt and the City's ability to issue additional debt in the future.

Demographic and Economic Information 254-256 These schedules offer demographic and economic indicators to help the reader understand the environment within which the City's financial activities take place and to help make comparisons over time and with other governments.

Operating Information 257-260 These schedules contain information about the City's operations and resources to help the reader understand how the City's financial information relates to the services the City provides and the activities it performs.

Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial report for the relevant year.

237 187) 2015 I 5,860,663 11,955,810 10,252,532 (25,344, 123,491,705 125,326,454 148,835,892 103,118,112 144,121,755 292,957,647 (412,423,438) (387,079,250) $ $ $ $ $ Schedule --~__(j__IT.§_:3_1,Q_42J G)(k) (k) (k) 756) 2014 3,564,661 9,879,916 (8,289,731) 14,927,978 98,125,716 (37,326,378) 107,340,009 126,498,271 429,210, 153,321,028 141,101,726 294,422,754 ( (391,884,379) (1_1!:5,62i~- $ $ $ $ ~ $ _ (i) (i) 2013 (7,839,453) 19,443,910 11,604,457 19,015,248 79,924,244 144,532,319 163,976,229 415,996,098 296,865,316 152,332,997 252,019,869 $ $ $ $ $ $ (i) (i) 2012 9,320,347 8,586,832 14,466,271 74,074,662 27,810,334 (10,330,463) 163,470,366 111,205,343 107,526,325 404,563,677 278,892,063 140,218,431 $ $ $138,673,632 $ $241,093,311 $ (f) (f) (f) 2011 179,893 1,134,546 11,599,189 27,616,182 24,796,734 44,913,484 74,138,620 (26,481,637) 130,651,294 16_:3_,Jl6,655 403, 135,560,473 271,394,055 135,833,582 240,003,238 $ $ $ $ $ $ _ (h) (g) (f) (f) (f) 134 (IM). 2,634,900 2010 28,271,364 11,260,187 25,636,464 categories: 64,496,637 34,156,310 Government 109,913, 137,156,516 162,792,980 402,841,193 264,656,695 127,500,179 240,048,214 do method $ $ $ $ $ $ parties into 5 (c) (c) (b) (e) (c) assets Primary interest down net the to 101 external of all by of (SL) broken 2009 9,723,843 fund (9,236,278) 19,928,717 use 29,164,995 34,096,612 66,471,646 assets line 110,292, 405,516,213 167,2'7'7'.~ 138,112,455 275,295,395 137,182,940 238,2~_Zfil_ be $ $ $ to consist $ $ $ fixed (d; general (a) (a) straight for Enterprise assets for an balances net FY2010 was Pension (v). fund it 4,675,040 2008 and adjustment 17,261,874 12,586,834 22,860,569 restricted for 124,925,028 168,748,767 403,716,1~§_ 133,301,364 261,529,224 102,064,459 128,227,860 234,967,359 and premium from that $ $ $ $ $ $ to (iv) been requires period Unrestrticted FY2009 bond (a) (a) in (iii), has of prior Reporting Unassigned prior 174 a (v) that GASB54 FY08, equals and and legislation. in 3,650,091 2007 6,816,326 Financial 10,466,417 26,306, 92,306,119 categories assets 118,612,293 168,832,294 387,456,227 138,876,029 258,377,517 119,501,487 218,623,~L amortization unit assets $ $ $ $ $ FY2010. $ and net FY2013 the of enabling net Assigned; different adjustment or 65 in (iv) restated into components. back portion Component and Accounting changing and two restated) restated) 63 that 62 look unrestricted provisions assets" is restated) & (as (as other Discrete and Committed; (as GASB68 FY2011 GASB GASB the (ii) adjustment of (iii) in of assets of Department of position position liabilities 54 and net became "Restricted back position net net (i) constitutional assets assets assets either net landfill look Finance GASB purpose project of project to to 2008 services services equals Authority separate restricted capital capital capital (ii).Restricted; through activities implementation activities implementation implementation in to due due in and in to Accounting) Capital Debt Special Capital Debt law to to Years Component, Berkeley, definition of activities assets activities government for for by for for for 2010 2009 2010 2007 due of housing by due due implemented began GASB54, the net Fiscal to Basis City government city City Investment Investment Investment Berkeley meet primary business-type governmental non-spendable; imposed Nine of Position Berkeley Prior Restated Restated Restated Restated Restated The Restricted Unrestricted Net Unrestricted Restricted Restricted Unrestricted Net Restricted Restricted Restricted Net Restated The Restated or not (i). Source: (k) (j) (i) (e) (f) (d) (g) (h) (b) (c) (a) Restricted Primary Total Business-type Total Total Governmental Last City (Accrual Net

238 125 II 691,350 1,582,411 2,000,063 2,320,608 2,182,771 2,902,288 2,749,275 2,319, 5,067,986 3,850,278 3,584,077 7,440,233 Continued 3,886,382 8,915,668 2015 12,069,245 55,499,824 13,545,934 17,752,712 19,422,959 33,379,186 19,738,696 32,611,968 77,862,363 35,475,983 31,486,649 106,809,311 316,285,333 238,422,970 $ $ $ $ Schedule (d) (d) 639,700 2,421,781 2,268,394 3,794,993 3,049,266 2,932,886 2,507,375 5,648,254 3,081,135 5,458,242 3,112,661 8,420,892 2014 10,247,574 33,064,026 63,652,229 14,732,355 31,936,126 20,035,232 30,139,123 36,753,573 299,096,566 223,606,567 $ $ $ $ 518,561 3,413,791 2013 3,319,845 9,581,029 2,176,943 3,392,344 3,774,777 2,447,033 5,648,421 3,506,704 8,468,678 4,455,553 18,684,450 14,294,277 29,551,902 64,927,464 16,040,026 17,793,785 19,700,947 75,080,757 75,489,999 13,460,624 33,142,494 30,692,445 36,489,886 94,011,336 95,581,595 293,438,278 $ $ $ $ (c) (c) (c) (c) 1,505,706 1,472,907 1,471,882 1,612,417 2,129,425 3,122,421 4,191,566 2012 2,965,332 3,259,428 9,152,576 3,646,479 7,360,188 12,813,186 12,400,758 13,223,132 16,271,404 65,308,721 31,483,965 19,665,018 73,247,816 19,546,406 13,890,897 35,885,547 29,929,909 93,967,743 293,868,082 220,620,266 218,357,520 $ $ $ $ 736,560 3,360,193 1,401,541 2,095,751 3,013,989 3,387,609 2,414,877 2,165,995 2,015,313 3,100,961 2,363,869 2,390,350 9,371,901 5,099,639 5,854,093 2,745,171 6,984,781 4,898,759 4,088,267 2011 11,687,510 66,194,873 35,975,381 73,623,510 19,136,705 13,405,466 35,014,849 32,417,995 34,033,319 21,671,819 92,302,278 32,723,124 294,§40,1§()_ 220,916,641 $ $ $ $ 480,068 1,367,591 2,584,744 2,974,062 2,292,171 8,102,721 3,037,335 9,581,085 2,987,585 5,027,085 7,403,385 5,209,064 5,151,053 2010 15,341,433 13,808,972 31,772,355 11,403,889 67,952,482 32,693,031 71,976,573 13,628,575 23,998,513 23,717,544 32,157,308 83,085,260 293,050,533 221,073,960 $ $ $ $ 1,525,429 1,505,087 1,142,896 5,798,539 3,027,156 4,054,674 2,882,256 2,875,534 2,880,513 7,579,581 2009 3,412,478 4,333,851 4,561,291 15,514,920 31,338,593 10,723,985 72,787,222 19,774,724 33,140,056 13,103,246 32,637,740 34,126,643 30,156,828 29,266,165 83,172,996 215,858,028 _28?,_645,250 $ $ $ $ (a} 107,910 714,769 771,563 1,510,382 1,007,647 2,894,176 2,451,135 2,919,162 2,703,970 4,157,414 3,208,496 6,741,263 4,380,468 2008 15,301,222 32,694,861 10,407,986 10,351,107 11,024,519 68,675,969 64,678,856 67,097,874 15,755,378 29,816,972 32,870,746 28,952,978 81,244,204 27,163,852 276, 209,010,035 $ $ $ $ 492,162 1,799,346 1,104,234 3,127,042 9,223,690 3,317,101 2,828,121 2,564,813 2,878,087 9,849,515 3,521,869 2,297,733 3,895,374 6,355,523 2,961,942 6,927,491 2007 15,974,825 32,328,025 63,535,667 10,023,197 86,315,338 15,563,578 15,433,912 26,564,445 23,807,680 13,036,473 27,344,501 30,957,018 74,872,926 25,380,703 197,044,632 1_8~,359,970 $ $ $ ___ revenues program expenses maintenance management activities activities debt contributions and and contributions activities and center streets streets Accounting) and Years Position water recreation development/housing recreation development/housing activities: of welfare activities: activities: welfare services: long-term government development and development and grants authority government purchase Net government related on and for services and business-type governmental operations and service and services safety Revenues Fiscal safety grants storm in Basis Berkeley governmental primary Total Total Nine of Highways Health General Culture Community Public Economic Building Permit Housing Clean Parking Refuse Marina Sewer Interest Community Culture Economic Public Highways Health General Charges Capital Operating Governmental Program Total Business-type Total Governmental Expenses (Accrual Last City Changes

239 II 383,930 2,216,349 2,068,847 Continued 6,242,357 2015 16,038,085 17,911,716 13,090,534 13,062,773 93,900,448 38,923,942 149,400,272 {166,885,061) (182,923,146) $ $ $ Schedule 41,575 2,212,217 8,516,934 2014 14,848,940 13,394,617 11,717,962 84,006,933 147,659,162 {151,437,404} (159,954,338) $ $ $ 109,224 1,861,681 2013 2,070,413 2,067,572 9,995,079 13,271,175 76,942,438 10,274,629 33,346,812 34,246,485 141,869,903 (153,430,056) $ ${151,568,375} $ 29,831 786,268 2012 2,984,924 2,632,538 8,968,166 2,065,087 5,299,039 5,242,568 5,477,565 12,166,250 74,034,084 32,702,914 139,342,805 {154,525,277} $ $ $(155,311,545) 768) 289,023 721, 139,323 3,011,690 8,487,701 4,736,825 2,070,815 9,047,693 9,817,873 2011 12,677,638 33,740,848 {154,432,745) (154, $ $ ~107,406 14,963 7,908,608 2,921,485 2,062,126 4,787,137 8,231,201 2010 {1,385,459} 32,313,189 138,543,596 {154,506,937} (153,121,478) $ $ $ 172) 20,297 2009 2,923,964 2,026,307 5,343,851 {1,686,609} 13,864,952 12,352,405 10,137,535 71,100,613 70,591,114 73,912,533 29,292,344 135,779,469 {153,865,781} (152,179, $ $ $ (a) 176,665 5,402,822 1,950,637 2,634,594 7,228,080 7,491,363 2008 15,119,555 11,268,021 72,500,696 {134,931,245} (140,334,066) $ $ ___1______1i1_, _ 590,403 5,185,253 2,642,140 2,012,753 6,579,472 8,930,408 4,403,372 4,708,412 2007 13,214,799 23,840,526 91,500,591 29,286,719 29,591,397 155,036,2~ {128,323,711} (133,508,965) $ $ $ revenues expense program net revenues maintenance management contributions and and activities and center Accounting) Years Position water of activities activities activities: services: government government grants authority purchase Net related services operations service services Fiscal storm in Basis Berkeley primary business-type primary Nine (Expense)/Revenue of Housing Building Refuse Permit Sewer Clean Marina Parking Operating Charges for Business-type Governmental Net Total Total Total Business-type Changes City (Accrual Last

