Berkeley City Council
May 23, 2023

Tuesday, May 23, 2023 AGENDA Page 1

P R O C L AM AT I O N

C AL L I N G A S P E C I AL M EE TI NG O F T HE

B E R K E LE Y CI T Y C O U N CIL
In accordance with the authority in me vested, I do hereby call the Berkeley City Council in special session as follows:

Tuesday, May 23, 2023
4:00 PM
SCHOOL DISTRICT BOARD ROOM - 1231 ADDISON STREET, BERKELEY, CA 94702 TELECONFERENCE LOCATION - 1404 LE ROY AVE, BERKELEY 94708

JESSE ARREGUIN, MAYOR
Councilmembers:

DISTRICT 1 – RASHI KESARWANI DISTRICT 5 – SOPHIE HAHN
DISTRICT 2 – TERRY TAPLIN DISTRICT 6 – SUSAN WENGRAF
DISTRICT 3 – BEN BARTLETT DISTRICT 7 – RIGEL ROBINSON
DISTRICT 4 – KATE HARRISON DISTRICT 8 – MARK HUMBERT
This meeting will be conducted in a hybrid model with both in -person attendance and virtual participation . For in- person attendees, face coverings or masks that cover both the nose and the mouth are encouraged. If you are feeling sick, please do not attend the meeting in person.

Live captioned broadcasts of Council Meetings are available on Cable B -TV (Channel 33) and via internet accessible video stream at http://berkeley.granicus.com/MediaPlayer.php?publish_id=1244.

Remote participation by the public is available through Zoom. To access the meeting remotely: Join from a PC, Mac, iPad, iPhone, or Android device: Please use this UR L: https://cityofberkeley- info.zoomgov.com/j/1604260018. If you do not wish for your name to appear on the screen, then use the drop down menu and click on "rename" to rename yourself to be anonymous. To request to speak, use the “raise hand” icon by rolling over the bottom of the screen. To join by phone: Dial 1-669-254-5252 or 1 -833-568-8864 (Toll Free) and enter Meeting ID: 160 426 0018. If you wish to comment during the public comment portion of the agenda, Press *9 and wait to be recognized by the Chair.

Please be mindful that the meeting will be recorded and all rules of procedure and decorum apply for in-person attendees and those participating by teleconference or videoconference.

To submit a written communication for the City Council’s consideration and inclusion in the public record , email [email protected].

This meeting will be conducted in accordance with the Brown Act, Government Code Section 54953 and applicable Executive Orders as issued by the Governor that are currently in effect . Any member of the public may attend this meeting. Questions regarding this matter may be addressed to Mark Numainville, City Clerk, (510) 981-6900. The City Council may take action related to any subje ct listed on the Agenda. Meetings will adjourn at 11:00 p.m. - any items outstanding at that time will be carried over to a date/time to be specified.

Tuesday, May 23, 2023 AGENDA Page 2
Preliminary Matters
Roll Call:

Action Calendar
The public may comment on each item listed on the agenda for action as the item is taken up. For items moved to the Action Calendar from the Consent Calendar or Information Calendar, persons who spoke on the item during the Consent Calendar public comment period may speak again at the time the matter is taken up during the Action Calendar.

The Presiding Officer will request that persons wishing to speak line up at the podium , or use the "raise hand" function in Zoom, to determine the number of persons interested in speaking at that time. Up to ten (10) speakers may speak for two minutes. If there are more than ten persons interested in speaking, the Presiding Officer may limit the public comment for all speakers to one minute per speaker. Speakers are permitted to yield their time to one other speaker, however no one speaker shall have more than four minutes. The Presiding Officer may, with the consent of persons representing both sides of an issue, allocate a block of time to each side to present their issue.

Action items may be reordered at the discretion of the Chair with the consent of Council.

1. Unfunded Liability Obligations and Unfunded Infrastructure Needs (Continued from April 11, 2023.)
From: City Manager
Recommendation: That the City Council takes the following actions:

1. Accept the Unfunded Liability Obligations and Unfunded Infrastructure Needs report;

2. Receive a presentation on Pensions and Other-Post Employment Benefits tonight and provide staff with direction;

3. Schedule for either the April 25, 2023 City Council Meeting or at a later date to be determined a presentation and discussion on Unfunded Infrastructure Needs.

Financial Implications: See report
Contact: Sharon Friedrichsen, Budget Manager, (510) 981-7000 Adjournment
I hereby request that the City Clerk of the City of Berkeley cause personal notice to be given to each member of the Berkeley City Council on the time and place of said meeting, forthw ith.

IN WITNESS WHEREOF, I have hereunto set my hand and caused the official seal of the City of Berkeley to be affixed on this 18th day of May, 2023.

Jesse Arreguin, Mayor
Public Notice – this Proclamation serves as the official agenda for this meeting.

ATTEST:

Date: May 18, 2023
Mark Numainville, City Clerk

Tuesday, May 23, 2023 AGENDA Page 3

NOTICE CONCERNING YOUR LEGAL RIGHTS : If you object to a decision by the City Council to approve or deny a use permit or variance for a project the following requirements and restrictions apply:
1) No lawsuit challenging a City decision to deny (Code Civ. Proc. §1094.6(b)) or approve (Gov. Code 65009(c)(5)) a use permit or variance may be filed more than 90 days after the date the Notice of Decision of the action of the City Council is mai led. Any lawsuit not filed within that 90 -day period will be barred. 2) In any lawsuit that may be filed against a City Council decision to approve or deny a use permit or variance, the issues and evidence will be limited to those raised by you or someone else, orally or in writing, at a public hearing or prior to the close of the last public hearing on the project.

Archived indexed video streams are available at:
https://berkeleyca.gov/your-government/city-council/city-council-agendas.

Channel 33 rebroadcasts the following Wednesday at 9:00 a.m. and Sunday at 9:00 a.m.

Communications to the City Council are public record and will become part of the City’s electron ic 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 to the City Clerk Department at 2180 Milvia Street. 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 Department for further information.

Any writings or documents provided to a majority of the City Council regarding any item on this agenda will be made available for public inspection at the public counter at the City Clerk Department located on the first floor of City Hall located at 2180 Milvia Street as well as posted on the City's website at https://berkeleyca.gov/.

Agendas and agenda reports may be accessed via the Internet at:
https://berkeleyca.gov/your-government/city-council/city-council-agendas and may be read at reference desks at the following locations:

City Clerk Department - 2180 Milvia Street, First Floor Tel: 510-981-6900, TDD: 510-981-6903, Fax: 510-981-6901 Email: [email protected]

Libraries: Main – 2090 Kittredge Street,
Claremont Branch – 2940 Benvenue, West Branch – 1125 University, North Branch – 1170 The Alameda, Tarea Hall Pittman South Branch – 1901 Russell

COMMUNICATION ACCESS INFORMATION:

This meeting is being held in a wheelchair accessible location.

To request a disability-related accommodation(s) to participate in the meeting, including auxiliary aids or services, please contact the Disability Services specialist at (510) 981-6418 (V) or (510) 981-6347 (TDD) at least three business days before the meeting date.

Please refrain from wearing scented products to this meeting.

Captioning services are provided at the meeting, on B -TV, and on the Internet. In addition, assisted listening devices for the hearing impaired are available from the City Clerk prior to the meeting, and are t o be returned before the end of the meeting.

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

ACTION CALENDAR
May 23, 2023
(Continued from April 11, 2023)
To: Honorable Mayor and Members of the City Council
From: Dee Williams-Ridley, City Manager
Submitted by: Sharon Friedrichsen, Budget Manager
Subject: Unfunded Liability Obligations and Unfunded Infrastructure Needs

RECOMMENDATION
That the City Council takes the following actions:

1. Accept the Unfunded Liability Obligations and Unfunded Infrastructure Needs report

2. Receive a presentation on Pensions and Other-Post Employment Benefits tonight and provide staff with direction

3. Schedule for either the April 25, 2023 City Council Meeting or at a later date to be determined a presentation and discussion on Unfunded Infrastructure Needs

INTRODUCTION
On May 29, 2012, the City Council adopted Resolution No. 65,748 N.S. “Requiring that the City Manager Develop and Publish a Biennial Report of Current City Liabilities and Projections of Future Liabilities. The purpose of this report is to provide a thorough overview of the City’s long-term expenditure obligations in a format that is easily understandable in a single report. As indicated below, the enacting Resolution stipulates that information pertaining to personnel-related costs, City-issued bonds, capital assets and infrastructure be included within the report as follows:

1. Employee and retiree benefit costs over a 10-year horizon

2. Costs for current active employees including:
a. total payroll costs for active employees during the current year; b. projected payroll costs for the same number of employees for the next 10- year period with costs increases based on MOU’s with bargaining units.

3. A summary of all current City obligations including:
a. general obligation bonds;
b. revenue bonds.

Unfunded Liability Obligations and Unfunded Infrastructure Needs ACTION CALENDAR May 23, 2023

4. Summary of all capital assets and infrastructure including:
a. Appraisal of Public Buildings valued at $5 million or more b. Condition of Streets and Roads using the “Street Saver” information projecting costs to bring streets and roads condition to an average Pavement Condition Index (PCI) of 75 within 5 years.
c. Sewers: updated asset management plan for public sewers including projected costs for succeeding 5 years and projected revenue from sewer fees for the succeeding 5 years.

This report is required to be published every two years, in the second year of the biennial budget, in advance of the Council’s consideration of the upcoming biennial budget. Instead of preparing a two-year budget for FY 2022 & FY 2023, the City prepared a one-year budget for FY 2022 and subsequently prepared a two-year budget for FY 2023 & FY 2024. Therefore, this report is being presented in the first year of the biennial budget to adhere to the two-year reporting requirement.

The projections in this report were developed by staff in the City Manager’s Budget Office and the Finance Department, with the assistance of several financial advisors including the City’s sales tax consultant and actuaries. Revenues are, of course, sensitive to normal business cycles as well as unanticipated economic volatility. Thus, it is important that the City continue its fiscally prudent planning to balance expenditures against projected revenues while addressing employee compensation as well as historically underfunded infrastructure needs.

SUMMARY
The following is a summary of key points that will be explained in detail in this report:
 Due to projected increases in personnel expenses, the City currently projects a General Fund structural deficit in FY 2025 through FY 2027.  The City has a significant pension liability that is anticipated to grow due to recent financial losses experienced by CalPERS. Also, of note, the City’s pension contributions for all City employees are anticipated to increase more than $32 million over the next ten years putting a strain on resources and services.  The City’s retiree health plans are significantly underfunded with the funded status of the City’s plans ranging from a low of 6.93% to a high of 51.22%.  Due to the age of the City’s infrastructure and limited resources allocated to infrastructure, the City’s unfunded infrastructure needs have increased over the years and is anticipated to range around $2.52 billion from FY 2024 to FY 2028.  Despite the recent adoption of Measure T1 and Measure O, the City has an aggregate bond tax rate for FY 2023 of 0.0623% (which represents $62.30 for each $100,000 in assessed value (“A.V”), which is below the historical peak of approximately $95 (per $100,000 in A.V) in tax year 1999-2000.

Unfunded Liability Obligations and Unfunded Infrastructure Needs ACTION CALENDAR May 23, 2023

CURRENT SITUATION AND ITS EFFECTS

1. Employee and Retiree Benefit costs over a 10-year horizon a. CalPERS Retirement Benefits
The City provides retirement benefits for employees through its participation in the California Public Employees’ Retirement System (CalPERS). This is a defined benefit pension plan funded by a combination of employee contributions that are set by statute and employer contributions that fluctuate from year to year based on an annual actuarial valuation performed by CalPERS. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. Benefits are based on years of credit service, equal to one year of full-time employment. Members with five years of total service are eligible to retire at age 50 with statutorily reduced benefits.

On January 1, 2013, the Public Employee Pension Reform Act (PEPRA) went into effect.

The State law applies to employees hired after January 1, 2013, who are new to CalPERS.

These employees are termed PEPRA members and employees that were enrolled in CalPERS (without significant separation) prior to January 1, 2013, are now referred to as “classic” members.1
The City contributes to three plans in the CalPERS system: (1) Police Safety Plan, (2) Fire Safety Plan, and (3) Miscellaneous Employee Plan. Each plan has a different rate for the City’s annual employer contribution that is generally based on the demographics of the plan participants and the value of investment returns of the City’s assets in the CalPERS system.

In addition, employees’ contributions vary by plan based on negotiated Memorandum of Understandings (MOU).

In 2013, the CalPERS Board voted to change the actuarial model for the pension plans and certain actuarial assumptions upon which rates are based. First, the model anticipated that the plans would be 100 percent funded in a fixed 30-year time period. Second, the time period to “smooth out” the impacts of CalPERS’ investment losses due to the recession was reduced from 15 years to 5 years. Finally, the rates were structured in such a way that the first five years were considered to be a “ramp up” period to improve the plans funded percentage. That meant that Fiscal Years 2016-2020 were expected to have higher rates, and the years following were projected to plateau for some time before decreasing in the last five years of the 30-year funding period.

In February 2014, the CalPERS Board voted to retain its current long-term assumed rate of return of 7.5 percen,t but adopted new mortality assumptions due to the fact that retirees are living longer. As a result of the new assumptions, the cost of employer contributions increased, again.
1 PEPRA miscellaneous members are enrolled in a 2% at 62 plan and PEPRA safety members (Fire and Police) are enrolled in a 2.7% at 57 plan. PEPRA members are required to pay half the normal cost of their plans.

Unfunded Liability Obligations and Unfunded Infrastructure Needs ACTION CALENDAR May 23, 2023

In December 2016, the CalPERS Board lowered the discount rate from 7.50 percent to

7.00 percent using a three-year phase in beginning with the June 30, 2016 actuarial valuation. The employer contribution for FY 2020 was calculated using a discount rate of 7.25 percent. CalPERS reduced the return rate to 7.25 percent in July 2018, with a futher reduction to 7.0 percent. CalPERS lowered the discount rate because the agency determined that achieving a 7.5 percent rate of return was now far less likely. The result of this lowered discount rate is that liabilities have grown and the City’s pension contributions have significantly increased.

Changes to the Unfunded Actuarial Liability (UAL) due to actuarial gains or losses, as well as changes in actuarial assumptions or methods, are amortized using a 5-year ramp up. This method phases in the impact of changes in UAL over a 5-year period and attempts to minimize employer cost volatility from year to year. As a result, however, required contributions can change gradually, but significantly, over the next five years.

