Berkeley City Council
May 20, 2025

Tuesday, May 20, 2025 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 E E T I N G O F T H E

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

Tuesday, May 20, 2025
4:30 PM
SCHOOL DISTRICT BOARD ROOM - 1231 ADDISON STREET, BERKELEY, CA 94702 TELECONFERENCE LOCATION - 1027D BANCROFT WAY, BERKELEY CA 94710

ADENA ISHII, MAYOR
Councilmembers:

DISTRICT 1 – RASHI KESARWANI DISTRICT 5 – SHOSHANA O’KEEFE DISTRICT 2 – TERRY TAPLIN DISTRICT 6 – BRENT BLACKABY
DISTRICT 3 – BEN BARTLETT DISTRICT 7 – CECILIA LUNAPARRA DISTRICT 4 – IGOR TREGUB DISTRICT 8 – MARK HUMBERT
This meeting will be conducted in a hybrid model with both in -person attendance and virtual participation. Live captioned broadcasts of Council meetings are available on B -TV (Channel 33) and via internet video stream at http://berkeley.granicus.com/MediaPlayer.php?publish_id=1244. All Council meetings are recorded.

To access the meeting remotely use this URL: https://cityofberkeley-info.zoomgov.com/j/1615868875. To request to speak, use the “raise hand” function in Zoom. To join by phone: Dial 1-669-254-5252 or 1-833-568-8864 (Toll Free) and enter Meeting ID: 161 586 8875.To provide public comment, Press *9 and wait to be recognized by the Chair. To submit a written communication for the public record, email [email protected].

This meeting will be conducted in accordance with the Brown Act, Government Code Section 54953. Any member of the public may attend this meeting, however, if you are feeling sick, please do not attend the meeting in person.

The City Council may take action related to any subject listed on the Agenda.

Pursuant to the City Council Rules of Procedure and State Law, the presiding officer may remove, or cause the removal of, an individual for disrupting the meeting. Prior to removing an individual, the presiding officer shall warn the individual that their behavior is disrupting the meeting and that their failure to cease their behavior may result in their removal. The presiding officer may then remove the individual if they do not promptly cease their disruptive behavior. “Disrupting” means engaging in behavior during a meeting of a legislative body that actually disrupts, disturbs, impedes, or renders infeasible the orderly conduct of the meeting and includes, but is not limited to, a failure to comply with reasonable and lawful regulations adopted by a legislative body, or engaging in behavior that constitutes use of force or a true threat of force.

Government Code Section 84308 (Levine Act) - Parties to a proceeding involving a license, permit, or other entitlement for use are required to disclose if they made contributions over $5 00 within the prior 12 months to any City employee or officer. Parties and participants with a financial interest are prohibited from making more than $500 in contributions to a decisionmaker for the 12 months after the final decision is rendered on the proceeding.

The above contribution disclosures and restrictions do not apply when the proceeding is competitively bid, or involves a personnel or labor contract. For more information, see Government Code Section 84308.

Tuesday, May 20, 2025 AGENDA Page 2

Preliminary Matters
Roll Call:

Action Calendar
The public may comment on each item listed on the agenda for action. 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 during the Action Calendar public comment period on the item
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. If ten or fewer persons are interested in speaking on an individual agenda item, each speaker 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 the ir 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.

The Presiding Officer may open and close an additional comment period for Action items on this agenda (excluding any public hearings, appeals, and/or quasi-judicial matters), at the start of the Action Calendar.

Those who speak on an item during this comment period may not speak a second time when the item is taken up by Council.

Action Calendar – Public Hearings
Staff shall introduce the public hearing item and present their comments. For certain hearings, this is followed by five-minute presentations each by first the appellant and then the applicant. The Presiding Officer will request that persons wishing to speak line up at the podium, or use the "raise hand" function in Zoom, to be recognized and to determine the number of persons interested in speaking at that time.

If ten or fewer persons are interested in speaking during a public hearing, each speaker 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 e ach side to present their issue.

When applicable, each member of the City Council shall verbally disclose all ex parte contacts concerning the subject of the hearing. Councilmembers shall also submit a report of such contacts in writing prior to the commencement of the hearing. Written reports shall be available for public review in the office of the City Clerk.

Action Calendar – Public Hearings

Tuesday, May 20, 2025 AGENDA Page 3

1. Authorizing the Execution, Sale, and Delivery of Lease Revenue Notes for the Fire Administration and Training Project
From: City Manager
Recommendation: Conduct a public hearing and upon conclusion adopt a Resolution authorizing the issuance and sale by the Berkeley Joint Powers Financing Authority of federally taxable Lease Revenue Notes in the aggregate principal amount of not to exceed $11,000,000 to provide financing for the construction of improvements to property used for fire administration and training, and approving related documents and actions.