240 II 27,918 90,971 85,691 {85,691) 113,610 221,637 389,343 988,313 2,506,398 3,860,198 3,445,882 7,131,568 4,201,668 2,665,478 9,951,462 7,822,325 2015 Concluded (2,001,301) 16,151,695 14,150,393 17,111,938 14,337,343 16,102,328 16,454,651 73,726,035 181,035,458 180,921,848 $ $ Schedule 3,293 135,412 387,021 400,987 {858,917) 1,226,855 1,156,367 1,249,232 3, 7,658,016 6,924,698 6,245,833 4,125,873 4,119,965 2,586,719 9,652,446 7,684,617 2014 {1,249,232) 14,387,874 15,370,377 15,971,859 28,874,864 21,216,848 70,348,949 180,312,271 181,171,188 $ $ 2,006 74,922 126,400 505,863 397,143 751,041 1,484,222 2013 5,555,601 3,995,492 2,273,001 2,537,917 9,483,390 3,926,460 6,479,721 {1,484,222) {1,355,816) 11,432,421 10,926,558 15,273,714 15,925,900 16,583,124 14,363,898 65,118,610 163,000,799 164,356,615 $ $ (c) 2,068 176,551 293,715 399,476 671,173 464,093 {671,173) {492,554) (259,613) 1,090,074 1,383,788 2012 1,036,535 1,972,376 1,448,935 2,760,171 2,853,421 2,454,762 3,741,157 7,115,652 4,609,048 9,186,260 14,844,945 14,091,347 15,645,975 15,266,649 14,581,791 60,233,049 155,909,065 156,401,619 $ $ 171 5,324 (IM). 94,652 21,820 (44,966) 383,675 338,709 771,456 304,928 394,257 547, 388,380 {304,929) 1,186,207 3,180,380 4,735,256 3,629,617 8,739,449 4,698,045 2,377,898 8,049,862 8,915,445 2011 14,411,756 13,954,587 14,159,245 50,956,374 154, 154,676,803 $ $ (b) (b) interest method to 10,742 145,262) 664,192 240,196 837,018 665,255 386,461 (SL) {837,018) 1,809,453 1,066,472 1,507,229 5,960,103 3,673,023 3,440,025 8,543,643 5,220,824 8,753,907 2010 {1, 14,418,851 13,505,958 12,733,983 14,420,383 13,911,751 50,488,138 155,171,128 154,930,931 line $ $ straight 2,109 from 194,860 264,520 215,292 920,612 707,429 372,325 {707,429) (594,577) 1,871,221 9,433,566 3,671,362 3,318,326 2009 8,453,191 2,286,603 2,335,060 8,625,163 8,549,702 8,568,098 {1,206,797) {1,471,317) 14,669,480 13,388,429 13,907,221 13,624,572 49,946,421 152,658,982 152,443,690 $ $ premium bond 171 of 1,882 11, 193,932) 369,556 565,457 1,193,932 1,340,949 7,948,874 2,546,052 7,385,655 2,868,810 2,999,006 3,588,753 8,040,640 2008 {1, 18,381,593 15,310,895 15,310,010 13,025,265 153,312,837 150,766,785 FY2008 $ $ ------amortization FY2013 the starting in 3,652 65 unit 452,854 377,022 382,044 980,335 {452,854) 1,756,780 1,303,926 1,166,355 6,942,034 7,748,232 6,382,420 3,305,969 2,149,728 2,212,258 8,049,906 8,294,518 7,850,614 7,240,292 2007 11,000,563 10,432,720 17,942,598 11,024,918 13,562,868 14,091,522 14,165,288 12,476,619 changing and 54,807,757 51,184,853 146,266,308 144,509,528 FY2011 62 63 in $ $ $ Position GASB GASB Net of of in programs discrete component adjustments" a purposes Department service back specific Changes assets fees to purposes: general debt became implementation "look implementation earnings assets subventions earnings Finance for for Other taxes to to to capital vehicle (Loss) special activities activities of state tax and due due due restricted authority capital levied levied for Accounting) Years of Gain/ Position sale motor not Position activities taxes Berkeley, investment of activities activities government activities: investment government occupancy license of on taxes taxes, taxes, sale Net Net and Restated Restated Housing Restated and Fiscal users taxes taxes in in Revenues Basis on City unrestricted (d) (b) (c) (a) Berkeley business-type primary governmental primary Parks Paramedic Fire Library Nine of Gain Business Utility Transfers Sales Other Unrestricted Property Property Property Transient Interest Extraordinary Interest Contributions Gain/Loss Miscellaneous Transfers Other Taxes Business-type Total Total Total Source: Notes: Business-type Change Governmental Total City Changes General Governmental (Accrual Last

241 Ill 111,970) 2015 3,648,330 3,830,670 3,024,783 (5, 12,140,810 53,289,050 45,810,050 135,592,436 $145,646,063 $ $ Schedule 132 2014 1,991,263 3,648,330 2,829,511 (7,689,049) 10,524,900 45,691,539 142,657,246 137,830, $ $ $ (e) (e) Funds. funds 128 129 categories: 5 project 2013 1,991,263 8,449,018 3,648,330 2,761,737 2,002,369 (6,737,953) 40,912, into 111,999, 105,535,062 $ $ $ Governmental capital in down (b} (b} and Sheet broken be 2012 2009 3,438,803 2,114,083 2,343,500 revenue definition 11,431,620 17,442,566 32,286,557 35,261,429 39,213,698 38,068,859 to 12,745,878 26,001,665 32,245,545 66,847,870 44,991,423 Balance $ $115,346,617 $ $110,292,101 $ $ $ the special (b) (b) (d) (d) balances on balances major 120 fund fund Unassigned 130,355 153, new fund, (v) 2011 2008 1,702,626 3,357,980 2,638,276 (3,083,091) (7,290,346) funds 16,158,919 15,319,622 36,020,731 16, 99, 41,650,076 67,651,814 31,664,729 47,817,849 Resources" 128,013,017 109,091,260 for and requires of $129,270,827 $ $ $ $ $ $ 54 General (c) (c) Project (a) (a) (a) (a) (a) in FY2011 Inflows in GASB 731) Assigned; Capital (iv) 724,500 in accounts 2010 2007 1,272,791 3,313,193 2,721,715 2,762,840 2,271,366 (2,403, 13,143,822 37,211,689 15,735,422 12,038,775 43,287,722 81,825,582 29,989,078 56,642,985 45, "Deferred 111,973,322 GASB54 FY2011. $113,564,098 $ $ $ $ $ of in 54 adding Committed; receivables receivable 65 of of (iii) GASB and Funds 63 funds funds change change implementation Accounting) to to to in: Funds Funds of implement GASB funds due due due (ii).Restricted; funds of to Basis Years reported 2007 2008 2010 Governmental governmental governmental fund fund in in revenue in project began Fiscal Accrual Governmental Governmental Fund other Fund other City Berkeley all general all Balance, general Special Capital Nine non-spendable; of Implementation Restated Restated The Restated Unassigned Nonspendable Restricted Nonspendable Committed Restricted Unassigned Other Assigned Reserved Assigned Reserved Unreserved Unreserved, Other (i). (a) (b) (d) (e) (c) Total Total General Total All Total General (Modified All Last Fund City

242 IV 57,500 176,045 221,637 747,408 790,282 continued 1,820,785 3,845,172 8,370,956 2,546,848 2,655,600 7,027,752 6,458,690 19,390,326 13,462,066 14,417,722 32,825,401 92,726,601 43,545,804 240, $167,926,924 Schedule 55,750 318,261 815,336 2014 2015 1,226,855 3,125,734 3,638,309 9,460,612 4,204,770 6,606,437 10,740,356 16,151,191 16,204,711 90,210,207 34,221,596 28,157,099 29,951,904 12,920,362 45,047,739 160,511,002 241,864,362 $ 187 126,959 142,883 751,041 647,812 2013 4,154,700 4,294,180 4,461,272 3,469,891 8,212,026 4,090,000 8,614,439 8,946,415 19,047,781 14,461,464 28,716,311 12,979, 224, 152,544,937 $ 57,941 358,434 362,188 881,108 2012 1,539,773 1,810,323 1,833,646 1,036,535 1,359,323 1,086,747 9,755,984 3,595,178 3,780,000 4,560,657 2,904,618 2,024,116 9,851,317 19,443,351 19,393,251 19,727,071 18,099,040 23,678,415 32,914,456 34,240,614 88,389,316 87,446,217 28,623,928 11,929,921 45,798,782 43,322,094 232,898,267 223,359,213 220,348,566 229,279,318 220,519,856 $144,860,044 154 180,467 190,606 547,171 755,903 782, 971,120 2011 2,743,700 8,510,135 1,771,895 4,759,669 14,195,181 17,753,578 32,428,584 86,910,102 10,561,972 12,043,388 49,755,227 222, 222, $141,205,937 121 206,387 158,371 665,255 460,743 409,872 2010 5,136,033 4,399,000 4,369,000 1,032,941 8,812,452 1,914,871 5,868,959 1,067,931 12,316,245 19,572,531 23,717,437 21,757,796 27,966,597 28,566,008 11, 10,933,508 48,999,218 222,583, 139,569,452 $ 74,702 194,860 411,413 887,535 2009 3,360,442 5,476,657 1,848,246 1,459,808 8,308,257 9,433,566 12,993,361 30,347,460 35,754,850 29,616,973 78,891,374 79,717,900 10,885,461 11,616,513 45,681,080 219,445,636 218,067,519 221,671,249 135,649,038 $ 130 41,601 121,599 565,457 332,279 580,144 2008 3, 9,794,468 6,148,777 4,380,468 4,302,026 4,983,688 4,755,777 2,536,531 7,385,655 11,113,003 13,963,017 18,338,303 30,713,797 25,761,628 27,736,082 10,921,168 77,487,988 10,474,180 50,298,070 211,047,235 220,438, $135,613,099 794,226 395,868 362,540 382,044 512,598 2007 8,824,669 2,467,872 6,081,191 8,731,843 1,685,798 1,731,548 9,691,836 6,382,420 10,629,931 11,988,001 27,343,370 28,828,440 28,520,889 24,523,142 12,943,542 72,587,976 43,618,133 202,800,662 206,800,448 $130,825,668 Funds Governmental donations Accounting) of and charges Basis Balances, Years permits streets reimbursements fiscal Service development/housing income welfare royalties development Penalties and repayment Fund and for government and expenditures revenues cost issuance outlay contributions Fiscal and Accrual in safety and and of Berkeley service Total Total Nine of Principal Highway Health Economic Interest Culture-recreation Community Capital Cost Public General Private Franchise Indirect Investment Miscellaneous Rents Fines Intergovernmental Charges Licenses Taxes Debt Current Expenditures: Revenues: (Modified Last Changes City