Effective with the June 30, 2019, actuarial valuation, the CalPERS Board adopted a new amortization policy that shortens the period over which actuarial gains or losses are amortized from 30 years to 20 years with the payments computed using a level dollar amount. In addition, the new policy removes the 5-year ramp-up and ramp-down on UAL bases attributable to assumption changes and non-investment gains or losses.

These changes will apply only to new UAL bases established on or after June 30, 2019.

In July 2021, high investment returns triggered an automatic discount rate reduction from 7 percent to 6.8 percent. This automatic reduction was the result of the Funding Risk Mitigation Policy put in place by the CalPERS Board of Directors in 2015, which was designed to lower the discount rate in years of extraordinary investment returns to reduce future funding risk over time.

For FY 2022, CalPERS announced a -6.1 percent net return on investments. This is obviously below CalPERS assumed 6.8 percent discount rate. As a result, the City’s pension contributions will likely increase for miscellaneous employees plan by 2-4 percent and safety members by 4-6 percent for fiscal year 2024-25.

With respect to future liabilities for the costs of these plans, the City has regularly retained an outside actuary to review the CalPERS’ estimates and provide independent actuary estimates that the City can use in budget planning. The chart below provides CalPERS payment amounts for FY 2023 and FY 2024 as provided to the city by CalPERS. The outside actuary provided estimated payment amounts for FY 2025 through FY 2034.

Unfunded Liability Obligations and Unfunded Infrastructure Needs ACTION CALENDAR May 23, 2023

There are a couple of important points about the chart. The first is that over the next 10 years there is close to an estimated $32 million dollar increase in pension costs to the City from FY 2025 to FY 2034. The next point is that regardless of the City’s financial position the payments will have to be made to CalPERS. This financial challenge will require us to be fiscally prudent over this period of time.

The changes made by CalPERS in the last few years are planned to achieve 100% funding for all plans within a 30-year time period. This means that there will be sufficient funds held in each plan to pay obligations for all inactive participants (including retirees) and benefits as a result of prior service for actives.

The funded status of a pension plan is defined as the ratio of assets to a plan’s accrued liabilities. Based on the CalPERS’ actuarial valuations as of June 30, 2021, the City’s plans are currently funded as follows: Miscellaneous 80.1%; Police Safety 68.7%; and Fire Safety

80.9%.

On June 26, 2018, Council authorized the City Manager to establish an IRS Section 115 Pension Trust Fund (“Trust”). The Trust can act as a rate stabilization fund and can be used to ease budgetary pressures resulting from unanticipated spikes in employer contribution rates. On May 14, 2019, Council authorized the City Manager to execute a contract with Keenan Financial Services to establish, maintain, and invest the Trust.

The Trust currently has a balance of $14,762,850.42 as of June 30, 2022 and receives funding through transfers from the General Fund and Capital Improvement Fund and savings from annually prepaying the City’s CalPERS payment.

FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033 FY 2034 Misc. 41.64 40.57 43.51 44.21 47.10 49.53 54.80 57.35 59.69 59.15 61.00 61.18 Police 20.04 20.32 21.47 22.43 23.59 24.71 26.74 27.94 28.96 29.52 30.19 30.32 Fire 10.58 10.24 10.97 11.54 12.24 12.89 14.27 14.96 15.57 15.80 16.24 16.28 Total 72.26 71.13 75.95 78.18 82.93 87.13 95.81 100.25 104.22 104.47 107.43 107.78 FY 2023 and FY 2024 are based on amounts provided by CalPERS.

FY 2025 through FY 2034 amounts are based on actuary's projections.

Rates used reflect current MOU agreements: Miscellaneous includes the 8% employee share paid by the City on behalf of the employee as well as the negotiatied employee's contribution to the employer rate.

Future Payments to California Public Employees Retirement System All Plans (dollars in millions) Fund Name Valuation Date Actuarial Source Estimated Liablity Plan Assets Unfunded
Liability
%
Funded
Miscellaneous 6/30/2021 CalPERS 1,181.2$ 946.3 $ 234.90 $ 80.1% Police 6/30/2021 CalPERS 483.8$ 332.5 $ 151.30 $ 68.7% Fire 6/30/2021 CalPERS 306.7$ 248.1 $ 58.60 $ 80.9% California Public Employees Retirement System Funded Status

Unfunded Liability Obligations and Unfunded Infrastructure Needs ACTION CALENDAR May 23, 2023

In addition, the City Council adopted a new fiscal policy on June 28, 2022 to allocate 1/3 of additional revenue earned from investments that is over the annual (fiscal year) baseline of $6 million to the Section 115 Pension Trust. b. Retiree Medical Plans
The City provides post-retirement health insurance benefits in accordance with the Memoranda Agreements between the City and the various collective bargaining units (and to unrepresented employees via Council adopted resolutions). These post- retirement benefits are often referred to as Other Post-Employment Benefits (“OPEB”).

The City has individual trusts for each bargaining unit that fund the medical plans as well as the closed plan for Police that provides a cash benefit. In 2012 the City and the Berkeley Police Association agreed to a new Retiree Medical plan that provides health insurance premium payments, rather than the pre-existing cash payments, to retirees.

The original plan is now a “closed” plan meaning that employees who retire after September 2012 will receive benefits from the new plan. However, the original plan must still make benefit payments to existing retirees and continue to be funded until those payment obligations cease.

The City obtains actuarial reports for each of these plans at least every two years and the City is responsible for investing the assets in these plans. The results of that investment activity are provided to the City Council in the regular Investment Report.

In some cases, the City’s actual contribution to each plan on an annual basis is based on the actuarially established “Annual Required Contribution” or as a percent of payroll.

However, some of the plans are funded on a “pay-as-you-go” basis. Funding on a pay- as-you-go basis is sufficient to cover the annual benefit payments made from the plan assets but impacts the ability to achieve the long-term funding targets.

On April 24, 2017, the City actuary presented various options that would reduce the City’s unfunded liabilities tied to post-employee benefits to meet the long-term funding targets.

Recommended for Council’s consideration were fully prefunding annual actuarially determined contributions, investment reallocations to increase returns, and establishing an irrevocable supplemental trust. Council has already acted on some of these recommendations. The City actuary has provided updated recommendations regarding increasing the City’s annual contribution to fully prefund the City’s OPEB liabilities that are described in more detail on page 27 of this report under the section entitled “Options to Address Long Term Retirement and Infrastructure Costs”.

The following retiree medical plans are discussed in detailed below:
 Police Retiree Income Benefit Plan (closed plan)
 Police Retiree Health Premium Assistance Plan
 Fire Employees Retiree Health Plan
 Retiree Health Premium Assistance Plan (Non-safety Members)

Unfunded Liability Obligations and Unfunded Infrastructure Needs ACTION CALENDAR May 23, 2023

Police Retiree Income Benefit Plan (closed plan)
The City provides a Retiree Income Benefit Plan for prior Police retirees. To be eligible for benefits, Police employees must retire from the City on or after July 1, 1989 and before September 19, 2012, be vested in a CalPERS pension, have ten years of service with the Berkeley Police department, and retire from the City on or after age 50 or with a disability benefit. Benefits commence 10 years after retirement for retirements before July 6, 1997, 5 years after retirement for retirements before July 1, 2007, and 2 years after retirement for retirements on or after July 1, 2007.

Benefits are payable for the retiree’s lifetime and continue for the life of the surviving spouse. For employees retiring before September 19, 2012, the City pays a monthly income benefit equal to the City’s Active 2-party Kaiser premium regardless of marital status. In 2022, the City’s monthly payment per participant for this benefit ranged from $457.35 to $1,829.38, depending on the retirees’ years of service at retirement. The monthly benefit is pro-rated based on years of service.

As of June 30, 2022, the most recent actuarial valuation date, the plan was 7.14% funded. The actuarial accrued liability for benefits in this plan was $64.81 million, and the actuarial value of assets was $4.63 million, resulting in an unfunded accrued liability of $60.18 million. Since the implementation of GASB 67 and 68, the Annual Required Contribution (ARC) is no longer provided. In addition, the Police Retiree Income Benefit Plan is a closed plan and therefore no “Actuarially Determined Contribution” is provided due to no new members and no payroll information.

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

To be eligible for benefits, Police employees must retire from the City on or after September 19, 2012, be vested in a CalPERS pension, have ten years of service with the Berkeley Police department, and retire from the City on or after age 50. Benefits commence immediately upon retirement, but may also be deferred for a period during which the member is covered under another health insurance plan. Benefits are payable for the retiree’s lifetime.

In 2022 the City paid for employees retiring on or after September 19, 2012, a maximum of $823.85/month toward the cost of single-party coverage and up to $1,647.69/month toward the cost of two-party coverage for retirees under age 65 enrolled in the City’s Retiree Health Plan.

Unfunded Liability Obligations and Unfunded Infrastructure Needs ACTION CALENDAR May 23, 2023

For retirees over age 65 the City’s share of single/two-party coverage is a maximum of $436.14/$872.28 per month and retirees must pay the difference of the actual premium cost. The City’s share will increase by either the amount Kaiser increases the retiree medical premium for that year or 6%, whichever is less. The monthly benefit is pro-rated based on years of service. The City pays this benefit plan on a pay-as-you-go basis.

As of July 1, 2021, the most recent actuarial valuation date, the Actuarially Determined Contribution (ADC) was $4.64 million and the plan was 6.93% funded. The actuarial accrued liability for benefits was $37.25 million, and the actuarial value of assets was $2.58 million, resulting in an unfunded accrued liability of $34.67 million Fire Employees Retiree Health Plan
The City sponsors a retiree health benefit plan for its Fire employees. To be eligible for benefits, Fire employees must retire from the City on or after July 1, 1997, be vested in a CalPERS pension, and retire from the City on or after age 50. Retirees can select from among any of the health plans offered to active employees. Benefits commence immediately upon retirement, but may also be deferred for a period during which the member is covered under another health insurance plan.

Benefits are payable for the retiree’s lifetime and continue for his or her covered spouse’s/domestic partner’s lifetime. The City contributions toward the medical premium depending on whether the retiree has dependent coverage and date of retirement. The City’s contribution increases by 4.5% per year regardless of the amount of increase in the underlying premium rate. The City’s contribution is prorated based on years of service. In 2019, the City’s monthly premium cost per participant for this benefit was a maximum of $662.85 for single party and $1,322.35 for two-party As of July 1, 2021, the most recent actuarial valuation date, the plan was 38.62% funded. The actuarial accrued liability for benefits was $32.78 million, and the actuarial value of assets was $12.66 million, resulting in an unfunded accrued liability of $20.12 million.

Retiree Health Premium Assistance Plan (Non-Safety Members) Effective June 28, 1998, the City adopted the City of Berkeley Retiree Health Premium Assistance Plan (for Non-Safety Members). Employees who retire from the City are eligible for retiree health benefits beginning on or after age 55 if they terminate employment with the City on or after age 50 with at least 8 years of service. Retirees can select a non-City sponsored health plan or enroll in any of the health plans offered to active employees. A retiree living outside the coverage area of the City’s health plans can select an out-of-area health plan.

Benefits are payable for the retiree’s lifetime and continue for his or her covered spouse’s/domestic partner’s lifetime. The City pays the monthly cost of the monthly premiums up to a Participant’s applicable percentage of the Base Dollar Amount and

Unfunded Liability Obligations and Unfunded Infrastructure Needs ACTION CALENDAR May 23, 2023

subject to annual 4.5% increases as specified in the Retiree Health Premium Assistance Plan document. In 2022, the City’s monthly premium cost per participant for this benefit was a maximum of $546.40 for single party and $940.10 for two-party. A participant’s applicable percentage is based on years of service with the City. The City funds the plan based on the MOU. Contribution amounts are negotiated and vary by bargaining unit.

As of July 1, 2021, the most recent actuarial valuation date, the plan was 38.62% funded. The actuarial accrued liability for benefits was $61.48 million, and the actuarial value of assets was $31.49 million, resulting in an unfunded accrued liability of $29.99 million.

Safety Members Pension Fund (closed plan)
The City also maintains the Safety Members Pension Fund (SMPF). This plan is a single-employer defined benefit pension plan for fire and police officers that retired before March 1973. In March 1973 all active fire and police officers were transferred from SMPF to CalPERS. Service and disability retirement benefits from the SMPF are based on a percentage of salary at retirement, multiplied by years of service. Benefits are adjusted annually by either:
 Current active salary increases (based on the same rank at retirement) or  The income in the California Consumer Price Index (with a 1% minimum and a 3% cap). SMPF also provides surviving spouse benefits.

The City pays SMPF benefits on a pay-as-you-go basis. In February 1989, the Berkeley Civic Improvement Corporation purchased, on behalf of the City, a Guaranteed Income Contract (GIC) from Mass Mutual. This contract provides annual payments through 2018 and an annual guaranteed 9.68% rate of return (net of expenses).

The City was paying the difference between the total SMPF benefits and the amount received from the Massachusetts Mutual Guaranteed Income Contract (GIC). The City will receive declining amounts from the GIC through FY 2019. At June 30, 2022, the unfunded accrued liability was $1.13 million. There were 6 participants remaining in the plan with the average age at 98.4 years.

Unfunded Liability Obligations and Unfunded Infrastructure Needs ACTION CALENDAR May 23, 2023

*Since the implementation of GASB 67 and 68 the Annual Required Contribution (ARC) is no longer provided. In additional, it is a closed plan and therefore no “Actuarially Determined Contribution” is provided due to no new members and no payroll information.

Supplemental Retirement Income Plan (SRIP) I (closed plan) On January 1, 1983, Ordinance No. 5450-N.S., which was codified in the Berkeley Municipal Code under Chapter 4.36.101 et seq., established SRIP I. The SRIP I plan consists of two components: 1) a defined contribution money purchase pension plan adopted in accordance with Sections 401(a) and 501(a) of the internal revenue code and 2) an employer paid disability benefit.

The City administrators of the money purchase pension plan are Hartford Life Insurance and Prudential Retirement Services. The plan is a defined contribution plan whereby the City contributes 5.7% of salary up to a salary of $32,400 into a tax-deferred and self- directed investment account and 1% of salary up to a salary of $32,400 into a disability reserve account for each permanent City employee. The total assets of SRIP I available for benefits at June 30, 2022, was $6,193,509 which was comprised of 98 participant accounts. These assets are the property of the individual account holders and not the property of the City. These assets cannot be used to pay disability benefits.