Financial Implications: See report
Contact: Henry Oyekanmi, Finance, (510) 981-7300

Action Calendar – New Business

2. Issuance of $35,000,000 General Obligation Bonds for Measure O – Affordable Housing
From: City Manager
Recommendation: Adopt a Resolution authorizing the issuance and sale of general obligation bonds to finance acquisition and improvement of affordable housing and authorizing actions related thereto.

Financial Implications: See report
Contact: Henry Oyekanmi, Finance, (510) 981-7300

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, forthwith.

IN WITNESS WHEREOF, I have hereunto set my hand and caused the official seal of the City of Berkeley to be affixed on this 15th day of May, 2025.

/s/ Adena Ishii, Mayor
Public Notice – this Proclamation serves as the official agenda for this meeting.

ATTEST:

Date: May 15, 2025
Mark Numainville, City Clerk

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 mailed. 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.

Tuesday, May 20, 2025 AGENDA Page 4
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 electronic records, which are accessible through the City’s website. Please note: e-mail addresses, names, addresses, and other contact information are not required, but if included in any communication to the City Council, will become part of the public record. If you do not want your e-mail address or any other contact information to be made public, you may deliver communications via U.S. Postal Service 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, and through the City's online records portal:
https://records.cityofberkeley.info/.

Agendas, agenda reports, and revised/supplemental material may be accessed via the online agenda for this meeting at:
https://berkeleyca.gov/your-government/city-council/city-council-agendas and may be accessed 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 [email protected], (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 to be returned before the end of the meeting.

PUBLIC HEARING
May 20, 2025
To: Honorable Mayor and Members of the City Council
From: Paul Buddenhagen, City Manager
Submitted by: Henry Oyekanmi, Director, Finance
Subject: Authorizing the Execution, Sale, and Delivery of Lease Revenue Notes for the Fire Administration and Training Project

RECOMMENDATION
Conduct a public hearing and upon conclusion adopt a Resolution authorizing the issuance and sale by the Berkeley Joint Powers Financing Authority of federally taxable Lease Revenue Notes in the aggregate principal amount of not to exceed $11,000,000 to provide financing for the construction of improvements to property used for fire administration and training, and approving related documents and actions.

FISCAL IMPACTS OF RECOMMENDATION
Authorization of the Resolution will provide the City with sufficient funds, along with existing City funds, to complete improvements to six buildings that the City currently leases for fire administration and training. The total cost of the improvements is estimated to be between $15 million and $17 million. The City plans to finance $10 million of the cost with the federally taxable Lease Revenue Notes (the “Notes”) to be issued by the Berkeley Joint Powers Financing Authority (the “Authority”), and use cash for the balance of the improvement costs. The Notes will be structured as a four-year note with interest payments only until final maturity on October 1, 2029, when the full principal amount will be paid. During the interest only period, from FY 2025-26 to FY 2028-29, debt service payments are approximately $586,000 per year. The Notes will not have capitalized interest or a debt service reserve fund. The interest on the Notes will be subject to federal income taxation because of the initial private ownership of the financed improvements by the property’s landlord. The City has an option to acquire the properties subject to the leases beginning upon completion of the improvements and continuing through December 31, 2028, and the City expects to refinance the Notes in connection with the City’s acquisition of the property on a federally tax-exempt basis.

The Notes are payable from lease payments made by the City to the Authority from any available funds, pursuant to a lease agreement involving various City assets. The City intends to internally budget a portion of Measure FF – Public Safety tax revenues as the funding source for the lease payments payable to the Authority. The leased assets proposed for the Notes are the Fire Station #2 (2035 Berkeley Way) and Fire Station #5 (2680 Shattuck Ave).

May 20, 2025

CURRENT SITUATION AND ITS EFFECTS
The City wishes to finance the acquisition and construction of certain improvements in six buildings located at 1250-1288 9th Street, 1226 9th Street, 1221 8th Street, 1223 8th Street, 1225 8th Street and 1249 8th Street, Berkeley, California 94710 (the “Fire Property”), which the City currently leases for fire administration and training. The total cost of the improvements is estimated to be between $15 million and $17 million. The City plans to finance $10 million of the total cost with these Notes and use cash for the balance of the improvement costs.

The City also has an option to acquire the Fire Property under its existing lease. The City has until December 31, 2028, to exercise its option to purchase the Fire Property, otherwise the City will continue in a 20-year lease. The four-year term and redemption provisions of the Notes is structured to align with potential future financing before December 31, 2028, during which a portion of the future financing would be used to purchase the Fire Property, and a portion would be used to pay off the Notes.