243 IV 5.78% 45,000 988,313 concluded 2,700,000 (1,298,712) 10,896,727 18,483,505 10,586,328 (22,527,217) $ Schedule 149,000 445,272 2014 2015 1, 13,921,733 35,437,529 20,541,117 15,000,000 21,515,796 $ 8,007 4.04% 4.06% 542,791 783,670 {504,219} 2013 5,693,852 (1,287,889) (6,770,000) 19,331,429 $ 140 3.99% 509,636 (721,526) 2012 (4,405,488) 20,022,143 (21,253,445) (20,093,967) (23,213,656) (12,378,411) {17,505,425} $ 168) 2,548 4.39% 428,536 601,687 2011 14,069,085 19,268,482 16,000,000 (22,232, $ 1,452 4.47% 403,977 (911,872} 2010 9,459,300 5,750,000 6,000,000 14,552,263 10,371,172 13,467,398 (16,336,520) $ 4.74% 2,490 2009 9,713,440 8,335,322 (1,378,116) 11,894,000 22,634,032 (24,817,082) $ 164 5.23% 1,882 152, 2008 9,394,000 4,542,779 9,390,895 13,933,676 22, (27,005,267) $ 132) 8.65% 9,023 55,930 221,927 144,059) (846,300) 2007 1,555,655 3,999,786 25,634,974 45,585,000 (44,960,627) (28, $ --(2,444, Funds agent Department noncapital premium escrow of participation participation Governmental Accounting) sources(uses) of loans loans of Finance bond bonds of expenditures revenues and and balances issued of redemption (loss) assets percentage Basis Balances, Years financing a sources(uses): (under) Berkeley, refunded notes certificate fund bonds notes certificates refunded gain/ bonds as of bonds in in of out of on on on of to Fund capital expenditures over other Fiscal Accrual in of City (deficiency) Berkeley financing service Total change Nine of Payment Sales Premium Premium Premium Refunded Issuance Proceeds Proceeds Refunding Transfers Transfers Net Debt Source: Extraordinary Excess Other City (Modified Last Changes

244 V Taxable Value 11,161,856 11,918,885 12,526,485 12,835,482 10,332,984 11,353,292 12,086,053 12,148,131 13,686,815 14,233,967 Estimated Actual Schedule that the At Direct Rate 10.47 10.47 10.55 10.45 10.54 10.51 10.48 10.51 10.53 10.65 upon factor" Tax Total owner. based new a 1 % 1 "inflation to of an Taxable by sold rate Value 12,835,482 12,526,485 11,918,885 13,686,815 14,233,967 12,148,131 12,086,053 11,161,856 11,353,292 10,332,984 is Assessed it Total that increased maximum a be time to the may (775,326) (686,387) (669,934) (640,481) (570,449) (538,391) (794,624) (669,646) (486,955) (415,243) at Less: taxes sold. Exemptions property limited of property reassessed 155 115 is which value the 156,657 305,922 297,649 280,230 275, 269,634 228, 230,899 269,072 212,847 13 of Property Institutional property price assessed Property the Proposition purchase year exceptions, Industrial 2,788,276 2,662,165 2,969,778 2,600,510 2,570,430 2,574,960 2,498,734 2,353,222 2,085,365 2,235,743 Property the passed Taxable Commercial few Office at and Each of With ). taxed. California 556 556 556 556 474 631 Values 474 1,325 2,335 2,520 of 2% Controller's reassessed Utility - of being is Actual State the value Auditor increase property of Estimated the County 114,801 of Dollars) voters and assessed 9,762,011 9, 9,943,462 9,915,723 7,673,198 8,415,411 Years Property Property of 11,213,456 11,914,464 10,578,918 10,320,198 maximum Residential the a value new Value Fiscal Alameda the 1978, Berkeley - In Ten of 2015 2009 2014 2013 2011 2012 2010 2007 2008 2006 Thousands 1. (limited to Year point, assessed Fiscal Source: Note: (In Last City Assessed

245 VI 12.35 12.56 12.47 12.72 12.45 12.49 12.30 12.62 12.67 12.56 Rate Schedule Total 0.05 0.03 0.04 0.08 0.04 0.08 0.05 0.06 0.09 Area fixed value) Rapid Transit Bay other 1.00% and the assessed 0.05 0.08 0.11 0.08 0.07 0.08 0.05 0.06 0.05 0.10 0.09 Bay Dist. to of school, Regional East 000 Park City, $1, addition of In 1 per Rates 0.09 0.07 0.07 0.07 0.07 0.07 0.07 0.07 0.06 0.07 Bay $10 Dist payment or within. ( East Municipal Utility the 00% for Overlapping 1. resides a at 0.41 0.44 0.43 0.22 0.43 0.24 0.42 0.27 0.36 0.43 values rate property Peralta College tax Community property subject the property 1.35 1.48 1.46 1.41 1.41 1.54 1.50 1.35 1.43 1.45 the assessed School Unified which Berkeley of sets for which 10.51 10.47 10.54 10.51 10.65 10.53 10.45 10.55 10.48 10.47 13 Rate percentage agencies Direct Total a as taxing Inc. all Rates taxes Proposition 0.51 0.47 0.47 0.54 0.53 0.45 0.51 0.48 0.65 0.55 Rates, by Service Tax Direct General Obligation Value) passed Debt charged Statistics, shared City is are Property voters Assessed 1.00% Municipal 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 of owners Basic Ra~ Years This California Overlapping $1,000 Fiscal bonds. California property Berkeley 1978, and Per 2013 2014 2015 2008 2011 2012 2009 2007 2010 2006 amount. Ten of In Year Fiscal 1) Notes: Districts' Source: ( fixed amount, Last (Rate Direct City

246 VII City Value 1.06% 1.97% 0.26% 0.22% 0.20% 0.48% 0.30% 0.46% 5.61% 0.33% 0.33% Total Percentage of Schedule 2015 110 118 132 37,002 30,941 29, 68, 65,561 42,473 46,867 47,551 151, 799,201 280,447 Value Taxable Taxable Assessed Assessed $14,233,967 $ City Value 5.08% 0.40% 0.36% 0.22% 0.17% 0.16% 0.14% 0.12% 7.85% 2.46% Total 16.97% Taxable Assessed of Percentage 2005 143 19,408 14,708 14,227 11,927 10,686 35,005 31,224 20,466 31,662 403, 213,830 8,690,985 Value Taxable Assessed $ $ $ - properties. Office (1) real City Collectors TRS the J secured Tax by net - Trs L LLC Trs only Ago H LLC LP II Auditor Janis assessed Hanumandla LP Payers Years LP INC LLC includes R & Esther Associates Street Center County & Tax Mitchell LLC Ten Dollars) taxpayers 4th Associates Properties A. of properties LLC Street value Street K & LLC and NAME Berkeley LLC Berkeley, LLC real John Business Property Alameda Street John Library Gardens Year ACQ Potter Principal Hanumandla All Berkeley Healthcare - - Seventh MLK University Action Fulton & Shattuck of Assessed Hillside Thousands (1) Source: Podlesak 1950 BVP Berkeley Fifth First Total GBC Gordon Reddy Essex Berkeley EQR Total 2929 Seventh Bayer SC Granite CVBAF (In Principle City Current ASSESSEE

247 711 799 611 658 VIII 1,896 1,308 1,780 1,361 1,129 1,083 Total Schedule Years(2) 16 191 118 100 139 139 166 134 210 269 end and not year Subsequent Unsecured in are fiscal penalties year subsequent 815 589 938 695 491 478 the 1,189 1,680 1,757 1,222 the levy for Collection include of Secured each types County much for tax the how both from for collections specifies total received that collections Levy 98.73% 98.57% 98.16% 97.47% 96.71% 97.27% 95.35% 95.34% 96.33% 97.64% result, Levt the of a County revenue Percentage the As on of the within Subsequent Office from Year based Property. amounts. Collected 39,951 38,891 36,422 47,523 45,464 42,724 41,699 34,335 31,909 year. Fiscal Amount reported unpaid fiscal Controller's information is - Unsecured each years ( 1 ) 1 ( to and 135 receive Auditor previously Collections, 48, 46,122 35,643 32,681 43,522 41,409 42,783 40,280 41,312 Levied 38,202 40,787 the not Year the and for belongs County Secured on Dollars) does Taxes subsequent Fiscal Years of in Levies City include received Fiscal Alameda Tax The assessed Berkeley 301- 2015 2014 2013 2011 2012 2010 2008 2009 2007 2006 Ten of Levies Collection Thousands Year Fiscal Ended June Source: Note: presented. interest (1) (2) shown. collection Last Property (In City

248 IX 84,420 94,369 88,732 99,596 106,986 118,642 109,531 104,442 115,230 109,312 Total Activities Governmental Schedule c 5,584 3,546 3,530 6,816 12,631 12,438 11,751 11,551 11,340 10,312 Payable Notes/Loans 5,940 5,823 6,153 6,139 6,126 6,012 of Total Certificates Participation 362 390 378 389 376 403 of Certificates (premiums) 131 (1) 1,220 1,281 1,177 1, 1,175 1,264 1,281 1,394 1,291 1,242 5,550 5,445 5,750 5,750 5,750 5,650 of premiums) Per of Capita Certificates Participation Participation onlt) (Net (1) 920 473 3.19% 3.56% 3.61% 3.93% 3.64% 3.14% 3.16% 3.37% 3.07% 1,343 2.82% 3,699 3,304 2,891 2,460 2,009 4,440 4,077 Lease Personal Capital instruments $ Income Percentage of debt - d 5,970 5,210 6,705 8,110 4,425 7,420 120,247 125,354 135,571 144,257 159,033 148,274 141,154 150,361 139,856 130,928 Total were Bonds Primary (long-term $ $ Government Redevelopment only) debts year, Activities the 8,875 6,560 9,520 7,155 7,698 38,743 36,712 35,131 30,544 37,271 36,559 35,827 36,622 35,975 13,455 12,550 11,715 10,940 10,215 40,391 Total Total Bonds Agency. Activities instruments Revenue outstanding $ $ statements during Business-Type the debt - e COP All Governmental 519 530 508 year financial 26. of 2003 premiums)_ 27,950 27,685 24,665 27,410 25,385 26,755 26,080 the the Lease Bonds 1X of Revenue to (long-term $ Certificates and (premiums) Redevelopment Participation AB c (Net during e per notes Bonds Activities the Berkeley Bonds 2012 9,826 8,549 3,319 6,956 3,102 9,200 4,432 4,710 8,875 6,625 6,052 9,520 7,179 in 10,428 11,056 12,550 11,715 10,940 10,215 13,455 premiums) the Lease Bonds 31, Payable of Revenue for Revenue $ $ Notes/Loans Funds. found Bond. data (Net be Obligation bonds Trust January Lease Business-ttpe can on 3,950 3,650 5,040 5,290 4,780 4,510 4,235 Revenue 26,886 25,931 21,995 88,336 84,608 82,421 68,700 79,475 76,290 60,000 64,255 67,915 71,430 1999 G.O. Total Total General population Bonds Bonds debt Private CAFR Revenue $ $ in allocation and Lease dissolved tax are defease defease FY2014 385 771 708 416 400 to to was and 1,975 1,922 2,006 in income outstanding Department Capita) Lease Bonds Bonds General Refunding Revenue refunding Obligation million (premiums) Type (premiums) $ million city's in Agency Agency, by e new personal Finance $27 the a $45.5 Except Per for Debt million over from 3,950 3,650 5,290 5,040 4,235 4,780 4,510 XIV over $7 GFOA comment 24,911 23,925 20,073 87,565 83,900 68,700 82,005 79,075 67,915 60,000 64,255 71,430 75,905 Successor premiums) premiums) Berkeley, to regarding Years Lease Bonds Bonds of of of General Revenue Obligation the Amount Redevelopment due refunded issued issued $ $ Thousands, to proceeds City Outstanding Fiscal (Net (Net Schedule Details in b a City City City of Berkeley the Ten of See Berkeley moved The Restated The The Restated 2011 2012 2014 2006 2007 2008 2009 2010 2013 2015 2013 2014 2015 2007 2008 2009 2010 2011 2012 with 2006 Year Year Fiscal Fiscal Source: (1) b Notes: d. e. a c f. (Dollars Last Ratios City