Police Employee
Retiree Income Benefit
Plan (closed)*
6/30/2022 $ 64.81 $ 4.63 $ 60.18 $ - $ 2.15 7.14% 148 Police Employees
Retiree Health
Premium Assistance
Plan (new)
7/1/2021 $ 37.25 $ 2.58 $ 34.67 $ 4.64 $ 0.40 6.93% 199 Fire Employees Retiree
Health Plan
7/1/2021 $ 32.78 $ 12.66 $ 20.12 $ 3.07 $ 0.74 38.62% 226 Retiree Health
Premium Assistance
Plans (Non-Safety
Members) *
7/1/2021 $ 61.48 $ 31.49 $ 29.99 $ 5.07 $ 2.22 51.22% 1669 Safety Members
Pension Fund
6/30/2022 $ 1.55 $ 0.41 $ 1.13 $ - $ 0.50 26.71% 6 $ 197.87 $ 51.77 $ 146.09 $ 12.78 $ 6.01 26.17% 2248 *Actual contribution does not include interest income
Retiree Medical Plan Actuarial Data
(dollars in milllions)
Plan
Measurement
Date
Actuarial
Estimated
Liabilities Plan Assets
Net Pension
Liability
Actuarially
Determined
Contribution
(ADC)
Actual
Contribution * % Funded
Total
Plan
Members

Unfunded Liability Obligations and Unfunded Infrastructure Needs ACTION CALENDAR May 23, 2023

The disability benefit is for employees hired after January 1, 1983 but prior to July 22, 1988, who became disabled and are entitled to receive a disability income benefit equal to 60% of their highest compensation, reduced by any disability payments they receive from Social Security, State Disability Insurance, or Worker’s Compensation. Employees hired after July 21, 1988, are not eligible for benefits under this plan which was closed to new enrollees.

Benefits are payable for the disabled participant’s lifetime or until recovery from disability. The third-party administrator is Cigna. Currently, the City pays the cost of the monthly disability benefits on a pay-as-you-go basis. As of July 1, 2022, there were a total of 54 closed group participants, 6 active employees and 48 disabled participants receiving benefits. The unfunded liability for SRIP I at July 1, 2022, the date of the last actuarial study, was $10,018,000.

Workers’ Compensation Program
The City of Berkeley began its self-insured workers' compensation program on March 1, 1975. The City’s self-insured retention (SIR) has varied between $100,000 and $1,000,000 prior to 2004/05 and is currently unlimited. Every two years, the City has an actuarial review conducted to determine the outstanding liabilities and determine the rates to use for budgeting and payroll purposes to fund the program annually.

The recent actuarial study by Bickmore Actuarial showed the City’s estimated outstanding liabilities, as of June 30, 2023, at an 80% confidence level to be at $46,316,000 for the workers’ compensation program. The City’s Workers’ Compensation Fund ended FY 2022 with a fund balance of $51,696,189, meaning that the City is able to fund its estimated liabilities in its Workers’ Compensation Program.

2. Current Costs for Active Employees
As of July 1, 2022, the City budgeted for 1,791.84 full-time equivalents (FTE). At any given time, the number of employees on the payroll is generally less than the budgeted number of FTE due to retirements and employment separations for other reasons. For purposes of this report, the analysis of the projected payroll costs for the next 10 years is based on the number of authorized budgeted FTE. That number was then projected based on the negotiated cost of living adjustments (COLA) established in collective bargaining agreements. Other increases were also assumed for medical costs, dental costs, cash in lieu, shoes and tools allowance, commuter checks, and other benefits.

Based on these assumptions, total payroll costs for all funds would grow from $342.4 million in FY 2024 to $486.9 million in FY 2034. For modeling purposes, the projected cost assumes no (0%) COLA, which means that the estimated increase of $144.5 million is due to the rise in the costs of benefits only.

Unfunded Liability Obligations and Unfunded Infrastructure Needs ACTION CALENDAR May 23, 2023

A couple of significant factors driving the increase in benefit costs include:
 Health care premiums for active employees (meaning exclusive of retiree medical contributions). The cost of premiums for medical alone is estimated to grow from $30.8 million in FY 2024 to almost $95.8 million in FY 2034 assuming annual increases of 12 percent as has been historically budgeted in the past.  Employer Paid Portion of PERS Costs is expected to rise from approximately $78 million in FY 2024 to $130 million in FY 2034. This does not take include any contributions made by employees towards overall City CalPERS costs that will be paid to PERS annually as shown in a previous chart.

3. Summary of all current City Obligations (GO bonds)
The City’s debt includes General Obligation Bonds and Revenue Bonds. Attachment 2 includes the detailed debt service payment schedules for each of these debt issuances.

The City currently has five outstanding general obligation (GO) bond authorizations (each with multiple series of bonds) related to public safety, libraries, senior centers, animal shelter, street and integrated watershed improvements, infrastructure and facilities improvement, and affordable housing. The oldest of the authorizations date back to 1992. The City has an aggregate bond tax rate for FY 2023 of 0.0623 (which represents $62.30 for each $100,000 in assessed value (“A.V”). This rate has dropped from a historical peak of approximately $95 (per $100,000 in A.V) in the tax year 1999- 2000. Based on projected annual increases in A.V and decreasing aggregate annual debt service over time, the tax rate will drop with the final tax collected in FY 2051 based on the current outstanding debt (Measure O is the latest bond authorization).

Zero COLA
FY 2023
Adopted
FY 2024
Adopted FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033 FY 2034 Total Payroll 205.7 $ 208.1 $ 208.1 $ 208.1 $ 208.1 $ 208.1 $ 208.1 $ 208.1 $ 208.1 $ 208.1 $ 208.1 $ 208.1 $ Total Benefits 128.5 $ 134.3 $ 154.9 $ 160.4 $ 169.4 $ 178.1 $ 192.0 $ 222.0 $ 232.7 $ 243.6 $ 267.1 $ 278.8 $ Fringe Rate 62% 65% 74% 77% 81% 86% 92% 107% 112% 117% 128% 134% Total
Personnel
Costs
334.3 $ 342.4 $ 363.1 $ 368.5 $ 377.5 $ 386.3 $ 400.1 $ 430.1 $ 440.8 $ 451.7 $ 475.2 $ 486.9 $ Citywide Total Personnel Costs and Fringe Rate Over Time with Zero COLAS

Unfunded Liability Obligations and Unfunded Infrastructure Needs ACTION CALENDAR May 23, 2023

It has been the City’s debt policy to issue each series of bonds with level amortization and terms of either 25 or 30 years. Many of the series have been refinanced for lower interest rates over time. Given the fixed term for each bond series, the aggregate annual debt service for all outstanding bonds decreases over time as each bond reaches its final maturity.

4. Summary of All Capital Assets and Infrastructure
The City has an extensive portfolio of capital assets and infrastructure, of which some of the assets are highlighted below and include the following:
 95 public buildings
 254 miles of public sanitary sewer mains and 130 miles of public sewer laterals  54 parks, 2 pools, 3 camps, and
 42 different facilities served by the City’s IT systems.

Maintaining these assets is a costly and time-consuming enterprise that requires significant resources and constant attention. Additionally, Berkeley is an aging city and thus its infrastructure faces challenges that other younger cities do not. The City’s unfunded infrastructure needs have increased and are anticipated to rise to $2.52 billion from FY 2024 to FY 2028. This dollar amount reflects staff’s best estimate of both the deferred maintenance in the City’s public infrastructure and the unfunded need to deliver public infrastructure that achieves a service level consistent with City Council’s direction, typically set through Council’s adoption of a comprehensive plan related to that category of public infrastructure.

Final
Maturity
Measure FF 2008 26,000,000$ 26,000,000$ -$ 17,925,000$ 2040 0.0059% 0.0058% 2015 General
Obligation Refunding
Bonds ( Refunding
Measure G, S, I
Consolidated)
2015 88,700,000 88,700,000 0 20,950,000 2038 0.0135% 0.0130% Measure M 2015 30,000,000 30,000,000 0 26,345,000 2047 0.0077% 0.0075% Measure T1 2016 100,000,000 80,000,000 20,000,000 75,480,000 2052 0.0170% 0.0160% Measure O 2018 135,000,000 78,000,000 57,000,000 76,440,000 2053 0.0088% 0.0200% Total 379,700,000$ 302,700,000$ 77,000,000$ 217,140,000$ 0.0529% 0.0623% FY 2022
Bond Tax
FY 2023
Bond Tax Bond Authorization Authorization
Year
Authorization
Amount
Bond issued
Amount
Unissued
Amount
Outstanding Debt Services
as of 6-30-2022

Unfunded Liability Obligations and Unfunded Infrastructure Needs ACTION CALENDAR May 23, 2023

Several recent items adopted by voters have provided a much-needed increase in the resources available for the City to address its infrastructure needs:
 Measure T1: In November 2016, Berkeley voters passed Measure T1,2 authorizing the City to sell $100 million of General Obligation Bonds to repair, renovate, replace, or reconstruct the City’s aging infrastructure and facilities, including sidewalks, storm drains, parks, streets, senior and recreation centers, and other important City facilities and buildings. Council approved 45 projects to be completed in Phase 1. The majority of these projects are now complete81, with the balance to be completed in 2023. On December 15, 2020, Council approved 36 additional projects to be completed in Phase 2, between 2021 and 2026.
 Measure F: The November 2014 voter approval of Measure F (a City-wide special park parcel tax) provided an additional $750,000 per year for major maintenance projects, raising annual funding for parks capital and major maintenance projects from the prior $250,000 to $1 million.  Clean Storm Water Fund: The Clean Storm Water fund provides the funding for the maintenance and improvement of the City’s storm water drainage system to reduce the pollutants in storm water from entering local creeks and the Bay. Revenue to this fund is from the collection of fees charged to every owner of real property in the City and is collected through property taxes.

Prior to FY 2019, Clean Storm Water Fund revenues were fee-supported and are capped at 1996 levels by Proposition 218, set at flat $34 fee per year. The revenues generated by this fee were no longer sufficient to pay for the Clean Storm Water program. The City conducted a Proposition 218 rate increase process that was approved by the voters and the City Council. The new fees generated by the 2018 Clean Storm Water Fee are shown as separate line item on property tax bills from the 1991 Clean Storm Water Fees. The fee is subject to an annual adjustment based on the Consumer Price Index.  Streetlight Assessment District Fund: The Streetlight Assessment District Fund provides for maintenance of the City’s 7,860 streetlights along the public streets, parking lots, pathways, recreation facilities, and marina. Also, it is to be used for installation or construction of public lighting facilities.

Revenue to this fund is collected through annual property taxes and is capped by Proposition 218, allowing for no rate increase to this assessment without voter approval. Property owners and the City Council approved a new 2018 Streetlight Assessment District that is shown as a separate line on the property tax bills. The Proposition 218 revenue increase provides additional revenue to support the program and maintain service levels. 2 See https://www.cityofberkeley.info/MeasureT1/.

Unfunded Liability Obligations and Unfunded Infrastructure Needs ACTION CALENDAR May 23, 2023

The approved ballot measure allows for an inflation adjustment based on the Consumer Price Index, but no more than 3% per year. The inflation index can be applied to the sum of the 1982 and 2018 assessments. Starting in FY 2022, Public Works will focus on an annual capital improvement projects for the street light program. Fund balance is mostly due to compounding salary savings from freezing and vacant positions. As the work on the streetlight deferred maintenance and capital plan ramps up, frozen positions will be reassessed.

Additionally, as part of the FY23-24 Budget adoption, the Council authorized a significant new infusion of investment in capital infrastructure. For Public Works this included an additional $5M in FY23 and $9.1M in FY24 for additional paving funds, as well as an additional $750,000 for deferred building maintenance and $750,000 for ADA Transitional Plan funding for the same period. An additional $1.5M in FY23 and $2M in FY24 were allocated to Parks, Recreation & Waterfront capital improvements.

Despite these measures, City facilities and infrastructure needs continue to exceed available funds. The current annual allocation to PRW capital of $3.815M – despite being the highest level of annual commitment in recent history – is still not enough to keep pace with the unfunded needs. The cost for existing and new planned infrastructure in parks, pools, camps, and the Waterfront exceeds $380 million.

The unfunded needs in for Public Works in terms of City buildings, sidewalks, streets, streetlights, sewer, storm water/ green infrastructure, traffic signals and parking infrastructures, undergrounding, Veterans and Old City Hall buildings, transfer station, bike and pedestrian plan projects, and transit projects, exceed $1.6 billion.

With the recent funding increases, the amount of recurring funding to address these needs is now an estimated $42.4 million as of FY24.

It is anticipated that infrastructure costs will continue to increase through typical “wear and tear” that impacts City infrastructure in the coming years, plus the pressures of long-deferred maintenance. As needed improvements continue to be deferred, operating and maintenance costs rise and rehabilitation and replacement costs increase substantially.

UNFUNDED NEEDS
The following describe the various unfunded needs by program category:
 City Buildings: Public Works is responsible for the maintenance of 56 of the City’s 95 facilities. The other 39 are maintained by PRW. The total replacement value of the Public Works-maintained buildings in this inventory exceeds $540 million. Library facilities and facilities leased to other entities are not included in this analysis. A third-party expert has provided facility condition assessments for many of these buildings.

Unfunded Liability Obligations and Unfunded Infrastructure Needs ACTION CALENDAR May 23, 2023

These assessments identify building components replacements (plumbing, electrical, HVAC, wall/door finishes, etc.) that either should have already been completed or schedules them before the useful life of the component is over.

Based on these assessments, the City’s existing facility needs are estimated at approximately $314,500,000, while the current budget allocation for building component replacement over the 5-year planning period is $13 million. An alternative analysis provided by the City’s Strategic Asset Management Plan identified an annual funding shortfall of $5.2 million to $11.7 million. Some of this annual funding gap is covered by one-time allocations from the General Fund or T1 funds.
 Parks, Recreation & Waterfront: The Parks, Recreation & Waterfront Department (PRW) operates, maintains and manages 54 parks, 4 community centers, 2 clubhouses, 2 pools, 3 resident camps, 15 athletic fields, 49 sports courts, 63 play areas, 36 picnic areas, 45,000 trees, 11.5 miles of landscaped street medians and triangles, 263 irrigation systems, and 30 restrooms and buildings. In addition, PRW operates and maintains the Berkeley Waterfront and its related facilities, including the docks, pilings, channel, streets, pathways, parking lots, buildings, trails, Shorebird Nature Center, Adventure Playground, and 1,000 boat slips. The recurring funding available for capital and major maintenance is $3.185 million, as shown in the table below.

Funding Source Annual Capital & Major
Maintenance Funding
Parks Tax Fund $1,065,000
Capital Improvement Fund $2,400,000
Marina Fund $350,000
Camps Fund3 $0
Total Funding Available $3,815,000
Unfunded needs for existing PRW infrastructure are summarized in the table below.

