5 overcoming the legacy of segregation. Most of Berkeley falls into what is generally considered a moderate- to high-opportunity area, in part because the City offers high-quality schools to students regardless of which neighborhood they live in. At the same time, Berkeley has been successful in locating nonprofit affordable housing in most parts of the City. These broader realities reduce the pressure on the City’s inclusionary housing policy to produce affordable units on-site in every building and allow the City to pursue a balanced strategy of private and publicly sponsored provision of affordable housing in every neighborhood. An appropriate goal might be for the City to target a mix of on-site units in most market rate buildings while maintaining the collection of critical fees to support nonprofit affordable properties.
Though our analysis confirmed that Berkeley’s current rules appear to strongly favor payment of the fee, the actual record of projects over the past few years paints a different picture and shows that Berkeley’s current policy is already achieving this kind of mix, with the majority of projects providing on-site units and paying a prorated fee.
Currently, providing an on-site affordable unit is generally far more costly to a developer than paying the associated fee. Just as an example, Street Level Advisors calculated that for a hypothetical Berkeley rental property, providing one on-site Very Low Income unit would reduce the resale value of a building by about $483,000. One on-site Low Income unit would reduce the building value by $340,000. Opting out of providing either of those units would require payment of an Affordable Housing Mitigation Fee totaling only $198,730.3 While the specifics differ for each building based on the local market rents, in this example on-site costs more than twice as much as paying the current fee.
We estimate that the current AHMF costs roughly $45 per gross residential foot, and the on-site requirements cost a typical project roughly $114 per foot.
In spite of this, between 2012 and 2020 nearly two-thirds of Berkeley’s projects have included some affordable units on-site and just under one-third have fully complied through the on-site option. Figure 3 shows that the mixed compliance option (some units plus some fee) has been the most popular option. There are likely several reasons for this, including political pressures, but one clear factor is the State Density Bonus (SDB). The State requires cities to allow developers who include affordable units to build more units on a site than would otherwise be allowed and to take advantage of certain planning and zoning concessions which make it easier to get projects built. Under the current rules, projects that provide at least 11% of their base project units affordable to Very Low-Income residents qualify for the maximum benefit under the Density Bonus. These benefits cause many Berkeley projects to include 11% affordable units on-site and pay the fee for the remaining units. A recent change to state law will allow a 50% density bonus to projects that provide 15% VLI units (among other options). This change should result in even more on-site units in Berkeley even under the current City ordinance. 3 Because Berkeley requires $39,746 per unit or 1 on-site unit for every 5 units (20%), every on-site unit that is included reduces the fee by 5 times $39,746.
6 FIGURE 1: Compliance Option Selected 2012 - 2020
Encourage a mix of units and fees
The changes proposed below clarify Berkeley’s policy to make on-site affordable units the preferred default requirement for both rental and ownership projects but allow payment of a fee as an alternative in order to:
1) continue to generate significant fee revenue to support nonprofit affordable housing projects throughout the City, and
2) offer flexibility for projects to choose between multiple compliance options depending on different circumstances.
Ideally, the proposed changes will encourage a mix of fees and units over time with fees coming primarily from projects where on-site units would be less feasible (e.g. due to economies of scale) or more difficult to monitor.
The proposed Affordable Housing Requirements ordinance would be structured so that providing on-site units is the default requirement for nearly all projects, with an exception for small projects and co-living type projects which would be encouraged to pay the fee. It might be possible to remove the fee option entirely, but state law requires cities to offer multiple compliance options such as a fee in their inclusionary housing ordinances. Ideally, the program would be structured such that the cost to a project of providing units on-site is more similar to the cost of paying the fee. This would maintain flexibility but reduce the incentive to pay the fee rather than provide units.
Over time, strong demand for housing in Berkeley should mean that higher fees are practical, but our analysis of current market conditions suggests that 2021 is a particularly risky time to raise Berkeley’s housing fees. The Covid-19 pandemic has created uncertainty in the real estate market and led to falling rents throughout the region. The multi-family rental prototypes we studied earned returns that were just barely above the minimums required for financial feasibility. The recommendations below call for restructuring the fee to be calculated on a per square-foot basis but setting it, for the moment, at a level which is financially comparable to
7 the current fee for most projects. Once the housing market has recovered from the effects of the pandemic, we recommend evaluating a fee increase which would bring the cost of the fee option closer to the cost of on-site compliance.
More immediately, the proposed changes recognize the growing popularity of mixed compliance based on the State Density Bonus and aim to increase the number of on-site units primarily by increasing the prevalence of these mixed compliance projects. Together these changes should increase the number of affordable units provided on-site within market rate projects throughout Berkeley without dramatically reducing the affordable housing fee revenue that the City’s HTF program receives.
Continue Berkeley’s legacy of value capture
A key goal of Berkeley’ inclusionary housing ordinance and Affordable Housing Mitigation Fee has been to ensure that new real estate development projects in Berkeley contribute benefits for the whole community. This principle of Public Value Capture (or Land Value Capture) calls on the City to closely evaluate the profitability of real estate projects and set its housing requirements at a level which captures a share of the profits to support housing for our lowest income residents. Careful value capture requires close attention to the financing and economic realities of development in order to ensure that the City is capturing the appropriate amount of financial returns.
Appendix A contains a detailed description of Street Level Advisors financial feasibility study.
Building on past studies conducted in support of Berkeley’s Affordable Housing Mitigation Fee, we analyzed a single hypothetical rental and a single condominium building prototype in order to better understand the financial feasibility of these projects under the current program and under the proposed changes described below.
For rental projects, our model suggests that most projects would not be able to feasibly comply with the current 20% on-site requirement but that projects that choose to pay the fee or access the State Density Bonus by providing some units on-site and paying a partial fee would both earn returns that are just barely above the threshold we identified for feasibility (5% yield on cost). The returns for density bonus projects are comparable to the fee alternative because the additional cost of providing some units on-site is offset by the additional benefit of building more units on the same site.
For our rental prototype (described in Appendix A), the proposed fee of $45 per gross square foot results in a virtually identical return to what the project would see under the current fee.
A higher fee ($55 per square-foot) would result in a marginal return. The proposed approach of providing more ‘credit’ for projects that provide on-site VLI units than those that provide LI units results in modest increases in the returns available to mixed compliance projects that take advantage of the State Density Bonus. While this small difference is not critical for this prototype, it is likely that there would be projects where this difference would result in on-site
8 affordable units in projects that would otherwise have paid the fee entirely (or not moved forward at all).
Figure 2: Comparison of Returns - Rental
For ownership projects, there is no Yield on Cost metric; feasibility is generally evaluated based on the profit from sales as a percent of the total development cost. Because there have been very few recent condo projects in Berkeley, it is not possible to identify the exact threshold for feasibility. One common benchmark considers projects that earn more than 10% profit to be ‘feasible.” We found that neither the current fee nor the current on-site requirement resulted in profit as a percent of development cost above this 10% threshold. The proposed switch to a $45 per square-foot fee would result in profit just above 10% while a higher $55 per square- foot fee would result in profit closer to 9%.
Figure 3: Comparison of Returns - Ownership
Continue progress on housing goals
The Bay Area and the Berkeley community need more housing. Rapidly rising housing costs and growing displacement pressures are the result of a systemic shortage of housing. While building more housing alone would not be sufficient to address the current inequities, we cannot
9 overcome our housing challenges without building significantly more housing. The Regional Housing Needs Allocation (RHNA) requires Berkeley to permit nearly 9,000 new homes at all income levels during the period from 2023 to 2031.
To meet this historic challenge, Berkeley’s affordable housing policies must balance two critical but competing goals.
1) We must set affordable housing requirements high enough to produce meaningful levels of affordable housing, and
2) We must ensure that they are not too high for developers to accommodate.
If Berkeley sets its requirements too low, it may see construction that only serves to further existing inequity and racial exclusion. But if requirements are set too high, the result could be that little or no new housing is built, which would itself perpetuate the inequities which drive ongoing displacement of existing residents and push prices and rents up to levels which effectively prevent new low- and moderate-income households, including many households of color, from moving to Berkeley.
Berkeley’s current affordable housing requirements (both the on-site requirements and the fee options) are somewhat higher than other East Bay jurisdictions (see Figure 6 below). But in spite of the relatively high costs, construction is continuing in Berkeley. Even during the pandemic, builders continue to undertake new residential projects. This suggests that Berkeley’s requirements do not dramatically overburden development. However, Street Level Advisors’ feasibility analysis (Appendix A) finds that the current requirements are only marginally financially feasible in today’s environment. This suggests that Berkeley could see more building overall - including more affordable housing development - by slightly reducing the cost of compliance for some projects.
The proposed changes include many small adjustments to current requirements intended to make it easier for developers to understand and comply with program rules and for the City to oversee and administer. This will also facilitate transparency for the community at large. These changes are explicitly intended to make it easier to build the new housing that Berkeley desperately needs. However, the proposed changes attempt to achieve this while simultaneously maintaining or increasing the overall contribution that new market-rate housing makes to the provision of affordable housing in Berkeley.
Under the proposed changes, some types of projects are asked to contribute more and others less (relative to the existing inclusionary requirements), but the goal is to maintain or increase the number of on-site units and the amount of fees available to the HTF program. The proposed changes do this by reducing the fee assessed to projects with relatively smaller units and increasing the fee on projects with large or extra large units. They will also slightly reduce the fee due from projects that provide some units on-site. These changes should encourage more projects to build some units on-site while also improving overall feasibility so that more housing projects are able to move forward.
10 Work within the City’s existing administrative capacity Berkeley’s current affordable housing requirements are among the most complex in the region, but the City has fewer administrative staff than many other jurisdictions. HHCS currently has a total of 1.3 FTE to implement the BMR program:
● 0.20 FTE to work on new projects (apply requirements, meet with applicants, draft and execute regulatory agreements);
● 1.0 FTE monitor for completed projects, funded by an annual monitoring fee on BMR units; and
● 0.10 FTE related policy work and program supervision.
Adopting changes to the City’s affordable housing requirements that increase administrative requirements would only be possible if new General Funds could be identified to support the implementation. As the City’s BMR portfolio expands, funding for an additional monitor should be a consideration as well. Implementing local affordability requirements is not an eligible use of federal funds, so local funds are required to support this activity.
The proposed changes described below add complexity to the rules in several places but attempt to offset the complexity by streamlining and eliminating administrative challenges in several other places. The goal is to design a program which the City can successfully implement with existing staffing resources.
11 Proposed Changes in Detail:
1. Consolidate Affordable Housing Requirements into a single framework Proposed Changes:
1.1. Combine the requirements of the Affordable Housing Mitigation Fee (AHMF) and Inclusionary Housing (IH) ordinances into a single “Affordable Housing” ordinance which would impose on-site affordable housing requirements for both ownership and rental projects.
1.2. The fee would be structured as an “in lieu fee” offered as an alternative to on-site units, rather than as a mitigation fee.
1.3. The new ordinance would also replace the affordable housing requirements sections of the Condo Conversion and Live/Work ordinances.
1.4. To the extent possible, standardize the requirements that are applied to different projects to simplify implementation of the program.
1.5. The new ordinance would apply to all new project applications received after a date specified several months after adoption.
Background and Analysis:
Prior to 2009, Berkeley had a single Inclusionary Zoning Ordinance (BMC Chapter 23C.12) which applied to both ownership and rental projects. In 2009, a Court of Appeals decision known as Palmer/Sixth Street Properties LP v. City of Los Angeles prevented California jurisdictions from enforcing inclusionary housing requirements on rental properties. Like many other cities, Berkeley responded by adopting an Affordable Housing Mitigation Fee (AHMF) (BMC section
22.20.065). Instead of requiring on-site units and then offering an in lieu fee as an alternative, the AHMF ordinance requires payment of a fee and allows the provision of on-site units as an alternative. This approach allowed Berkeley to achieve its policy goals without violating the restrictions imposed by the Palmer decision. But it created a situation in which the City had two different ordinances that attempt to impose similar requirements. The provisions of the Inclusionary Housing Ordinance that applied to rental housing remained in the Berkeley Municipal Code but were unenforceable and superseded by the AHMF ordinance.
In 2018, the California Legislature passed AB1505 which effectively overturned the Palmer decision and authorized the implementation of inclusionary housing requirements applied to rental properties. This legislation has allowed a number of cities to update their programs to combine rental and ownership requirements under a single inclusionary housing ordinance.
For example, in June 2019, the Mountain View City Council completed a two-phase process to update its Below Market Rate Program requirements. Mountain View now requires any new residential development, whether rental or ownership, to provide 15% of its units at affordable
12 rents.4 Similarly, after suspending its inclusionary rental housing requirement in 2011 to comply with the Palmer decision, the City of Menlo Park updated its Below Market Rate Housing Program to subject all new residential developments to its affordable housing requirements.5
Berkeley’s new Affordable Housing Requirements (AHR) ordinance would address both rental and ownership projects (including Live/Work and Group Living Accommodations) and would impose an on-site affordable housing requirement for both while allowing payment of an in lieu fee.
2. Calculate the fee on a per square-foot basis
Proposed Change:
2.1. Calculate affordable housing fees on a per square-foot basis instead of per unit.
Initially set the fee at $45 per gross residential square foot, which is roughly equivalent to the current fee for projects with typically sized units. Collect the fee at the time of Certificate of Occupancy eliminating the current discount for earlier payment. Increase the fee amount automatically based on the change in the California Construction Cost Index.
Background and Analysis:
Some stakeholders have expressed concerns that projects that propose units with large numbers of bedrooms are not being required to pay an appropriate fee. Because Berkeley charges its AHMF on a per unit basis, a project that chooses to include a number of 5-bedroom units for example, would pay far less proportionally than a similarly sized project with studio, 1- and 2-bedroom units. It is not clear whether this savings is enough to cause developers to choose much larger bedroom configurations since these large unit ‘co-living’ projects are a trend nationwide. But it is clear that Berkeley’s ordinance creates an incentive for projects that select this configuration and there does not seem to be a public policy reason for Berkeley to prefer these extra-large units. While there are benefits to projects that include ‘family sized’ 2 and 3-Bedroom units (discussed in proposed change #9 below), beyond 3 bedrooms, new units are generally housing multiple unrelated individuals rather than families.
A number of cities have changed to calculating in lieu fees on a per square-foot basis. San Francisco and Santa Barbara both made this change in 2019 and San Jose made a similar change in early 2021. Instead of charging a flat fee per unit, the City would charge the fee for each square foot of residential space in the building regardless of how the building is divided up into 4 City of Mountain View, Below Market Rate Program,
https://www.mountainview.gov/depts/comdev/preservation/homebuying/bmrhousing/default.asp 5 City of Menlo Park, BMR Requirements for Residential Developers, https://www.menlopark.org/DocumentCenter/View/1493/BMR-Requirements-for-Residential-Developers
13 units. As an example, a 25,000 square foot building would pay the same fee whether it was split up into 50 small studios or 15 multi-bedroom co-living units.
Currently, in Berkeley, every rental project would pay $39,746 per unit (assuming that they provided no units on-site). For a typical project, this is equivalent to a fee of $45 per gross residential square foot, as illustrated in the table below. “Gross Square Feet – Residential” is defined as all of the square footage of a new building (as defined in BMC 23F.04.010 ) minus any exclusively commercial space or indoor parking area. In a typical project, the gross square footage is roughly 1.25 times the net square footage.
We conducted a market analysis in order to estimate a per square-foot fee which would be equivalent to the current AHMF. We collected data on the unit sizes of 18 recent Berkeley projects. We then multiplied the average unit sizes by 1.25 to estimate the gross square footage of each of these projects. For each project, we calculated an ‘equivalent per square- foot fee’ by dividing the fee that the project would have paid under the current rules (assuming no on-site units) by the gross square footage. The equivalent per square-foot fees ranged from $38 to $65. The typical fee was approximately $45 which corresponds to an average unit size of 705 square feet.6 Figure 4 shows the distribution of average unit sizes and equivalent square foot fees.
Figure 4: Impact of unit size on equivalent square foot fee calculation 6 This excludes several outlier projects with very large or very small units.
14 Figure 5 shows a sample of recent projects in order to illustrate the impact of switching to a per square-foot fee. Under the current per unit fee, projects that have the same number of units like Avalon and Hillside Village would pay the same amount of fee. The equivalent per square- foot fees ($37.91 vs. $48.14) show that Avalon is getting a much better deal by paying less relative to its size.
The per square-foot fee adjusts for the difference in project sizes. If Berkeley switched to a standard fee of $45 per square-foot, projects with small units such as the Delaware Apartments would pay a lower total fee while projects with large units such as Higby would pay higher total fees.
Figure 5: Equivalent per foot fees for recent projects - Examples Project Name Total
Units
Average
Unit
Square
Footage
Current Fee
(Assuming
$39,746 per
unit)
Equivalent
Per square-
foot Fee
Projected
Fee
(assuming
$45/sq.foot)
Higby 98 864 $3,895,108 $36.82 $4,760,145
Avalon 94 839 $3,736,124 $37.91 $4,434,615
Stonefire 98 782 $3,895,108 $40.65 $4,311,900
Hillside Village 94 661 $3,736,124 $48.14 $3,492,405
The Dwight 99 617 $3,934,854 $51.57 $3,433,680
The Delaware 51 581 $2,027,046 $54.72 $1,667,025
15 For comparison, Figure 6 provides fee levels for nearby jurisdictions.
Figure 6: Comparison of Inclusionary Housing Requirements and Fee Levels for Other Jurisdictions City % Affordable
Housing Required
On-site
Fee Notes
Alameda 15% for all
multifamily projects
$20,342 Per Unit No alternative to
fee for buildings
of 9 or fewer
units
Emeryville 20% for all
multifamily projects
$31,032 Per Unit
Fremont 12.9% for rental $27.00 Per
Residential Square
Foot
Hayward 6% for rental,
10% for ownership
$19.37 Per
Residential Square
Foot
Lower fees for
high-density
condos
Livermore 10% downtown, 15%
everywhere else
$29.23 Per
Residential Square
Foot
Projects with 10
or more units
may not pay fee
Oakland 10% if low- or
moderate- income
units, 5% if very low-
income units
For multi-family:
$22,000 per unit in
Zone 1, $17,750 in
Zone 2,
$12,000 in Zone 3
Pleasanton 15% for all
multifamily projects
$45,083 per unit
San Francisco 20% for small
projects, 25% for
large rental, 33% for
large ownership
$199.50 Per Gross
square foot times
affordable percent
Equivalent to
$60 per square-
foot for many
projects.