249 768 676 835 752 778 (b) X Per Debt Capita Outstanding Schedule a of as (a) funds. of Taxable 2012. Debt General Trust Value 31, Property Net Percentage CAFR. Actual Bonds Private January statements. as FY2014 on on Total Agency financial the dissolved to comments was Successor notes of GFOA the which the to Certificates in per Participation Agency, Outstanding found Bonds 2015 be - transferred to Debt can Tax Bonds were Allocation Refunding debt FY2005 14. Bonded Redevelopment for amounts Pension 815 data Berkeley General schedule Berkeley outstanding into Capita) of on Pension value to Bonds~ Outstanding Refunding Per City city's outstanding bonds found Debt the belong the be property Except All for can 84,608 Revenue Bonded V Bonds 26. Bonds Department, General Years Obligation regarding data 1 X 1 from AB Thousands, General Fiscal Finance in to Schedule Details allocation Berkeley of 2011 2013 2015 2009 2007 Ten of due Restated Population See Year Fiscal )Tax Source: (d) (b) (c (a) Notes: (Dollars Last Ratios City

250 Schedule XI City of Berkeley Direct and Overlapping Governmental Activities Debt As of June 30, 2015 (In Thousands of Dollars, except assessed valuation)

2014-15 Assessed Valuation: $ 14,233,967, 105

Estimated Estimated Share of Direct Debt Outstanding Percentage and Overlapping DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: 6/30/2015 Agglicable Debt 6/30/15 Bay Area Rapid Transit District $630,795 2.66% $ 16,754 East Bay Municipal Utility District, Special District No. 1 10,910 17.73% 1,935 Peralta Community College District 381,035 19.02% 72,488 Berkeley Unified School District 228,615 100.00% 228,606 City of Berkeley (GO bonds net of premium) 83,903 100.00% 83,900 City of Berkeley (GO bonds premium) 708 100.00% 708 City of Berkeley Community Facilities District No. 1 4,500 100.00% 4,500 East Bay Regional Park District 176,790 4.08% 7,208 City of Berkeley Thousand Oaks Heights AFUU Assessment District 1,205 100.00% 1,205

Subtotal overlapping tax and assessment debt 417,303

DIRECT AND OVERLAPPING GENERAL FUND DEBT: Alameda County and Coliseum Obligations $870,419 6.75% $ 58,788 Alameda County Pension Obligations 67, 164 6.75% 4,536 Alameda-Contra Costa Transit District Certificates of Participation 24,790 8.01% 1,985 Peralta Community College District Pension Obligations 164,554 19.02% 31,305 City of Berkeley Revenue bonds (Governmental activities) 5,237 100.00% 5,237 (1) City of Berkeley Revenue bonds premium (Governmental activities) 508 100.00% 508 (1) City of Berkeley Certificates of Participation (Governmental activities) 5,445 100.00% 5,445 (1) City of Berkeley Certificates of Participation premium (Governmental activities) 378 100.00% 378 (1) City of Berkeley Capital Leases (Governmental activities) 2,460 100.00% 2,460 (1) City of Berkeley Notes and Loans Payable (Governmental activities) 10,312 100.00% 10,312 (1) City of Berkeley Pension Obligations (Governmental activities) 815 100.00% 815 (1)

Subtotal overlapping General Fund debt $ 121,768

Overlapping tax increment debt: 100.00%

TOTAL DIRECT DEBT 109,762 TOTAL OVERLAPPING DEBT 429,310

COMBINED TOTAL DIRECT AND OVERLAPPING DEBT $ 539,072 (2)

Notes:

(1) Excludes issue to be sold.

(2) Excludes tax and revenue anticipation notes, business-type activities, and mortgage revenue.

Source: California Municipal Statistics, Inc.

251 2015 XII 4.13% 84,608 84,608 2015 Year 2,135,095 2,135,095 2,050,487 2,050,487 14,233,967 $ $ $ $ Schedule Fiscal for 4.50% 88,336 2014 2,053,022 1,964,686 $ $ Calculation 4.13% 76,290 2013 1,925,322 1,849,032 Debt Margin limit: $ $ to Legal Margin Value 3.80% 68,700 Debt applicable limit 2012 $1,878,973 $1,810,273 Debt Debt Legal Assessed 4.74% 82,421 2011 1,739,799 $1,822,220 $ 3.94% 68,700 limit 2010 1,744,208 1,812,908 $ $ city. debt the law 4.16% 71,430 2009 general 1,787,833 1,716,403 However, a $ $ were limit. city 3.99% debt 64,255 a 2008 the 1,674,278 1,610,023 if $ $ have effect not in be does 1,496,907 1,556,907 $ $ would such, as that and, 4.90% 4.01% limit 67,915 60,000 2006 2007 city 1,387,252 1,455,167 15% $ $ Department the charter a limit using the is Finance to debt of Information, limit Berkeley Dollars) calculated to Years of Berkeley, of is applicable of City margin percentage debt Fiscal City a Berkeley The debt Debt Margin net applicable limit Ten as of Thousands computation Source: Debt Note: limit Legal Debt Total City (In Last Legal

252 0.97 3.36 2.51 0.47 2.38 lot. Coverage I XII the surface 451 454 451 451 in 3,148 one Total below Schedule funds and shown 166 146 123 201 reserve garages Interest the Bonds Bonds with (3) parking Revenue two Revenue 2015, 285 250 of Service Lease Lease March Principal A Debt on operation 2005 the by Refunding amount amortization A from Net 2006 Revenue Available and FY 2005 principal in generated (1) ratio) Parking depreciation refunded remaining Less: revenue Department Operating the less was coverage Expenses all Off-Street total off the Bonds Finance except is pay expenses agent. to Coverage, Dollars, fiscal Revenue Berkeley, Years revenue Revenue Operating of of of elected operating Lease Fiscal City Revenue City Berkeley Pledged 2011 2007 Ten accounts of 1994 Includes The Thousands Year Fiscal Source: Note: (3) (2) (1) Last (In Pledged City

253 5.8% 9.0% 5.9% 7.0% 4.0% 4.4% 4.6% XIV 10.8% 11.3% 10.3% (7) City Rate Unemployment Schedule of 183 (6) 35,838 36,142 35,899 36,204 37,581 34,953 34, 35,843 33,933 34,953 California Enrollment University Division 8,988 9,248 9,324 9,410 9,410 8,954 8,856 9,076 9,088 9,385 (5) Public School Enrollment (8) (8) Information 1) 33.6 31.7(8) 31.8 33.6 32.7 34.1 34.1 34.1 34.8 33.6 (4) Age market Median Census January Labor of - (8) (8) U.S. Education (as of Unit Capita (3) 35,482 35,482 38,896 36,884 35,482 35,482 36,884 36,884 41,656 40,546 dollars), Income Personal Per Department 88 Census Department Research Area constant Bay (in Development California (2) Population 3,994,564 3,935,412 3,806,083 3,922,503 3,887,020 4,950,941 4,758,965 4,046,580 4,074,079 4,500,890 dollars) - Income from Personal of (thousands Finance Employment District Governments, Governments, of Area Area Bureau School Dept. (1) Bay Bay California 118,853 117,372 106,697 107,268 112,580 114,046 114,821 115,716 106,347 105,385 California Economic Statistics, of of of Population of Census State Years Unified and State www.bayareacensus.ca.gov/cities/berkeley.htm U.S. Fiscal Berkeley Berkeley From University From California Association Association From 2015 2010 2012 2013 2014 2007 2008 2009 2011 2006 Ten of Year Fiscal Ended (7) (8) (5) (3) (4) (2) (1) (6) Source: Last Demographic City

254 City XV 3.65% 1.12% 2.66% 2.18% 2.05% 5.20% 0.64% 0.86% 0.77% 41.50% 22.35% Total Percentage Employment Of Schedule 1 5 3 9 4 6 8 7 2 10 2015 Rank 560 500 418 728 1,733 1,417 1,336 3,385 2,376 14,540 26,993 Employees City 1.99% 1.66% 1.58% 0.79% 0.45% 5.13% 0.92% 0.45% 2.72% 33.63% 17.94% Total Percentage Of Employment 9 1 5 4 8 3 7 2 6 10 2005 Rank 342 340 600 700 1,200 1,262 1,516 2,065 3,900 25,560 13,635 Employees Development Comp Economic Health of of Laboratory Ago group Office district Berkeley Management Years Company Medical National Department Ten Total School Hotel Hospitals Berkeley, Produce and Casting California of Market Bay of Berkeley Unified Bowl Employers City California Year Steel Berkeley Permanente Berkeley East Corporation of Claremont of of Source: Bayer Berkeley Kaiser Berkeley Pacific FHR State City Lawrence University Sutter Andronico's Emolover Principal City Current

255 5.85 XVI 19.75 98.88 65.00 41.05 175.78 140.00 121.05 105.95 289.60 273.00 2015 1,335.91 (5) Schedule 5.85 98.88 21.95 61.30 101.33 172.00 273.00 285.60 2014 1,322.91 Services". (3) 19.45 97.66 48.45 41.05 275.00 287.60 1,327.49 2013 Community & (3) 5.85 5.85 19.45 85.64 58.55 53.05 109.70 139.75 142.35 157.33 139.75 123.95 101.73 139.00 122.95 296.25 289.20 1,486.37 2012 Housing 62 5.85 "Health, 19.85 96.26 59.05 GASS 113.78 139.75 158.28 161.33 191.30 182.30 175.00 301.00 294.70 2011 1,541.15 of 7.85 department: 65.55 96.76 year 115.53 194.54 139.75 203.30 2010 1,634.11 one full development/housing implementation into one to 9.85 due 120.36 325.00 326.00 206.30 2009 Office 1,670.22 totaling Community unit to consolidated Budget 19.30 19.30 18.30 10.00 73.00 74.05 35.73 30.63 positions moved 124.84 152.54 164.48 165.33 136.75 136.75 197.80 330.00 271.48 279.30 308.20 304.20 301.20 were 2008 Works. 1,659.64 from component were as Public employee budget 19.30 72.50 45.83 with Department 127.56 147.68 190.31 310.00 267.73 308.20 2007 included Planning 1,635.11 more biennal or not Function/Program Services by one combined was 9.50 9.50 services, 19.30 it 45.83 66.75 as 121.37 149.98 135.75 136.50 189.60 312.00 253.98 305.20 adpoted 2006 1,609.26 but been Health year. a Health 2013 has staff and Employees in (4) calculated and 16 hours is (2), had Office divisions (1) FY2012 Department on Transportation Governmental Budget some - Authority of City based Housing 2011, 4) is Office ( & Years (1) approximately 2,080 Housing Manager or recreation FY12, development/housing equivalent employment Development Fiscal City Government and FY2006, FY2010 services Berkeley Works/Transportation Board Berkeley During Information In In Ten service of Full-time of (3) (5) (4) (2) (1) Source: Notes: Planning Library Public Rent Economic Police Health Fire Function/Program Community Culture Transportation Total General Last Full-time-Equivalent City