Unfunded PRW Capital Needs – Existing infrastructure
Improvements Cost Estimate
Resident Camps $8,460,855
Waterfront $160,995,276
Pools $7,581,600
Park Buildings/Facilities $4,749,030
Parks (General) $15,163,200
Parks (Specific) $39,279,006
Park Restrooms $2,316,600
3 Due to the loss and rebuilding of Berkeley Tuolumne Camp, the Camps Fund does not have sufficient funds at this time to cover any annual investment in capital or major maintenance.

Unfunded Liability Obligations and Unfunded Infrastructure Needs ACTION CALENDAR May 23, 2023

Total Need $238,545,567
In addition, there is $145M in unfunded needs for planned PRW improvements that are not currently existing infrastructure, shown in the table below.

Unfunded PRW Capital Needs – New Planned Infrastructure Improvements Cost Estimate San Pablo Park: New Community Center and Pool $39,000,000 King Park: New 25M Competitive Pool / Locker Room $16,000,000 Tom Bates Sports Complex: New Youth Soccer Field,
Pickleball Courts and Restroom $1,980,000
New Restrooms in Parks over 1 Acre: James Kenney,
Aquatic, Civic Center, King, and John Hinkel Parks $2,630,000 James Kenney Park: Skate Spot $369,000
Waterfront: New Bike Park adjacent to University Ave. $1,650,000 Waterfront: Pier/Ferry Preferred Concept with landside
and waterside improvements $83,500,000
Total Need $145,129,000
These new infrastructure improvements would add new community amenities, and are included because conceptual planning processes have been completed or Council has provided direction to implement. If this new planned infrastructure is built, there will be approximately $44M in savings realized in existing infrastructure cost estimates, as they would replace some existing infrastructure.

The estimates do not reflect funding arrangements. For example, for the pier/ferry, the City and the Water Emergency Transit Authority (WETA) would share responsibility for identifying funding for the preferred concept developed during a year-long community process.4
The majority of PRW unfunded needs are at the Waterfront, where many of the docks, pilings, buildings, parking lots and streets have reached the end of their useful life and are starting to fail. As documented in multiple reports over the last several years5, there is a diminishing ability to pay for the 4 See https://berkeleyca.gov/sites/default/files/documents/2021-12- 07%20Item%2002%20Large%20Scale%20Ferry%20Feasibility%20Study%E2%80%93%20A%20Preferr ed%20Concept_0.pdf
5 See March 16, 2022 BMASP Community Meeting #2 presentation (https://www.cityofberkeley.info/uploadedFiles/Parks_Rec_Waterfront/Level_3__-General/2022- 03-16-FINAL-Mtg_deck-CW2-Deck.pdf); April 29, 2021 PRW Budget Presentation to the Council Budget & Finance Policy Committee,
(https://www.cityofberkeley.info/uploadedFiles/Clerk/PRW%20FY22%20Budget%20Presentation %20Rev2.pdf); February 16, 2021 Council report and presentation for the BMASP and Pier/Ferry Worksession (https://www.cityofberkeley.info/Clerk/City_Council/2021/02_Feb/Documents/2021-

Unfunded Liability Obligations and Unfunded Infrastructure Needs ACTION CALENDAR May 23, 2023

pressing capital needs in the Waterfront. From the Marina Fund, $350,000 per year is budgeted for capital improvements. This amount is insufficient to address Waterfront needs. The Marina Fund is projected to need $1.4M in the next budget cycle just to maintain baseline Waterfront operations and does not currently have the ability to support capital projects. Capital needs at the Waterfront are otherwise dependent on General Fund, external funding and grants. Over $40M has been invested into the Waterfront by the City over the last fifteen years6, but it is only a small percentage of the investment needed. The City is working on a Waterfront Specific Plan7, which will explore new revenue generating opportunities to help address the structural deficit, exhausted reserves, and declining operating revenue that makes it impossible for the Marina Fund to reinvest in its facilities.  Streets & Roads: There are approximately 215 centerline miles of improved streets in Berkeley and their estimated replacement value is $816,753,950. Every two to three years, portions of Berkeley’s streets are inspected using the Metropolitan Transportation Commission’s Pavement Management System (PMS) to identify repair needs and assign a pavement condition index (PCI). The City uses the PMS and PCI to track and prioritize pavement rehabilitation and maintenance needs on individual asphalt streets and the overall condition of the City’s street pavement network. The current overall average PCI rating is 56 (out of 100). This puts Berkeley’s streets in the ‘at-risk’ category. The recently updated Street Maintenance and Rehabilitation Policy (2022) identified a goal of 02-16_WS_Item_02_Berkeley_Marina_Area_Specific_Plan_pdf.aspx); November 10, 2020 Marina Fund presentation to Council Budget & Finance Policy Committee (
https://www.cityofberkeley.info/uploadedFiles/Clerk/2020-11-12 Item 2c Budget.pdf); December 13, 2018 Off- Agenda Memo (https://www.cityofberkeley.info/uploadedFiles/Clerk/Level_3_- _General/Marina%20Fund%20Update%20121318.pdf); November 15, 2018 Worksession Report
(
https://www.cityofberkeley.info/Clerk/City_Council/2018/11_Nov/Documents/2018-11- 15_WS_Item_02_Parks_Recreation_Waterfront_pdf.aspx); July 1, 2018 Off-Agenda Report (https://www.cityofberkeley.info/uploadedFiles/Clerk/Level_3_- _General/CM%20Update%20-%20Waterfront%20-
%20Hs%20%20Lordships%20(w%20attachments).pdf); May 8, 2018 Worksession Report (https://www.cityofberkeley.info/Clerk/City_Council/2018/05_May/Documents/2018-05- 08_WS_Item_03_Parks,_Recreation,_Waterfront.aspx); May 8, 2018 Proposed Budget Update (https://www.cityofberkeley.info/Clerk/City_Council/2018/05_May/Documents/2018-05- 08_WS_Item_01_FY_2019_Proposed_Budget_Update.aspx); April 12, 2018 Off-Agenda Report (
https://www.cityofberkeley.info/uploadedFiles/Clerk/Level_3_- _General/Marina%20Fund%20Update%20041218.pdf); and November 7, 2017 Worksession Report
(
https://www.cityofberkeley.info/Clerk/City_Council/2017/11_Nov/Documents/2017-11- 07_WS_Item_02_Parks,_Recreation_and_Waterfront_CIP.aspx). 6See https://berkeleyca.gov/sites/default/files/2022-04/Waterfront%20CIP%20Projects%20021622.pdf and https://berkeleyca.gov/sites/default/files/documents/2022-12- 13%20Special%20Item%2002%20Grant%20Contracts%20with%20the%20State%20Coastal.pdf 7 See https://berkeleyca.gov/your-government/our-work/capital-projects/berkeley-marina-area-specific- plan-bmasp-project

Unfunded Liability Obligations and Unfunded Infrastructure Needs ACTION CALENDAR May 23, 2023

good condition for the City’s streets, which is a PCI between 70 to 79.

To keep the streets from deteriorating further, City Council has adopted a policy allocated $8 million annually in General Fund money. That $8 million contribution, along with existing transportation funds totaling $7.3 million, would ensure the pavement condition is at least maintained and does not decline. If that committed is continued, the City would have to spend an additional $247,500,000 to achieve a PCI of 75 within 15 years. This funding only assumes treatment of pavement surface, markings, and curb cuts, not costs related to drainage improvements, green infrastructure, and implementation of the City’s bicycle, pedestrian, and Vision Zero plans.
 Sidewalks & Pathways: The City has 400 miles of sidewalk. Public Works manages a sidewalk repair program to keep the City’s sidewalks safe and provide for safe pedestrian passage, including makesafe repairs, annual proactive repair program, and the City’s 50/50 replacement cost-share program in which the City shares the costs for broken sidewalks with property owners.

Public Works responds to all reported sidewalk hazards, assesses each situation and installs an asphalt make-safe or grinds the sidewalk hazard if applicable, and on occasion perform limited sidewalk removal and replacement if a sidewalk hazard cannot be made reasonably safe.

These sidewalks have an estimated replacement value of $400,000,000.

Deferred maintenance in this asset is estimated at $60,000,000, primarily derived from the recently completed ADA Transition Evaluation that proactively assessed all of the City’s sidewalks and identified repair locations. However, the City has only $1 million available in annual funding towards sidewalks maintenance and repair from baseline allocations from the Capital Improvement Fund and 50/50 Program contributions from residents.  Sewers: The City owns and operates 255 miles of sewer mains and 165 miles of lower laterals. Their estimated replacement value is $820,000,000. The estimated cost of rehabilitating all of the City's sewer pipes per the City's adopted plans is $183,500,000. This is one of the asset categories with a dedicated fee that has been adjusted every five years. It is adequately funding a maintenance and capital renewal program, resulting in the deferred maintenance declining over time.

The City’s Strategic Asset Management Plan also found proper maintenance funding for this asset. In 2014, the City (along with EBMUD and all agencies conveying flows to EBMUD) concluded negotiations with the Environmental Protection Agency and the Department of Justice for violation of the Clean Water Act and agreed to a stipulated settlement known as the final Consent Decree. To comply with the Consent Decree, the City is required to rehabilitate an average of 4.2 miles of sewer pipeline annually based on a three-year rolling average. Effectively, this mandated significant additional maintenance activities and capital improvements, and resulted in increased costs of managing the City’s existing sewer system.

Unfunded Liability Obligations and Unfunded Infrastructure Needs ACTION CALENDAR May 23, 2023

 Storm Water & Green Infrastructure: The City’s engineered storm drains include approximately 78 miles of underground pipes, manholes, catch basins and cross-drains, and 30+ green infrastructure locations. Their estimated replacement value is $440,253,101. The unfunded infrastructure need is estimated at $362,000,000. This estimate is derived from the remaining improvements of the adopted 2012 Watershed Management Plan, and staff estimates including staff estimates for green infrastructure.

Much of the stormwater infrastructure is over 80 years old and needs substantial rehabilitation, including rehabilitation of pipeline reaches; replacement of deteriorated drain inlets and piping; major cleaning of the primary storm collectors in the lower watersheds; and replacement of street cross drains. The City’s Strategic Asset Management Plan identified that the maintenance funding for this asset was likely too low, given the life of these assets, expanding green infrastructure requirements, and new threats from more intense, climate-fueled storms. Public Works seeks to initiate the Stormwater Comprehensive Plan in 2023. This plan will update the Watershed Management Plan and incorporate the Green Infrastructure Plan (2019), along with rehabilitation or replacement of the aging infrastructure.

Adoption of the Plan would then enable the City to consider whether to update its stormwater fee to better address existing and future needs.  Traffic Signals & Parking Infrastructure: The City currently has 142 traffic signals, 20 rectangular rapid flashing beacons, 2,100 parking meters and 240 pay stations. Staff estimated $23,500,000 in unfunded needs related to the replacement and renewal of these infrastructure components.  Undergrounding Project: The City has approximately 15 miles (as identified in the Phase 3 Report for undergrounding) of key evacuation routes where undergrounding utility wire needs to take place in Berkeley. The estimated cost is approximately $7,000,000 per mile with a 4% annual escalator factor applied. The estimated cost of these improvements is currently $109,200,000.
 Vets & Old City Hall: Both Old City Hall and Veteran’s Buildings are in need or renovation and were built prior to seismic standards and must be retrofitted. Staff estimated a cost of $110,000,000 to complete these renovations and retrofits.
 Transfer Station: The Transfer Station, which was constructed in 1982, requires a redesign and replacement estimated at $76 million. The Solid Waste & Recycling Transfer Station Replacement Project Feasibility Study was completed in November 2019 after a robust public input process.

Unfunded Liability Obligations and Unfunded Infrastructure Needs ACTION CALENDAR May 23, 2023

Currently, the Transfer Station has two below-grade refuse and organic materials load out tunnels that top-load trailers who transfer the material off the site for recycling and/or disposal. The Transfer Station and its ancillary structures are showing considerable wear and tear after 38 years of operation, and the current facilities are not configured for efficient diversion or customer-friendly recycling of incoming materials.
 Bike & Pedestrian Projects: City Council has approved the Bicycle Plan (2017) and Pedestrian Plan (2021). Staff estimate the unfunded need to implement these plans and the projects derived from them to be at least $129 million. These projects also are important to the Vision Zero Action Plan (2020), which seeks to eliminate severe injuries and fatalities on our City Streets, a high proportion of which are bicyclists and pedestrians.  Transit Projects: The City is committed to encouraging transit use. An AC- Transit Major Corridor Study (2016) recommended a series of improvements throughout the City. Those improvements are currently estimated at $53 million, including funds sufficient to install new and/or replace bus pads. The City is currently developing a Transit First Implementation Plan to help guide and focus ongoing transit operations improvements on City streets.  Fire Projects: In consultation with Public Works Staff, the Fire Department has conducted a long-term assessment of its facilities that takes in to account the age of the facility, modern workplace exposure protection, and modifications to staffing and equipment driven by development, congestion and changes to population. That assessment shows $288M in unfunded facility needs.

Information Technology Infrastructure
Technology infrastructure presents unique challenges with respect to forecasting long term requirements because technology evolves quickly compared to other types of infrastructure. The City’s needs in terms of network bandwidth, data storage, and wireless devices may be dramatically different in the future than they are today. Additionally, unlike traditional infrastructure replacement projects which can be done incrementally, some technology tools require a large upfront investment to implement but cost significantly less to upgrade as the technology becomes more common. City staff currently use and maintain a vast technology infrastructure to provide services to the community each day.

Current information technology infrastructure will expand as the City uses more technology tools to gain efficiencies.

The Department of Information Technology provides the City’s computing infrastructure, supporting desktops, laptops, mobile devices, back-end server infrastructure, network accessibility and digital data security. Examples of such infrastructure include:
 Computer asset inventory comprising approximately 1,412 desktops, 796 laptops, 240 tablets, and 118 Public Safety Mobile Data Computers (MDCs), which continues to increase due to remote work expansion.

Unfunded Liability Obligations and Unfunded Infrastructure Needs ACTION CALENDAR May 23, 2023

 Replacement of aging, end-of-life enterprise systems such as the FUND$ financial system.
 A major update of the City’s phone system (Voice over IP or VOIP) via unfunded upgrades to address eFax, Automation of line move/add/change, softphones, VOIP security, etc.
 Increased capacity for City’s digital data storage needs and cybersecurity initiatives.

Many of the above prior projects were unfunded and were the result of a need to respond to an immediate or impending threat (such as a breach, or aging, unsupported, end-of- life equipment), as the timing of the needs often outpaced the ability to anticipate and plan for long term sustainability due to a number of factors, including loss of institutional knowledge through personnel departures and retirements or lack of “pipeline” funding (i.e., what would be needed for the next n-years to replace an end-of-life system).