San Jose (proposed) 15% for all
multifamily projects
Moderate Market
Areas: $18.26 per
net residential foot
Strong Market
Areas: $43
16 The current AHMF ordinance allows developers to choose between paying a higher fee (currently $39,746) at the Certificate of Occupancy when a project is nearly complete or a reduced fee (currently $36,746 ) earlier when a project receives a building permit. Nearly all projects have selected the higher fee because of the high value that developers place on the ability to pay the fee later. Paying later reduces their financing costs and lowers their overall financial risk. Removing the option to pay early would recognize this reality and eliminate an additional element of administrative complexity and communication challenge.
The existing Affordable Housing Mitigation Fee is automatically adjusted by the annual percentage change in the California Construction Cost Index published by the California Department of General Services, every other year. The automatic adjustment is applied to all projects that have not received final approval by the City of Berkeley prior to the date of the automatic adjustment. This automatic adjustment ensures that the fee keeps pace (roughly) with what it costs the City and its nonprofit partners to construct new affordable housing using the fee revenue. This method should remain in place.
3. Evaluate the potential for higher fees when the market is stronger Proposed Change:
3.1. In order to encourage more on-site units, phase in a slightly higher fee once the housing market has stabilized. Conduct an updated feasibility analysis within 3 years, increase the per square-foot fee if the analysis shows that typical projects could support the higher fee.
Background and Analysis:
Under current market conditions, Berkeley’s on-site compliance option (20%) is significantly more costly for most projects relative to the cost of the Affordable Housing Mitigation Fee or In-lieu Fee. This creates an incentive for projects to choose to pay the fee instead of providing units on-site. In spite of this incentive, the majority of projects have provided some level of on- site units because the State Density Bonus provides an even stronger incentive to include affordable units on-site, and the units count against the fee obligation as well.
Ideally, the on-site unit and in-lieu fee requirements would be more closely aligned so that they represented similar costs for most projects. This kind of alignment would likely result in a higher number of on-site units without entirely eliminating the fee revenue which is critical to Berkeley’s HTF program. Aligning the economics of these two options would require either raising the fee or lowering the on-site requirement considerably.
17 In rough terms, the on-site requirement would need to be lowered to about 15% in order to represent a cost to most rental projects that was equivalent to the cost of the current AHMF.
However, none of the local stakeholders we spoke with suggested that there would be public support for lowering Berkeley’s on-site requirement.
A number of stakeholders, on the other hand, suggested raising the fee. This seems to be the more obvious path to aligning the cost of the two options and increasing the share of units on- site. However, our feasibility analysis (Appendix A) suggests that 2021 would be a particularly risky time to raise the affordable housing fee. The Covid-19 pandemic has created uncertainty in the real estate market. Rents in Berkeley have fallen significantly and rents in high-cost newly constructed buildings may have fallen more than the average. At the same time, construction costs have not (yet) fallen leaving most multi-family housing developments in a precarious position. Builders are still moving forward with new rental buildings in Berkeley but the City’s volume of new applications has fallen relative to recent years. It seems likely that Berkeley will continue to be a desirable location for new housing over the long term but it is not yet clear whether there will be a protracted slow down in new building throughout the region following the pandemic.
While the level of local fees, including affordable housing fees, is just one small factor that developers consider when they decide whether or not to move forward with a project, Berkeley already charges more than most other East Bay jurisdictions and increasing the fee at this time could contribute to a greater slow down in new building.
For this reason, we are recommending that Berkeley allow for a period of housing market recovery before considering an increase in the Affordable Housing Fee. The City could plan on an update to the feasibility analysis in one to three years or wait for evidence that either rents have begun increasing or that construction costs have begun to fall before reconsidering the level of the fee.
4. Incentivize Extremely Low-Income (30% of AMI) units
Proposed Changes:
4.1. Require all VLI Units to be offered to voucher holders (50% to Housing Choice Voucher Holders and 50% to Shelter + Care Voucher Holders) before being marketed to other income eligible households.
Alternative:
4.2. Retain the current rules which require 40% of VLI units be offered first to Housing Choice Voucher Holders and another 40% be offered first to Shelter + Care Voucher Holders.
18 Background and Analysis:
A number of local stakeholders have expressed a desire to see Berkeley’s program provide relatively more units to serve Extremely Low-income (ELI) households (below 30% of Area Median Income) who face the most acute housing challenges.
Some cities achieve this by creating a formula which allows developers to substitute a smaller number of units targeting Extremely Low Income residents for some portion of otherwise required on-site BMR units. Los Angeles’s Transit Oriented Communities (TOC) program requires affordable units in exchange for a significant density bonus. The TOC program allows developers to choose between providing a greater number of low-income units or a smaller number of more deeply affordable Extremely Low Income units. Even though the rents on the ELI units are much lower, many developers have chosen this option because they can provide fewer affordable units (and more market rate units). Between 30% and 50% of the BMR units produced through the program have targeted ELI households and this program has driven a significant increase in the total number of income restricted ELI units produced in LA. In 2020, 34% of new BMR units in LA were restricted to ELI tenants.
While this type of approach might increase the number of ELI units in Berkeley, it is worth noting that Berkeley is already a national leader in serving ELI households through inclusionary housing. Currently 29% of Berkeley’s BMR tenants have incomes below 30% of AMI and the share of ELI tenants is likely to increase noticeably under current rules. Berkeley’s AHMF requires that at least half of BMR units must target 50% of AMI and, of those, 40% must be offered first to Housing Choice voucher holders from the Housing Authority and another 40% must be offered first to Shelter Plus Care voucher holders managed by the City’s Housing and Community Services division. Voucher holders in both programs generally have incomes well below 30% of AMI. And because of the acute shortage of inexpensive market rate housing, most of the households that receive vouchers in Berkeley are unable to use them in the market.
This approach has benefits for developers as well. The City allows the property to receive the contract rent offered by the subsidy program as long as the tenant’s share of rent is below the BMR limit. The contract rents are generally far below the market rent for brand new buildings but also quite a bit higher than the BMR affordable rent for 50% AMI units. Because of the voucher, the ELI tenants, on the other hand, generally pay much less than the 50% AMI affordable rent.
In addition, because of the way Berkeley’s requirements interact with the State Density Bonus (SDB), developers tend to favor the 50% AMI units. As a result, 77% of Berkeley’s BMR units approved since 2012 have been regulated as 50% AMI units. If this pattern continues and, going forward, 80% of these units are reserved for voucher holders, then we would expect voucher holders to make up 62% of new BMR tenants.
A 2020 State law (AB 2345) expands the SDB beginning in January 2021. Developers will now be allowed to build 50% more units if they provide at least 15% VLI units (among other options). This new law should result in a greater number of on-site VLI units and, as a result, a greater number of ELI/voucher tenants. At some point, it is likely that the City would exhaust
19 the supply of unused vouchers and some of these units would ultimately be leased to Very low Income tenants (below 50% of AMI) instead.
In addition to its success in serving ELI tenants in BMR units, the City currently requires that at least 20% of units in all projects funded with the Housing Trust Fund be affordable to ELI tenants.
Requiring that all VLI units first be offered to voucher holders would slightly increase the share of ELI tenants housed going forward while also removing an element of complexity from the program and simplifying otherwise complex rounding issues.
5. Adjust the residual fee for mixed compliance projects Proposed Change:
5.1. Encourage more mixed compliance projects by changing the calculation of the remaining fee due when projects provide less than 20% affordable units on-site.
Restructure the remainder fee so that providing VLI (50% AMI) units reduces the fee due by more than providing LI (80% AMI) units.
Alternative:
5.2. Continue the current practice of providing the same reduction in fee for any units, whether they serve VLI tenants or LI tenants.
Background and Analysis:
Currently rental projects that provide 20% affordable units on-site are exempt from the Affordable Housing Mitigation Fee (AHMF). Half of these units must be for Very Low Income (VLI) residents earning less than 50% of AMI and half must be for Low Income (LI) residents earning less than 80% of AMI. When a developer provides a portion of the required units on- site, the City has a formula that is used to determine the remaining fee. For example, if a project provides half of the required on-site units, they also owe half of the fee that would have been due. In order to access the benefits of the State Density Bonus, the majority of recent projects have selected this mixed compliance option.
Under the current rules, providing any on-site affordable housing unit reduces the fee that is due by the same amount regardless of whether the unit provided is a LI or a VLI unit. But because the VLI units rent for much less, they are much more costly to provide on-site. When a developer agrees to provide any permanently affordable unit, they will receive less rental income from that unit throughout the life of the project than they would from a market-rate unit. As a result, each affordable unit in a project decreases the value of a building - the amount that a building could be sold for. Street Level Advisors estimated the cost of providing these units on-site for a hypothetical six story project and found that a VLI unit reduces the value by $483,000 while a LI unit reduces value by $340,000.
20 One way to encourage more projects to provide some units on-site would be to restructure the remainder fee so that providing VLI (50% AMI) units reduces the fee due by more than providing LI (80% AMI) units. Based on the relative affordable rents, providing 10% VLI units could relieve the developer of $30 of the $45 per square-foot remainder fee, while providing 10% LI units could relieve them of only $15 of the $45 per square-foot fee. Projects providing fewer than the 10% of units required in either category would pay a fee adjusted proportionally.7
Figure 7: Examples to illustrate partial compliance - 100 unit project Example VLI units LI Units Fee
On-site Only 10 10 $0
Fee Only 0 0 $45
Only VLI 10 0 $15
Only LI 0 10 $30
Half Each 5 5 $22.50
11% VLI 11 0 $12
15% VLI 15 0 $0
This change would increase the feasibility of the mixed compliance options and should result in on-site units from some projects that would have otherwise selected to pay the fee. However it is important to note that this mixed compliance option is already the most popular option and appears to be financially feasible without this change.
6. Standardize ownership fees
Proposed Change:
6.1. Apply the same per square-foot fee for both rental and ownership units. Continue to require different income targeting for ownership units. 7 The formula for calculating the reduction in fee could be (Full Fee* 1.33 / 20) * (actual % of VLI units) + (Full Fee * .67 /20) * (actual % of LI units). If the full fee is $45 per square-foot, then each 1% of VLI units would reduce the fee due by $3 per square-foot and each 1% of LI units would reduce the fee by $1.50 per square-foot.
21 Alternative:
6.2. Charge any project that chooses to record a Condominium Map a higher fee of $55 per square-foot.
Background and Analysis:
Many local stakeholders are under the impression that Berkeley’s current Inclusionary In-Lieu Fee for ownership projects is higher than the Affordable Housing Mitigation Fee for rental projects. Berkeley has seen very few ownership projects in recent years, so it is difficult to directly compare, but our analysis suggests that this is true, both on a per unit and per square- foot basis.
In lieu of each affordable unit, the current Inclusionary Housing Ordinance allows payment of a fee equal to 62.5% of the difference between the market price and the “affordable” price. To estimate the equivalent per square-foot fee that this rate yields, we used proprietary data from Property Radar to calculate average square footages and market values for Berkeley condos, shown in Figure 8.
Figure 8: Condo pricing estimates
Berkeley Condo Sales 2021 Prototype (New Building)
Unit Size Avg Sqft Avg Value Projected Value
Studio 646 $620,752
1-BR 814 $703,556 $725,000
2-BR 1117 $853,125 $925,000
3-BR 1571 $995,797 $1,100,000
It is likely that newly built condos would sell for higher than average prices but there have not been enough Berkeley condo projects in recent years to calculate appropriate projections for new buildings only. We have assumed sale prices for newly built condo units would be roughly 5 to 10% higher than the citywide average condo sales prices.
The IHO defines the affordable price for the purpose of calculating the fee as three times (3x) the Area Median Income (AMI) adjusted for household size. We used those prices to estimate in lieu fees. We then multiplied those numbers by 20% to yield the equivalent per unit fee, which range from $48,000 to $85,000. This suggests that the fees required for ownership projects in the IHO are indeed higher than the $39,746 per unit currently required for rental
22 projects under the AHMF. Our estimates for the equivalent per square-foot fees for ownership projects range from $54 to $75, which is higher than the typical equivalent per square-foot fees that we found for rental projects. Projects with very high cost condo units would face even higher fees.
Figure 9: Estimated BMR Ownership Fees 2021
Unit Size Sq Ft Market
Price
Affordable
Price
In Lieu Fee In Lieu Fee
Per Unit
In Lieu Fee
per Sq Ft
Studio 646 $620,752 $234,960 $241,120 $48,224 $75
1BR 814 $703,556 $250,650 $283,066 $56,613 $70
2BR 1117 $853,125 $282,000 $356,953 $71,391 $64
3BR 1571 $995,797 $313,200 $426,623 $85,325 $54
Note that the median condo value in Berkeley has risen dramatically in recent years, from a low of $364,000 in 2012 to $900,000 in January 2021.8 Because prices have risen much faster than income, the in lieu fee has risen too.
We analyzed the financial feasibility of the current fees for hypothetical affordable ownership projects (Appendix A) and found that the current fees resulted in profits that fall below commonly used benchmarks for necessary profit. High cost condos might be able to pay the fee and earn the minimum required profit but projects with sales prices closer to Berkeley’s average condo prices were not. However, under current conditions, more typically priced condos were able to pay the proposed rental fee of $45 per square-foot and remain financially feasible. While there have not been enough condo projects in Berkeley recently to draw strong conclusions, this exercise lends support to the assertion that the relatively high level of Berkeley’s fee for ownership projects is contributing to developer’s choice to build rental rather than ownership housing.
The current policy appears to discourage homeownership development. Some local stakeholders have expressed an interest in adjusting the policy to give developers, and ultimately Berkeley residents, more choice between rental and homeownership housing.
Setting the fee at $45 per square-foot for both types of project would level the playing field considerably. The typical ownership unit would still pay more because ownership units tend to be larger. As an alternative, many cities charge homeownership units slightly more. Setting 8 Zillow Home Value Index for Condos/Co-ops, https://www.zillow.com/berkeley-ca/home-values
23 Berkeley’s fee at, for example, $55 per square-foot for ownership projects would slightly disincentivize ownership but by less than the current fee approach.
Addressing rental projects that record condo maps
Another reason to consider standardizing the fee between rental and ownership projects stems from the fact that a growing number of new multi-family buildings are recording condominium maps but opening initially as rental housing projects. This gives project owners the flexibility to later sell the rental units as condos if housing market conditions change. The added flexibility makes it easier for developers to access project financing or to access financing on better terms.
For projects that provide on-site affordable rental units, the City records restrictions which require that the BMR units remain affordable rentals for the life of the project. But the potential for projects that are initially rental and pay the AHMF but later convert to ownership is not addressed in Berkeley’s current code. Projects that paid the AHMF as rental projects and later sold condo units would owe an additional fee, but monitoring and collecting this fee is administratively and legally challenging.
Some cities have responded to this trend by requiring projects that record a condo map when they are first built to pay a higher affordable housing fees that would be due for ownership projects even if the building is initially operated as rental housing. This would not be practical under Berkeley’s current approach because the ownership in lieu fee is set based on the actual sale price of units but those may not be determined for many years (if ever). Setting a single in lieu fee that would be applied to both rental and ownership projects at the time of development would eliminate this complexity. Alternatively, setting a higher fee per square- foot for projects with a Condo Map would also provide a practical alternative, though it might increase costs on rental projects that are not likely to ever actually convert to ownership but need the Condo Map in order to access certain financing sources.
7. Standardizing Live Work and GLA requirements
Proposed Change:
7.1. Remove the exemption for Live / Work projects from IHO/AHMF ordinances; apply the same requirements to Live / Work projects as any other project except for the “affirmative marketing” provision
7.2. Remove the exemption for units with Group Living Accommodations (GLA) tenancy (and consider retaining an exemption for University-recognized GLAs) Background and Analysis:
A 2018 Council Referral (2018-09-12, Item 17) called for the elimination of the affordable housing requirements in the Live Work Ordinance and removal of the live/work exemptions
24 from both the IHR and AHMF ordinances. This action would simply apply the Inclusionary Housing or AHMF ordinances to Live Work exactly as they are applied to other projects.
Live/Work units are currently exempt from both the Inclusionary zoning ordinance and the Affordable Housing Mitigation fee. Instead, Berkeley’s Live Work Ordinance (Berkeley Municipal Code 23E.20) requires projects that create 5 or more Live/Work units to include 1 inclusionary unit affordable to 80% of AMI for every 5 Live/Work units created. The inclusionary requirements in the Live/Work ordinance differ from the requirements applied to other projects. Affordable units under the Live/Work ordinance are all targeted to 80% of AMI. In addition, the Live Work Ordinance specifically allows inclusionary Live/Work units to be smaller, have lesser finishes and be located anywhere in a project while both the IHR and AMHF ordinances require units to be the same size, have comparable finishes and be distributed throughout a project.
There is one provision of the Live/Work ordinance which is specific to Live/work affordable units which it would make sense to retain or move to the new ordinance. Inclusionary live/work units must be affirmatively marketed to “income-eligible persons performing a work activity permitted in the District where the project is located whose type of work causes them to have a requirement for a space larger in size than typically found in residential units.” The ordinance currently provides no standards for documenting tenants’ need for live/work space or rules for waiving this requirement in the event that a tenant with this need cannot be found within a reasonable period.
The ordinance currently exempts Group Living Accommodations (GLA) units, but because this classification represents a type of tenancy rather than a specific type of unit, it would make sense to subject GLA units to the Affordable Housing Requirements like any other unit.
Fraternities, sororities, and other specially designated units managed by the University would retain their exemption. Further study could be necessary to assess the impact of this change on project feasibility.
8. Add a land dedication option
Proposed Change:
8.1. Add a land dedication option which authorizes the City Manager to approve donation of land to the City or an approved nonprofit housing developer. Donated land must be appraised for a value of at least 75% of the in lieu fee which would otherwise be due, be sufficiently sized and zoned to support multifamily housing development and otherwise be suitable for affordable housing development.
Alternative:
8.2. Don’t add a land dedication option - continue with two compliance options; on-site units or in lieu fee, though this would leave projects newly excluded from the on-site option with only one compliance option.