256 Schedule XVII City of Berkeley Operating Indicators Current and last two fiscal years

Fiscal Year Fiscal Year Fiscal Year 2013 2014 2015 FUNCTION/PROGRAM

General government Building Permits Issued Residential Permits Issued 1,769 1,995 1,899 Residential Permits Value $ 73,326,217 $ 95,615,783 $ 161,551,963 Commercial Permits Issued 352 368 340 Commercial Permits Value $ 43,663,329 $ 56,376,980 $ 72,691,761

Residential Parking Permits Number of Daily Permits Issued 34,936 36,868 41,287 Number of 14 Day Permits Issued 1,450 1,528 1,857 Number of Annual Permits Issued 14,750 15,182 15,802

City Clerk Number of Council Resolutions Passed 432 469 441 Number of Ordinances Passed 49 50 66 Number of Contracts Passed 485 563 445

General Services Number of Purchase Orders Issued 4,624 4,708 4,560

Police Physical Arrests 2,759 2,799 2,815 Parking Violations 184,717 159,067 144,237 Traffic (moving) Violations 6,565 6,758 5,647 DUI Arrests 84 157 306

Fire Structure Fires 86 95 82 Vehicle Fire 29 29 24 Other Fires 139 130 120 Medical Calls 10,101 10,016 9,888 Haz-mat Calls 84 130 105 Other Calls 3,895 3,942 4,139 Out of City 35 54 71

Department of Health Services (e) 1) Health Inspections and Permits 6,814 8,449 7,917 Public Health Services Encounters (e) 3) 50,932 60,000 60,415 Mobile Crisis Visits 1,288 1,134 1,422

Housing and Community Services Department (e) 1) Home Delivered Meal (e) 2) 49,796 46,514 53,276 Summer and year-round jobs provided for youth (e) 2) 395 395 327

Library Number of visits made to Library Branches 1,044,671 1,335,281 1,087,683 Number of people that are registered library card holders 93,868 109,078 120,058 Number of times materials from the library circulated (items checked out) 1,902,935 1,973,998 1,878,826

(Continued)

257 Schedule XVII

City of Berkeley Operating Indicators Current and last two fiscal years

Fiscal Year Fiscal Year Fiscal Year 2013 2014 2015

Solid Waste Management Diversion Rate (pending State Approval) (a) NA NA NA Transfer Station Customers (b) 106,728 111,855 118,300

Total incoming tons at transfer station Refuse and C&D 74,059 69,533 78,780 Organics 35,124 34,114 37,775 Total incoming tons 109,183 103,647 116,555

Landfilled Tons (c) 52,743 51,197 50,880 Recycled /Composted Tons (d) 51,321 55,740 65,069 Total tons exiting transfer station (c) 104,064 106,377 115,949

Recycling Method Recycled/Composted tons: Organics collection to compost facility 20,569 20,619 21,678 Organics - public to compost facility 14,555 16,966 16,097 Transfer Station Salvage 754 820 995 C&D Diverted at sorting facility 12,243 18,336 27,277 Add'I TS Diversion Programs 3,200 852 1,244 TOTAL TRANSFER STATION DIVERSION 51,321 57,593 67,291

Buyback dropoff 3,658 3,602 3,524 Residential Curbside 7,837 8,160 8,904 Commercial recycling 2,507 2,580 2,916 TOTAL RECYLING COLLECTION at CCC (Not at transfer station) 14,002 14,342 15,344 TOTAL CITY CONTROLLED DIVERSION 65,323 71,935 82,635

Other Public Works Street Resurfacing/Overlay/Reconstruction (miles) 3.40 3.06 7.77 ADA Compliance: New Curb Ramps 1 150 195 Traffic Circles - Cumulative 55 55 55 Street Poles with Lights - Cumulative 7,860 7,860 7,860

Marina Number of Berths 1,021 1,021 1,021 Number of Occupied Berths 913 897 894 Number of new berthers 157 159 124 Number of paid launchers 2,582 2,900 4,123 Launch Ramp Total Revenue (f) $ 38,733 $ 43,512 $ 61,844

Parking Number of Pay and Display Meters Operating 218 220 227 Number of Single Space Meters Operating 2,384 2,383 2,168

Planning and Development Department Customers Served 23,191 19,475 25,073 Building & Safety Inspections Performed 21,835 27,602 29,305 Toxics: CUPA Inspections 378 266 249 Redevelopment: Number of active projects (g) 5 5

Sanitary Sewer Number of Customer Accounts Billed 32,703 32,876 33,305

(Concluded)

258 Schedule XVII

(a) California legislation 881016 changed measurement requirements. 1)Adopting measurement requirements of pounds per person per day instead of diversion rates which are no longer in use. 2)Adopting measurement requirements of pounds per person per day instead of diversion rates which are no longer in use. (b) "Customers" are all paying customers regardless of the town they come from. Landfilled and recycled tons are all tons going through the transfer station. It includes SWMD collection trucks, as well as paying customers. (c) Outside tons not included in transfer station tons: 1) Tons collected by private haulers and taken to other landfills 2) Tons delivered by members of the public to other landfills or transfer stations 3) Berkeley tons recycled by the private sector (d) Recycling Method new this year provides the detail of Total City-controlled Diversion (e) Departmental Reorganization: 1) Health and Human Services restructuring now named Department of Health Services, Housing Department renamed to Housing and Community Services Departent. Public Health, Housing and Community Services along with Planning and Development Department all have changes in their department composition and functions in 2010. *Amending BERKELEY MUNICIPAL CODE SECTIONS 2.50.010, 2.50.020, 2.50.030, 2.50.040, 2.50.050, 2.50.060, 2.61.020, 2.62.010, 2.62.020, 2.62.030, and 2.60.040 To Reflect updated organizational changes 2) Program moved 201 Oto Housing and Community Services Departments 3) Health Education and linkages to services indicator no longer measured as operating indicator 4) Operating indicator "Health Education and linkages to services" now referred to as "Public Health Services Encounters" (f) Launch Ramp Fees increased midway through each year from $5 FY2008, to $10 FY2009, then to $15 FY2010 (g) In accordance with the timeline as set forth in the Bill AB 1X 26, all redevelopment agencies in the State of California were dissolved and ceased to operate as a legal entity as of February 1, 2012. In FY2015, it was determined that the Excess Bond Proceeds were eligible for transfer to the City to fund the following projects: 1) Bicycle Crossing Improvement, 2) NW berkeley sidewalk paving and 3) Conduct Gilman overcrossing preliminary study. Therefore, the Agency has no active projects.

259 Schedule XVIII City of Berkeley Capital Asset Statistics by Function/Program Current and last two fiscal years

Fiscal Year Fiscal Year Fiscal Year 2013 2014 2015 Function/Program

Police Number of Stations 1 1 2 Parking Enforcement Vehicles 32 32 42

Fire Number of Stations 7 7 7 Number of Fire Trucks 12 12 12 *

Library Central Library 1 1 1 Branch Libraries 4 4 4

Solid Waste Management Collection Vehicles 28 34 38 Support Vehicles 20 21 21 Transfer Tractors 8 8 8 Transfer Trailers 9 9 9

Other Public Works Streets (miles) 216 216 216 Streetlights 7,860 7,860 7,860 Traffic Signals 135 136 136 Sidewalks (miles) 300 300 300

Parks and Recreation Number of Parks 52 52 52 Public Swimming Pools 3 2 2 Over night Summer Camps 3 2 2 Number of Community Centers 4 4 4 Number of Club Houses 2 2 2 Community Gardens 6 6 6 Nature Center 1 1 1 Adventure Playground 1 1 1

Sanitary Sewer Public Sanitary Sewer Mains (miles) 255 254 254 Public Sewer Laterals (miles) 130 130 130

Parking Number of Parking Garages 3 3 3 Number of Parking Lots 2 2 2 Number of Off Street Parking Meter Spaces 139 143 143 Number of Off Street Parking Garage Spaces 937 969 969

Source: Operating indicators were provided by the various operating departments

* On March 2, 2015 as part of pilot program, Fire added a part-time "Truck", 10 hours a day; weekdays only. This addition affected a fraction of 85 days, which calculated out to be approximately 0.10. However, the fractional numbers did not show up towards the total for this report.

260 CITY OF BERKELEY GENERAL OBLIGATION AND GENERAL FUND OBLIGATIONS CONTINUING DISCLOSURE ANNUAL REPORT INFORMATION

$17,865,000 $41,245,000 City of Berkeley City of Berkeley 2002 General Obligation Refunding Bonds General Obligation Refunding Bonds, 2007 Series B $4,340,000 City of Berkeley $7,200,000 General Obligation City of Berkeley Refunding Bonds, 2007 Series A General Obligation Bonds, Series 2008 (Measure I - Animal Shelter Project)

$10,000,000 City of Berkeley General Obligation Bonds, Series 2009 (Measure FF - Neighborhood Branch Library Improvements Project)

$16,000,000 City of Berkeley General Obligation Bonds, Series 2010 (Measure FF - Neighborhood Branch Library Improvements Project)

$5,750,000 $27,260,000 City of Berkeley Berkeley Joint Powers Financing Authority 2010 Certificates of Participation 2012 Refunding Lease Revenue Bonds (Animal Shelter Financing) (1999 and 2003 Refinancing)

$15,000,000 City of Berkeley 2014 General Obligation Bonds (Street and Integrated Watershed Improvements)

ContentofAnnualReports

(a) Audited financial statements:

This exhibit is attached to the City's audited financial statements.

261 (b) Summary of investments held in the City's investment portfolio for the most recently-completed fiscal year, including market value, book value and a description of any investments that do not comply with the City's investment policies:

City of Berkeley Investment Portfolio As of June 30, 2015

Security Type Market Value Book Value U.S. Agency Securities $90,037,200.00 $89,970,878.68 Municipal Bonds 15,143,000.70 15,080,605.47 Medium Term Notes 36,681,270.00 36,304,241.14 Others 132,033,510.44 132,033,510.44 Total $273,894,981.14 $273,389,235. 73

All of the City's investments comply with its investment policies.

( c) General fund budget for the fiscal year during which the annual report is filed ( only required for the 2010 Certificates of Participation and 2012 Refunding Lease Revenue Bonds):

The City's current budget will be provided separately from this report.

( d) General fund balance sheet for the most recently-completed fiscal year:

Please see information in the audited financial statements.

( e) General fund summary of revenues and expenditures for the most recently-completed fiscal year:

Please see information in the audited financial statements.

(f) General fund tax revenues by source for the most recently-completed fiscal year:

Please see information in the audited financial statements.