For FY 2023 through FY 2025, which is about the limit of future foresight as it applies to IT systems, at least six critical projects need to be addressed through unfunded liabilities to preserve the City’s digital assets:

1. Continued implementation of Cybersecurity Resiliency Plan:

In late 2018, the City began development of its Cyber Resilience Plan (CRP) to help ensure the City is sufficiently and prudently equipped to handle cyberattacks and to help the City mitigate the effects of a successful cyberattack, should one occur. Information Technology continues to implement the solutions identified in the CRP.

2. Customer Relationship Management (CRM):

In FY 2019, the City upgraded its existing CRM software application, used by 311, Public Works and Parks, Recreation and Waterfront (PRW). Beginning November 2021, Public Works and PRW implemented a separate work order system called NextGen, which is not well integrated with the existing Lagan system still in use by 311 (the Lagan system is still being used by 311 to field over 100,000 requests for service per year). A new 311 CRM system replacement and implementation was targeted for FY2021 but delayed due to COVID and a related proposed budget reduction. 311 paused the release of the RFP until the Public Works NextGen work order system was implemented and the Zero Waste billing system vendor was selected.

An RFP for a new CRM system will be published in late FY 2023 with an estimated implementation completion date of FY 2025. During this period, 311 will remain on Verint-Lagan ($33,000 per year) until the new CRM is fully implemented.

The new CRM will give 311 the ability to capture, route, and manage all forms of requests through multiple communication channels with integration to the Public Works and PRW NexGen work order system, and Zero Waste billing system.

Unfunded Liability Obligations and Unfunded Infrastructure Needs ACTION CALENDAR May 23, 2023

A new CRM cloud-based system will allow community members to make service requests online via a City of Berkeley CRM portal on the City’s website.

Community members, City Staff and Council will be able to view status of service requests and view integrated knowledge documents online through the 311 CRM portal.

3. Geographical Information Systems (GIS)– Master Address Database (MAD) to address the Non-Compliance with NENA GRID and e911 Technology:

As the City deploys new systems such as work order, zero waste billing, digital permitting CRM and others, it is critical to have a modern, centralized address/parcel database that can easily feed accurate and consistent GIS information. Having one source of truth for address data will allow for ease of maintenance, timely updates, and consistency. This will bring greater efficiencies for city departments through various workflows including permitting, building inspections, work orders, billing, assessments and more. It will result in service that is more effective to our community by providing real time and accurate address data across departments. This project will be in conjunction the Property Tax Replacement Project, which is scheduled to begin in FY 2024.

4. IT Department Move to 1947:

The Department of Information Technology was in the planning stages to relocate to 1947 Center Street to accommodate all of its staff, as well as several City Manager’s Office (CMO) personnel, totaling over 55 total employees. The move to 1947 Center Street was delayed in FY20 due to COVID related proposed budget deductions, and again delayed in FY 2022 due to unexpected asbestos abatement construction delays. The move is now targeted to begin before the end of FY 2023 and complete in FY 2024.

5. Improvement to City-wide Facilities Wi-Fi:

Currently all City of Berkeley facilities are not setup to provide seamless Wi-Fi connectivity. Furthermore, those locations providing current Wi-Fi are serviced with aging, deprecated and/or non-enterprise quality equipment which has proven to be troublesome and failure-prone. In anticipation of a more disbursed work culture, it is imperative that the City provide enterprise quality, secure and high- speed Wi-Fi access at all its facilities serving both employees and the public, including outdoor areas of the Marina and other PRW facilities. The availability of such service will enhance productivity and safety for all, and is consistent with needs of all City departments as well as an outside audit finding. IT will engage a managed service provider to install, upgrade and/or replace all Wi-Fi access points and accompanying technology at all City managed facilities and areas. This managed service will alleviate the heavy service demands placed on staff to provide field support for maintaining equipment, as the managed service will provide full, turnkey support of all equipment with designated response windows.

Unfunded Liability Obligations and Unfunded Infrastructure Needs ACTION CALENDAR May 23, 2023

6. Implementation of City-wide collaboration tools (MS TEAMS and SharePoint):

The City lacks an enterprise solution for collaboration and productivity. Microsoft Teams and SharePoint are licensed products that the City subscribes to and provides for unified messaging for all organizations. It is a platform solution and workspace for real-time collaboration and communication, meetings, file and app sharing. Implementation of MS TEAMS and SharePoint will allow City to collaborate on a broader scale, and increase security and accessibility of electronic media and documents. It also will allow the City to better manage any file retention policies. Implementation of MS TEAMS and SharePoint will require the services of both internal staff as well as a qualified professional consultant and implementer.

Options to Address Long Term Retirement and Infrastructure Costs The City continues to consider how to prioritize expenditures to address some of its long- term obligations in order to maintain a healthy future. As mentioned earlier in this report, Council has already taken the following actions to address the City’s unfunded liabilities.  On June 26, 2018, Council authorized the City Manager to establish an IRS Section 115 Pension Trust Fund (Trust) to be used to help pre-fund pension obligations. On May 14, 2019, Council authorized the City Manager to execute a contract with Keenan Financial Services to establish, maintain, and invest the pension Section 115 Trust.
 The Section 115 Trust currently has a balance of $14,762,850.42 and is being funded annually through transfers from the General Fund and Capital Improvement Fund and the savings from prepayment of the annual PERS payment, and, beginning in FY 2023, through any additional earned investment revenue over the baseline projection.

At the March 9, 2023 Budget & Finance Policy Committee Meeting, the Committee received a presentation from the City’s actuary, Foster & Foster, regarding the status of the City’s pension plans and retiree health plans (Other-Post Employment Benefits) (Attachment 5). The presentation included specific funding recommendations including:
 Fully pre-fund the City’s OPEB liabilities by increasing the annual contribution to the City’s four retiree health plans by $8.8 million, for a total of $15 million, over the next 20 years.
 Continue the City’s current target of allocating $5.5 million annually to the Section 115 Pension Trust to reach a recommended Trust balance of $25-$50 million.

Berkeley voters have approved several bond measures to improve the City’s infrastructure, including Measure F for parks, Measure M for streets, and most recently Measure T1, which authorized the City to sell $100 million of General Obligation Bonds to repair, renovate, replace or reconstruct the City’s aging infrastructure and facilities. The Adopted Biennial Budget includes funding of $18.3 million for street rehabilitation in FY 2023, which includes $7.1 million from the CIP Fund ($2.1 million baseline and $5.0 million additional

Unfunded Liability Obligations and Unfunded Infrastructure Needs ACTION CALENDAR May 23, 2023

funding), State gas tax, Measure BB and other sources. In FY 2024, the General Fund (through the CIP Fund) contributes nearly $11.0 million and funding from all sources total $19.4 million. In addition to funding for streets, the Adopted Budget allocates funding for other critical public safety projects such as the Jail Control Panel Replacement project, the Waterfront piling project, the Telegraph/Channing Garage Elevator Repairs, and various traffic calming and improvement projects. In total, the General Fund contributes approximately $14.0 million for capital projects in both fiscal years 2023 and 2024, including streets, funded by a portion of projected excess property transfer tax revenues.

A separate presentation and discussion on Unfunded Infrastructure Needs will be held either at the April 25, 2023 City Council Meeting or a later date to be determined.

General Fund Revenue Projections
As noted in the introduction, when this report was originally presented in 2013, members of the City Council requested that staff include long-term revenue projections in the next biennial report, in addition to the expenditure projections identified in Council Resolution No. 65,748-N.S. The intent was to present a complete and informative forecast, and provide a better long-term perspective on Berkeley’s ability to achieve financial stability through future economic cycles. The projections presented in this report are limited to the General Fund as those funds are the most discretionary in terms of allocation, and also highly subject to economic conditions. The General Fund typically comprises about one-half of the City’s total budget; the remainder of the budget consists of various Special Funds which are restricted in purpose (e.g. Zero Waste, Permit Services Center, Sewer, Public Health, and Mental Health).

The chart below provides a summary of total General Fund Revenues projected through FY 2027. The revenue projections have been updated to reflect results from the first six months of Fiscal Year 2023. Fifty percent (50%) of the City’s FY 2023 Projected General Fund revenue is derived from Secured Property, Sales Tax, Business License Taxes, and Property Transfer Taxes. Each major contributing revenue stream is described in more detail below. Additional detail on General Fund Revenue Projections can be found in Attachment 4.

FY 2023
Adopted
FY 2023
Projected FY 2024 FY 2025 FY 2026 FY 2027
GF Revenues
Baseline 258.7 $ 272.9 $ 274.6 $ 262.2 $ 267.6 $ 272.5 $ General Fund Revenues Projections (dollar in millions)

Unfunded Liability Obligations and Unfunded Infrastructure Needs ACTION CALENDAR May 23, 2023

Property Tax
Given the continued high collection rate, and the resilience of property values in the City, as well as a large volume of recent property sales (which bring assessed values to market value), we are projecting that annual growth will be approximately 5.5% over the next several years. The persistence of strong growth of property valuations in recent years, as well as the spike in current year sales (which bring properties assessed valuations to market value), have caused staff to increase the projected growth rate from the 3.5% that we have used in prior long-term projections.

Sales Tax
The immense effects of COVID-19 on sales tax revenue in FY 2021 were largely reversed in FY 2022, with revenue levels almost back to FY 2019 levels, and staff now project growth to level off to approximately 4% in FY 2024. There is still some potential risk that an overall slowdown in underlying economic recovery will be reflected in reduced growth in consumer spending and sales tax collections Business License Taxes
We are projecting a 5% growth in Business License Tax revenue from heavily impacted FY 2021 levels, as economic activity recovers from the recession caused by the pandemic. Long-term projections will be adjusted as the post-pandemic economic environment becomes clearer. 2023 business license returns (for 2022 gross receipts) are just now being received, so we will know more about how revenues are trending once they are processed over the next month or so.

Transfer Tax
Given the continued strength in property values and in sales activity, we expect Transfer Tax revenues to remain basically flat from FY 2024 – FY 2027. The spike in revenue being seen in FY 2022, and to a lesser extent in FY 2023, is likely due to sales triggered by looming interest rate increases that have been signaled by the Federal Reserve, as well as some pent-up demand from mildly depressed sales during the pandemic. Over the 5 years prior to the pandemic, transfer tax revenues grew 6% per year on average, but interest rate increases will probably negatively impact sales prices and volumes somewhat in the next few years. We also expect revenues from Measure P supplemental tax on high value property transfers to remain basically flat.

General Fund Revenues versus General Fund Expenditures
One value of producing long term General Fund revenue projections is to compare them against General Fund expenditure projections. Since about 57% of the General Fund expenditures are personnel costs, any change in those costs has an impact on the balance between revenues and expenditures.

The chart below is offered as a demonstration only and is not a proposal or budget plan.

Unfunded Liability Obligations and Unfunded Infrastructure Needs ACTION CALENDAR May 23, 2023

The expenditure projections assume the following:
• Staffing level held constant using the FY 2023 Adopted Budget • No cost of living adjustments (COLA) beyond what is currently negotiated • PERS rates based on rates provided by the City’s actuarial agency • Other Fringe Benefits increase annually by 8 percent starting in FY 2025 • Salary Savings budgeted at 8 percent annually starting in FY 2025 • Non-Personnel costs increase annually by 3 percent starting in FY 2025 • General Fund Transfer to the CIP Fund is $19M annually and includes • Baseline Amount of $5M
• Property transfer tax of $14M
• FY 2025 and outward years shows the new policy of funding an additional $18M towards Streets
Staff is in the process of developing the FY 2024 Mid-Biennial Budget Update, however, the preliminary forecast above indicates that the City has a structural deficit that needs to be addressed in FY 2025 through FY 2027, due, in part, to the impact of CalPERS financial losses in FY 2022.

CONCLUSION
One of the terms that is often used with respect to the long-term obligations that are described above is “unfunded liabilities.” Unfunded liabilities are defined as identifiable obligations of an organization for which the organization does not have 100% of the funding (cash or other assets) set aside to cover the cost should all obligations become immediately due. Generally, an organization manages a balance between funding a portion of the entire obligation and the associated risk that the obligation will be due at the same time. This balance is considered the practical and responsible approach since payment demands of these obligations rarely, if ever, occur simultaneously. The alternative would be to 100% fund the obligations causing a great portion of cash to be reserved and not available for providing services or meeting other immediate obligations, needs, or desires of the community. Maintaining a careful balance between cash on hand to fund daily operations and liquidity to cover unfunded liabilities is a key challenge for all governments.

FY 2023
Adopted
FY 2023
Projected
FY 2024
Adopted
FY 2025
Projected
FY 2026
Projected
FY 2027
Projected
GF Revenues
Baseline
258.70 $ 272.90 $ 261.70 $ 262.20 $ 267.60 $ 272.50 $ GF Expenditures -
Zero COLA
280.70 $ 275.70 $ 274.00 $ 293.70 $ 295.00 $ 299.60 $ Surplus/(Deficit) (22.00) $ (2.80) $ (12.30) $ (31.50) $ (27.40) $ (27.10) $ *FY 2023 Adopted & FY 2024 Adopted balanced through the use of fund balance General Fund Revenues v.s. Expenditures - Demonstrative Comparison (dollars in millions)

Unfunded Liability Obligations and Unfunded Infrastructure Needs ACTION CALENDAR May 23, 2023

POSSIBLE FUTURE ACTION
The information contained in this report will be referenced throughout the budget planning meetings in advance of the FY 2024 Mid-Biennial Budget Update and during the FY 2025 & FY 2026 Biennial Budget process. The City’s Budget and Finance Policy Committee will continue to discuss funding options and provide recommendations to the City Council to address the City’s unfunded liabilities and infrastructure needs.

FISCAL IMPACTS OF POSSIBLE FUTURE ACTION
There is no fiscal impact associated with receiving the report. However, the report describes the immediate and long-term projected costs associated with pension and other post-employment benefits. In order to help mitigate these specific liabilities, the City’s actuarial recommends the City continue to allocate $5.5 million each fiscal year to the Section 115 Pension Trust for the next 2 years (to reach a balance of $25 million) to six years (to reach a balance of $50 million) and increase the contribution to retiree health insurance plans by $8.8 million over the next 20 years in order to fully pre-fund its OPEB liabilities. In addition, significant resources will be necessary to address the City’s infrastructure needs.

ENVIRONMENTAL SUSTAINABILITY AND CLIMATE IMPACTS
Actions included in the budget will be developed and implemented in a manner that is consistent with the City’s environmental sustainability goals and requirements.