25 Background and Analysis:
Some stakeholders have suggested that the program would be stronger if Berkeley allowed developers to comply by providing off-site affordable projects, preserving existing ‘naturally occurring affordable housing’ or dedicating land for affordable housing development. We evaluated the feasibility of adding off-site and preservation options and concluded that Berkeley currently lacks the staff capacity necessary to effectively implement these complex options. However, it is worth noting that the City can and does use in lieu fee revenue collected to finance both off-site projects and preservation/rehabilitation projects. By collecting fees and then going through the existing procedures for the HTF and Small Sites programs, the City avoids the need to develop new detailed rules and closely monitor developer implementation of these alternatives.
The third option, land dedication, however, provides an outcome which the City cannot achieve on its own through the use of fee revenue. While this option also would require detailed rules to avoid abuse, it may be less challenging than off-site or preservation options and is likely to be used in far fewer cases.
Access to sites is one of the key barriers facing affordable housing developers. Market rate developers sometimes end up with control over sites which could be better used for affordable housing. Sometimes market rate projects are large enough to set aside a portion for affordable housing. In these, somewhat rare, cases, it is sometimes more affordable for the developer to donate land for affordable housing than to build on-site units or pay an in lieu fee. If the donated site is appropriate for affordable housing, it can save significant time and make new projects possible. Of course, if sites are not appropriate, land donation can result in a significant burden on City resources. If the policy were to include a land dedication option, the City would need to develop detailed guidelines which outlined site requirements and retain the option to only accept sites when there is a high probability that they will be developable for affordable housing including, for example, expressions of interest from local affordable housing developers.
9. Provide a family sized units option
Proposed Change:
9.1. In lieu of providing 20% of units at affordable prices, allow projects to provide affordable units comprising 20% of the Gross Residential Floor Area in the project provided that at least 50% of those units are in 2 or 3 bedroom units.
Background and Analysis:
Berkeley’s IHR and AHMF ordinances currently require that on-site BMR affordable units be of the same type and size as market rate units in the property. As the cost of construction has risen, there has been a trend for market rate projects to include smaller and smaller
26 apartments and this has meant that the BMR units have been shrinking as well. Some stakeholders have asked the City to consider ways to incentivize more ‘family sized’ units even in buildings where the market rate units are quite small. This request has been made at the same time that other stakeholders have called for the City to actively discourage units with high bedroom counts (i.e., co-living units).
It seems that in the current context the City should be encouraging 2 and 3-bedroom units but not larger ones. One way to achieve this is to require that projects set aside a given percentage of floor area for affordable housing instead of a percentage of units if the majority of those units are 2 and 3-bedroom units.
When New York City adopted their Mandatory Inclusionary policy for the first time in 2016, rather than requiring a percentage of units be affordable, they required that the affordable units make up a percentage of net residential floor area.9 This allows developers to include larger or smaller affordable units. Projects offering smaller BMR units may need to provide more units and projects offering larger units would provide fewer units. Cambridge, MA, a city with size and demographic similarities to Berkeley, also switched to this method in 2017, but with the additional condition that large developments (30,000 square feet or more) are required to include 3-bedroom affordable units.10 Both of these approaches would add considerable complexity to already complex rules in Berkeley. The proposed change would continue to require 20% of units for most Berkeley projects, but would add an alternative for projects that chose to offer mostly 2 and 3 bedroom BMR units.
10. Simplify the requirements for condominium conversions Proposed Changes:
10.1. Calculate the Condo conversion fee at 8% of the market value of converted units.
10.2. Reduce the conversion fee to 4% for any unit that is and has been occupied by an owner as his or her principal place of residence for at least 5 consecutive years immediately prior to the date that the fee is paid, including as a tenant in that unit immediately prior to ownership.
10.3. Also reduce the conversion fee to 4% for any co-housing unit, any unit that is part of a housing cooperative, or conversion undertaken by a nonprofit developer.
10.4. Continue to allow a further 25% discount in the fee if it is paid at the time of conversion rather than at the time of sale of condo units.
10.5. Add flexibility in the use of conversion fees. Allow up to 10% of conversion revenue to be used for Condominium Conversion program delivery and/or Housing Trust 9 New York City Mandatory Inclusionary Housing Program, https://www1.nyc.gov/site/planning/plans/mih/mandatory-inclusionary-housing.page 10 City of Cambridge Inclusionary Housing,
https://www.cambridgema.gov/CDD/housing/inclusionaryhousing
27 Fund program and project monitoring and enforcement or related program administrative costs with the remaining 80% placed into the Housing Trust Fund.
Background and Analysis:
Berkeley’s Condominium conversion ordinance (CCO) (Berkeley Municipal Code [BMC] Chapter
21.28 et seq.) requires payment of an Affordable Housing Mitigation Fee at the time that rental properties are converted to condominium ownership. Between 1992 and 2009 this mitigation fee recaptured essentially the entire difference in affordability that resulted from conversion.
This had the effect of discouraging conversions. In 2005, the state Court of Appeal held that cities could not prohibit conversion of rental units to Tenants in Common ownership (TIC). Since then, the City has sought to encourage conversion of rental units to condominiums rather than TICs because of difficulties that can arise for people who invest in TIC properties. It has done so by imposing a de facto cap on the affordable housing mitigation fee charged for conversion to condominiums since 2009.
Nexus Fee Calculation: Under the current ordinance the AHMF for condo conversions is calculated through a complex ‘nexus formula’ that considers costs of ownership, rental and mortgage rates. Alternatively, owners can choose to pay 8% of the sales price (or 4% for 2-unit buildings) instead of the Nexus Fee if they agree to limit rent increases for any existing tenants.
This alternative calculation generally results in much lower fees. As a result, the nexus-based fee method has been used very rarely. We recommend that all condominium conversions be subject to the 8%/4% fee, and that all sitting tenants be provided protections and an opportunity to purchase.
Examples:
Nexus Formula: Rental Costs = $1,500 per month x 12 months/year = $18,000 annually Ownership Cost (including principal, interest, taxes, insurance, and homeowners’ association dues) = $2,700 per month x 12= $32,400 Assume a mortgage rate of 6.5 percent. Increased housing cost due to ownership conversion of the unit = $32,400 - $18,000 = $14,400 Mitigation Fee = $14,400/0.065 = $221,538 Alternative Formula: Sale price for converted unit = $400,000. If owner agrees to limit rents to existing or future tenants. Mitigation fee = 8% x $400,000 = $32,000.
Discount for Owner Occupants/Tenant Conversion: Currently, the condo conversion ordinance provides a 50% reduction in the fee to owners who have lived in their units for the 5 prior years. However, only owners who resided in their units on June 30, 2010 are currently eligible.
If the property contains three or more units, the affordable housing mitigation fee for a unit that is occupied by an owner as their principal place of residence for at least 5 consecutive years immediately prior to the date of sale, including as a tenant in that unit immediately prior to ownership, shall be reduced by 50 percent, but only if the owner owned and resided in the unit as of June 30, 2010.
28 A Council referral had proposed to extend the 50% reduction to tenants in addition to owners who have lived in a unit for at least 5 years prior to conversion so long as the building was 4 or fewer units.
If the property contains 4 units or fewer, the affordable housing mitigation fee for a unit that is and has been occupied by an owner as his or her principal place of residence for at least 5 consecutive years immediately prior to the date of conversion or sale, including as a tenant in that unit immediately prior to ownership, shall be reduced by 50 percent.
It is not clear why this tenant conversion benefit should be limited based on building size. The current ordinance is limited to properties with 3 or more units while the referral was limited to 4 or fewer units. The proposed change would apply to owner occupied or tenant purchased units in buildings of any size.
Although instances of condominium conversion by nonprofits, in co-housing projects, or in housing cooperatives are quite rare, it makes sense to extend the fee reduction to these cases as well.
Use of Fee Revenue: The current condo conversion ordinance does not allow any of the Mitigation Fee revenue to be used for program administration, but the program can be staff- intensive to implement. The AMHF and IHR Ordinances allow a portion of fee revenue to be used for program administrative staffing.
11. Prohibit on-site units for Group Living Accommodation (GLA) Proposed Change:
11.1. Prohibit projects with an average of more than 3 bedrooms per unit from selecting the on- site option in order to reduce administrative burdens.
11.2. Adopt a local density bonus that enables these projects to access the benefits of the State Density Bonus in exchange for an increased in lieu fee instead of on-site units.
Background and Analysis:
Group Living Projects: It is challenging to regulate and monitor BMR units in co-living and group living projects where individuals generally lease bedrooms not apartments. It is difficult to find eligible households who can both qualify for and afford 4-bedroom or larger BMR units and the households that would most benefit from large BMR units might be less interested in living in a building that was primarily targeting students and young adults. Additionally, it is typical for groups of unrelated adults renting larger units together to change composition frequently, which makes maintaining current documentation of eligibility more complicated for owners and therefore compliance more difficult for the City to monitor.
29 Local Density Bonus: Berkeley cannot prevent developers from providing on-site affordable units in order to qualify for the benefits of the State Density Bonus (SDB). It would be possible for the City to simply require some projects to pay the full fee even if they provide on-site units for the purpose of accessing the density bonus but this would impact the feasibility of small projects and projects that provide large bedroom count units. An alternative would be for the City to adopt a limited local density bonus program for these projects that are not allowed to provide on-site units under the City’s ordinance. This local bonus could provide access to all of the benefits of the State Density Bonus (including additional density and other planning concessions) in exchange for a fee rather than on site units. We calculated that, for a typical rental project, providing 11% (of base units) on-site increases the cost of compliance relative to paying the fee only by $10 per square-foot. If a local density bonus offered the benefits of 35% increased density and other concessions to projects that paid $55 per square-foot (instead of $45) this option would be no more or less attractive to developers than the current State Density Bonus option. In other words, if a co-living project could access the density bonus in exchange for a fee of $55 per square-foot they would generally choose that option rather than provide onside units.
12. Change requirements for small projects/missing middle projects Proposed Changes:
12.1. Eliminate exemption for 1-4 unit projects and replace it with a tiered fee that steps up gradually for projects with less than 12,000 gross residential square feet, by reducing the fee by $2 per square-foot for each 1000 square foot increment less than 12,000.
12.2. Offer a local density bonus, equal to the State Density Bonus, to projects providing <5 BMR units that choose the in lieu fee.
Alternative:
12.3. Eliminate exemption for 1-4 unit projects and expect even very small projects to contribute the full fee.
Background and Analysis:
Currently both the AHMF and the Inclusionary housing ordinance exempt buildings with 1-4 units. Presumably this exemption was motivated by a sense that very small projects would have a harder time absorbing the cost of including affordable housing into their budgets. While this is often, but not always true, there is no reason to think that suddenly at 5 units a project budget can easily afford to comply. There is a much wider range of ”missing middle”-type projects that may be feasible in Berkeley at a small scale which may also struggle to meet the City’s requirements. Many of these projects may be larger than 5 units.
At the same time there has been significant concern in Berkeley about the potential that developers may segment larger projects into several smaller 4-unit projects in order to circumvent the inclusionary housing or AHMF ordinance. By exempting very small projects but
30 then suddenly imposing the full requirement at a certain point, the current ordinance creates an incentive to build projects in 4-unit increments.
One approach to this challenge would be to impose the fee (at some level) on every project (with the exception of Accessory Dwelling Units), but to reduce the fee for small projects.
Many cities just impose a lower fee for smaller projects. San Jose just amended their program to set the fee at a level that is 50% lower for projects with fewer than 20 units. However, this approach still creates a big step up at 20 units. An alternative is to gradually phase in higher fees as the size of the project increases. Figure 10 shows the schedule that would result from a $2 decrease in the fee for each increment of 1000 gross residential square feet below 12,000.
Figure 10: Proposed schedule for small project phase-in Gross Residential Square Feet Fee per square-foot
12,000+ $45
11,000-11,999 $43
10,000-10,000 $41
9,000-9,999 $39
8,000-8,999 $37
7,000-7,999 $35
6,000-6,999 $33
5,000-5,999 $31
4,000-4,999 $29
3,000-3,999 $27
2,000-2,999 $25
1,000-1,999 $23
<1,000 $21
Reducing the fee for small projects would have an uncertain impact on Berkeley’s future fee revenue. The City would collect less revenue from small projects with at least 5 units, but would begin collecting fees from 1 to 4 unit projects. Offering a local density bonus to projects providing less than 5 BMR units that choose the in lieu fee would likely reduce the number of projects with a small number of on-site BMR units that need to be monitored while also increasing total fee revenue.
Small projects pose a special challenge for program administration and monitoring. Monitoring compliance for a building with one or two regulated units requires a similar investment of staff time as a project with 20 BMR units. Often the owners of smaller buildings have fewer resources and less outside professional property management support and as a result, they often find the burdens of compliance more challenging, and require relatively more intervention and training from City staff.
Many cities address this by encouraging developers of small properties to select the fee or other option rather than providing on-site BMR units which may prove difficult to monitor.
31 Redwood City prohibits the on-site units option for projects with fewer than 20 total units, effectively requiring these projects to pay the in lieu fee.
In Berkeley, however, because so many projects select mixed-compliance, there is a real risk that projects with more than 20 total units could end up including only a very small number of on-site BMR units. For example a 40 unit project selecting on-site compliance (20%) would provide 8 BMR units but if they chose to only provide 10% on-site and pay a fee for the remainder they would only provide 4 BMR units on-site. Removing the on-site option for projects that would result in fewer than 5 BMR units would force these projects to either pay the fee entirely or fully comply through the on-site option. Either option would simplify monitoring enormously.
13. Cap the annual rate of rent increases
Proposed Change:
13.1. Limit the annual increase in BMR affordable rents for occupied units to no more than the annual change in the Consumer Price Index. Allow rents to be marked up to the maximum ‘affordable’ rents based on HUD AMI calculations whenever units turn over.
Alternative:
13.2. Limit the annual rent increase to no more than 10% in any single year.
Background and Analysis:
Sudden increases in the Area Median Income can result in large changes in the allowable affordable rent which can negatively impact BMR tenants. Similarly, some property owners fail to annually adjust rents as allowed by the current ordinance. They are allowed to ‘catch up’ by raising the rents by a larger amount later but this too can cause sudden shocks in rent for vulnerable tenants.
Limiting the amount that rent can be increased for occupied BMR units would provide stability and predictability for tenants. This change, however, will have a real impact on the operating budgets of projects with on-site BMR units. The current rules tie rents to changes in the Area Median Income (AMI). Over the past several decades the AMI has risen quite a bit faster than the Consumer Price Index. While the AMI is generally a measure of what people in the area earn, the rapid increase in the AMI has been driven, in part, by the growth of high paying jobs and the influx of higher income residents throughout the Bay Area rather than a rise in the wages and other income that lower- income residents earn. As a result, ‘affordable’ rents have risen faster than what many low-income tenants can comfortably ‘afford.’
Limiting the rate of rent increases will have a real impact on the operating budgets of buildings that include on-site units. As long as units remain occupied, the rents may rise
32 more slowly than building operating costs. It is likely that this change in policy will make the on-site option slightly less attractive to developers and increase the likelihood of projects selecting to pay the fee in lieu. However, a growing number of Berkeley projects are including on-site VLI units and then filling those units with residents who hold housing vouchers. The policy should continue to allow these properties to collect the full voucher payment standard which might increase faster than CPI without impacting affordability for the residents. This reliance on vouchers should mean that many density bonus projects would not be impacted by a rule tying rent increases to CPI.
14. Administrative changes
a. Require compliance plans
Proposed Change:
14.1. Require developers of new projects to submit a simple Affordable Housing Compliance Plan at the time of Building Permit application indicating their proposed strategy for complying with the requirements of the AHR ordinance. Allow revisions to this plan at any time prior to the Certificate of Occupancy.
Background and Analysis:
Currently developers can wait until their projects are built and applying for a Certificate of Occupancy to inform the City of their intended strategy for complying with the AHMF or Inclusionary Housing Ordinance, including whether they intend to pay the fee or provide some or all of the required on-site units. Requiring developers to indicate a proposed strategy earlier in the process a) allows city staff to make plans for monitoring units or project fee revenue so that it can be invested quickly and b) ensures that developers are fully understanding Berkeley’s requirements early in the development.
Many cities provide a simple fill in the blanks template for this purpose and allow projects to change their plans at a later date by simply submitting a revised plan. b. Authorize administrative citations
Proposed Change:
14.2. Explicitly authorize the creation of a proposed schedule of fines for monitoring and compliance violations to be included in the program guidelines.
Background and Analysis:
Other jurisdictions have found that having the ability to impose monetary fines is an effective tool for encouraging developer and property manager compliance with
33 monitoring requirements. Explicitly authorizing citations in the ordinance might help clarify staff’s authority to impose these penalties.
c. Authorize annual monitoring fee for ownership units
Proposed Change:
14.3. Explicitly authorize the City to charge a fee annually to BMR Homeowners to offset monitoring costs. The fee would be assessed only on new owners going forward.
The fee would be included as a housing cost in calculation of the affordable sales prices so that buyers will pay less for their units in order to make the fee affordable.
Background and Analysis:
The City currently charges owners of rental properties an annual monitoring fee but no fee is charged to BMR homeowners.
d. Deduct required fees/costs from gross rent
Proposed Change:
14.4. Clarify this language in the ordinance to make it clear that mandatory fees or costs must be deducted from the maximum allowable rent for BMR rental units.
Background and Analysis:
Currently the AHMF ordinance calls for reduction in the maximum rent based on the anticipated cost of tenant paid utilities. Some properties impose other mandatory costs such as renter’s insurance or administrative fees. Current practice is to deduct any cost which is mandatory for BMR tenants from the maximum gross rent to calculate the affordable rent but this requirement is not currently outlined in the ordinance.
34 Appendix A: Financial Feasibility Analysis
Overview:
The City of Berkeley retained Street Level Advisors to recommend changes to its existing affordable housing requirements. Our policy recommendations are intended to increase the construction of affordable units while maintaining the financial feasibility of market-rate development. We conducted a financial feasibility study in order to understand the current housing development environment and predict how our recommended policies might affect this environment. Our study relies on a static pro forma analysis to estimate the return on investment that can be generated by typical residential developments in Berkeley.