BACKGROUND
The City currently leases the Fire Property under a certain Standard Multi-Tenant Office Lease - Gross dated as of June 27, 2024, by and between Smith & Walters, Inc. and the City. Substantial improvements to the Fire Property need to occur, including demolition, seismic construction, wall construction, HVAC, and other capital improvements. The cost of these improvements is estimated to be between $15 million and $17 million. The City will pay for these improvements using a combination of cash and proceeds from the Notes. The proceeds from the Notes are needed by the City by the end of June 2025.

RATIONALE FOR RECOMMENDATION
There are a few primary reasons for issuing the Notes in the current structure:
 Issuing the Notes will provide the City with the necessary funds to pay for the improvements by the end of June 2025.
 The Notes will need to be issued on a federally taxable basis because the Fire Property is currently owned by the landlord.
 The four-year term and redemption provision of the Notes is structured to align with a potential future financing before December 31, 2028, during which a portion of the future financing would be used to purchase the Fire Property, and a portion would be used to pay off the Notes.

The Indenture of Trust and the Lease Agreement include covenants to initiate a refinancing of the Notes beginning on October 1, 2029 if a refinancing has not already occurred.

May 20, 2025

PRELIMINARY OFFICIAL STATEMENT
The attached Preliminary Official Statement has been reviewed and approved for transmittal to the City Council by the City’s financing team. The distribution of the Preliminary Official Statement by the City is subject to federal securities laws, including the Securities Act of 1933 and the Securities Exchange Act of 1934. These laws require the Preliminary Official Statement to include all facts that would be material to an investor in the proposed bonds. Material information is information that there is a substantial likelihood would have actual significance in the deliberations of the reasonable investor when deciding whether to buy or sell the bonds. If the City Council concludes that the Preliminary Official Statement includes all facts that would be material to an investor in the bonds, it must adopt a resolution that authorizes staff to execute a certificate to the effect that the Preliminary Official Statement has been “deemed final.” The Securities and Exchange Commission (the “SEC”), the agency with regulatory authority over the City’s compliance with the federal securities laws, has issued guidance as to the duties of the City Council with respect to its approval of the Preliminary Official Statement. In its “Report of Investigation in the Matter of County of Orange, California as it Relates to the Conduct of the Members of the Board of Supervisors” (Release No. 36761 / January 24, 1996) (the “Release”), the SEC indicated that, if a member of the City Council has knowledge of any facts or circumstances that an investor would want to know about prior to investing in the bonds, whether relating to their repayment, tax- exempt status, undisclosed conflicts of interest with interested parties, or otherwise, he or she should endeavor to discover whether such facts are adequately disclosed in the Preliminary Official Statement. In the Release, the SEC indicated that the steps that a member of the City Council could take include becoming familiar with the Preliminary Official Statement and questioning staff and consultants about the disclosure of such facts.

The Notes are payable from lease payments made by the City from any available funds. “SECURITY FOR THE NOTES.” The City has included financial information and operating data related to the City’s ability to pay the lease payments in Appendix A to the Preliminary Official Statement: “FINANCIAL, ECONOMIC AND DEMOGRAPHIC INFORMATION FOR THE CITY OF BERKELEY AND ALAMEDA COUNTY.” The City’s Annual Comprehensive Financial Report for fiscal year 2023-24 is included in Appendix C to the Preliminary Official Statement.

In addition, the City includes information about material risks to purchasers of the Notes in “NOTE OWNERS’ RISKS,” and information about relevant constitutional and statutory limitations on the City’s ability to collect revenues and pay the lease payments in the section of the Preliminary Official Statement captioned “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS.”

ALTERNATIVE ACTIONS CONSIDERED
None

May 20, 2025

CONTACT PERSON
Henry Oyekanmi, Director, Finance Department, 510-981-7326 Attachments:
1: Resolution – A Resolution of the City Council of the City of Berkeley Approving the Issuance and Sale of Lease Revenue Notes in the Aggregate Principal Amount of Not to Exceed $11,000,000 by the Berkeley Joint Powers Financing Authority to Provide Financing for the Construction of Improvements to Property Used for Fire Administration and Training, and Approving Related Documents and Actions. 2: Draft Preliminary Official Statement
3: Draft Indenture of Trust
4: Draft Lease Agreement
5: Draft Site Lease
6: Draft Assignment Agreement
7: Draft Official Notice of Sale
8: Notice of Public Hearing
9: Approving Legal Opinion

ACTION CALENDAR
May 20, 2025
RESOLUTION NO. ___

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BERKELEY APPROVING

THE ISSUANCE AND SALE OF LEASE REVENUE NOTES IN THE AGGREGATE PRINCIPAL AMOUNT OF NOT TO EXCEED $11,000,000 BY THE BERKELEY JOINT