CONTACT PERSON
Sharon Friedrichsen, Budget Manager, City Manager’s Office, 981-7000 Rama Murty, Senior Management Analyst, City Manager’s Office, 981-7000 Henry Oyekanmi, Finance Director, Department of Finance, 981-7300 Attachments:

1. Employee and Retiree Benefits Funded Status

2. City’s Debt Obligations
Exhibit A: General Obligation bonds
Exhibit B: Revenue Bonds

3. Capital Assets
Exhibit A: Infrastructure
Exhibit B: Appraisal of Buildings Valued at $5 million or more

4. General Fund Revenues

5. Foster & Foster, Incorporated City of Berkeley Pension and OPEB Funding Study

Fund Name Valuation Date
Estimated
Liability Plan Assets Funding Target Net Liability % Funded Police Retiree Income Plan (closed)* 6/30/2020 $ 79.95 $ 5.83 2 $ 74.1 7.29% Police Employee Retiree Health Plan
(new)*
7/1/2019 $ 40.43 $ 2.49 2 $ 37.9 6.16% Fire Employees Retiree Health Plan* 7/1/2019 $ 25.83 $ 11.31 1 $ 14.5 43.8% Retiree Health Premium Assistance
Plan (Non-Safety Members)*
7/1/2019 $ 68.46 $ 27.81 1 $ 40.7 40.62% Safety Members Pension Fund* 6/30/2020 $ 1.86 $ 0.10 2 $ 1.76 5.4% Miscellaneous CalPERS Plan* 6/30/2021 1,181.2$ 946.3$ 1 $ 234.9 80.1% Police CalPERS Plan* 6/30/2021 483.8$ 332.5$ 1 $ 151.3 68.7% Fire CalPERS Plan* 6/30/2021 306.7$ 248.1$ 1 $ 58.60 80.9% TOTAL 2,188.2$ 1,574.4$ - 613.8$ 72.0% Since the implementation of GASB67 and 68 the Annual Required Contribution (ARC) is no longer provided.

Funding Target:
2 - pay as you go
Employee and Retiree Benefits Funded Status (dollars in millions) Attachment 1 1 - percentage of payroll
*Retiree Medical Plan & CalPERS Plans data from acturial reports from Foster & Foster, Inc.

Attachment 2 Exhibit A
FY Principal Interest Principal Interest Principal Interest Principal Interest Principal Interest Principal Interest Principal Interest Principal Interest Principal Interest Principal Interest 217,140,000
2023 370,000 526,000.00 2,270,000 779,837.50 320,000 420,112.50 730,000.00 1,000,556.26 740,000.00 1,265,540.00 265,000.00 272,075.00 395,000.00 409,312.50 1,500,000.00 1,258,325.00 - 560,733 6,590,000 6,492,492 13,082,491.51 210,550,000 2024 385,000 507,125.00 2,380,000 663,587.50 335,000 403,737.50 765,000.00 963,181.26 770,000.00 1,237,265.00 275,000.00 258,575.00 415,000.00 389,062.50 1,750,000.00 1,177,075.00 805,000 2,081,070 7,880,000 7,680,679 15,560,678.76 202,670,000 2025 405,000 491,425.00 2,495,000 541,712.50 350,000 386,612.50 805,000.00 923,931.26 800,000.00 1,209,790.00 285,000.00 244,575.00 435,000.00 367,812.50 920,000.00 1,110,325.00 580,000 2,032,770 7,075,000 7,308,954 14,383,953.76 195,595,000 2026 420,000 478,787.50 2,625,000 413,712.50 370,000 370,462.50 845,000.00 882,681.26 825,000.00 1,181,352.50 300,000.00 229,950.00 455,000.00 345,562.50 965,000. 00 1,063,200.00 615,000 1,997,970 7,420,000 6,963,679 14,383,678.76 188,175,000 2027 430,000 465,237.50 2,760,000 306,687.50 385,000 355,362.50 885,000.00 843,856.26 855,000.00 1,151,952.50 315,000.00 214,575.00 485,000.00 322,062.50 1,010,000.00 1,013,825.00 650,000 1,961,070 7,775,000 6,634,629 14,409,628.76 180,400,000 2028 445,000 449,350.00 2,840,000 222,687.50 405,000 339,562.50 920,000.00 807,756.26 885,000.00 1,121,502.50 335,000.00 198,325.00 505,000.00 297,312.50 1,065,000.00 961,950.00 690,000 1,922, 070 8,090,000 6,320,516 14,410,516.26 172,310,000 2029 465,000 431,150.00 1,960,000 150,687.50 425,000 322,962.50 960,000.00 779,156.26 915,000.00 1,090,002.50 355,000.00 181,075.00 530,000.00 271,437.50 1,115,000.00 907,450.00 730,000 1,880,670 7,455,000 6,014,591 13,469,591.26 164,855,000 2030 480,000 412,250.00 880,000 108,087.50 450,000 307,712. 50 980,000.00 757,931.26 950,000.00 1,057,365.00 370,000.00 162,950.00 555,000.00 244,312.50 1,170,000.00 850,325.00 775,000 1,836,870 6,610,000 5,737,804 12,347,803.76 158,245,000 2031 500,000 392,650.00 305,000 89,931.25 470,000 293,912.50 1,000,000.00 731,906.26 980,000.00 1,023,590.00 395,000.00 143,825.00 585,000.00 215,812.50 1,230,000.00 796,475.00 820,000 1,790,370 6,285,000 5,478,473 11,763,472.51 151,960,000 2032 520,000 372,250.00 315,000 79,856.25 485,000 279,587.50 1,030,000.00 701,456.26 1,015,000.00 989,946.25 410,000.00 125,750.00 615,000.00 188,887.50 1,280,000.00 752,675.00 860,000 1,749,370 6,530,000 5,239,779 11,769,778.76 145,430,000 2033 540,000 350,712.50 325,000 69,253.13 500,000 264,812.50 1,060,000.00 670,106.26 1,050,000.00 956,390.00 430,000.00 108,950.00 640,000.00 163,787.50 1,320,000.00 713,675.00 915,000 1,697,770 6,780,000 4,995, 457 11,775,456.89 138,650,000 2034 565,000 327,921.88 335,000 57,906.26 515,000 250,875.00 1,095,000.00 637,781.26 1,085,000.00 921,696.25 450,000.00 94,725.00 665,000.00 137,687. 50 1,355,000.00 673,550.00 965,000 1,642,870 7,030,000 4,745,013 11,775,013.15 131,620,000 2035 590,000 304,100.01 345,000 46,006.26 530,000 237,812.50 1,125,000.00 604,481.26 1,120,000.00 885,865.00 460,000.00 82,200.00 690,000.00 114,037.50 1,400,000.00 632,225.00 1,025,000 1,584,970 7,285,000 4,491,698 11,776,697.53 124,335,000 2036 610,000 278,587.51 360,000 33,668.76 550,000 223,968.75 1,160,000.00 570,206.26 1,155,000.00 848,896.25 480,000.00 68,700.00 715,000.00 95,643.75 1,440,000.00 596,825.00 1,085,000 1,523,470 7,555,000 4,239,966 11,794,966.28 116,780,000 2037 640,000 251,243.76 370,000 20,662.51 570,000 209,268.75 1,195,000.00 534,881.26 1,190,000.00 807,815.00 495,000.00 54,675. 00 730,000.00 76,650.00 1,470,000.00 567,725.00 1,145,000 1,463,795 7,805,000 3,986,716 11,791,716.28 108,975,000 2038 665,000 222,696.88 385,000 6,978.13 590,000 193,675.00 1,230,000.00 497,737.51 1,235,000.00 762,346.25 510,000.00 39,600.00 750,000.00 56,325.00 1,500,000.00 538,025.00 1,205,000 1,406,545 8,070,000 3,723,929 11,793,928.77 100,905,000 2039 695,000 192,946.88 610,000 177,175.00 1,270,000.00 458,675.01 1,285,000.00 715,096.25 525,000.00 24,075.00 770,000.00 35,400.00 1,530,000.00 507,725.00 1,265,000 1,346,295 7,950,000 3,457,388 11,407,388.14 92,955,000 2040 725,000 161,884.38 630,000 160,125.00 1,310,000.00 418,362.51 1,330,000.00 666,065.00 540,000.00 8,100.00 795,000.00 11,925. 00 1,560,000.00 476,825.00 1,325,000 1,284,943 8,215,000 3,188,229 11,403,229.39 84,740,000 2041 760,000 128,925.00 655,000 142,456.25 1,350,000.00 375,956.26 1,380, 000.00 615,252.50 1,590,000.00 445,325.00 1,390,000 1,220,680 7,125,000 2,928,595 10,053,595.01 77,615,000 2042 790,000 94,050.00 680,000 124,100.00 1,395,000.00 331,350.01 1,435,000.00 562,471.25 1,620,000.00 413,225.00 1,460,000 1,153,265 7,380,000 2,678,461 10,058,461.26 70,235,000 2043 830,000 57,600.00 705,000 104,175.00 1,440,000.00 285,281.26 1,485,000.00 507,721.25 1,655,000.00 380,475.00 1,530,000 1,082,455 7,645,000 2,417,708 10,062,707.51 62,590,000 2044 865,000 19,462.50 735,000 82,575.00 1,485,000.00 237,750.01 1,545,000.00 450,908.75 1,685,000.00 347,075.00 1,605,000 1,008,250 7,920,000 2,146,021 10,066,021.26 54,670,000 2045 765,000 60,075.00 1,535,000.00 188,675.01 1,600,000.00 394,740.00 1,720,000.00 311,950.00 1,685,000 928,000 7,305,000 1,883,440 9,188,440.01 47,365,000 2046 795,000 36,675.00 1,585,000.00 137,975.01 1,655,000.00 339,405.00 1,760,000.00 274,975.00 1,765, 000 843,750 7,560,000 1,632,780 9,192,780.01 39,805,000 2047 825,000 12,375.00 1,635,000.00 84,628.13 1,710,000.00 282,200.00 1,795,000.00 236,081.25 1,855,000 755,500 7,820,000 1,370,784 9,190,784.38 31,985,000 2048 1,690,000.00 28,518.75 1,770,000.00 223,040.00 1,835,000.00 107,943.75 1,950,000 662,750 7,245,000 1,022,253 8,267,252.50 24,740, 000
2049 1,830,000.00 161,840.00 1,875,000.00 174,600.00 2,045,000 565,250 5,750,000 901,690 6,651,690.00 18,990,000 2050 1,890,000.00 98,600.00 1,920,000.00 132,412.50 2,150,000 463,000 5,960,000 694,013 6,654,012.50 13,030,000 2051 1,955,000.00 33,235.00 1,960,000.00 89,212.50 2,255,000 355,500 6,170,000 477,948 6,647,947.50 6,860,000 2052 2,005,000.00 45,112.50 2,370,000 242,750 4,375,000 287,863 4,662,862.50 2,485,000 2053 2,485,000 124,250 2,485,000 124,250 2,609,250.00 - Grant
Total 12,695,000$ 6,916,356$ 20,950,000$ 3,591,263$ 13,650,000$ 5,760,169$ 30,480,000$ 14,454,778$ 36,440,000$ 21,561,890$ 7,195,000$ 2,512,700$ 10,730,000$ 3,743,031$ 45,000,000$ 17,556,588$ 40,000,000$ 39,169,020$ 217,140,000$ 115,265,795$ 332,405,795$ General Obligation Bonds
Total End of FY GO
Bonds Balance
Annual Total
P & I
2014 Measure M (2014
Street and Integrated
Watershed)
2015 GO Refunding Bonds
(Refunding Measure G, S, I)
2016 Measure M (2016 Street
and Integrated Watershed)
2017 Measure T1 Infrastructure and
Facilities Improvementsd 2020 Measure O Affordable Housing 2020 G.O Bonds ( Series A) 2020 G.O Bonds ( Series B) 2021 G.O Bonds ( Measure T1) 2022 Measure O Affordable
Housing

Attachment 2 Exhibit B
FY Principal Interest Principal Interest Principal Interest Principal Interest Principal Interest 2022 - - - 52,045,000 2023 352,498.83 146,881.34 1,152,501 480,231. 16 0.00 138, 200.00 840,000 1,074, 650.00 2,345, 000 1,839, 963 4,184, 962.50 49,700,000 2024 366,551.94 130,667.56 1,198,448 427,219. 93 0.00 138, 200.00 870,000 1,041, 050.00 2,435, 000 1,737, 137 4,172, 137.49 47,265,000 2025 386,460.51 111,842.25 1,263,539 365,670. 25 0.00 138, 200.00 905,000 1,006, 250.00 2,555, 000 1,621, 963 4,176, 962.50 44,710,000 2026 405,197.99 92,050.79 1,324,802 300,961. 71 0.00 138, 200.00 945,000 970,050. 00 2,675, 000 1,501, 263 4,176, 262.50 42,035,000 2027 427,448.74 71,234.62 1,397,551 232,902. 88 0.00 138, 200.00 980,000 932,250. 00 2,805, 000 1,374, 588 4,179, 587.50 39,230,000 2028 442,672.95 53,908.31 1,447,327 176,254. 19 0.00 138, 200.00 1,020,000 893,050. 00 2,910, 000 1,261, 413 4,171, 412.50 36,320,000 2029 459,068.24 40,095.28 1,500,932 131,092. 22 190,000. 00 133,450.00 1,060,000 852,250. 00 3,210, 000 1,156, 888 4,366, 887.50 33,110,000 2030 320,879.33 16,461.17 1,049,121 102,695. 08 280,000. 00 121,700.00 1,105,000 809,850. 00 2,755, 000 1,050, 706 3,805, 706.25 30,355,000 2031 1,450,000 74,187.50 290,000.00 107,450.00 1,145,000 765,650. 00 2,885, 000 947,288 3,832, 287.50 27,470,000 2032 1,500,000 25,312.50 305,000.00 92,575.00 1,190,000 719,850. 00 2,995, 000 837,738 3,832, 737.50 24,475,000 2033 320,000.00 76,950.00 1,240,000 672,250. 00 1,560, 000 749,200 2,309, 200.00 22,915,000 2034 335,000.00 60,575.00 1,290,000 622,650. 00 1,625, 000 683,225 2,308, 225.00 21,290,000 2035 350,000.00 46,950.00 1,340,000 571,050. 00 1,690, 000 618,000 2,308, 000.00 19,600,000 2036 360,000.00 36,300.00 1,380,000 530,850. 00 1,740, 000 567,150 2,307, 150.00 17,860,000 2037 375,000.00 27,150.00 1,425,000 489,450. 00 1,800, 000 516,600 2,316, 600.00 16,060,000 2038 380,000.00 19,600.00 1,465,000 446,700. 00 1,845, 000 466,300 2,311, 300.00 14,215,000 2039 390,000.00 11,900.00 1,510,000 402,750. 00 1,900, 000 414,650 2,314, 650.00 12,315,000 2040 400,000.00 4,000.00 1,555,000 357,450. 00 1,955, 000 361,450 2,316, 450.00 10,360,000 2041 1,600,000 310,800.00 1,600,000 310,800 1,910, 800.00 8,760,000 2042 1,650,000 262,800.00 1,650,000 262,800 1,912, 800.00 7,110,000 2043 1,700,000 213,300.00 1,700,000 213,300 1,913, 300.00 5,410,000 2044 1,750,000 162,300.00 1,750,000 162,300 1,912, 300.00 3,660,000 2045 1,805,000.00 109,800.00 1,805,000 109,800 1,914, 800.00 1,855,000 2046 1,855,000.00 55,650.00 1,855,000 55,650 1,910,650.00 - Grand Total 3,160,779$ 663,141$ 13,284,221$ 2,316, 527$ 3,975, 000$ 1,567, 800$ 31,625, 000$ 14,272, 700$ 52,045, 000$ 18,820, 169$ 70,865,169$ Berkeley Rep. 2012 Refunding 1947 Center 2012 Refunding End of FY Rev
Bonds
Balance
Revenue Bonds
Annual Total
P & I
Total2016 Parking Revenue Bond
2010 Animal Shelter COP
2021 RefudingRevenue