For the rental prototype, we used a common measure of return known as yield on cost (YOC), or a project’s net operating income divided by the total development cost. Based on a review of current market conditions in Berkeley and the East Bay, we concluded that projects earning a yield of at least 5.0% would be “feasible” meaning that they would likely be able to secure investment. Projects earning slightly less (between 4.5% and 5%) would be considered “marginal” meaning that some projects in this category might be able to obtain financing while others might not. Projects earning less than a 4.5% yield we considered “infeasible.”
For ownership projects, the Yield on Cost cannot be calculated so we used a different measure of profitability: Profit as a percent of development cost, also called Return on Cost. Because of the lack of recent condo projects in Berkeley, we were unable to objectively determine the minimum necessary profit as a percent of cost for local ownership projects. As a point of reference, a common rule of thumb used in other studies considers projects “feasible” when profit exceeds 10-15% of development cost.
Our rental prototype is a 6-story, 72-unit development with a small amount of commercial space on the ground floor and one parking space for every two housing units. We estimate that under current conditions, rental projects that choose to pay Berkeley’s Affordable Housing Mitigation Fee (AHMF) earn a Yield on Cost of 5.08% - just barely above the feasibility threshold. Projects that provide on-site units earn a yield of 4.94% just under the threshold into the marginal category. However, economic conditions are in flux due to the COVID-19 pandemic, and new projects could become more feasible in the near future.
Our prototype, revenue, and cost assumptions are based on prior studies, comparable projects, and other market research. The remainder of this memo describes these assumptions and our methodology in more detail.
35 Prior Studies:
Over the past decade, the City of Berkeley has evaluated the financial feasibility of its affordable housing requirements several times. Our analysis builds on the feasibility studies conducted by these consultants.
The 2015 Bay Area Economics Nexus Study contains one section that addresses the financial feasibility of new rental housing. BAE estimated the Return on Cost for a four-story, mixed-use development in the C-W zoning district at two different fee levels. In their simplified model, all 81 units are 900 square foot two-bedrooms. BAE’s analysis suggested that the fee could be increased to $34,000 while maintaining the minimum necessary return on cost.
The 2016 Strategic Economics Feasibility Analysis tested a wider range of fee levels. Using a four-story model that is almost identical to the BAE model, they estimated the Yield on Cost at six fee levels between $0 and $84,391. Strategic Economics considered Yield on Cost because it is a more accurate measure of feasibility for rental housing than Return on Cost. The minimum Yield on Cost required for feasibility in their analysis was 6.5% reflecting the higher interest rate environment in 2016. They found that new developments would be marginally feasible if the fee was $45,000 and infeasible if the fee was any higher.
Together, the BAE and Strategic Economics analyses suggested that new rental development would be feasible at fee levels equivalent to and above the current level.
Prototypes Studied:
Rents and construction costs have escalated dramatically since the Strategic Economics analysis was published. Our recent data shows that rents are over 30% higher and the construction costs per square-foot in our model below are nearly double those in the Strategic Economics report. Our specific revenue and cost assumptions are described in the next section.
Because of these trends, the type of development project that both BAE and Strategic Economics used as their example would no longer be financially feasible in Berkeley. Driven by these same trends, the types of development projects being undertaken in Berkeley have shifted. Developers have responded to rising construction costs by building smaller units, fewer parking spaces and taller buildings on smaller lots. Figure 1 shows that developers of multi- family buildings in Berkeley have been primarily proposing 5-8 story buildings in recent years.
36 Figure 1: Permit applications for residential project with >20 units 2016 – 2020
Following these trends, we have used a slightly different prototype to test feasibility in today’s market. Our prototype is a 6-story building with wood frame residential over a concrete podium. Where BAE and Strategic Economics assumed a 1-acre lot, we have assumed a half- acre. Our prototype includes 72 housing units and 3,000 square feet of commercial space (see Figure 2). Our model is taller but contains fewer units and less commercial space than the 4- story, 81-unit Strategic Economics prototype. The units in our model are also smaller than the units in the Strategic Economics analysis. Based on a detailed study of recent projects in Berkeley we have assumed a mix of 450 square-foot studios, 725 square-foot one-bedrooms, and 925 square-foot two bedrooms where Strategic Economics had assumed that all units would be 900 square-foot two-bedrooms.
Recent data also suggests that the capitalization rate for residential development is 4.0-4.25%, significantly lower than the cap rate of 5.0% which Strategic Economics used in 2016.
Additionally, the parking ratio of 1 space per unit in the Strategic Economics study reflects the minimum parking requirements in much of the city at the time their study was published. As parking minimums have recently been eliminated, we assume a more modest parking ratio of
0.5 spaces per unit, consistent with observed occupancy rates.
37 Figure 2: Rental Prototype Details
For the ownership prototype, we assumed larger average unit sizes. In order to facilitate comparison, we assumed a building of the same overall size (square feet) but with fewer units of larger size. We also assumed the same parking ratio (.5) as our rental prototype in order to facilitate comparison, though it is more likely that a condo project would provide 1 space per unit which would lower overall returns.
38 Figure 3: Ownership Prototype Details
Revenue and Cost Assumptions:
The revenue and cost assumptions used in our pro forma analysis are shown in Figure 4. The main inputs that influence project revenue are the residential rents. Our analysis of data from CoStar, RealPage, and Berkeley’s Rent Stabilization Board led us to estimate that typical rents for newly built apartments in Berkeley would be approximately $3,100 for studios, $4,000 for one-bedrooms, and $4,500 for two-bedrooms. Other revenues include commercial rents of $3 per square-foot and parking revenue of $200 per space per month. These assumptions reflect rents that would have been assumed by projects prior to the pandemic. During the pandemic, rents throughout the region have fallen dramatically with some estimates showing rent in Berkeley down by 5 to 10% along with significant increases in apartment vacancy rates. The best available evidence suggests that these decreases are likely temporary. Developers in
39 Berkeley are moving forward on construction of new apartments which would not be financially feasible if the pandemic rents and vacancy rates were permanent.
The key input driving costs is the construction cost estimate of $400 per gross square foot. This assumption is based on actual construction costs for comparable East Bay projects and studies that estimate the construction cost inflation rate. Other important development cost assumptions include land at $8,000,000 per acre and parking construction costs at $50,000 per space. We assume that soft costs - which include architecture, engineering, and inspection fees – equal 22% of hard costs. Our estimates for land, parking, and soft costs rely on data from several comparable Berkeley projects but, of course, these figures vary quite a bit between actual projects. Financing costs include the construction loan interest rate of 4.5% and the initial construction loan fee of 1.0%. Our financing cost assumptions are based on independent estimates of prevailing interest rates and data from comparable Berkeley projects.
The current inclusionary housing rules require that 80% of on-site VLI units be offered first to housing voucher holders. Berkeley allows developers to charge the full Housing Authority Payment Standard rent for these units even when it exceeds the rent that could be charged to a VLI tenant with no voucher. We have assumed these slightly higher rents for 80% of any VLI units on-site.
Note: The COVID-19 pandemic caused an uncommon economic crisis that the US is only beginning to recover from. It is unclear what persistent impacts the pandemic will have on the housing development environment and consequently on our model. We cannot be certain how inputs such as construction costs and rents will change or how investors that finance development will respond to this uncertainty. Over the past year construction costs have continued to rise while rents have fallen across the Bay Area. This combination has made it harder for real estate projects to achieve feasibility, but these trends do not appear to be lasting. Our model reflects conditions as they were at the beginning of 2020.
40 Figure 4: Revenue and Cost Assumptions
Policy Scenarios:
We built a financial model using the project prototypes described above in order to test the impact of potential changes to the City’s affordable housing requirements on the feasibility of
41 residential development. We ran the model for the same hypothetical projects under a number of different policy assumptions. First, we established the returns that would be available under the current law depending on which performance option the project selected.
Current Program Scenarios
Rental
Current Fee: Under this alternative, we assume the hypothetical project elects to pay Berkeley’s current Affordable Housing Mitigation Fee (AHMF) of $39,746 for each unit in the building. A project paying the fee would not be eligible for the density bonus.
Current On-site Units: Under this alternative, we imagine the project selecting instead to provide on-site units as provided under the current AMHF ordinance.
The project would provide 7 Very Low Income (VLI) units (10%) and 7 Low Income (LI) units (10%). For the sake of comparison, we have assumed that the project does not access the density bonus though it would likely qualify.
Current Mixed Compliance – 11% VLI: The most common approach in recent years has been for projects to provide enough units on-site in order to maximize the benefits of the State Density Bonus and pay a fee to cover the remainder of their obligation under Berkeley’s AHMF. Prior to 2021, projects that provided 11% of base units as restricted Very Low Income units on-site would receive the maximum 35% density bonus. We have assumed that our hypothetical project could increase the total number of housing units by 35% (from 79 to 97) with no increase in land costs11.
Current Mixed Compliance – 15% VLI: In 2020 the State Legislature approved an expansion of the State Density Bonus which allows greater increases in density in exchange for more affordable housing units on-site. Now a developer can request a 50% increase in residential density if they provide, for example, at least 15% Very Low Income units. We have analyzed the profitability of a hypothetical 11 Our analysis does not attempt to capture the full financial value of the density bonus. In addition to the right to build more housing units on a given site, state law allows developers to request a number of planning concessions based on the amount of affordable housing that they provide. These concessions clearly provide real value which can increase the profitability of projects. However, because the dollar value of concessions is abstract and highly dependent on the particular project, we have not attempted to include this in our financial modeling. As a result, our conclusions are likely to slightly understate the difference between the returns from density bonus and other types of projects.
42 project assuming a 50% increase in units with 15% of base units (10% of total units) restricted to VLI residents under current rules.
Ownership
Current On-site Compliance: A for-sale project that elected to provide on-site affordable units would be required to provide 20% of units to be affordable to and occupied by Low Income households earning less than 80% of AMI.
Current In Lieu Fee (Based on Sales Prices): Alternatively, a developer may pay an in lieu fee calculated based on 62.5% of the difference between the market price and the affordable price. This approach results in a different level of fee for different projects depending on the market prices of units in the project. For the sake of illustration, we estimated a range of current market prices based on average condo sales prices listed on Zillow.com and calculated the fee which would be due.
Figure 5: Condo Pricing Assumptions
Estimated BMR Ownership Fees 2021
Unit
Size
Sq Ft Estimated Market
Price
Affordable
Price
In Lieu
Fee
In Lieu Fee Per
Unit
In Lieu Fee per
Sq Ft
1BR 814 $703,556 $250,650 $283,066 $56,613 $70
2BR 1117 $853,125 $282,000 $356,953 $71,391 $64
3BR 1571 $995,797 $313,200 $426,623 $85,325 $54
Alternative Policy Options
In addition to evaluating the performance of the prototype under the current policy rules, we considered several alternative scenarios based on the proposed policy changes.
Rental
$45 Per square-foot Fee: Under this alternative, we assumed that the City adopted a fee of $45 per gross square foot (excluding parking and commercial space) and we evaluated the returns for a prototype project that elected to pay this fee in full with no on-site BMR units.
43 $55 Per square-foot Fee: This alternative assumes full payment of a higher fee per square-foot.
Mixed Compliance (Weighted)– 11% VLI: In this alternative we have assumed a $45 per square-foot fee is adopted along with an adjusted formula for determining the remainder fee for mixed compliance projects. We assumed that each 1% of VLI units provided would reduce the fee due by $3 per square-foot and each 1% of LI units would reduce the fee by $1.50 per square-foot. In this alternative, we assume a project that provides 11% of the base units (equivalent to 8% of total units) as VLI in order to receive a 35% density bonus.
Mixed Compliance (Weighted)– 15% VLI: In this alternative we assume a project that provides 15% of the base units (equivalent to 10% of total units) as VLI in order to receive a 50% density bonus under state law. As with the scenario above, this alternative assumes that the formula for calculating the remaining fee for mixed compliance provides greater reductions for projects that provide VLI units.
Ownership
$45 Per Square-foot Fee: In this scenario, we have assumed that the City adopts a single per square-foot rate of $45 which would be applied to all projects whether rental or ownership.
$55 Per Square-Foot Fee: This alternative assumes that the City adopts a higher per square-foot fee for ownership projects (or any project that records a condominium map).
Findings:
For rental projects, our model suggests that most projects would not be able to feasibly comply with the current 20% on-site requirement but that projects that choose to pay the fee or access the State Density Bonus by providing some units on-site and paying a partial fee would both earn returns that are just barely above the threshold which we identified for feasibility (5% yield on cost). The returns for density bonus projects are comparable to the fee alternative because the additional cost of providing some units on-site is offset by the additional benefit of building more units on the same site.
For this prototype, the proposed fee of $45 per gross square foot results in a virtually identical return. A higher fee ($55 per square-foot) would result in a marginal but very close to feasible
44 return. The proposed approach of providing more ‘credit’ for projects that provide on-site VLI units than those that provide LI units results in modest increases in the returns available to mixed compliance projects that take advantage of the State Density Bonus. While this small difference is not critical for this prototype, it is likely that there would be projects where this difference would result in on-site affordable units in projects that would otherwise have paid the fee entirely (or not moved forward at all).
Figure 6: Comparison of Returns - Rental
For ownership projects, we found that neither the current fee nor the current on-site requirement resulted in profit as a percent of development cost above the benchmark of 10%.
The proposed switch to a $45 per square-foot fee would result in profit just above 10% while a higher $55 per square-foot fee would result in profit closer to 9%.
Figure 7: Comparison of Returns - Ownership
Sensitivity Analysis:
Revenues and Costs: The feasibility projections above are highly sensitive to assumptions about rents and construction costs. These assumptions are different from one project to the next and change in somewhat unpredictable ways over time. The heat table in Figure 8 below shows the
45 yields on cost that our model predicts for a range of different scenarios in regard to construction costs and rents for our prototype. This table shows returns for a 6-story rental project that selects the proposed $45 per square-foot fee option. The axes indicate how these scenarios compare with current construction cost and rent levels. The (0%, 0%) cell in the center of the table represents the estimated yield on cost for projects given today’s rents and construction costs. The (-10%, 10%) cell in the top right represents the yield for projects if rents decrease 10% and construction costs increase 10% relative to current levels. Green cells represent situations in which projects will be feasible, with expected yields on cost at or above 5%. The redder a cell is, the less feasible projects will be. A rise in construction costs will increase the total development cost of a project, making it less feasible. A drop in market rents will decrease the rental income a project can expect, also making it less feasible.
Figure 8: Yield on Cost Sensitivity to Rents and Construction Costs
With current rents and construction costs, projects are just barely feasible with estimated yields of 5.07%. However, if rents rise by just 2% and construction costs remain flat, projects will become more feasible with expected yields of 5.17%. As expected, yields increase as rents rise and decrease as construction costs rise. Yield on cost is just slightly more sensitive to construction costs than rents. Construction costs falling by 10% will increase yields a bit more than rents rising by 10%.
Parking: The feasibility of new rental development in Berkeley is also highly sensitive to assumptions about the amount of parking provided. The parking ratio is the number of parking spaces divided by the number of residential units. Before 2021, Berkeley’s zoning regulations mandated projects in some districts to have parking ratios of at least 1. Berkeley recently eliminated minimum parking requirements, making parking ratios of 0 possible.
Figure 9 shows the yields on cost that our model predicts for a range of parking scenarios. In our model, parking ratios are used to describe the amount of parking provided by a project.
Creating parking spaces is expensive and limits the area available for the project’s residential or amenity space. As a result, higher parking ratios reduce a project’s yield on cost and projected feasibility. Our model predicts that projects that provide no parking will be solidly financially feasible while projects that provide 1 space per unit are not currently feasible.
46 Figure 9: Yield on Cost Sensitivity to the Parking Ratio
Even with strong financial incentives and no City parking requirements, most projects are likely to include significant amounts of parking. Depending on the location of the project, tenants may see parking as a necessary building amenity. In other cases, project investors insist on some level of parking. When Seattle eliminated parking requirements in many parts of the city, one study found that most projects still included parking. In areas with no parking requirement, nearly 30% of new buildings provided no parking after the mandate was removed. But the remaining 70% provided parking even though it was not required by the city. Figure 10 shows that the average project provided .49 parking spaces per unit.
Figure 10: Seattle parking reform results
Attachment 4: Summary of Council Referrals Related to City Affordable Housing Requirements
Referral Short Description
Conducting an Analysis of
Increasing Inclusionary
Housing over Affordable
Housing Mitigation Fee
(9/10/19)
A companion to 4/23/19 referral to analyze feasibility of ideas from Homeless Commission including:
-Requiring on-site units instead of a fee
-Requiring an increased number of inclusionary units
-Providing an incentive to build on-site instead or pay the fee (similar to the Adeline Corridor Specific Plan)
-Prohibit payment of fee in certain geographic areas
-Ensure access for extremely low-income persons and persons experiencing homelessness.
Refer to the City Manager
and the Housing Advisory
Commission to Consider
Reforming the Affordable
Housing Mitigation Fee
(4/23/19)
Evaluate the possibility of changing the City’s affordable housing fee structure, including converting the current per-unit calculation to a per- square foot fee, per-bedroom fees and/or whether to apply a different fee methodology in different parts of the city.
Affordable Housing Mitigation
Fee Resolution to Close a
Loophole for Avoiding the
Mitigation Fee through
Property Line Manipulation
(2/19/19)
Close a loophole allowing avoidance of the affordable housing fees through lot line manipulation by requiring the fee from projects on contiguous lots under common ownership with the potential for 5 or more units across all lots. Modify the structure of the in lieu fee for ownership projects to a flat per unit fee similar to the rental fee.
Evaluate the appropriateness of the fee level.
Encourage Long Term
Tenant Stability (11/27/18)
Modify the Berkeley Municipal Code (BMC Section 21.28.080) to allow tenants buying their units (through Tenancy-In-Common) to pay only 50% of the Affordable Housing Mitigation Fee at the time of conversion.
This is the same benefit offered to owners who convert rental buildings that they also live in to ownership.
Rectify Discrepancy
Regarding Inclusionary Units
in Live/Work Housing
(9/13/2018)
Eliminate the affordable housing requirements in the Berkeley Municipal Code (BMC Sections 23C.12 and 23E.20.080) and instead apply the Inclusionary Housing or AHMF ordinances to Live Work exactly as they are applied to other projects.