(g) Assessed valuation of property in the City for the most recently-completed fiscal year and, to the extent the City is no longer on the Teeter Plan ( or its equivalent) and such information is available from the County, information about property tax levies and collections for the most recently completed fiscal year:

Please see information in the audited financial statements.

(h) Summary of property tax rates for all taxing entities within the City expressed as a percentage of assessed valuation:

Please see information in the audited financial statements.

262 (i) Top ten property tax assessees for current fiscal year, taxable value and percentage of total assessed value:

Please see information in the audited financial statements.

(j) Taxable transactions in the City for the most recently-completed fiscal year ( only required for the 2010 Certificates of Participation and 2012 Refunding Lease Revenue Bonds):

The State of California's taxable transaction data generally lags by approximately one year, and therefore, is not available for the most recently completed fiscal year. The most currently available taxable transaction data for the City will be provided separately from this report. (k) Description of the City's outstanding general fund debt and lease obligations as of the end of the most recently-completed fiscal year, including long-term general fund obligations:

Please see information in the audited financial statements.

(1) A schedule of aggregate annual debt service on tax-supported indebtedness of the City:

Please see information in the audited financial statements.

(m) Summary of outstanding and authorized but unissued tax-supported indebtedness of the City:

Authorized Election Amount Unissued Bond Issue Outstandin2 2002 Bonds $6,485,000 1992 $55,000,000 $0 2007 A Bonds $3,350,000 1996 $49,000,000 $0 2007 B Bonds $28,645,000 2002 $7,200,000 $0 2008 Bonds $6,460,000 2009 Bonds $9,355,000 2008 $26,000,000 $0 2010 Bonds $14,765,000 2012 $30,000,000 $15,000,000 2014 Bonds $14,840,000 Total $167,200,000 $15,000,000 $83,900,000

263 (n) Amount of all general obligation debt of the City outstanding, and total scheduled debt service on such general obligation debt.

Fiscal 2002 2007 A 2007 B 2008 2009 2010 2014 Year G.O. Bonds G.O. Bonds G.O. Bonds G.O. Bonds G.O. Bonds G.O. Bonds G.O. Bonds Total 2014-15 1,454,845.00 328,693.76 2,735,218.76 439,525.00 655,562.50 951,806.26 $874,688.89 7,440,340.17 2015-16 1,459, 107.50 334,568.76 2,738,918.76 443,750.00 660,162.50 952,906.26 898,075.00 7,487,488.78 2016-17 1,463,532.50 335,868.76 2,735,118.76 447,625.00 664,462.50 948,506.26 900,850.00 7,495,963.78 2017-18 1,467,907.50 337,268.76 2,733,818.76 445,775.00 668,206.25 948,606.26 898,000.00 7,499,582.53 2018-19 957,685.00 333,368.76 2,734,818.76 448,175.00 670,843.75 946, 131.26 898,125.00 6,989,147.53 2019-20 955,382.50 334,168.76 2, 733,018. 76 445,275.00 672,875.00 945,881.26 897,500.00 6,984, 101.28 2020-21 955,570.00 334,568.76 2, 728,418. 76 447,075.00 676,137.50 944,631.26 896,125.00 6,982,526.28 2021-22 334,568.76 2,730,818.76 443,575.00 670,212.50 951,856.26 894,000.00 6,025,031.28 2022-23 334,003.13 2,727,443.76 444,775.00 668,475.00 947,906.26 896,000.00 6,018,603.15 2023-24 332,693.75 2, 723,087 .51 445,575.00 665,762.50 947,975.01 892,125.00 6,007,218.77 2024-25 330,793.75 2,720,012.51 445,975.00 662,075.00 945,093.76 896,425.00 6,000,375.02 2025-26 333,362.50 2,716,550.01 445,975.00 660,512.50 944,693.76 898,787.50 5,999,881.27 2026-27 330,400.00 2,717,315.63 450,306.25 665,906.25 948,393.76 895,237.50 6,007,559.39 2027-28 331,906.25 2, 711,900.00 448,787.50 670,050.00 946,193.76 894,350.00 6,003,187.51 2028-29 1,957,337.50 446,675.00 668,156.25 943,193.76 896,150.00 4,911,512.51 2029-30 679,962.50 449,031.25 668,900.00 944,293.76 892,250.00 3,634,437.51 2030-31 450,750.00 672,037.50 943,996.88 892,650.00 2,959,434.38 2031-32 451,203.13 668,937.50 942,287.50 892,250.00 2,954,678.13 2032-33 450,362.51 670,737.50 944,443.75 890,712.50 2,956,256.26 2033-34 448,828.13 672,362.50 940,465.63 892,921.88 2,954,578.14 2034-35 446,600.00 672,737.50 940,353.13 894,100.01 2,953,790.64 2035-36 448,562.50 676,737.50 943,412.50 888,587.51 2,957,300.01 2036-37 444,715.63 678,531.25 939,625.00 891,243.76 2,954,115.64 2037-38 445,059.38 678,081.25 939,456.25 887,696.88 2,950,293.76 2038-39 676,056.25 937,800.00 887,946.88 2,501,803.13 2039-40 677,325.00 939,550.00 886,884.38 2,503,759.38 2040-41 888,925.00 888,925.00 2041-42 884,050.00 884,050.00 2042-43 887,600.00 887,600.00 2043-44 884,462.50 884,462.50 Total $8, 714,030.00 $4,666,234.46 $40,823, 759.50 $10, 723,956.28 $17,401,843.75 $24,569,459.55 $26,768,720.19 $133,678,003. 73

( o) Additional material information:

The City is not aware of any additional material information.

264 Reporting of Significant Events

There were no Significant Events that occurred during the most recently completed fiscal year. According to the Continuing Disclosure Certificate, Significant Events include:

1) Principal and interest payment delinquencies. 2) Non-payment related defaults. 3) Unscheduled draws on debt service reserves reflecting financial difficulties. 4) Unscheduled draws on credit enhancements reflecting financial difficulties. 5) Substitution of credit or liquidity providers, or their failure to perform. 6) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security. 7) Modifications to rights of security holders. 8) Optional, contingent or unscheduled bond calls and tender offers. 9) Defeasances. 10) Release, substitution, or sale of property securing repayment of the securities. 11) Rating changes. 12) Bankruptcy, insolvency, receivership or similar event of the City or other obligated person. 13) The consummation of a merger, consolidation, or acquisition involving the City or an obligated person, or the sale of all or substantially all of the assets of the City or an obligated person ( other than in the ordinary course of business), the entry into a definitive agreement to undertake such an action, or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material. 14) Appointment of a successor or additional trustee or the change of name of a trustee, if material.

$12,415,000 City of Berkeley Pension Obligation Bonds Series 1998

Content of Annual Reports

(a) Audited financial statements:

This exhibit is attached to the City's audited financial statements.

(b) A description of the Bonds issued by the Issuer and outstanding as of the date of such report:

Please see information in the audited financial statements.

( c) A statement of direct and overlapping debt:

Please see information in the audited financial statements.

(d) A schedule of Bond redemptions and the source of funds for such redemptions:

No Bond redemptions have occurred to date.

265 Reporting of Significant Events

There were no significant events that occurred during the most recently completed fiscal year. According to the Continuing Disclosure Certificates, significant events include:

1) Principal and interest payment delinquencies: 2) Nonpayment related defaults: 3) Modifications to rights of Holders: 4) Optional, contingent or unscheduled Bond calls: 5) Defeasances: 6) Rating changes: 7) Adverse tax opinions or events adversely affecting the tax-exempt status of the Bonds: 8) Unscheduled draws on the debt service reserves, if any, reflecting financial difficulties: 9) Unscheduled draws on any credit enhancement facility, if any, reflecting financial difficulties: 10) Substitution of the provider of any credit enhancement facility or any failure by said provider to perform on any credit enhancement facility: 11) Release, substitution or sale of property securing repayment of the Bonds:

CITY OF BERKELEY LAND-SECURED OBLIGATIONS CONTINUING DISCLOSURE ANNUAL REPORT INFORMATION

$1,490,000 City of Berkeley Thousand Oaks Heights Applicant Funded Utility Undergrounding Assessment District Limited Obligation Improvement Bonds

Content of Annual Reports

(a) Audited financial statements:

This exhibit is attached to the City's audited financial statements.

(b) The following information:

1. Principal amount of Bonds outstanding: $1,205,000

2. Balance in the Acquisition and Improvement Account: $0

3. The amount of any advances made by the City pursuant to Section 8769(a) of the Improvement Bond Act of 1915, to cure any deficiency in the Redemption Account, or, if a reserve account has been established for the Bonds, the balance in reserve account and a statement of projected reserve fund draw, if any:

There are no deficiencies in the Redemption Account and no reserve account was established for the bonds.

266 4. The delinquency rate, total amount of delinquencies, number of parcels delinquent in payment of the Assessment:

Assessment Levy and Delinquency Information Fiscal Year 2014-15

Number of Amount Delinquent Delinquency Total Levy Delinquent Parcels Rate $111,442.96 $0 0 0.0%

Reporting of Significant Events

There were no significant events that occurred during the most recently completed fiscal year. According to the Continuing Disclosure Certificates, significant events include:

1) Principal and interest payment delinquencies. 2) Non-payment related defaults. 3) Modifications to rights of Bondholders. 4) Optional, contingent or unscheduled Bond calls. 5) Defeasances. 6) Rating changes. 7) Adverse tax opinions or events affecting the tax-exempt status of the Bonds. 8) Unscheduled draws on the debt service reserves, if any, reflecting financial difficulties. 9) Unscheduled draws on credit enhancements reflecting financial difficulties. 10) Substitution of credit or liquidity providers, or their failure to perform. 11) Release, substitution, or sale of property securing repayment of the Bonds.

$9,750,000 City of Berkeley Community Facilities District No. 1 (Disaster Fire Protection) Special Tax Bonds

Content of Annual Reports

(a) Audited financial statements:

This exhibit is attached to the City's audited financial statements.

267 (b) Operating data:

Total Building Square Footage by Use Type

Use Tn~e Sguare Feet Residential $60,539,158 Commercial 18,650,891 Institutional 2,765,359 Governmental 302,077 TOTAL $82,257 ,485 Exem:et Total 5,283,, 129 TAXABLE TOTAL $76,974,356

Levy and Coverage Data

Bond Year Total Tax Levy Debt Service Coverage Ratio $1,003,007.28 $758,332.50 l.32x

( c) Additional material information:

The City is not aware of any additional material information.

Reporting of Significant Events

There were no significant events that occurred during the most recently completed fiscal year. According to the Continuing Disclosure Certificates, significant events include:

I) Principal and interest payment delinquencies. 2) Non-payment related defaults. 3) Unscheduled draws on debt service reserves reflecting financial difficulties. 4) Unscheduled draws on credit enhancements reflecting financial difficulties. 5) Substitution of credit or liquidity providers, or their failure to perform. 6) Adverse tax opinions or events affecting the tax-exempt status of the security. 7) Modifications to rights of security holders. 8) Contingent or unscheduled bond calls. 9) Defeasances. 10) Release, substitution, or sale of property securing repayment of the securities. 11) Rating changes.