Attachment 3Internal
FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 Total
Year 1 Year 2 Year 3 Year 4 Year 5 Year 1- 5
Parks, Park Buildings, Pools, Waterfront, and Camps - Existing Infrastructure Available Funding(1)
$3,815,000 $3,815,000 $3,815,000 $3,815,000 $3,815,000 $19,075,000 Expenditures $3,815,000 $3,815,000 $3,815,000 $3,815,000 $3,815,000 $19,075,000 Capital & Maint. Need (2)
$238,550,000
Unfunded Liability ($243,889,665) ($249,437,577) ($255,201,857) ($261,190,945) ($267,413,607) ($267,413,607) Available Funding $0 $0 $0 $0 $0 $0
Expenditures $0 $0 $0 $0 $0 $0
Capital & Maint. Need $145,130,000
Unfunded Liability ($150,790,070) ($156, 670,883) ($162,781,047) ($169,129,508) ($175,725,559) ($175,725,559) City Buildings
Available Funding $1,800,000 $2,800,000 $2,800,000 $2,800,000 $2,800,000 $13,000,000 Expenditures $1,800,000 $2,800,000 $2,800,000 $2,800,000 $2,800,000 $13,000,000 Capital & Maint. Need $314,500,000
Unfunded Liability ($324,895,300) ($334,657,017) ($344,799,440) ($355,337,419) ($366,286,378) ($366,286,378) Sidewalks & Pathways
Available Funding $1,035,000 $1,035,000 $1,035,000 $1,035,000 $1,035,000 $5,175,000 Expenditures $1,035,000 $1,035,000 $1,035,000 $1,035,000 $1,035,000 $5,175,000 Capital & Maint. Need $60,000,000
Unfunded Liability ($61,264,635) ($62,578,591) ($63,943,791) ($65,362,234) ($66,835,996) ($66,835,996) Streets & Roads
Available Funding $15,920,000 $14,820,000 $14,820,000 $14,820,000 $14,820,000 $75,200,000 Expenditures $15,920,000 $14,820,000 $14,820,000 $14,820,000 $14,820,000 $75,200,000 Capital & Maint. Need $248,750,000
Unfunded Liability ($241,910,370) ($235,946,894) ($229,750,843) ($223,313,146) ($216,624,379) ($216,624,379) Street Lights
Available Funding $400,000 $400,000 $400,000 $400,000 $400,000 $2,000,000 Expenditures $400,000 $400,000 $400,000 $400,000 $400,000 $2,000,000 Capital & Maint. Need $5,250,000
Unfunded Liability ($6,741,500) ($6,588,819) ($6,430,182) ($6,265,360) ($6,094,109) ($6,094,109) Sewers
Available Funding $20,813,315 $24,489,500 $21,967,500 $20,885,000 $20,885,000 $109,040,315 Expenditures $20,813,315 $24,489,500 $21,967,500 $20,885,000 $20,885,000 $109,040,315 Capital & Maint. Need $183,500,000
Unfunded Liability ($169,031,466) ($150, 179,102) ($133,211,855) ($116,707,602) ($99,559,684) ($99,559,684) Storm Water & Green Infrastructure
Available Funding $3,005,000 $2,050,000 $2,000,000 $2,000,000 $2,000,000 $11,055,000 Expenditures $3,005,000 $2,050,000 $2,000,000 $2,000,000 $2,000,000 $11,055,000 Capital & Maint. Need $362,000,000
Unfunded Liability ($372,995,805) ($385,412,691) ($398,365,786) ($411,824,052) ($425,807,190) ($425,807,190) Traffic Signals & Parking Infrastructure
Available Funding $400,000 $400,000 $400,000 $400,000 $400,000 $2,000,000 Expenditures $400,000 $400,000 $400,000 $400,000 $400,000 $2,000,000 Capital & Maint. Need $23,500,000
Unfunded Liability ($24,000,900) ($24,521,335) ($25,062,067) ($25,623,888) ($26,207,619) ($26,207,619) Undergrounding Project
Available Funding $0 $0 $0 $0 $0 $0
Expenditures $0 $0 $0 $0 $0 $0
Capital & Maint. Need $110,750,000
Unfunded Liability ($115,069,250) ($119,556,951) ($124,219,672) ($129,064,239) ($134,097,744) ($134,097,744) Vets & Old City Hall
Available Funding $0 $0 $0 $0 $0 $0
Expenditures $0 $0 $0 $0 $0 $0
Parks, Park Buildings, Pools, Waterfront - New Planned Infrastructure(3) San Pablo Park: Community Center and Pool; King Park: 25M Competitive Pool / Locker Room; Tom Bates Sports Complex: Youth Soccer Field, Pickleball Courts and Restroom; New Restrooms in Parks over 1 Acre: James Kenney, Aquatic, Civic Center, King, and John Hinkel Parks; James Kenney Park: Skate Spot; Waterfront Bike Park; Pier/Ferry Preferred Concept with landside and waterside improvements

Attachment 3Internal
Capital & Maint. Need $130,000,000
Unfunded Liability ($135,070,000) ($140,337,730) ($145,810,901) ($151,497,527) ($157,405,930) ($157,405,930) Transfer Station
Available Funding $0 $0 $0 $0 $0 $0
Expenditures $0 $0 $0 $0 $0 $0
Capital & Maint. Need $76,000,000
Unfunded Liability $78,964,000 $82,043,596 $85,243,296 $85,243,296 Bike & Ped Projects
Available Funding $0 $0 $0 $0 $0 $0
Expenditures $0 $0 $0 $0 $0 $0
Capital & Maint. Need $129,000,000
Unfunded Liability ($134,031,000) ($139,258,209) ($144,689,279) ($150,332,161) ($156,195,115) ($156,195,115) Transit Projects
Available Funding $0 $0 $0 $0 $0 $0
Expenditures $0 $0 $0 $0 $0 $0
Capital & Maint. Need $53,000,000
Unfunded Liability ($55,067,000) ($57,214,613) ($59,445,983) ($61,764,376) ($64,173,187) ($64,173,187) Fire Projects
Available Funding $0 $0 $0 $0 $0 $0
Expenditures $0 $0 $0 $0 $0 $0
Capital & Maint. Need $288,000,000
Unfunded Liability ($299,232,000) ($310,902,048) ($323,027,228) ($335,625,290) ($348,714,676) ($348,714,676) TOTAL
Available Funding $46,788,315 $49,409,500 $46,837,500 $45,755,000 $45,755,000 $234,545,315 Expenditures $46,788,315 $49,409,500 $46,837,500 $45,755,000 $45,755,000 $234,545,315 T1 Funding: $100M Infrastructure Bond(4)
$16,978,333 $8,093,333 $4,105,000 $0 $0 $29,176,666
Capital & Maint. Need $2,079,930,000
Unfunded Liability ($2,094,793,723) ($2,118,987,845) ($2,150,685,871) ($2,188,807,620) ($2,228,416,117) ($2,228,416,117) (3) If new planned infrastructure is built, there will be approx. $44M in savings realized in existing infrastructure cost estimates. (4) The $100M T1 bond funding allocations started in 2017 and are planned to be exhausted in 2026. (1) Unless otherwise noted, available funding includes recurring sources of capital and major maintenance funding. (2) Capital & Maint. Needs are current estimates of unfunded needs. Needs are estimated to increase at a rate of 3.9% per year.

Public Buildings - Appraisal of Assets Valued @ $5M or More Other ID. Address Sq Feet Year Built Last Appr. Occupied As Leased Owned Total Values MAIN LIBRARY 2090

KITTREDGE
STREET
(FRONT)
102,000 1931 2021 LIBRARY - HIGH
END
OWNED $ 83,882,271

CIVIC CENTER BUILDING
ANNEX
1947 CENTER
STREET
112,798 1947 2021 PUBLIC WORKS

ENGINEERING AND

TRANSPORTATION
OWNED $ 80,731,494

CENTER STREET

GARAGE AND

COMMERCIAL SPACE
2025 CENTER
STREET
248,000 2018 2021 CITY AND PUBLIC

PARKING AND
OFFICE
OWNED $ 44,950,008

MARTIN LUTHER KING
JR. CIVIC CENTER
2180 MILVIA
STREET
89,075 1940 2021 OFFICE BUILDING OWNED $ 76,798,274

PUBLIC SAFETY

BUILDING (INCLUDES

PRIIMARY EOC)
2100 MARTIN

LUTHER KING
JR WAY
60,108 2000 2021 POLICE

STATION/FIRE

STATION OFFICES
OWNED $ 40,144,015
OLD CITY HALL 2134 MARTIN

LUTHER KING
JR. WAY
38,400 1908 2021 OFFICE OWNED $ 29,831,879

TELEGRRAPH/CHANNING
(SATHER GATE) MALL

AND GARAGE
2438 DURANT

AVENUE/CHAN

NING AVENUE
186,890 1990 2021 PARKING GARAGE

W/RETAIL
OWNED $ 22,081,096

FIRE DEPARTMENT

WAREHOUSE
1011 FOLGER
AVENUE
8,021 2011 2019 WAREHOUSE OWNED $ 13,373,058

DONA SPRING ANIMAL

SHELTER
1 BOLIVAR
DRIVE
11,700 2013 2021 ANIMAL SHELTER OWNED $ 9,875,519 LIBRARY-WEST BRANCH 1125

UNIVERSITY
AVENUE
9,300 2013 2021 LIBRARY OWNED $ 8,446,998

TAREA HALL PITTMAN

SOUTH BRANCH
1901 RUSSELL
STREET
8,700 2013 2021 LIBRARY OWNED $ 7,789,776

OXFORD STREET
GARAGE
2165

KITTREDGE
STREET
42,128 2009 2021 PARKING/RETAIL OWNED $ 6,241,391 BERKELEY REP THEATER 2025 ADDISON
STREET
24,893 2000 2016 THEATRE OWNED $ 6,678,445

VETERANS MEMORIAL
HALL
1931 CENTER
STREET
33,254 1923 2021 ASSEMBLY AND

HOMELESS

SHELTER
OWNED $ 20,390,535
Attachment 3, Exhibit BPage 34 of 74

Public Buildings - Appraisal of Assets Valued @ $5M or More Other ID. Address Sq Feet Year Built Last Appr. Occupied As Leased Owned Total Values Attachment 3, Exhibit B

NORTH BERKELEY

SENIOR CITIZENS
CENTER
1901 HEARST
AVENUE
20,880 1977 2021 SENIOR CENTER OWNED $ 6,661,453

JAMES KENNEY

RECREATION CENTER
1718 & 1720
8TH STREET
17,724 1973 2019 RECREATION

CENTER/ASSEMBL
Y
OWNED $ 6,740,269

LIBRARY-NORTH
BRANCH
1170 THE

ALAMEDA
9,555 1936 2019 LIBRARY OWNED $ 6,571,658

LIBRARY - CLAREMONT
BRANCH
2940

BENVENUE
AVENUE
8,110 1924 2019 LIBRARY OWNED $ 5,403,431

SOUTH BERKELEY

SENIOR CENTER
2939 ELLIS
STREET
17,156 1977 2019 SENIOR CENTER OWNED $ 6,441,480 BERKELEY MARINA 201

UNIVERSITY
AVENUE
152,571 1974 2019 BOAT DOCKS OWNED $ 6,171,038

BERKELEY TUOLUMNE
CAMP
31585 HARDIN

FLAT RD,

GROVELAND,
CA
34,365 2022 DINING HALL/TENT

CABINS/DESK
OWNED $ 13,470,651
HS LORDSHIPS 199 SEAWALL 25,000 1967 2021 RESTAURANT AND

SPECIAL EVENT
VENUE
OWNED $ 10,246,736
512,921,475$ TOTAL

Attachment 4

5 YEARS PROJECTED GENERAL FUND

REVENUES
Projected General Fund
Revenue
FY 2023 through FY 2027
FY 2023
Adopted FY 2023 FY 2024 FY 2025 FY 2026 FY 2027
Undesignated Revenues
Secured Property Taxes 75,664,920 79,091,256 81,859,450 84,724,531 87,689,889 90,759,035 Supplemental Taxes 2,000,000 2,300,000 2,300,000 2,300,000 2,300,000 2,300,000 Unsecured Property Taxes 3,516,000 3,516,000 3,516,000 3,516,000 3,516,000 3,516,000 Property Transfer Taxes 18,000,000 18,000,000 16,000,000 16,000,000 16,000,000 16,000,000 Property Transfer Tax - Measure P 14,073,750 14,073,750 14,073,750 14,073,750 14,073,750 14,073,750 Sales Taxes 19,016,546 19,634,807 19,391,714 20,231,914 21,146,495 22,043,410 Soda Tax 990,210 1,025,800 1,025,800 1,025,800 1,025,800 512,900 Utility Users Taxes 13,800,000 15,000,000 15,000,000 15,000,000 15,000,000 15,000,000 Transient Occupancy Taxes(TOT) 5,000,000 7,500,000 7,725,000 7,956,750 8,195,453 8,441,316 Short-term Rentals 1,000,000 1,400,000 1,400,000 1,400,000 1,400,000 1,400,000 Business License Taxes 19,000,000 19,000,000 19,000,000 19,380,000 19,767,600 19,767,600 Recreational Cannabis 1,400,000 1,400,000 1,400,000 1,428,000 1,456,560 1,456,560 Measure U1 4,900,000 4,900,000 4,900,000 4,998,000 5,097,960 5,097,960 Other Taxes 2,631,441 3,331,441 3,331,441 3,331,441 3,331,441 3,331,441 Vehicle In Lieu Taxes 15,926,168 16,626,651 17,208,584 17,810,884 18,434,265 19,079,464 Parking Fines - Regular Collections 4,326,450 4,800,000 4,800,000 4,800,000 4,800,000 4,800,000 Parking Fines - Booting Collections - - - - - -
Moving Violations 132,600 132,600 132,600 135,252 137,957 137,957 Ambulance Fees 3,880,779 5,330,779 5,350,779 3,880,779 3,880,779 3,880,779 Interest Income 6,000,000 7,000,000 7,000,000 7,000,000 7,000,000 7,000,000 Franchise Fees 1,613,283 1,720,056 1,720,056 1,720,056 1,720,056 1,720,056 Other Revenues 6,729,977 7,529,977 7,529,977 7,529,977 7,529,977 7,529,977 Indirect cost reimbursements 5,490,000 5,990,000 5,990,000 5,990,000 5,990,000 5,990,000 Transfers 17,096,148 17,096,148 21,023,924 4,472,621 4,562,074 4,562,074