Pilot Density Bonus Program
for the Telegraph Avenue
Commercial District to
Generate Revenue to House
the Homeless and Extremely
Low-Income Individuals
(5/30/17)
Create a new City Density Bonus policy for the Telegraph Avenue Commercial District to generate in-lieu fees instead of on-site affordable housing units.
To read the reports from which these referrals derived, please visit the City of Berkeley’s Records Online page, at
https://records.cityofberkeley.info/PublicAccess/paFiles/cqFiles/index.html . For Search Type select “Public – Staff Report Query,” for Meeting Body select “City Council,” and for Doc Date put the date of the referral formatted MM/DD/YYYY (e.g. 09/10/2019).
Other fields may be left blank. Click “Search” and the requested document should come up as one of a handful of listed results.
For further assistance searching Records Online, please contact the City Clerk Department at [email protected].
Attachment 5
NOTICE OF PUBLIC HEARING
BERKELEY CITY COUNCIL
AMENDMENTS TO BMC CHAPTER 23.328 UPDATING THE CITYWIDE
AFFORDABLE HOUSING REQUIREMENTS IN THE ZONING
ORDINANCE; REPEAL OF BMC SECTIONS 22.20.065, AND SECTION
23.312.040(A)(6); AND A RESOLUTION ADOPTING REGULATIONS
FOR VOUCHER PROGRAM AND ESTABLISHING AN IN-LIEU FEE
PURSUANT TO BMC SECTION 23.328.020(A)(2) AND RESCINDING RESOLUTION NO. 68,074-N.S.
The public may participate in this hearing by remote video or in-person.
The Department of Planning and Development and Planning Commission of the City of Berkeley is proposing amendments to BMC Chapter 23.328, updating the citywide affordable housing requirements in the Zoning Ordinance; repeal of BMC Sections
22.20.065, and Section 23.312.040(A)(6); and a Resolution Adopting Regulations for Voucher Program and Establishing an In-Lieu Fee Pursuant to BMC Section
23.328.020(A)(2) and Rescinding Resolution No. 68,074-N.S.
Pursuant to CEQA Guidelines Section 15378(a) and 15060(c)(2), environmental review is not required because the proposed amendments do not meet the definition of a Project under CEQA Guidelines Section 15378(a), nor does it constitute an activity covered by CEQA under CEQA Guidelines Section 15060(c)(2) because passage of amendments do not constitute a direct physical impact on the environment, nor would it result in an indirect, reasonably foreseeable physical impact on the environment. The proposed amendments do not include any provisions that would exempt or otherwise reduce environmental review required under CEQA for individual development projects.
The hearing will be held on, Tuesday, December 6, 2022 at 6:00 p.m. at the Berkeley Unified School District Board Room located at 1231 Addison Street, Berkeley CA 94702.
A copy of the agenda material for this hearing will be available on the City’s website at https://berkeleyca.gov/ as of November 23, 2022. Once posted, the agenda for this meeting will include a link for public participation using Zoom video technology, as well as any health and safety requirements for in-person attendance.
For further information, please contact Alisa Shen, Principal Planner at (510) 981-7409.
Written comments should be mailed directly to the City Clerk, 2180 Milvia Street, Berkeley, CA 94704, or emailed to [email protected] in order to ensure delivery to all Councilmembers and inclusion in the agenda packet.
Communications to the Berkeley City Council are public record and will become part of the City’s electronic records, which are accessible through the City’s website. Please note: e-mail addresses, names, addresses, and other contact information are not required, but if included in any communication to the City Council, will become part of the public record. If you do not want your e-mail address or any other contact information to be made public, you may deliver communications via U.S. Postal Service or in person to the City Clerk. If you do not want your contact information included in the public record, please do not include that information in your communication. Please contact the City Clerk at 981-6900 or [email protected] for further information.
Published: November 25 and December 2, 2022 – The Berkeley Voice Per California Government Code Sections 65856(a) and 65090. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ I hereby certify that the Notice for this Public Hearing of the Berkeley City Council was posted at the display case located near the walkway in front of the Maudelle Shirek Building, 2134 Martin Luther King Jr. Way, as well as on the City’s website, on November 23, 2022.
__________________________________
Mark Numainville, City Clerk
Office of the City Manager
2180 Milvia Street, Berkeley, CA 94704 ● Tel: (510) 981-7000 ● TDD: (510) 981-6903 ● Fax: (510) 981-7099 E-Mail: [email protected] Website: http://www.cityofberkeley.info/manager
INFORMATION CALENDAR
December 6, 2022
To: Honorable Mayor and Members of the City Council
From: Dee Williams-Ridley, City Manager
Submitted by: Henry Oyekanmi, Director, Finance Department Subject: FY 2022 Fourth Quarter Investment Report: Ended June 30, 2022
SUMMARY
The City’s investment policy requires that a quarterly investment report be submitted to the City Council on the status of the investment portfolio. The report includes all investments managed by the City of Berkeley and provides information on the types, values (par, book, and market), term, and yield of each security. The return on pooled investments for the quarter ended June 30, 2022 was 1.29%, 60 basis points more than the .69% earned by the State Local Agency Investment Fund (State LAIF), which is the benchmark for investment performance used by the City. The return on pooled investments of 1.29% for the quarter ended June 30, 2022 was 32 basis points more than the rate of .97% earned in the quarter ended March 31, 2022.
The average return on all Retiree Medical Trust Fund investments was 4.40% for the quarter ended June 30, 2022.
CURRENT SITUATION AND ITS EFFECTS
Attached is a summary of quarterly reports for the fiscal year 2022 Fourth Quarter ending June 30, 2022 representing the status of the City’s investment portfolio. The report includes all investments managed by the City of Berkeley and provides information on the values (par, book, and market), term, and yield of each security.
Summary information by type of security and detailed information on each security is provided on Exhibit 2-A. An evaluation of portfolio performance for this accounting period compared to the previous three accounting periods is also included in Attachment 1.
Investment Report: FY2022 4th Qtr INFORMATION CALENDAR Ended June 30, 2022 DECEMBER 6, 2022
A. Portfolio Results
As a result of the differences in the investment policies of different cities, including responsible investing policies, maturity restrictions, investment restrictions, etc., it was difficult for the City of Berkeley to come up with a reasonable performance measure for pooled cash investments. In order to provide some measure of the relative performance of the City’s investment returns, many years ago the City established the State Local Agency Investment Fund (LAIF) as the performance measure to be reported in the quarterly investment reports, since many local governments invested significant portions of their investment portfolios in LAIF.
LAIF was intended to be a reference point to compare the City’s investment performance against, rather than a true performance measure, since most cities typically earn a yield higher than LAIF in normal interest rate environments, and because LAIF’s average maturity of its investments is generally shorter than most cities. As a result, past City Councilmembers requested that information about the rates earned by other California cities be included in the quarterly investment reports for comparison purposes, despite the differences in the investment policies of the various cities.
1. Liquidity of Portfolio:
The average investment in the pooled portfolio matures in 1,386 days as of June 30, 2022. This is 34 days more than the 1,352 maturity days as of March 31, 2022.
2. Comparison of Results to Performance Measures – Pooled investments:
Quarter Ended June 30, 2022
The City’s yield on investments for the quarter ended June 30, 2022 was 1.29%, an increase of 32 basis points (.32%) from the .97 earned during the quarter ended March 31, 2022. The average yield on a 90-day Treasury bill at the end of the quarter ended June 30, 2022 was 1.63%, an increase of 115 basis points (1.15%) from the .48% at the end of the previous quarter.
As summarized in Table 1, staff’s overall results were above the performance measure for the quarter. Staff’s performance was above the performance measure in April by approximately 57 basis points (+.57%); over the performance measure in May by approximately 61 basis points (+.61%); and, was over the performance measure in June by approximately 64 basis points (+.64%). The performance measure for the return on investments is compared to the rate of return of the State LAIF.
Investment Report: FY2022 4th Qtr INFORMATION CALENDAR Ended June 30, 2022 DECEMBER 6, 2022
Table 1
For Quarter Ending June 30, 2022
Period City State LAIF Difference
Apr-22 1.09% .52% 0.57%
May-22 1.29% .68% 0.61%
Jun-22 1.50% .86% 0.64%
Apr 1-June 30
1.29% .69% 0.60%
3. Investment Results-Retiree Health Insurance Funds:
Average interest rates earned on the retiree health insurance trust funds for the quarter ended June 30, 2022 compared to the quarter ended March 31 2022, were as follows:
Table 2
EARNED INTEREST RATES
For Quarter Ended 6/30/2022 Compared To 3/31/2022
Trust Fund 4th Qtr
6/30/22
3rd Qtr
3/31/22
Retiree Medical Trust Fund (Misc Employees) 4.85% 4.83% Fire Retiree Medical Trust Fund 3.98% 3.96%
Police Retiree Medical Trust Fund 3.33% 3.61%
The rates earned on these plans are expected to be higher in the future, as staff plans to use the investment authority granted by Council to purchase Bond and Stock Mutual Funds/Index Funds or purchase long-term bond as rates move higher.
Details related to retiree health trust fund investments are in Attachment 3, Exhibits 3- A, 3-B, and 3-C of this report.
B. Discussion of Interest Rate Environment and Outlook
In its June 15, 2022 statement, the Federal Open Market Committee indicated that overall economic activity appears to have picked up after edging down in the first quarter. Job
Investment Report: FY2022 4th Qtr INFORMATION CALENDAR Ended June 30, 2022 DECEMBER 6, 2022
gains have been robust in recent months, and the unemployment rate has remained low.
Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher energy prices, and broader price pressures.
The invasion of Ukraine by Russia is causing tremendous human and economic hardship.
The invasion and related events are creating additional upward pressure on inflation and are weighing on global economic activity. In addition, COVID-related lockdowns in China are likely to exacerbate supply chain disruptions. The Committee is highly attentive to inflation risks.
Yield Trend
The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. In support of these goals, the Committee decided to raise the target range for the federal funds rate from 1-1/2 to 1-3/4 percent and anticipates that ongoing increases in the target range will be appropriate. In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and mortgage- backed securities, as described in the Plans for Reducing the Size of the Federal Reserve’s Balance Sheet that were issued in May. The Committee is strongly committed to returning inflation to its 2 percent objective. In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals. The Committee’s assessments will take into account a wide range of information, including readings on public health, labor market conditions, inflation pressures and inflation expectations, and financial and international developments.
Since the Federal Reserve change its zero-interest rate policy in March 2017 to combat high inflation, the federal reserve has raised the Federal Funds rate five times as follows:
Table 3
DATE RATE CHANGE FEDERAL FUNDS
RATE
03/17/22 .25% .25%-0.50%
05/05/22 .50% .75%-1.00%
06/16/22 .75% 1.50%-1.75%
07/27/22 .75% 2.25%-2.50%
09/21/22 .75% 3.00%-3.25%
The Federal Reserve has two more meetings scheduled in 2022 (November 1-2, and December 13-14), and staff expects they will raise interest rates an additional .75% at both meetings, bringing the Federal Funds Rate to 4.50%-4.75% by the end of the year.
Investment Report: FY2022 4th Qtr INFORMATION CALENDAR Ended June 30, 2022 DECEMBER 6, 2022
Change in Strategy
Prior to the Fed’s change in monetary policy starting March 16, 2022, staff’s basic strategy consisted of not purchasing any Agency or Medium-Term corporate note securities with a maturity beyond three years, unless the securities were step-up securities (i.e., securities whose interest rates increased periodically, if they were not called). After the Fed’s change in monetary policy in March 2022, the City’s investment strategy changed to extending the investment maturities of securities purchased beyond three years and locking in rates. This should result in a significant increase in interest income during the remainder of FY 2022, and into FY 2023.
As a result of the Fed’s sharp increase in interest rates and the move to sell Agency and Mortgage-Backed securities from its Balance Sheet, there is an increasing probability of a recession in the US in 2023, which could force the Federal Reserve to start reducing interest rates later in 2023 or early 2024, if inflation starts declining.
The City’s earned rate is expected to be above the City’s benchmark (State LAIF) and the City’s return is expected to be comparable to rates earned by most other cities in California. A sample of rates earned by Northern and Southern California cities is reflected in table 3 below (previously only Northern California cities were included):
Table 4
Other California Cities
Earned Interest Rates
For the Quarter Ending June 30, 2022
City Rates Earned
Burbank 1.76%
Palo Alto 1.62%
Los Angeles 1.41%
Berkeley 1.29%
San Jose 1.11%
Torrance 1.06%
Sacramento 1.05%
Hayward 1.03%
Oakland .93%
San Francisco .80%
San Diego .56%
Investment Report: FY2022 4th Qtr INFORMATION CALENDAR Ended June 30, 2022 DECEMBER 6, 2022
BACKGROUND
Pooled Investments
Short-term cash is invested primarily in government sponsored enterprises (referred to as Federal Agency) notes and medium-term corporate notes for periods of one to five years. Additional cash is invested in a money market fund or overnight securities to meet the liquidity needs of the City.
In some cases, the City may have investments with a current market value that is greater or less than the recorded cost. These changes in market value are due to fluctuations in the market and have no effect on yield, as the City does not intend to sell securities prior to maturity.
Retiree Health Trust Fund Investments
The City agreed to provide retiree Health insurance coverage for fire, police and miscellaneous employees under certain terms and conditions. An actuarial study commissioned by the City many years ago determined that, in addition to City Contributions, an average rate of return of 7% on miscellaneous employees trust fund assets invested must be achieved to fund the retiree health benefit at the desired 70% level. Primarily as a result of the Federal Reserve Board’s decision to keep short-term rates near zero for the last 14 years, the average rate currently earned is significantly below that 7% level. City’s Finance Department staff manages these investment portfolios.
ENVIRONMENTAL SUSTAINABILITY AND CLIMATE IMPACTS
There are no identifiable environmental effects or opportunities associated with the subject of this report.
CONTACT PERSON
Henry Oyekanmi, Director, Finance Department, 981-7326
ATTACHMENTS
1. Portfolio Evaluation FY 2022 Fourth Quarter
2. Investment Report Analysis FY 2022 Fourth Quarter
a. Exhibit 2-A: Pooled Cash and Investments
b. Exhibit 2-B.1 through 2-B.3: Interest Earnings April 1, 2022 – June 30, 2022 c. Exhibit 2-C: Book Value By Investment Type
d. Exhibit 2-D: Current Holdings vs. Policy Limits
e. Exhibit 2-E: Investment Portfolio Trend
3. Summary of Pooled and Cash Investments FY 2022 Fourth Quarter –Trust Funds a. Exhibit 3-A: Retiree Medical Trust Funds –Misc.