268 SUCCESSOR AGENCY REDEVELOPMENT AGENCY OF THE CITY OF BERKELEY SUCCESSOR AGENCY OBLIGATIONS CONTINUING DISCLOSURE ANNUAL REPORT INFORMATION

$7,880,000 Redevelopment Agency of the City of Berkeley West Berkeley Redevelopment Project 2005 Refunding Tax Allocation Bonds

Content of Annual Reports

(a) Audited financial statements:

This exhibit is attached to the City's audited financial statements.

(b) The historical assessed valuation of properties located within the West Berkeley Redevelopment Project Area:

West Berkeley Redevelopment Project Area Historical Assessed Valuation

Fiscal State Less Other Change over Prior Year Year Board Secured Unsecured Subtotal Exem~tions Total Dollar Percent 2006-07 $340,463 $147,759,056 $18,045,492 $166,145,011 $217,000 $165,928,011 $14, 734,981 9.7% 2007-08 $14,310 $140,332,732 $21,585,054 $161,932,096 $217,000 $161,715,096 ($4,212,915) (2.5%) 2008-09 $14,310 $141,644,610 $20,967,850 $162,626, 770 $210,000 $162,416, 770 $710,674 0.4% 2009-10 $ 14,310 $163,374,444 $21, 135,438 $184,524, 192 $4,461,893 $180,062,299 $17,645,529 10.9% 2010-11 $ 15,264 $159,970,195 $20,255, 102 $180,240,561 $4,437,821 $175,802,740 ($4,259,559) (2.4%) 2011-12 $15,264 $164,608,501 $17,639,389 $182,263, 154 $4,469,699 $177,793,455 $1,990,715 1.1% 2012-13 $15,264 $166,309,499 $50,236,894 $216,561,657 $4,569,013 $211,992,644 $34, 199, 189 19.2% 2013-14 $15264 $187,868,657 $30,289,973 $218, 173,894 $4,656,034 $213,517,860 $1,525,216 0.7% 2014-15 $256,065 $177,648,655 $29,766,953 $207,671,673 $4,676,176 $202,995,497 ($10,522,363) (4.9%) 2015-16 $14,310 $186,545,584 $29,581,491 $216,141,385 $9,139,626 $207,001,759 $4,006,262 1.9%

269 (c) The ten largest assessees located within the Project Area:

West Berkeley Redevelopment Project Area Largest Local Taxpayers Fiscal Year 2015-16 Assessed %of Pro:eertI Owner PrimarI Land Use Valuation Tota1<1) 1. Jamestown Premier Berkeley Oro Restaurant $15,548,456 8.77% 2. Kaiser Foundation Health Plan Industrial Light/manufacturing 14,872,882 8.39% 3. Extra Space Berkeley LLC Warehouse/self Storage 11,234,909 6.34% 4. Demo 4th St Berkeley One Story Store 11,087,230 6.26% 5. Drew Properties LLC. Misc. Improved Commercial 7,801,398 4.40% 6. Kaiser Foundation Hospitals Industrial Light/ manufacturing 7,489,230 4.23% 7. Prison Law Office 1 to 5 Story Office Bldg. 905,285* 0.51% 8. Kaiser Foundation Hospitals Industrial Light/ manufacturing 5,323,232 3.00% 9. Ferreira Steven J TR & F erreir Store 1st floor w/office/apts above 4,395,882 2.48% 10. Cedar/fourth Street Partners Industrial Light/ manufacturing 422072770 2.37% Total Tot Ten $82,866,274 46.75% *Net of other exemption of $4,548,236 Cl) 2015-16 Total Taxable Assessed Valuation: $177,246,112

(d) In the event that the Agency has actual knowledge of any appeals of assessed valuation of property within the Project Area, then the Annual Report shall contain the following information:

(i) The aggregate amount by which such assessed value would be reduced if all such appeals were granted in the amount requested:

Not applicable. There were no assessed value appeals within the Project Area for FY 2015-16.

(ii) The identity of each property owner whose appeals, if granted in the full amount requested for properties owned by such owner, would cause the total tax increment revenues in the Project Area to be reduced by more than five percent (5%):

Not applicable. There were no assessed value appeals within the Project Area for FY 2015-16.

Reporting of Significant Events

There were no significant events that occurred during the most recently completed fiscal year. According to the Continuing Disclosure Certificates, significant events include:

1) Principal and interest payment delinquencies. 2) Non-payment related defaults. 3) Modifications to rights of Bondholders. 4) Optional, contingent or unscheduled bond calls. 5) Defeasances. 6) Rating changes. 7) Adverse tax opinions or events affecting the tax-exempt status of the Bonds. 8) Unscheduled draws on the debt service reserve reflecting financial difficulties.

270 9) Unscheduled draws on any credit enhancement facility reflecting financial difficulties. 10) Substitution of the provider of any credit enhancement facility or any failure by said provider to perform on any credit enhancement facility. 11) Release, substitution or sale of property securing repayment of the Bonds.

271 REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

To the Honorable Mayor and Members of City Council of the City of Berkeley Berkeley, California

We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business-type activities, the discretely presented component units, each major fund, and the aggregate remaining fund information of City of Berkeley, California (City), as of and for the year ended June 30, 2015, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements, and have issued our report thereon dated December 22, 2015

Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the City’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City’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 was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or, significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

Address: 180 Grand Avenue, Suite 1500 Oakland, CA 94612 • Phone: 510.768.8251 • Fax: 510.768.8249

272 To the Honorable Mayor and Members of City Council of the City of Berkeley Berkeley, California Page 2

Compliance and Other Matters As part of obtaining reasonable assurance about whether City’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 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.

Badawi and Associates Certified Public Accountants Oakland, California December 22, 2015

273

APPENDIX C

PROPOSED FORM OF OPINION OF BOND COUNSEL

______, 2016

City Council City of Berkeley 2180 Milvia Street Berkeley, California 94704

OPINION: $15,000,000 City of Berkeley 2016 General Obligation Bonds (Street and Integrated Watershed Improvements)

Members of the City Council:

We have acted as bond counsel in connection with the issuance by the City of Berkeley (the “City”) of its City of Berkeley 2016 General Obligation Bonds (Street and Integrated Watershed Improvements) issued in the aggregate principal amount of $15,000,000 (the “Bonds”). The Bonds have been issued by the City under the Constitution of the State of California, Chapter 7.64 of the Berkeley Municipal Code and laws of the State of California, including but not limited to Article 4.5 of Chapter 3 of Part 1 of Division 2 of Title 5 of the Government Code of the State of California, and Resolution No. ______of the City Council of the City of Berkeley, adopted on May 31, 2016 (the “Resolution”). We have examined the law and such certified proceedings and other papers as we deem necessary to render this opinion.

As to questions of fact material to our opinion, we have relied upon representations of the City contained in the Resolution and in the certified proceedings and certifications of public officials and others furnished to us, without undertaking to verify the same by independent investigation.

Based upon the foregoing, we are of the opinion, under existing law, as follows:

1. The City is duly organized and validly existing as a charter city and municipal corporation under the Constitution and laws of the State of California, with the power to adopt the Resolution, perform the agreements on its part contained therein and issue the Bonds.

2. The Bonds are valid and binding general obligations of the City.

3. The City has the power, is obligated and in the Resolution has covenanted to levy ad valorem taxes upon all property within the City which is subject to taxation by the City, without limitation of rate or amount, for the payment of the Bonds and the interest thereon.

C-1 City of Berkeley ______, 2016 Page 2

4. Interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; it should be noted, however, that, for the purpose of computing the alternative minimum tax imposed on corporations (as defined for federal income tax purposes), such interest is taken into account in determining certain income and earnings. The opinion set forth in the preceding sentence is subject to the condition that the City comply with all requirements of the Internal Revenue Code of 1986 which must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be, or continue to be, excluded from gross income for federal income tax purposes. The City has covenanted in the Resolution and in other instruments relating to the Bonds to comply with each of such requirements; and the City has full legal authority to make and comply with such covenants. Failure to comply with certain of such requirements may cause the inclusion of interest on the Bonds in gross income for federal income tax purposes to be retroactive to the date of issuance of the Bonds. We express no opinion regarding other federal tax consequences arising with respect to the Bonds.

5. The interest on the Bonds is exempt from personal income taxation imposed by the State of California.

The rights of the owners of the Bonds and the enforceability of the Bonds may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights heretofore or hereafter enacted and may also be subject to the exercise of judicial discretion in appropriate cases.

Respectfully submitted,

A Professional Law Corporation

C-2

APPENDIX D

FORM OF CONTINUING DISCLOSURE CERTIFICATE

This Continuing Disclosure Certificate (this “Disclosure Certificate”) is executed and delivered by the City of Berkeley (the “City”) in connection with the issuance of the bonds captioned above (the “Bonds”). The Bonds are being issued under the Constitution and laws of the State of California, including but not limited to, Article 4.5 of Chapter 3 of Part 1 of Division 2 of Title 5 of the Government Code of the State of California, under a resolution adopted by the City Council of the City on May 31, 2016 (the “Bond Resolution”) and pursuant to and consistent with the Charter of the City.

The City hereby covenants and agrees as follows:

Section 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the City for the benefit of the holders and beneficial owners of the Bonds and in order to assist the Participating Underwriter in complying with S.E.C. Rule 15c2- 12(b)(5).

Section 2. Definitions. In addition to the definitions set forth above and in the Bond Resolution, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section 2, the following capitalized terms have the following meanings:

“Annual Report” means any Annual Report provided by the City pursuant to, and as described in, Sections 3 and 4.

“Annual Report Date” means the date not later than April 1 after the end of each fiscal year of the City (currently June 30th).

“Dissemination Agent” means the City or any other Dissemination Agent designated in writing by the City and which has filed with the City a written acceptance of such designation. As of the date of this Disclosure Certificate, the City is acting as Dissemination Agent.

“Listed Events” means any of the events listed in Section 5(a).

“MSRB” means the Municipal Securities Rulemaking Board, which has been designated by the Securities and Exchange Commission as the sole repository of disclosure information for purposes of the Rule.

“Official Statement” means the final official statement executed by the City in connection with the issuance of the Bonds.

“Participating Underwriter” means any of the original underwriters of the Bonds required to comply with the Rule in connection with offering of the Bonds.

“Rule” means Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time.

D-1

Section 3. Provision of Annual Reports.

(a) The City shall, or shall cause the Dissemination Agent to, not later than the Annual Report Date, commencing April 1, 2017 with the report for the 2015-16 fiscal year, provide to the MSRB in an electronic format as prescribed by the MSRB, an Annual Report that is consistent with the requirements of Section 4 of this Disclosure Certificate. Not later than 15 Business Days prior to the Annual Report Date, the City shall provide the Annual Report to the Dissemination Agent (if other than the City). If by 15 Business Days prior to the Annual Report Date the Dissemination Agent (if other than the City) has not received a copy of the Annual Report, the Dissemination Agent shall contact the City to determine if the City is in compliance with the previous sentence. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 4 of this Disclosure Certificate; provided that the audited financial statements of the City may be submitted separately from the balance of the Annual Report, and later than the Annual Report Date, if not available by that date. If the City’s fiscal year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5(b). The City shall provide a written certification with each Annual Report furnished to the Dissemination Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished by the City hereunder.