Total Undesignated Revenues 242,188,272 256,399,265 261,679,074 248,705,755 254,056,056 258,400,279

Attachment 4

Designated Revenues
Prop. Transfer Taxes for capital improvements 16,462,172 16,462,172 12,962,172 13,541,415 13,541,415 14,132,244 Total Designated Revenues 16,462,172 16,462,172 12,962,172 13,541,415 13,541,415 14,132,244

TOTAL REVENUES AND TRANSFERS 258,650,444 272,861,437 274,641,246 262,247,170 267,597,471 272,532,523 Property Taxes
Given the c ontinued hig
h collection rate, and the resilience of property values in the City, as well as a large volume of recent property sales (which bring assessed values to market value), we are projecting that annual growth will be approximately 5.5% over the next several years. The persistence of strong growth of property valuations in recent years, as well as the spike in current year sales (which bring properties assessed valuations to market value), have caused staff to increase the projected growth rate from the 3.5% that we have used in prior long-term projections.

Sales Taxes
The immense effects of COVID-19 on sales tax revenue in FY 2021 were largely reversed in FY 2022, with revenue levels almost back to FY 2019 levels, and staff now project growth to level off to approximately 4% in FY 2024.

There is still some potential risk that an overall slowdown in underlying economic recovery will be reflected in reduced growth in consumer spending and sales tax collections.

Business License Taxes
We are projecting a 5% growth in Business License Tax revenue from heavily impacted FY 2021 levels, as economic activity recovers from the recession caused by the pandemic. Long -term projections will be adjusted as the post - pandemic economic environment becomes clearer. 2023 business license returns (for 2022 gross receipts) are just now being received, so we will know more about how revenues are trending once they are processed over the next month or so.

Transient Occupancy Tax
With recovery of business at the City’s hotels expected to lag behind general economic recovery, and relying on industry guidance regarding predicted occupancy levels, we are currently projecting only 3% annual growth from current revenue levels. Even after taking into consideration the new downtown hotel, we will continue to monitor the major hotels’ projections of future occupancies and will adjust long-term projections as necessary.

Utility Users Tax
We expect UUT revenue to rise marginally from FY 2022 through FY 2024, after increasing slightly in the current year due to rate increases approved by the Public Utilities Commission. Revenues are expected to remain flat after FY 2024 and beyond after all the rate increases have been actualized.

Attachment 4

Transfer Tax
Given the continued strength in property values and in sales activity, we expect Transfer Tax revenues to remain basically flat from FY 2024 – FY 2027. The spike in revenue being seen in FY 2022, and to a lesser extent in FY 2023, is likely due to sales triggered by looming interest rate increases that have been signaled by the Federal Reserve, as well as some pent- up demand from mildly depressed sales during the pandemic. Over the 5 years prior to the pandemic, transfer tax revenues grew 6% per year on average, but interest rate increases will probably negatively impact sales prices and volumes somewhat in the next few years. We also expect revenues from Measure P supplemental tax on high value property transfers to remain basically flat.

CITY OF BERKELEY
Pension and OPEB
Funding Study

Mary Elizabeth Redding, FSA, EA, MAAA
Bianca Lin, FSA, EA, MAAA
Katherine Moore, ASA, MAAA
Wai Man Yam
Foster & Foster, Inc.

February 23, 2023

l:\berkeleycity\opeb\unfunded_liability_study\2022\f&f_berkeleycity_23-02-23_pension_and_opeb_funding_study_v2.docx Agenda
 OPEB
 OPEB Funding Recommendation
 CalPERS
 CalPERS Funding Recommendation
 Summary

February 23, 2023 1

OPEB

February 23, 2023 2
Definitions
 OPEB: Other (than pension) Post Employment Benefits: Medical benefits paid to retirees
 No legal requirement to provide OPEB
 Depends on bargaining agreements
 Unlike pensions, could be eliminated for future hires  Depending on bargaining agreements, could be changed
for current employees/retirees

February 23, 2023 3
Definitions
 Normal Cost (NC): value of benefits earned by employees in the coming year
 Actuarial Accrued Liability (AAL): value of benefits earned to date
 Unfunded Actuarial Accrued Liability (UAL):

AAL minus Assets
 Discount Rate (DR): Rate used to calculate present value of future benefits.
 Based on expected rate of return on invested assets.
 Higher rate => lower present value

February 23, 2023 4

Definitions
 Actuarially Determined Contribution (ADC): Full Prefunding:
 Normal Cost plus
 Amortization (payment over time) of UAAL
 Why is there a UAAL?
 OPEB was not fully funded in the past
 Cost of benefits being earned every year should have been paid since plan inception
 Cost of benefits being earned is currently $8 million/year  Things did not always happen as expected

February 23, 2023 5
OPEB Funding Study Assumptions
 Projection assumptions for study
 Current investment policy: 3%/year future returns
 Full prefunding = normal cost + 20 year amortization of unfunded actuarial accrued liability
 No change in number of active employees
 Note: Investing funds for the long term should provide higher returns, on average, and reduce needed City contributions.

February 23, 2023 6
OPEB Benefit Summary

Miscellaneous Fire PERIP Police
Benefit Up to cap Up to cap Kaiser 2-party
premium
amount
Up to cap
Cap depends on Retirement date,
Bargaining Unit,
Coverage
Retirees after
1997 only
Retirement
before
September
2012
Retirement
after
September
2012
100% of Cap 20 years 25 years N/A 20 years
Cap Increases Kaiser premium
increases, up to

4.5%/Year

4.5% per year No limit Kaiser
premium
increases, up
to 6%/Year
Current Trust
Contributions
% of payroll; in
MOUs
About 1/3 of
recommended
contribution
Retiree
premium
amount
About 8% of
recommended
contribution

February 23, 2023 7
OPEB - Miscellaneous

$-
$1
$2
$3
$4
$5
$6
$7
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
Contribution
(Amounts in millions)
Benefit Payments Current Contribution Amounts
Full Pre-Funding, DR 3%

February 23, 2023 8
OPEB - Miscellaneous

$-
$20
$40
$60
$80
$100
$120
$140
$160
$180
2021 2024 2027 2030 2033 2036 2039 2042 2045 2048 2051
Unfunded Actuarial Accrued Liability
(Amounts in millions)
Current Contribution Amounts Full Pre-Funding, DR 3%

February 23, 2023 9
OPEB – Police

$-
$1
$2
$3
$4
$5
$6
$7
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
Contribution
(Amounts in millions)
Benefit Payments Current Contribution Amounts
Full Pre-Funding, DR 3%

February 23, 2023 10
OPEB – Police
$-
$20
$40
$60
$80
$100
$120
$140
$160
$180
2021 2024 2027 2030 2033 2036 2039 2042 2045 2048 2051
Unfunded Actuarial Accrued Liability
(Amounts in millions)
Current Contribution Amounts Full Pre-Funding, DR 3%

February 23, 2023 11
OPEB – Fire

$-
$1
$2
$3
$4
$5
$6
$7
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
Contribution
(Amounts in millions)
Benefit Payments Current Contribution Amounts
Full Pre-Funding, DR 3%

February 23, 2023 12
OPEB - Fire

$-
$20
$40
$60
$80
$100
$120
$140
$160
$180
2021 2024 2027 2030 2033 2036 2039 2042 2045 2048 2051
Unfunded Actuarial Accrued Liability
(Amounts in millions)
Current Contribution Amounts Full Pre-Funding, DR 3%

February 23, 2023 13
Police Retirement Income Plan (PERIP)

$-
$1
$2
$3
$4
$5
$6
$7
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
Contribution
(Amounts in millions)
Benefit Payments Current Contribution Amounts
Full Pre-Funding, DR 3.0%

February 23, 2023 14
Police Retirement Income Plan (PERIP)
$-
$20
$40
$60
$80
$100
$120
$140
$160
$180
2021 2024 2027 2030 2033 2036 2039 2042 2045 2048 2051
Unfunded Actuarial Accrued Liability
(Amounts in millions)
Current Contribution Amounts Full Pre-Funding, DR 3.0%

February 23, 2023 15
Total of All OPEB Plans
Summary of Recommendation
($ Millions)

Plan
Current
Contribution
Amounts

Increase
Full Pre-
Funding
ADC
(DR 3%)
Miscellaneous $2.5 $2.1 $4.6
Fire 0.9 1.7 2.6
PERIP 2.8 1.4 4.3
Police 0.3 3.5 3.9
Total $6.5 $8.8 $15.3

Recommended contributions are based on 3% expected annual return on trust funds. Higher expected returns would lower needed funding.

February 23, 2023 16
Total of All OPEB Plans

February 23, 2023 17

CalPERS Pensions

February 23, 2023 18
How Did We Get A Large
CalPERS Unfunded Liability?
 Combination of many factors
 Large investment losses in some years combined with
“smoothing” policy delayed funding improvement.
 Enhanced benefits
 Demographics - growing number of retirees
 Updated & strengthened actuarial assumptions
 PEPRA (hires after 1/1/2013) beginning to help contributions  The City has always paid the required CalPERS contributions

February 23, 2023 19
Number of Pension Members

February 23, 2023 20
Pension Funded Status (Combined)

Do as combined Misc. Police, Fire

February 23, 2023 21
Miscellaneous–CalPERS Rates (% Payroll)

0%
10%
20%
30%
40%
50%
60%
Contribution Projection – Percent of Pay
25th Percentile 50th Percentile 75th Percentile

February 23, 2023 22
Fire–CalPERS Rates ($millions)

0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Contribution Projection – Percent of Pay
25th Percentile 50th Percentile 75th Percentile

February 23, 2023 23
Police–CalPERS Rates (% Payroll)

0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
110%
120%
Contribution Projection – Percent of Pay
25th Percentile 50th Percentile 75th Percentile

February 23, 2023 24
Total Projected CalPERS Contributions
($Millions)

72.3 71.1

76.0 78.2

82.9 87.1

95.8 100.2 104.2 104.5 107.4 107.8

41.6 40.6 43.5 44.2 47.1 49.5

54.8 57.3 59.7 59.1 61.0 61.2

20.0 20.3 21.5 22.4 23.6 24.7 26.7 27.9 29.0 29.5 30.2 30.3

10.6 10.2 11.0 11.5 12.2 12.9 14.3 15.0 15.6 15.8 16.2 16.3 $0
$20
$40
$60
$80
$100
$120
22/23 23/24 24/25 25/26 26/27 27/28 28/29 29/30 30/31 31/32 32/33 33/34 Contribution Projection ($Millions)
Miscellaneous & Safety
Total Miscellaneous Safety Police Safety Fire

February 23, 2023 25

CalPERS Funding

February 23, 2023 26
Reduce/Eliminate Unfunded Liability

 The City is already paying the full actuarially determined contribution for its CalPERS plans
 The City’s funded status is similar to other CalPERS public agencies
 Most ideas to pay down the unfunded liability ahead of schedule are not recommended
 Pension Obligation Bond (POB) is interest arbitrage
 Success not guaranteed
 Unlike OPEB, City cannot leave CalPERS
 New hires must be in CalPERS
 Current employees must retain current benefits
 $2.1 Billion payment needed to leave CalPERS

February 23, 2023 27
Irrevocable Supplemental (§115) Trust

 Can only be used to:
 Reimburse City for CalPERS contributions
 Make payments directly to CalPERS
 Investments significantly less restricted than City investment funds
 City’s §115 Trust
 Established in FY2018
 Contributions up to $5.2 Million per year
 Current target contribution $5.5 Million per year
 Balance 6/30/2022 $14.8 Million

February 23, 2023 28
Irrevocable Supplemental (§115) Trust

 Best use: Rate Stabilization
 Add to Trust when possible
 Use Trust funds to help pay CalPERS contributions in highest years or if unexpected increases
 Accumulate funds to eventually pay down UAL
 Target:
 Consider City’s reserve policy?
 Consider potential variability of projected contributions?  In 10 years, 50% chance of contributions $25M larger or smaller than projected
 Consider potential contribution impact of large
investment loss?

February 23, 2023 29
Example: Impact of 1 Year Poor Returns
Difference in Contributions Due to Poor 2022 Investment Return

February 23, 2023 30
Example: Impact of 1 Year Poor Returns
Difference in Contributions Due to Poor 2022 Investment Return (Total City Plans)
($Millions)

Payment Year
Increase
Each Year
Cumulative
Increase
 2024/25 $4.9 $4.9
 2025/26 9.7 14.6
 2026/27 14.5 29.2
 2027/28 19.3 48.5
 2028/29 24.1 72.6

February 23, 2023 31
CalPERS Funding Recommendation
 Prioritize OPEB
 Continue funding CalPERS §115 Trust as possible
 Current $5.5M/year target is ideal
 Recommend trust balance of $25M to $50M
 Higher balance could be used to pay down UAL

February 23, 2023 32

Summary

February 23, 2023 33
Summary of Recommendations
 OPEB Funding (Misc, Police, Fire, “PERIP”)
 Full pre-funding; will increase annual contribution
 Total $8.8 million additional per year
 CalPERS
 Continue targeting $5.5 million per year

February 23, 2023 34

Thank You