b. Exhibit 3-B: Retiree Medical Trust Funds –Fire
c. Exhibit 3-C: Retiree Medical Trust Funds –Police
Attachment 1
Total Portfolio
Pooled Cash and Investments (COB) 698,786,628$ 581,600,292$ 599,176,851$ 526,986,435$ Pooled Cash and Investments (Trust) 49,954,298 50,745,325 52,859,894 52,247,171 Total Cash and Investments 748,740,926$ 632,345,617$ 652,036,745$ 579,233,606$ Average Life of Investment Portfolio
Pooled Investments (CoB) 1,386 1,352 1,300 1,304
Trust Investments 2.069 years 2.008 years 2.378 years 1.961 years Weighted Yield
Pooled Investments (CoB) 1.293% 0.969% 1.096% 0.992%
Trust Investments 4.398% 4.137% 4.055% 3.369%
Prime Rate 4.750% 3.500% 3.250% 3.250%
91-day Treasury Bill Rate 1.626% 0.482% 0.030% 0.033%
2-year Treasury Note Rate 2.953% 2.335% 0.732% 0.276%
Cash and Investments Maturity
Within one year 327,419,689$ 43.73% 253,735,661$ 40.13% 250,773,736$ 38.46% 164,472,378$ 28.39% Between 1 to 3 years 65,308,653 8.72% 52,619,468 8.32% 48,320,863 7.41% 43,663,650 7.54% Between 3 to 5 years 329,817,379 44.05% 305,166,300 48.26% 321,618,796 49.33% 333,855,324 57.64% Between 5 to 10 years 11,272,605 1.51% 20,824,188 3.29% 31,323,351 4.80% 37,242,254 6.43% Over 10 years 14,922,600 1.99% - 0.00% - 0.00% - 0.00% Total 748,740,926$ 100.00% 632,345,617$ 100.00% 652,036,745$ 100.00% 579,233,606$ 100.00% Portfolio Evaluation
September 2021December 2021March 2022
Quarter Ending
June 2022
Quarter Ended June 30, 2022
Attachment 2
Pension and OPEB
Investments Pooled Investments Trust Investments Total
Portfolio 718,816,520$ 25,189,520$ 744,006,040$ Unrecognized gain/(loss) (20,962,612) (2,243,556) (23,206,168) Total Investments 697,853,908 22,945,964 720,799,872 Cash Pooled Cash
Pension and OPEB
Trust Cash Total
Cash with Fiscal Agents 14 - 14 Cash Deposits in Banks 27,941,041 - 27,941,041 Pooled Cash Adjustment (27,008,334) 27,008,334 - Total Cash 932,720 27,008,334 27,941,054 Adjusted Grand Total (All Cash and Investments) 698,786,628$ 49,954,298$ 748,740,926$ Pooled Cash Portfolio Breakdown As of June 30, 2022 Book Value Market Value Investments 467,399,144$ 446,436,532$
Fidelity Money Market (TRANS) 44,722,419 44,722,419 Fidelity Money Market 206,694,957 206,694,957 718,816,520$ 697,853,908$
Note: Pooled cash for General Fund includes Rent Board cash of $6,431,961 Investment Report Analysis
As of June 30, 2022
CUSIP Investment # Issuer Book Value Par Value Market Value Current
Rate
YTM/C
365
Maturity
Date
Days To
Maturity
Moody's
Rating
Certificates of Deposits
254673RD0 14539 Discover Bank 250,000.00 250,000.00 251,062.50 3.30 3.300 07/05/23 369 N/A 795450T47 14540 Sallie Mae Bank 250,000.00 250,000.00 251,065.00 3.30 3.300 07/03/23 367 N/A Subtotal and Average 500,000.00 500,000.00 502,127.50 3.300 368 Medium Term Notes
008252AM0 14582 Affiliated Managers Group 1,029,930.31 1,000,000.00 1,006,230.00 4.250 2.300 02/15/2024 594 A3 037833AK6 14536 Apple Inc 4,968,199.48 5,000,000.00 4,971,100.00 2.400 3.225 05/03/2023 306 AAA 04685A2L4 14590 Athene Global Funding 5,975,502.07 5,950,000.00 5,656,903.00 2.500 2.320 01/14/2025 928 N/A 04685A2L4 14602 Athene Global Funding 4,912,461.35 5,000,000.00 4,753,700.00 2.500 3.250 01/14/2025 928 N/A 084670BJ6 14542 Berkshire Hathaway 4,995,751.82 5,000,000.00 4,991,250.00 3.000 3.150 02/11/2023 225 AA2 15654VAK4 14641 T-1 Century Housing Corp 4,000,000.00 4,000,000.00 3,997,000.00 0.300 0.300 07/15/2022 14 N/A 20030NBN0 14563 Comcast Corp 5,038,681.18 5,000,000.00 4,929,200.00 3.375 3.100 08/15/2025 1,141 A3 233851CU6 14571 Daimler Finance 5,051,716.70 5,000,000.00 4,826,350.00 3.450 3.190 01/06/2027 1,650 A3 233851CU6 14574 Daimler Finance 3,792,260.92 3,725,000.00 3,595,630.75 3.450 3.000 01/06/2027 1,650 A3 24422EUM9 14554 John Deere Cap 5,020,533.14 5,000,000.00 5,023,550.00 3.650 3.300 10/12/2023 468 A2 375558BF9 14570 Gilead Sciences 5,087,297.63 5,000,000.00 4,910,250.00 3.650 3.118 03/01/2026 1,339 A3 53944VAS8 14580 Lloyds Bank Plc 5,000,285.88 5,000,000.00 4,998,300.00 2.250 2.200 08/14/2022 44 A1 540424AQ1 14555 Loews Corporation 4,970,768.97 5,000,000.00 4,980,500.00 2.625 3.350 05/15/2023 318 A3 589331AT4 14545 Merck & Co Inc 4,993,949.64 5,000,000.00 5,001,450.00 2.400 3.030 09/15/2022 76 A1 68389XAS4 14548 Oracle Corp 5,010,716.42 5,000,000.00 4,984,650.00 3.625 3.388 07/15/2023 379 BAA2 747525AT0 14564 Qualcomm Inc 4,986,958.53 5,000,000.00 4,977,550.00 2.900 3.050 05/20/2024 689 A2 747525AU7 14587 Qualcomm Inc 6,178,986.57 5,963,000.00 5,831,038.81 3.250 2.435 05/20/2027 1,784 A2 828807CS4 14606 Simon Property Group 4,997,358.62 5,000,000.00 4,931,050.00 3.375 3.353 10/01/2024 823 A3 07330MAA5 14588 Truist Bank 5,285,366.72 5,000,000.00 4,885,750.00 3.800 2.365 10/30/2026 1,582 A2 Subtotal and Average 91,296,725.95 90,638,000.00 89,251,452.56 2.847 809 Federal Agency Coupon Securities
3133ENVS6 14650 Federal Farm Credit Bank 5,000,000.00 5,000,000.00 4,967,100.00 2.030 2.030 05/02/23 305 AAA Subtotal and Average 5,000,000.00 5,000,000.00 4,967,100.00 2.030 305 Medium-Term Notes - Callable
05531FBF9 14561 BB&T Corporation 5,048,837.27 5,000,000.00 5,029,800.00 3.750 3.012 12/06/2023 523 A3 22553PWD7 14652 Credit Suisse AG 5,000,000.00 5,000,000.00 5,007,400.00 4.050 4.050 05/25/2025 1,059 A1 22553PXJ3 14655 Credit Suisse AG 5,000,000.00 5,000,000.00 5,002,500.00 5.000 5.284 05/31/2032 3,622 A1 693475AV7 14557 PNC Financial Services 5,009,147.29 5,000,000.00 5,000,700.00 3.500 3.425 01/23/2024 571 A3 751212AC5 14566 Ralph Lauren 5,091,645.62 5,000,000.00 4,979,100.00 3.750 3.106 09/15/2025 1,172 A3 91159HHU7 14562 US Bancorp 5,142,859.65 5,000,000.00 5,024,450.00 3.950 2.848 11/17/2025 1,235 A3 Subtotal and Average 30,292,489.83 30,000,000.00 30,043,950.00 3.614 1,360 City of Berkeley
Pooled Cash and Investments
As of June 30, 2022
CUSIP Investment # Issuer Book Value Par Value Market Value Current
Rate
YTM/C
365
Maturity
Date
Days To
Maturity
Moody's
Rating
City of Berkeley
Pooled Cash and Investments
As of June 30, 2022
Federal Agency Callable
3130ARXL0 14649 Federal Home Loan Banks 5,000,000.00 5,000,000.00 4,986,200.00 3.000 3.000 05/25/2023 328 AAA 5,000,000.00 5,000,000.00 4,986,200.00 3.000 328 Federal Agency Continuously Callable
31422XJW3 14638 Farmer Mac 10,000,000.00 10,000,000.00 9,455,100.00 0.300 0.300 07/20/2026 1,480 N/A 3133ENUV0 14644 Federal Farm Credit Bank 5,000,000.00 5,000,000.00 4,947,000.00 4.000 4.000 04/19/2032 3,580 AAA 3133ENVV9 14647 Federal Farm Credit Bank 5,000,000.00 5,000,000.00 4,964,950.00 3.630 3.630 05/03/2027 1,767 AAA 3133ENWW6 14653 Federal Farm Credit Bank 4,994,558.15 5,000,000.00 4,967,150.00 4.370 4.786 05/17/2032 3,608 AAA 3130AMAV4 14611 Federal Home Loan Banks 5,600,000.00 5,600,000.00 5,175,632.00 1.250 1.125 04/29/2027 1,763 AAA 3130ALZA5 14612 Federal Home Loan Banks 9,000,000.00 9,000,000.00 8,474,490.00 0.750 0.500 04/29/2026 1,398 AAA 3130AMEX6 14613 Federal Home Loan Banks 15,000,000.00 15,000,000.00 14,111,550.00 0.750 0.550 05/27/2026 1,426 AAA 3130AMF72 14615 Federal Home Loan Banks 15,000,000.00 15,000,000.00 14,018,850.00 0.650 0.650 05/27/2026 1,426 AAA 3130AMFQ0 14616 Federal Home Loan Banks 15,000,000.00 15,000,000.00 14,029,200.00 1.150 1.020 05/26/2026 1,425 AAA 3130AMFT4 14617 Federal Home Loan Banks 10,000,000.00 10,000,000.00 9,330,300.00 0.625 0.625 05/27/2026 1,426 AAA 3130AMG22 14618 Federal Home Loan Banks 20,000,000.00 20,000,000.00 18,685,600.00 0.700 0.500 05/27/2026 1,426 AAA 3130AMGG1 14619 Federal Home Loan Banks 10,000,000.00 10,000,000.00 9,364,700.00 0.600 0.600 05/26/2026 1,425 AAA 3130AMFN7 14620 Federal Home Loan Banks 10,000,000.00 10,000,000.00 9,382,000.00 0.500 0.500 05/26/2026 1,425 AAA 3130AMG55 14622 Federal Home Loan Banks 10,000,000.00 10,000,000.00 9,262,600.00 0.750 0.750 05/27/2027 1,791 AAA 3130AMG22 14624 Federal Home Loan Banks 10,000,000.00 10,000,000.00 9,342,800.00 0.700 0.500 05/27/2026 1,426 AAA 3130AMLS9 14627 Federal Home Loan Banks 10,000,000.00 10,000,000.00 9,377,200.00 0.750 0.713 06/17/2026 1,447 AAA 3130AMN24 14628 Federal Home Loan Banks 10,000,000.00 10,000,000.00 9,350,900.00 1.150 1.034 06/03/2026 1,433 AAA 3130AMN57 14629 Federal Home Loan Banks 20,000,000.00 20,000,000.00 18,649,200.00 1.100 1.013 06/03/2026 1,433 AAA 3130AMP71 14630 Federal Home Loan Banks 20,000,000.00 20,000,000.00 18,725,600.00 1.200 1.077 06/18/2026 1,448 AAA 3130AMPL0 14631 Federal Home Loan Banks 15,000,000.00 15,000,000.00 14,022,900.00 1.150 0.375 06/08/2026 1,438 AAA 3130AMMW9 14632 Federal Home Loan Banks 10,000,000.00 10,000,000.00 9,411,000.00 0.875 0.500 06/10/2026 1,440 AAA 3130AMWM0 14634 Federal Home Loan Banks 4,250,000.00 4,250,000.00 3,952,075.00 1.050 0.500 06/30/2026 1,460 AAA 3130AN5U0 14642 Federal Home Loan Banks 10,000,000.00 10,000,000.00 9,387,200.00 0.625 0.500 07/29/2026 1,489 AAA 3130ANJY7 14643 Federal Home Loan Banks 40,000,000.00 40,000,000.00 37,084,400.00 0.400 0.400 08/26/2026 1,517 AAA 3130ARTE1 14645 Federal Home Loan Banks 6,425,000.00 6,425,000.00 6,325,605.25 4.100 4.100 04/26/2032 3,587 AAA 3130ARX71 14648 Federal Home Loan Banks 5,000,000.00 5,000,000.00 4,962,750.00 3.000 3.000 05/23/2025 1,057 AAA 3130ARYA3 14651 Federal Home Loan Banks 5,000,000.00 5,000,000.00 4,979,600.00 4.000 4.000 05/26/2027 1,790 AAA 3130AS7K9 14654 Federal Home Loan Banks 5,000,000.00 5,000,000.00 4,952,950.00 4.440 4.440 05/26/2032 3,617 AAA 3130ASGF0 14656 Federal Home Loan Banks 5,000,000.00 5,000,000.00 5,011,800.00 4.000 4.000 06/30/2025 1,095 AAA 3134GXRS5 14646 Federal Home Loan Mortgage Co 5,000,000.00 5,000,000.00 4,970,150.00 3.100 3.100 04/29/2025 1,033 AAA 3134GXC36 14658 Federal Home Loan Mortgage Co 5,000,000.00 5,000,000.00 5,013,750.00 4.000 4.000 12/30/2024 913 AAA 330,269,558.15 330,275,000.00 311,689,002.25 1.154 1,587
CUSIP Investment # Issuer Book Value Par Value Market Value Current
Rate
YTM/C
365
Maturity
Date
Days To
Maturity
Moody's
Rating
City of Berkeley
Pooled Cash and Investments
As of June 30, 2022
Municipal Bonds
13063DGB8 14559 General Obligation Unlimited 5,040,370.45 5,000,000.00 4,996,700.00 3.375 3.087 04/01/2025 1,005 N/A Subtotal and Average 5,040,370.45 5,000,000.00 4,996,700.00 3.087 1,005 Money Market
SYS14190 14190 Fidelity Money Market 44,722,419.18 44,722,419.18 44,722,419.18 0.002 0.002 1 N/A SYS14265 14265 Fidelity Money Market 206,694,956.65 206,694,956.65 206,694,956.65 0.003 0.003 1 N/A Subtotal and Average 251,417,375.83 251,417,375.83 251,417,375.83 0.003 1 Total Investments and Average 718,816,520.21 717,830,375.83 697,853,908.14 1.289 Total Investments (Book Value) 718,816,520.21
Cash 932,720.00
Total Investments (Book Value) and Cash 719,749,240.21
Increase / (Decrease) in Market Value of Securities (20,962,612.07) Total Investments (Market Value) and Cash 698,786,628.14
Pooled Investments Selected Funds
Interest Earnings
City of Berkeley
2180 Milvia Street, 3rd Floor
Berkeley, CA 94704
(510)981-7335
Sorted by Fund - Fund
April 1, 2022 - April 30, 2022
Yield on Beginning Book Value
Maturity
Date
Current
Rate
Ending
Par Value
EndingSecurity
TypeFund Book Value
Beginning
Book Value
Adjusted Interest Earnings
Accretion
Amortization/
Earnings
Adjusted InterestAnnualized
YieldCUSIP Investment #
Interest
Earned
Fund: Pooled Investment - Long Term
10,000,000.0014627 10,000,000.00 0.625MC5 06/17/2026 5,208.33 0.00 5,208.330.634010 10,000,000.003130AMLS9 10,000,000.0014624 10,000,000.00 0.600MC5 05/27/2026 5,000.00 0.00 5,000.000.608010 10,000,000.003130AMG22 10,000,000.0014620 10,000,000.00 0.500MC5 05/26/2026 4,166.67 0.00 4,166.670.507010 10,000,000.003130AMFN7 10,000,000.0014622 10,000,000.00 0.750MC5 05/27/2027 6,250.00 0.00 6,250.000.760010 10,000,000.003130AMG55 10,000,000.0014628 10,000,000.00 1.150MC5 06/03/2026 9,583.34 0.00 9,583.341.166010 10,000,000.003130AMN24 20,000,000.0014629 20,000,000.00 1.100MC5 06/03/2026 18,333.33 0.00 18,333.331.115010 20,000,000.003130AMN57 10,000,000.0014642 10,000,000.00 0.625MC5 07/29/2026 5,208.33 0.00 5,208.330.634010 10,000,000.003130AN5U0 4,250,000.0014634 4,250,000.00 0.500MC5 06/30/2026 1,770.83 0.00 1,770.830.507010 4,250,000.003130AMWM0 15,000,000.0014631 15,000,000.00 1.150MC5 06/08/2026 14,375.00 0.00 14,375.001.166010 15,000,000.003130AMPL0 20,000,000.0014630 20,000,000.00 1.200MC5 06/18/2026 20,000.00 0.00 20,000.001.217010 20,000,000.003130AMP71 10,000,000.0014632 10,000,000.00 0.625MC5 06/10/2026 5,208.34 0.00 5,208.340.634010 10,000,000.003130AMMW9 10,000,000.0014619 10,000,000.00 0.600MC5 05/26/2026 5,000.00 0.00 5,000.000.608010 10,000,000.003130AMGG1 20,000,000.0014618 20,000,000.00 0.600MC5 05/27/2026 10,000.00 0.00 10,000.000.608010 20,000,000.003130AMG22 5,600,000.0014611 5,600,000.00 1.250MC5 04/29/2027 2,566.67 0.00 2,566.670.558010 5,600,000.003130AMAV4 9,000,000.0014612 9,000,000.00 0.750MC5 04/29/2026 3,875.00 0.00 3,875.000.524010 9,000,000.003130ALZA5 15,000,000.0014616 15,000,000.00 0.500MC5 05/26/2026 6,250.00 0.00 6,250.000.507010 15,000,000.003130AMFQ0 10,000,000.0014617 10,000,000.00 0.625MC5 05/27/2026 5,208.33 0.00 5,208.330.634010 10,000,000.003130AMFT4 15,000,000.0014615 15,000,000.00 0.650MC5 05/27/2026 8,125.00 0.00 8,125.000.659010 15,000,000.003130AMF72 15,000,000.0014613 15,000,000.00 0.500MC5 05/27/2026 6,250.00 0.00 6,250.000.507010 15,000,000.003130AMEX6 40,000,000.0014643 40,000,000.00 0.400MC5 08/26/2026 13,333.33 0.00 13,333.330.406010 40,000,000.003130ANJY7 6,425,000.0014645 6,425,000.00 4.100MC5 04/26/2032 3,658.68 0.00 3,658.684.157010 0.003130ARTE1 5,000,000.0014644 5,000,000.00 4.000MC5 04/19/2032 6,666.67 0.00 6,666.674.056010 0.003133ENUV0 5,000,000.0014646 5,000,000.00 3.100MC5 04/29/2025 861.11 0.00 861.113.143010 0.003134GXRS5 5,000,684.7814580 5,000,000.00 2.250MTN 08/14/2022 9,375.00 -199.44 9,175.562.232010 5,000,884.2253944VAS8 4,961,881.5014536 5,000,000.00 2.400MTN 05/03/2023 10,000.00 3,159.00 13,159.003.229010 4,958,722.50037833AK6 250,000.0014539 250,000.00 3.300SCD 07/05/2023 678.08 0.00 678.083.300010 250,000.00254673RD0 250,000.0014540 250,000.00 3.300SCD 07/03/2023 678.08 0.00 678.083.300010 250,000.00795450T47 4,994,593.2214542 5,000,000.00 3.000MTN 02/11/2023 12,500.00 579.30 13,079.303.186010 4,994,013.92084670BJ6 10,000,000.0014638 10,000,000.00 0.300MC5 07/20/2026 2,500.00 0.00 2,500.000.304010 10,000,000.0031422XJW3 4,989,043.9414545 5,000,000.00 2.400MTN 09/15/2022 10,000.00 2,452.85 12,452.853.038010 4,986,591.09589331AT4 5,012,435.6314548 5,000,000.00 3.625MTN 07/15/2023 15,104.17 -859.61 14,244.563.457010 5,013,295.2468389XAS4 5,023,205.5714554 5,000,000.00 3.650MTN 10/12/2023 15,208.33 -1,336.21 13,872.123.359010 5,024,541.7824422EUM9 Portfolio BERK