(b) If the City does not provide (or cause the Dissemination Agent to provide) an Annual Report by the Annual Report Date, the City shall provide (or cause the Dissemination Agent to provide) to the MSRB, in an electronic format as prescribed by the MSRB, a notice in substantially the form attached as Exhibit A.

(c) With respect to each Annual Report, the Dissemination Agent shall:

(i) determine each year prior to the Annual Report Date the then-applicable rules and electronic format prescribed by the MSRB for the filing of annual continuing disclosure reports; and

(ii) if the Dissemination Agent is other than the City, file a report with the City certifying that the Annual Report has been provided pursuant to this Disclosure Certificate, and stating the date it was provided.

Section 4. Content of Annual Reports. The City’s Annual Report shall contain or incorporate by reference the following:

(a) The City’s audited financial statements prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the City’s audited financial statements are not available by the Annual Report Date, the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available.

(b) Unless otherwise provided in the audited financial statements filed on or before the Annual Report Date, financial information and operating data with respect to the City for the preceding fiscal year, substantially similar to that provided in the Official Statement:

(i) Assessed value of taxable property within the jurisdiction of the City;

D-2

(ii) Summary of property tax rates for all taxing entities within the City expressed as a percentage of assessed valuation in the form of Table 5 of the Official Statement;

(iii) Top ten property tax assessees for current fiscal year, taxable value and percentage of total assessed value in substantially the form of Table 6 of the Official Statement;

(iv) If and to the extent such information is available from the County, property tax collection delinquencies for the City; and

(v) Amount of all general obligation debt of the City outstanding, and total scheduled debt service on such general obligation debt.

(c) In addition to any of the information expressly required to be provided under this Disclosure Certificate, the City shall provide such further material information, if any, as may be necessary to make the specifically required statements, in the light of the circumstances under which they are made, not misleading.

(d) Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the City or related public entities, which are available to the public on the MSRB’s internet web site or filed with the Securities and Exchange Commission. The City shall clearly identify each such other document so included by reference.

Section 5. Reporting of Significant Events.

(a) The City shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds, if material:

(1) Principal and interest payment delinquencies. (2) Non-payment related defaults. (3) Unscheduled draws on debt service reserves reflecting financial difficulties. (4) Unscheduled draws on credit enhancements reflecting financial difficulties. (5) Substitution of credit or liquidity providers, or their failure to perform. (6) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security. (7) Modifications to rights of security holders, if material. (8) Bond calls, if material, and tender offers. (9) Defeasances. (10) Release, substitution, or sale of property securing repayment of the securities, if material. (11) Rating changes.

D-3

(12) Bankruptcy, insolvency, receivership or similar event of the City or other obligated person. (13) The consummation of a merger, consolidation, or acquisition involving the City or an obligated person, or the sale of all or substantially all of the assets of the City or an obligated person (other than in the ordinary course of business), the entry into a definitive agreement to undertake such an action, or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material. (14) Appointment of a successor or additional trustee or the change of name of a trustee, if material.

(b) Whenever the City obtains knowledge of the occurrence of a Listed Event, the City shall, or shall cause the Dissemination Agent (if not the City) to, file a notice of such occurrence with the MSRB, in an electronic format as prescribed by the MSRB, in a timely manner not in excess of 10 business days after the occurrence of the Listed Event. Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(8) and (9) above need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to holders of affected Bonds under the Resolution.

(c) The City acknowledges that the events described in subparagraphs (a)(2), (a)(7), (a)(8) (if the event is a bond call), (a)(10), (a)(13), and (a)(14) of this Section 3 contain the qualifier “if material.” The City shall cause a notice to be filed as set forth in paragraph (b) above with respect to any such event only to the extent that the City determines the event’s occurrence is material for purposes of U.S. federal securities law.

(d) For purposes of this Disclosure Certificate, any event described in paragraph (a)(12) above is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent, or similar officer for the City in a proceeding under the United States Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the City, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement, or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the City.

Section 6. Identifying Information for Filings with the MSRB. All documents provided to the MSRB under the Disclosure Certificate shall be accompanied by identifying information as prescribed by the MSRB.

Section 7. Termination of Reporting Obligation. The City’s obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the City shall give notice of such termination in the same manner as for a Listed Event under Section 5(b).

Section 8. Dissemination Agent. The City may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any Dissemination Agent, with or without appointing a successor Dissemination Agent. Any Dissemination Agent may resign by providing 30 days’ written notice to the City.

D-4

Section 9. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the City may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied:

(a) if the amendment or waiver relates to the provisions of Sections 3(a), 4 or 5(a), it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature, or status of an obligated person with respect to the Bonds, or type of business conducted;

(b) the undertakings herein, as proposed to be amended or waived, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the primary offering of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and

(c) the proposed amendment or waiver either (i) is approved by holders of the Bonds in the manner provided in the Bond Resolution for amendments to the Bond Resolution with the consent of holders, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the holders or beneficial owners of the Bonds.

If the annual financial information or operating data to be provided in the Annual Report is amended pursuant to the provisions hereof, the first annual financial information filed pursuant hereto containing the amended operating data or financial information shall explain, in narrative form, the reasons for the amendment and the impact of the change in the type of operating data or financial information being provided.

If an amendment is made to the undertaking specifying the accounting principles to be followed in preparing financial statements, the annual financial information for the year in which the change is made shall present a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. The comparison shall include a qualitative discussion of the differences in the accounting principles and the impact of the change in the accounting principles on the presentation of the financial information, in order to provide information to investors to enable them to evaluate the ability of the City to meet its obligations. To the extent reasonably feasible, the comparison shall be quantitative. A notice of the change in the accounting principles shall be filed in the same manner as for a Listed Event under Section 5(b).

Section 10. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the City from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Certificate. If the City chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate, the City shall have no obligation under this Disclosure Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event.

D-5

Section 11. Default. If the City fails to comply with any provision of this Disclosure Certificate, the Participating Underwriter or any holder or beneficial owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the City to comply with its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an Event of Default under the Bond Resolution, and the sole remedy under this Disclosure Certificate in the event of any failure of the City to comply with this Disclosure Certificate shall be an action to compel performance.

Section 12. Duties, Immunities and Liabilities of Dissemination Agent.

(a) The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and the City agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which they may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent’s negligence or willful misconduct. The Dissemination Agent shall have no duty or obligation to review any information provided to it by the City hereunder, and shall not be deemed to be acting in any fiduciary capacity for the City, the Bond holders or any other party. The obligations of the City under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds.

(b) The Dissemination Agent shall be paid compensation by the City for its services provided hereunder in accordance with its schedule of fees as amended from time to time, and shall be reimbursed for all expenses, legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder.

Section 13. Notices. Any notice or communications to be among any of the parties to this Disclosure Certificate may be given as follows:

To the City: City of Berkeley 2180 Milvia Street Berkeley, California 94704 (510) 981-7000

Any person may, by written notice to the other persons listed above, designate a different address or telephone number(s) to which subsequent notices or communications should be sent.

Section 14. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the City, the Dissemination Agent, the Participating Underwriter and holders and beneficial owners from time to time of the Bonds, and shall create no rights in any other person or entity.

D-6

Section 15. Counterparts. This Disclosure Certificate may be executed in several counterparts, each of which shall be regarded as an original, and all of which shall constitute one and the same instrument.

Date: ______, 2016 CITY OF BERKELEY

By: Director of Finance

D-7

EXHIBIT A

NOTICE OF FAILURE TO FILE ANNUAL REPORT

Name of Issuer: City of Berkeley (the “City”)

Name of Bond Issue: City of Berkeley 2016 General Obligation Bonds (Street and Integrated Watershed Improvements)

Date of Issuance: ______, 2016

NOTICE IS HEREBY GIVEN that the City has not provided an Annual Report with respect to the above-named Bonds as required by the Continuing Disclosure Certificate, dated ______, 2016. The City anticipates that the Annual Report will be filed by ______.

Date: [DISSEMINATION AGENT]

By: Name: Title:

D-8

APPENDIX E

DTC AND THE BOOK-ENTRY ONLY SYSTEM

The following description of the Depository Trust Company (“DTC”), the procedures and record keeping with respect to beneficial ownership interests in the Bonds, payment of principal, interest and other payments on the Bonds to DTC Participants or Beneficial Owners, confirmation and transfer of beneficial ownership interest in the Bonds and other related transactions by and between DTC, the DTC Participants and the Beneficial Owners is based solely on information provided by DTC. Accordingly, no representations can be made concerning these matters and neither the DTC Participants nor the Beneficial Owners should rely on the foregoing information with respect to such matters, but should instead confirm the same with DTC or the DTC Participants, as the case may be.

Neither the issuer of the Bonds (the “Issuer”) nor the trustee, fiscal agent or paying agent appointed with respect to the Bonds (the “Agent”) take any responsibility for the information contained in this Appendix.

No assurances can be given that DTC, DTC Participants or Indirect Participants will distribute to the Beneficial Owners (a) payments of interest, principal or premium, if any, with respect to the Bonds, (b) certificates representing ownership interest in or other confirmation or ownership interest in the Bonds, or (c) redemption or other notices sent to DTC or Cede & Co., its nominee, as the registered owner of the Bonds, or that they will so do on a timely basis, or that DTC, DTC Participants or DTC Indirect Participants will act in the manner described in this Appendix. The current "Rules" applicable to DTC are on file with the Securities and Exchange Commission and the current "Procedures" of DTC to be followed in dealing with DTC Participants are on file with DTC.

1. The Depository Trust Company (“DTC”), New York, NY, will act as securities depository for the securities (the “Securities”). The Securities will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Security certificate will be issued for each issue of the Securities, each in the aggregate principal amount of such issue, and will be deposited with DTC. If, however, the aggregate principal amount of any issue exceeds $500 million, one certificate will be issued with respect to each $500 million of principal amount, and an additional certificate will be issued with respect to any remaining principal amount of such issue.

2. DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and

E-1

dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has a Standard & Poor’s rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com.

3. Purchases of Securities under the DTC system must be made by or through Direct Participants, which will receive a credit for the Securities on DTC’s records. The ownership interest of each actual purchaser of each Security (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Securities are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Securities, except in the event that use of the book-entry system for the Securities is discontinued.

4. To facilitate subsequent transfers, all Securities deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co. or such other name as may be requested by an authorized representative of DTC. The deposit of Securities with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Securities; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Securities are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.

5. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Securities may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Securities, such as redemptions, tenders, defaults, and proposed amendments to the Security documents. For example, Beneficial Owners of Securities may wish to ascertain that the nominee holding the Securities for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.

6. Redemption notices shall be sent to DTC. If less than all of the Securities within an issue are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.

E-2

7. Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or vote with respect to Securities unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to Issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy).

8. Redemption proceeds, distributions, and interest payments on the Securities will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts, upon DTC’s receipt of funds and corresponding detail information from Issuer or Agent on payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC, Agent, or Issuer, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of Issuer or Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.

9. DTC may discontinue providing its services as securities depository with respect to the Securities at any time by giving reasonable notice to Issuer or Agent. Under such circumstances, in the event that a successor depository is not obtained, Security certificates are required to be printed and delivered.

10. Issuer may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Security certificates will be printed and delivered to DTC.

11. The information in this section concerning DTC and DTC’s book-entry system has been obtained from sources that Issuer believes to be reliable, but Issuer takes no responsibility for the accuracy thereof.

E-3