APData Updated: ~REPORT~: 10/25/2022 16:02
Run Date: 10/25/2022 - 16:02 IE (PRF_IE) 7.3.11
Report Ver. 7.3.11
Maturity
Date
Current
Rate
Ending
Par Value
EndingSecurity
TypeFund
Book Value
Beginning
Book Value
Adjusted Interest Earnings
Accretion
Amortization/
Earnings
Adjusted Interest
April 1, 2022 - April 30, 2022
Interest Earnings
Pooled Investments Selected Funds
Annualized
YieldCUSIP Investment #
Interest
Earned
Fund: Pooled Investment - Long Term
4,965,183.4314555 5,000,000.00 2.625MTN 05/15/2023 10,937.50 2,792.78 13,730.283.366010 4,962,390.65540424AQ1 5,010,123.8714557 5,000,000.00 3.500MC3 01/23/2024 14,583.33 -488.29 14,095.043.423010 5,010,612.16693475AV7 5,042,817.1414559 5,000,000.00 3.375MUN 04/01/2025 14,062.50 -1,223.35 12,839.153.097010 5,044,040.4913063DGB8 5,054,527.0514561 5,000,000.00 3.750MC3 12/06/2023 15,625.00 -2,844.89 12,780.113.075010 5,057,371.9405531FBF9 5,006,712.3014585 5,000,000.00 3.050MC3 06/20/2022 12,708.34 -4,109.57 8,598.772.088010 5,010,821.8705531FBG7 5,149,908.6514562 5,000,000.00 3.950MC3 11/17/2025 16,458.33 -3,524.50 12,933.833.054010 5,153,433.1591159HHU7 5,040,746.0114563 5,000,000.00 3.375MTN 08/15/2025 14,062.50 -1,032.42 13,030.083.144010 5,041,778.4320030NBN0 4,985,806.1214564 5,000,000.00 2.900MTN 05/20/2024 12,083.33 576.20 12,659.533.090010 4,985,229.92747525AT0 6,186,353.9314587 5,963,000.00 3.250MTN 05/20/2027 16,149.79 -3,683.69 12,466.102.450010 6,190,037.62747525AU7 5,096,410.5614566 5,000,000.00 3.750MC3 09/15/2025 15,625.00 -2,382.47 13,242.533.160010 5,098,793.03751212AC5 5,091,265.7014570 5,000,000.00 3.650MTN 03/01/2026 15,208.34 -1,984.04 13,224.303.159010 5,093,249.74375558BF9 3,794,744.4014574 3,725,000.00 3.450MTN 01/06/2027 10,709.37 -1,241.74 9,467.633.035010 3,795,986.14233851CU6 5,053,626.2414571 5,000,000.00 3.450MTN 01/06/2027 14,375.00 -954.77 13,420.233.230010 5,054,581.01233851CU6 1,033,005.3414582 1,000,000.00 4.250MTN 02/15/2024 3,541.66 -1,537.52 2,004.142.357010 1,034,542.86008252AM0 5,296,349.4014588 5,000,000.00 3.800MTN 10/30/2026 15,833.34 -5,491.35 10,341.992.373010 5,301,840.7507330MAA5 5,977,178.0014590 5,950,000.00 2.500MTN 01/14/2025 12,395.84 -837.96 11,557.882.352010 5,978,015.9604685A2L4 4,906,708.5314602 5,000,000.00 2.500MTN 01/14/2025 10,416.67 2,876.40 13,293.073.298010 4,903,832.1304685A2L4 4,997,162.9614606 5,000,000.00 3.375MTN 10/01/2024 14,062.50 97.83 14,160.333.448010 4,997,065.13828807CS4 4,000,000.0014641 T-1 4,000,000.00 0.300MTN 07/15/2022 1,000.00 0.00 1,000.000.304010 4,000,000.0015654VAK4 416,413,000.00Subtotal 417,445,474.27 1.389 461,583.50-21,197.46482,780.96401,041,671.73 Fund: Fidelity MM - Trans
22,335,222.6614190 22,335,222.66 0.002RRP 3,355.05 0.00 3,355.050.183030 22,331,867.61SYS14190 22,335,222.66Subtotal 22,335,222.66 0.183 3,355.050.003,355.0522,331,867.61 Fund: Fidelity MM - Regular
112,835,638.2614265 112,835,638.26 0.003RRP 16,949.43 0.00 16,949.430.183040 112,818,688.83SYS14265 112,835,638.26Subtotal 112,835,638.26 0.183 16,949.430.0016,949.43112,818,688.83 551,583,860.92Total 552,616,335.19 1.087 481,887.98-21,197.46503,085.44536,192,228.17 Portfolio BERK
APData Updated: ~REPORT~: 10/25/2022 16:02
Run Date: 10/25/2022 - 16:02 IE (PRF_IE) 7.3.11
Report Ver. 7.3.11
Pooled Investments Selected Funds
Interest Earnings
City of Berkeley
2180 Milvia Street, 3rd Floor
Berkeley, CA 94704
(510)981-7335
Sorted by Fund - Fund
May 1, 2022 - May 31, 2022
Yield on Beginning Book Value
Maturity
Date
Current
Rate
Ending
Par Value
EndingSecurity
TypeFund Book Value
Beginning
Book Value
Adjusted Interest Earnings
Accretion
Amortization/
Earnings
Adjusted InterestAnnualized
YieldCUSIP Investment #
Interest
Earned
Fund: Pooled Investment - Long Term
10,000,000.0014627 10,000,000.00 0.625MC5 06/17/2026 5,208.33 0.00 5,208.330.613010 10,000,000.003130AMLS9 10,000,000.0014624 10,000,000.00 0.700MC5 05/27/2026 5,111.11 0.00 5,111.110.602010 10,000,000.003130AMG22 10,000,000.0014620 10,000,000.00 0.500MC5 05/26/2026 4,166.66 0.00 4,166.660.491010 10,000,000.003130AMFN7 10,000,000.0014622 10,000,000.00 0.750MC5 05/27/2027 6,250.00 0.00 6,250.000.736010 10,000,000.003130AMG55 10,000,000.0014628 10,000,000.00 1.150MC5 06/03/2026 9,583.33 0.00 9,583.331.128010 10,000,000.003130AMN24 20,000,000.0014629 20,000,000.00 1.100MC5 06/03/2026 18,333.34 0.00 18,333.341.079010 20,000,000.003130AMN57 10,000,000.0014642 10,000,000.00 0.625MC5 07/29/2026 5,208.34 0.00 5,208.340.613010 10,000,000.003130AN5U0 4,250,000.0014634 4,250,000.00 0.500MC5 06/30/2026 1,770.83 0.00 1,770.830.491010 4,250,000.003130AMWM0 15,000,000.0014631 15,000,000.00 1.150MC5 06/08/2026 14,375.00 0.00 14,375.001.128010 15,000,000.003130AMPL0 20,000,000.0014630 20,000,000.00 1.200MC5 06/18/2026 20,000.00 0.00 20,000.001.177010 20,000,000.003130AMP71 10,000,000.0014632 10,000,000.00 0.625MC5 06/10/2026 5,208.33 0.00 5,208.330.613010 10,000,000.003130AMMW9 10,000,000.0014619 10,000,000.00 0.600MC5 05/26/2026 5,000.00 0.00 5,000.000.589010 10,000,000.003130AMGG1 20,000,000.0014618 20,000,000.00 0.700MC5 05/27/2026 10,222.23 0.00 10,222.230.602010 20,000,000.003130AMG22 5,600,000.0014611 5,600,000.00 1.250MC5 04/29/2027 5,833.33 0.00 5,833.331.226010 5,600,000.003130AMAV4 9,000,000.0014612 9,000,000.00 0.750MC5 04/29/2026 5,625.00 0.00 5,625.000.736010 9,000,000.003130ALZA5 15,000,000.0014616 15,000,000.00 1.150MC5 05/26/2026 7,604.16 0.00 7,604.160.597010 15,000,000.003130AMFQ0 10,000,000.0014617 10,000,000.00 0.625MC5 05/27/2026 5,208.33 0.00 5,208.330.613010 10,000,000.003130AMFT4 15,000,000.0014615 15,000,000.00 0.650MC5 05/27/2026 8,125.00 0.00 8,125.000.638010 15,000,000.003130AMF72 15,000,000.0014613 15,000,000.00 0.750MC5 05/27/2026 6,666.67 0.00 6,666.670.523010 15,000,000.003130AMEX6 40,000,000.0014643 40,000,000.00 0.400MC5 08/26/2026 13,333.33 0.00 13,333.330.392010 40,000,000.003130ANJY7 5,000,000.0014651 5,000,000.00 4.000MC5 05/26/2027 2,777.78 0.00 2,777.783.380010 0.003130ARYA3 5,000,000.0014654 5,000,000.00 4.440MC5 05/26/2032 3,083.33 0.00 3,083.333.751010 0.003130AS7K9 5,000,000.0014649 5,000,000.00 3.000MC4 05/25/2023 2,500.00 0.00 2,500.002.607010 0.003130ARXL0 6,425,000.0014645 6,425,000.00 4.100MC5 04/26/2032 21,952.08 0.00 21,952.084.023010 6,425,000.003130ARTE1 5,000,000.0014648 5,000,000.00 3.000MC5 05/23/2025 3,333.33 0.00 3,333.332.704010 0.003130ARX71 5,000,000.0014644 5,000,000.00 4.000MC5 04/19/2032 16,666.66 0.00 16,666.663.925010 5,000,000.003133ENUV0 5,000,000.0014647 5,000,000.00 3.630MC5 05/03/2027 14,116.67 0.00 14,116.673.554010 0.003133ENVV9 4,994,512.2414653 5,000,000.00 4.370MC5 05/17/2032 4,855.55 12.24 4,867.793.953010 0.003133ENWW6 5,000,000.0014650 5,000,000.00 2.030FAC 05/02/2023 8,176.39 0.00 8,176.391.990010 0.003133ENVS6 5,000,000.0014646 5,000,000.00 3.100MC5 04/29/2025 12,916.67 0.00 12,916.673.042010 5,000,000.003134GXRS5 5,000,485.3314580 5,000,000.00 2.250MTN 08/14/2022 9,375.00 -199.45 9,175.552.160010 5,000,684.7853944VAS8 4,965,040.4914536 5,000,000.00 2.400MTN 05/03/2023 10,000.00 3,158.99 13,158.993.123010 4,961,881.50037833AK6 Portfolio BERK
APData Updated: ~REPORT~: 10/25/2022 16:00
Run Date: 10/25/2022 - 16:00 IE (PRF_IE) 7.3.11
Report Ver. 7.3.11
Maturity
Date
Current
Rate
Ending
Par Value
EndingSecurity
TypeFund
Book Value
Beginning
Book Value
Adjusted Interest Earnings
Accretion
Amortization/
Earnings
Adjusted Interest
May 1, 2022 - May 31, 2022
Interest Earnings
Pooled Investments Selected Funds
Annualized
YieldCUSIP Investment #
Interest
Earned
Fund: Pooled Investment - Long Term
250,000.0014539 250,000.00 3.300SCD 07/05/2023 700.69 0.00 700.693.300010 250,000.00254673RD0 250,000.0014540 250,000.00 3.300SCD 07/03/2023 700.68 0.00 700.683.300010 250,000.00795450T47 4,995,172.5214542 5,000,000.00 3.000MTN 02/11/2023 12,500.00 579.30 13,079.303.083010 4,994,593.22084670BJ6 10,000,000.0014638 10,000,000.00 0.300MC5 07/20/2026 2,500.00 0.00 2,500.000.294010 10,000,000.0031422XJW3 4,991,496.7914545 5,000,000.00 2.400MTN 09/15/2022 10,000.00 2,452.85 12,452.852.939010 4,989,043.94589331AT4 5,011,576.0214548 5,000,000.00 3.625MTN 07/15/2023 15,104.16 -859.61 14,244.553.346010 5,012,435.6368389XAS4 5,021,869.3614554 5,000,000.00 3.650MTN 10/12/2023 15,208.34 -1,336.21 13,872.133.252010 5,023,205.5724422EUM9 4,967,976.2014555 5,000,000.00 2.625MTN 05/15/2023 10,937.50 2,792.77 13,730.273.256010 4,965,183.43540424AQ1 5,009,635.5814557 5,000,000.00 3.500MC3 01/23/2024 14,583.33 -488.29 14,095.043.312010 5,010,123.87693475AV7 5,041,593.7914559 5,000,000.00 3.375MUN 04/01/2025 14,062.50 -1,223.35 12,839.152.998010 5,042,817.1413063DGB8 5,051,682.1614561 5,000,000.00 3.750MC3 12/06/2023 15,625.00 -2,844.89 12,780.112.977010 5,054,527.0505531FBF9
0.0014585 0.00 3.050MC3 06/20/2022 8,048.61 -2,602.73 5,445.882.090010 5,006,712.3005531FBG7 5,146,384.1514562 5,000,000.00 3.950MC3 11/17/2025 16,458.34 -3,524.50 12,933.842.957010 5,149,908.6591159HHU7 5,039,713.6014563 5,000,000.00 3.375MTN 08/15/2025 14,062.50 -1,032.41 13,030.093.044010 5,040,746.0120030NBN0 4,986,382.3314564 5,000,000.00 2.900MTN 05/20/2024 12,083.34 576.21 12,659.552.990010 4,985,806.12747525AT0 6,182,670.2514587 5,963,000.00 3.250MTN 05/20/2027 16,149.79 -3,683.68 12,466.112.373010 6,186,353.93747525AU7 5,094,028.0914566 5,000,000.00 3.750MC3 09/15/2025 15,625.00 -2,382.47 13,242.533.059010 5,096,410.56751212AC5 5,089,281.6614570 5,000,000.00 3.650MTN 03/01/2026 15,208.33 -1,984.04 13,224.293.058010 5,091,265.70375558BF9 3,793,502.6614574 3,725,000.00 3.450MTN 01/06/2027 10,709.38 -1,241.74 9,467.642.938010 3,794,744.40233851CU6 5,052,671.4714571 5,000,000.00 3.450MTN 01/06/2027 14,375.00 -954.77 13,420.233.127010 5,053,626.24233851CU6 1,031,467.8314582 1,000,000.00 4.250MTN 02/15/2024 3,541.67 -1,537.51 2,004.162.284010 1,033,005.34008252AM0 5,290,858.0614588 5,000,000.00 3.800MTN 10/30/2026 15,833.33 -5,491.34 10,341.992.299010 5,296,349.4007330MAA5 5,976,340.0314590 5,950,000.00 2.500MTN 01/14/2025 12,395.83 -837.97 11,557.862.277010 5,977,178.0004685A2L4 4,909,584.9414602 5,000,000.00 2.500MTN 01/14/2025 10,416.66 2,876.41 13,293.073.190010 4,906,708.5304685A2L4 4,997,260.7914606 5,000,000.00 3.375MTN 10/01/2024 14,062.50 97.83 14,160.333.336010 4,997,162.96828807CS4 4,000,000.0014641 T-1 4,000,000.00 0.300MTN 07/15/2022 1,000.00 0.00 1,000.000.294010 4,000,000.0015654VAK4 5,000,000.0014655 5,000,000.00 5.000MC3 05/31/2032 694.44 0.00 694.445.069010 0.0022553PXJ3 5,000,000.0014652 5,000,000.00 4.050MC3 05/25/2025 3,375.00 0.00 3,375.003.520010 0.0022553PWD7 456,413,000.00Subtotal 457,416,186.34 1.495 548,870.34-19,678.36568,548.70417,445,474.27 Fund: Fidelity MM - Trans
44,686,581.1414190 44,686,581.14 0.002RRP 21,358.48 0.00 21,358.481.126030 22,335,222.66SYS14190 44,686,581.14Subtotal 44,686,581.14 1.126 21,358.480.0021,358.4822,335,222.66 Fund: Fidelity MM - Regular
170,556,248.0414265 170,556,248.04 0.003RRP 50,609.78 0.00 50,609.780.528040 112,835,638.26SYS14265 170,556,248.04Subtotal 170,556,248.04 0.528 50,609.780.0050,609.78112,835,638.26 671,655,829.18Total 672,659,015.52 1.288 620,838.60-19,678.36640,516.96552,616,335.19 Portfolio BERK
APData Updated: ~REPORT~: 10/25/2022 16:00
Run Date: 10/25/2022 - 16:00 IE (PRF_IE) 7.3.11
Report Ver. 7.3.11
Pooled Investments Selected Funds
Interest Earnings
City of Berkeley
2180 Milvia Street, 3rd Floor
Berkeley, CA 94704
(510)981-7335
Sorted by Fund - Fund
June 1, 2022 - June 30, 2022
Yield on Beginning Book Value
Maturity
Date
Current
Rate
Ending
Par Value
EndingSecurity
TypeFund Book Value
Beginning
Book Value
Adjusted Interest Earnings
Accretion
Amortization/
Earnings
Adjusted InterestAnnualized
YieldCUSIP Investment #
Interest
Earned
Fund: Pooled Investment - Long Term
10,000,000.0014627 10,000,000.00 0.750MC5 06/17/2026 5,694.45 0.00 5,694.450.693010 10,000,000.003130AMLS9 10,000,000.0014624 10,000,000.00 0.700MC5 05/27/2026 5,833.33 0.00 5,833.330.710010 10,000,000.003130AMG22 10,000,000.0014620 10,000,000.00 0.500MC5 05/26/2026 4,166.67 0.00 4,166.670.507010 10,000,000.003130AMFN7 10,000,000.0014622 10,000,000.00 0.750MC5 05/27/2027 6,250.00 0.00 6,250.000.760010 10,000,000.003130AMG55 10,000,000.0014628 10,000,000.00 1.150MC5 06/03/2026 9,583.33 0.00 9,583.331.166010 10,000,000.003130AMN24 20,000,000.0014629 20,000,000.00 1.100MC5 06/03/2026 18,333.33 0.00 18,333.331.115010 20,000,000.003130AMN57 10,000,000.0014642 10,000,000.00 0.625MC5 07/29/2026 5,208.33 0.00 5,208.330.634010 10,000,000.003130AN5U0 4,250,000.0014634 4,250,000.00 1.050MC5 06/30/2026 1,835.77 0.00 1,835.770.526010 4,250,000.003130AMWM0 15,000,000.0014631 15,000,000.00 1.150MC5 06/08/2026 14,375.00 0.00 14,375.001.166010 15,000,000.003130AMPL0 20,000,000.0014630 20,000,000.00 1.200MC5 06/18/2026 20,000.00 0.00 20,000.001.217010 20,000,000.003130AMP71 10,000,000.0014632 10,000,000.00 0.875MC5 06/10/2026 6,666.67 0.00 6,666.670.811010 10,000,000.003130AMMW9 10,000,000.0014619 10,000,000.00 0.600MC5 05/26/2026 5,000.00 0.00 5,000.000.608010 10,000,000.003130AMGG1 20,000,000.0014618 20,000,000.00 0.700MC5 05/27/2026 11,666.66 0.00 11,666.660.710010 20,000,000.003130AMG22 5,600,000.0014611 5,600,000.00 1.250MC5 04/29/2027 5,833.34 0.00 5,833.341.267010 5,600,000.003130AMAV4 9,000,000.0014612 9,000,000.00 0.750MC5 04/29/2026 5,625.00 0.00 5,625.000.760010 9,000,000.003130ALZA5 15,000,000.0014616 15,000,000.00 1.150MC5 05/26/2026 14,375.00 0.00 14,375.001.166010 15,000,000.003130AMFQ0 10,000,000.0014617 10,000,000.00 0.625MC5 05/27/2026 5,208.34 0.00 5,208.340.634010 10,000,000.003130AMFT4 15,000,000.0014615 15,000,000.00 0.650MC5 05/27/2026 8,125.00 0.00 8,125.000.659010 15,000,000.003130AMF72 15,000,000.0014613 15,000,000.00 0.750MC5 05/27/2026 9,375.00 0.00 9,375.000.760010 15,000,000.003130AMEX6 40,000,000.0014643 40,000,000.00 0.400MC5 08/26/2026 13,333.34 0.00 13,333.340.406010 40,000,000.003130ANJY7 5,000,000.0014651 5,000,000.00 4.000MC5 05/26/2027 16,666.66 0.00 16,666.664.056010 5,000,000.003130ARYA3 5,000,000.0014656 5,000,000.00 4.000MC5 06/30/2025 555.56 0.00 555.564.056010 0.003130ASGF0 5,000,000.0014654 5,000,000.00 4.440MC5 05/26/2032 18,500.00 0.00 18,500.004.502010 5,000,000.003130AS7K9 5,000,000.0014649 5,000,000.00 3.000MC4 05/25/2023 12,500.00 0.00 12,500.003.042010 5,000,000.003130ARXL0 6,425,000.0014645 6,425,000.00 4.100MC5 04/26/2032 21,952.09 0.00 21,952.094.157010 6,425,000.003130ARTE1 5,000,000.0014648 5,000,000.00 3.000MC5 05/23/2025 12,500.00 0.00 12,500.003.042010 5,000,000.003130ARX71 5,000,000.0014644 5,000,000.00 4.000MC5 04/19/2032 16,666.67 0.00 16,666.674.056010 5,000,000.003133ENUV0 5,000,000.0014647 5,000,000.00 3.630MC5 05/03/2027 15,125.00 0.00 15,125.003.680010 5,000,000.003133ENVV9 4,994,558.1514653 5,000,000.00 4.370MC5 05/17/2032 18,208.34 45.91 18,254.254.447010 4,994,512.243133ENWW6 5,000,000.0014650 5,000,000.00 2.030FAC 05/02/2023 8,458.33 0.00 8,458.332.058010 5,000,000.003133ENVS6 5,000,000.0014658 5,000,000.00 4.000MC5 12/30/2024 555.56 0.00 555.564.056010 0.003134GXC36 5,000,000.0014646 5,000,000.00 3.100MC5 04/29/2025 12,916.66 0.00 12,916.663.143010 5,000,000.003134GXRS5 Portfolio BERK
APData Updated: ~REPORT~: 10/25/2022 15:44
Run Date: 10/25/2022 - 15:45 IE (PRF_IE) 7.3.11
Report Ver. 7.3.11
Maturity
Date
Current
Rate
Ending
Par Value
EndingSecurity
TypeFund
Book Value
Beginning
Book Value
Adjusted Interest Earnings
Accretion
Amortization/
Earnings
Adjusted Interest
June 1, 2022 - June 30, 2022
Interest Earnings
Pooled Investments Selected Funds
Annualized
YieldCUSIP Investment #
Interest
Earned
Fund: Pooled Investment - Long Term
5,000,285.8814580 5,000,000.00 2.250MTN 08/14/2022 9,375.00 -199.45 9,175.552.233010 5,000,485.3353944VAS8 4,968,199.4814536 5,000,000.00 2.400MTN 05/03/2023 10,000.00 3,158.99 13,158.993.225010 4,965,040.49037833AK6 250,000.0014539 250,000.00 3.300SCD 07/05/2023 678.08 0.00 678.083.300010 250,000.00254673RD0 250,000.0014540 250,000.00 3.300SCD 07/03/2023 678.09 0.00 678.093.300010 250,000.00795450T47 4,995,751.8214542 5,000,000.00 3.000MTN 02/11/2023 12,500.00 579.30 13,079.303.186010 4,995,172.52084670BJ6 10,000,000.0014638 10,000,000.00 0.300MC5 07/20/2026 2,500.00 0.00 2,500.000.304010 10,000,000.0031422XJW3 4,993,949.6414545 5,000,000.00 2.400MTN 09/15/2022 10,000.00 2,452.85 12,452.853.035010 4,991,496.79589331AT4 5,010,716.4214548 5,000,000.00 3.625MTN 07/15/2023 15,104.17 -859.60 14,244.573.458010 5,011,576.0268389XAS4 5,020,533.1414554 5,000,000.00 3.650MTN 10/12/2023 15,208.33 -1,336.22 13,872.113.361010 5,021,869.3624422EUM9 4,970,768.9714555 5,000,000.00 2.625MTN 05/15/2023 10,937.50 2,792.77 13,730.273.363010 4,967,976.20540424AQ1 5,009,147.2914557 5,000,000.00 3.500MC3 01/23/2024 14,583.34 -488.29 14,095.053.423010 5,009,635.58693475AV7 5,040,370.4514559 5,000,000.00 3.375MUN 04/01/2025 14,062.50 -1,223.34 12,839.163.098010 5,041,593.7913063DGB8 5,048,837.2714561 5,000,000.00 3.750MC3 12/06/2023 15,625.00 -2,844.89 12,780.113.078010 5,051,682.1605531FBF9 5,142,859.6514562 5,000,000.00 3.950MC3 11/17/2025 16,458.33 -3,524.50 12,933.833.058010 5,146,384.1591159HHU7 5,038,681.1814563 5,000,000.00 3.375MTN 08/15/2025 14,062.50 -1,032.42 13,030.083.146010 5,039,713.6020030NBN0 4,986,958.5314564 5,000,000.00 2.900MTN 05/20/2024 12,083.33 576.20 12,659.533.089010 4,986,382.33747525AT0 6,178,986.5714587 5,963,000.00 3.250MTN 05/20/2027 16,149.79 -3,683.68 12,466.112.453010 6,182,670.25747525AU7 5,091,645.6214566 5,000,000.00 3.750MC3 09/15/2025 15,625.00 -2,382.47 13,242.533.163010 5,094,028.09751212AC5 5,087,297.6314570 5,000,000.00 3.650MTN 03/01/2026 15,208.33 -1,984.03 13,224.303.161010 5,089,281.66375558BF9 3,792,260.9214574 3,725,000.00 3.450MTN 01/06/2027 10,709.37 -1,241.74 9,467.633.036010 3,793,502.66233851CU6 5,051,716.7014571 5,000,000.00 3.450MTN 01/06/2027 14,375.00 -954.77 13,420.233.232010 5,052,671.47233851CU6 1,029,930.3114582 1,000,000.00 4.250MTN 02/15/2024 3,541.67 -1,537.52 2,004.152.364010 1,031,467.83008252AM0 5,285,366.7214588 5,000,000.00 3.800MTN 10/30/2026 15,833.33 -5,491.34 10,341.992.378010 5,290,858.0607330MAA5 5,975,502.0714590 5,950,000.00 2.500MTN 01/14/2025 12,395.83 -837.96 11,557.872.353010 5,976,340.0304685A2L4 4,912,461.3514602 5,000,000.00 2.500MTN 01/14/2025 10,416.67 2,876.41 13,293.083.294010 4,909,584.9404685A2L4 4,997,358.6214606 5,000,000.00 3.375MTN 10/01/2024 14,062.50 97.83 14,160.333.448010 4,997,260.79828807CS4 4,000,000.0014641 T-1 4,000,000.00 0.300MTN 07/15/2022 1,000.00 0.00 1,000.000.304010 4,000,000.0015654VAK4 5,000,000.0014655 5,000,000.00 5.000MC3 05/31/2032 20,833.34 0.00 20,833.345.069010 5,000,000.0022553PXJ3 5,000,000.0014652 5,000,000.00 4.050MC3 05/25/2025 16,875.00 0.00 16,875.004.106010 5,000,000.0022553PWD7 466,413,000.00Subtotal 467,399,144.38 1.741 654,933.47-17,041.96671,975.43457,416,186.34 Fund: Fidelity MM - Trans
44,722,419.1814190 44,722,419.18 0.002RRP 35,838.04 0.00 35,838.040.976030 44,686,581.14SYS14190 44,722,419.18Subtotal 44,722,419.18 0.976 35,838.040.0035,838.0444,686,581.14 Fund: Fidelity MM - Regular
206,694,956.6514265 206,694,956.65 0.003RRP 138,708.61 0.00 138,708.610.989040 170,556,248.04SYS14265 206,694,956.65Subtotal 206,694,956.65 0.989 138,708.610.00138,708.61170,556,248.04 Portfolio BERK
APData Updated: ~REPORT~: 10/25/2022 15:44
Run Date: 10/25/2022 - 15:45 IE (PRF_IE) 7.3.11
Report Ver. 7.3.11
Maturity
Date
Current
Rate
Ending
Par Value
EndingSecurity
TypeFund
Book Value
Beginning
Book Value
Adjusted Interest Earnings
Accretion
Amortization/
Earnings
Adjusted Interest
June 1, 2022 - June 30, 2022
Interest Earnings
Pooled Investments Selected Funds
Annualized
YieldCUSIP Investment #
Interest
Earned
717,830,375.83Total 718,816,520.21 1.500 829,480.12-17,041.96846,522.08672,659,015.52 Portfolio BERK
APData Updated: ~REPORT~: 10/25/2022 15:44
Run Date: 10/25/2022 - 15:45 IE (PRF_IE) 7.3.11
Report Ver. 7.3.11
Exhibit 2-C
Certificates of Deposit - S & L
$502,128 0.07%
Medium Term Notes
$119,295,403 17.07%
Federal Agency
$321,642,302 46.03%
Municipal Bonds
$4,996,700 0.72%
Money Market $251,417,376
36%
Bank Account $932,720
0.13%
Pooled Cash and Investments
(Market Value)
as of June 30, 2022
Exhibit 2-D
$932,720
$251,417,376
$502,128
$119,295,403
$321,642,302
$4,996,700
$698,786,628
$698,786,628
$209,635,988
$209,635,988
$698,786,628
$698,786,628
BANK ACCOUNTS
MONEY MARKET
CERTIFICATES OF DEPOSITS
MEDIUM TERM NOTES
FEDERAL AGENCY BONDS
MUNICIPAL BONDS
City of Berkeley
Current Holdings vs. Policy Limits
as of June 30, 2022
Policy Limits
Current Holdings
Exhibit 2-E
$-
$100,000,000
$200,000,000
$300,000,000
$400,000,000
$500,000,000
$600,000,000
$700,000,000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Investment Values
Pooled and Trust
Cash and Investment Portfolio Trend
as of June 30, 2022
Attachment 3
Pooled Cash
Investments Gain/Loss on & Investments
Pooled Cash (Book Value) Investments (Market Value)
Retiree Medical Trust Fund
Fund No.
721 BHA 383,608$ 202,515$ (30,190)$ 555,933$ 722 M1=IBEW (27,884) 97,307 (7,249) 62,174 723 M2=Local 1 6,203,125 4,468,805 (433,332) 10,238,598 724 MUI=Z1 981,435 917,142 (45,657) 1,852,920 725 MUI=Z2 to Z6 1,468,309 1,270,437 (89,626) 2,649,120 726 M535= Local 535 5,601,588 4,117,535 (268,133) 9,450,990 727 M3=Local 790 3,664,400 2,772,096 (302,037) 6,134,459 Total Retiree Medical Trust Fund 18,274,581 13,845,837 (1,176,224) 30,944,194 Fire Medical Trust Fund
736 Fire Medical Trust Fund 5,820,985 6,851,672 (632,303) 12,040,354 Total Fire Medical Trust Fund 5,820,985 6,851,672 (632,303) 12,040,354 Police Medical Trust Fund
731 Police EE Retiree HLT Assistance Plan 858,758 1,641,191 (176,003) 2,323,946 701 Safety Members Pension Fund 31,116 31,116 706 Police Medical Trust Fund 2,022,894 2,850,820 (259,026) 4,614,688 Total Police Medical Trust Fund 2,912,768 4,492,011 (435,029) 6,969,750 Total Trust Funds 27,008,334$ 25,189,520$ (2,243,556)$ 49,954,298$ Summary of Pooled Cash and Investments - Trust Funds
(Market Value)
As of June 30, 2022
Exhibit 3-A
CUSIP Investment # Issuer Par Value
Beginning Book
Value
Ending Book
Value Market Value Maturity Date
Moody's
Rating
Current
Rate
Annualized
Yield Interest Earned
Amortization/
Accretion
Adjusted Interest
Earnings
Federal Agency Coupon Securities
3133EFQT7 14361 Fed Farm Credit Bank 2,600,000.00 2,606,639.63 2,606,184.86 2,568,696.00 11/25/2025 AAA 2.700 2.631 17,550.00 (454.77) 17,095.23 Municipal Bonds
786091AG3 14316 SACGEN 5,000,000.00 5,180,118.11 5,166,609.25 5,439,550.00 08/01/2025 A3 7.250 5.979 90,625.00 (13,508.86) 77,116.14 Savo Island Loan
SYS10988 10988 EMPMED 193,000.00 193,000.00 193,000.00 193,000.00 09/01/2025 N/A 8.000 7.944 3,822.67 - 3,822.67 Preferred Securities
00206R706 14591 AT&T Inc. 1,680,033.60 1,680,033.60 1,680,033.60 1,276,692.20 N/A N/A 4.596 4.728 19,801.73 - 19,801.73 00206R706 14596 AT&T Inc. 1,680,008.40 1,680,008.40 1,680,008.40 1,276,673.05 N/A N/A 4.640 4.744 19,869.10 - 19,869.10 00206R706 14597 AT&T Inc. 2,520,000.00 2,520,000.00 2,520,000.00 1,915,000.00 N/A N/A 4.643 4.744 29,803.50 - 29,803.50 Total 13,673,042.00$ 13,859,799.74$ 13,845,836.11$ 12,669,611.25$ 4.850 181,472.00$ (13,963.63)$ 167,508.37$ Total Investments (Book Value) 13,845,836.11$
Gain/Loss on Investments (1,176,224.86)
Total Investments (Market Value) 12,669,611.25
Temporarily Invested with Pooled Cash & Investments 18,274,581.00 Total Pooled Cash and Investments 30,944,192.25$
Adjusted Interest Earnings
Retiree Medical Trust Fund
Fund 721 - 727
Investments
As of June 30, 2022
Interest Earnings
April 1 to June 30, 2022
April 1 to June 30, 2022
Interest Earnings
Exhibit 3-B
CUSIP Investment # Issuer Par Value
Beginning Book
Value
Ending Book
Value Market Value Maturity Date
Moody's
Rating
Current
Rate
Annualized
Yield Interest Earned
Amortization/
Accretion
Adjusted Interest
Earnings
Medium Term Notes
6174467X1 14318 Morgan Stanley DW DTC#0015 2,000,000.00 2,028,155.51 2,026,225.58 2,032,080.00 11/24/2025 BAA1 5.000 4.565 25,000.00 (1,929.93) 23,070.07 Federal Agency Coupon Securities
3133EFQT7 14362 Fed Farm Credit Bank 2,300,000.00 2,305,873.52 2,305,471.23 2,272,308.00 11/25/2025 AAA 2.700 2.631 15,525.00 (402.29) 15,122.71 Preferred Securities
00206R706 14592 AT&T Inc. 1,679,983.20 1,679,983.20 1,679,983.20 1,276,653.90 N/A N/A 4.596 4.744 19,868.80 - 19,868.80 00206R706 14594 AT&T Inc. 839,991.60 839,991.60 839,991.60 638,326.95 N/A N/A 4.640 4.744 9,934.39 - 9,934.39 Total 6,819,974.80$ 6,854,003.83$ 6,851,671.61$ 6,219,368.85$ 3.980 70,328.19$ (2,332.22)$ 67,995.97$ Total Investments (Book Value) 6,851,671.61$
Gain/Loss on Investments (632,302.76)
Total Investments (Market Value) 6,219,368.85
Temporarily Invested with Pooled Cash & Investments 5,820,985.00 Total Pooled Cash and Investments 12,040,353.85$
Fire Retiree Medical
Fund 736
Adjusted Interest Earnings
April 1 to June 30, 2022As of June 30, 2022
Investments Interest Earnings
Interest Earnings
April 1 to June 30, 2022
Exhibit 3-C
CUSIP Investment # Issuer Par Value
Beginning Book
Value
Ending Book
Value Market Value Maturity Date
Moody's
Rating
Current
Rate
Annualized
Yield Interest Earned
Amortization/
Accretion
Adjusted Interest
Earnings
Medium Term Notes
6174467X1 14319 Morgan Stanley DW DTC#0015 500,000.00 507,038.88 506,556.39 508,020.00 11/24/25 BAA1 5.000 4.565 6,250.00 (482.49) 5,767.51 Federal Agency Coupon Securities
3133EFQT7 14363 Fed. Farm Credit Banks 2,300,000.00 2,305,873.52 2,305,471.23 2,272,308.00 11/25/25 AAA 2.700 2.631 15,525.00 (402.29) 15,122.71 Preferred Securities
00206R706 14593 AT&T Inc. 1,679,983.20 1,679,983.20 1,679,983.20 1,276,653.90 N/A N/A 4.596 4.744 19,868.80 - 19,868.80 Total 4,479,983.20$ 4,492,895.60$ 4,492,010.82$ 4,056,981.90$ 3.327 41,643.80$ (884.78)$ 40,759.02$ Total Investments (Book Value) 4,492,010.82$
Gain/Loss on Investments (435,028.92)
Total Investments (Market Value) 4,056,981.90
Temporarily Invested with Pooled Cash & Investments 2,912,768.00 Total Pooled Cash and Investments 6,969,749.90$
Police Retiree Medical
Fund 731 and 706
Adjusted Interest Earnings
Investments Interest Earnings
As of June 30, 2022 April 1 to June 30, 2022
Interest Earnings
April 1 to June 30, 2022
Communications
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2180 Milvia Street
Berkeley, CA 94704
(510) 981-6900
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