POWERS FINANCING AUTHORITY TO PROVIDE FINANCING FOR THE

CONSTRUCTION OF IMPROVEMENTS TO PROPERTY USED FOR FIRE

ADMINISTRATION AND TRAINING, AND APPROVING RELATED DOCUMENTS AND

ACTIONS
WHEREAS, the City of Berkeley (the “City”) wishes to finance the acquisition and construction of certain improvements to the buildings (the “Project”) located at 1250-1288 9th Street, 1226 9 th Street, 1221 8 th Street, 1223 8 th Street, 1225 8 th Street and 1249 8 th Street, Berkeley, California 94710 (the “Fire Property”), which the City uses for fire administration and training; and
WHEREAS the City currently leases the Fire Property under that certain Standard Multi- Tenant Office Lease - Gross dated as of June 27, 2024 (as amended and assigned from time to time, the “Existing Lease”), by and between Smith & Walters, Inc., a California corporation (the “Lessor”), and the City, and has an option to acquire the Fire Property under the Existing Lease; and
WHEREAS, the City and the California Municipal Finance Authority are parties to an Amended and Restated Joint Exercise of Powers Agreement dated as of October 2, 2012, pursuant to which there has been established under the Joint Exercise of Powers Act (Government Code §6500 et seq.) the Berkeley Joint Powers Financing Authority (the “Authority”) as a joint powers authority under the laws of the State of California for the purpose, among others, of assisting the financing and refinancing of certain public programs and projects of the City; and
WHEREAS, the City has proposed to lease to the Authority the land and improvements constituting two City fire stations (the “Leased Property”) under a Site Lease (the “Site Lease”), in consideration of the payment by the Authority of an upfront rental payment (the “Site Lease Payment”) that is sufficient to provide funds to finance the Project; and WHEREAS, in order to raise funds to pay the Site Lease Payment, the Authority proposes to issue and sell its Berkeley Joint Powers Financing Authority 2025 Lease Revenue Notes (Fire Administration and Training Project) (Federally Taxable) (the “Notes”) under Article 4 of the Joint Exercise of Powers Act (the “Bond Law”); and WHEREAS, in order to secure the payments of principal of and interest on the Notes, and any bonds, notes or other obligations issued by the Authority to refund the Notes, the Authority proposes to lease the Leased Property back to the City under a Lease Agreement (the “Lease Agreement”), under which the City is obligated to pay semiannual

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lease payments (the “Lease Payments”) as rental for the Leased Property, and, pursuant to an Assignment Agreement (the “Assignment Agreement”), the Authority will assign substantially all of its rights under the Lease Agreement to The Bank of New York Mellon Trust Company, N.A., as trustee for the Notes (the “Trustee”); and WHEREAS, there has been submitted to the City Council a form of preliminary Official Statement in connection with the marketing of the Notes, and the City Council, with the aid of its staff, has reviewed the preliminary Official Statement to assure proper disclosure of all material facts relating to the Notes that are in the personal knowledge of the members of the City Council and the City staff; and
WHEREAS, the Authority proposes to sell the Notes pursuant to a competitive bidding process; and
WHEREAS, in order to assist the purchaser of the Notes (the “Underwriter”) in complying with Rule 15c2-12 of the Securities and Exchange Commission, the City will undertake certain continuing disclosure obligations with respect to the Notes pursuant to a continuing disclosure certificate to be executed by the City (the "Continuing Disclosure Certificate"), the form of which is on file with the City Clerk; and WHEREAS, in order to comply with Government Code Section 5852.1, certain information relating to the Notes is set forth in Appendix A attached to this Resolution, and such information is hereby disclosed and made public; and WHEREAS, as a condition precedent to the issuance of the Notes, Section 6586.5 of the California Government Code requires that the City approve the Authority’s issuance of the Notes and make certain findings, and Section 6586.5 further requires that the City give the approval and make the findings only after holding a noticed public hearing; and WHEREAS, as required by Section 6586.5, the City has caused publication of a notice of a public hearing once at least five days prior to the hearing in a newspaper of general circulation in the City; and
WHEREAS, on the date hereof, the City Council held a public hearing at which all interested persons were provided the opportunity to speak on the subject of the proposed issuance of Notes by the Authority to provide financing for the Project; and WHEREAS, the City Council wishes at this time to approve all proceedings to which it is a party relating to the issuance and sale of the Notes; NOW THEREFORE, BE IT RESOLVED by the Council as follows:

SECTION 1. Recitals. The City Council hereby finds that the recitals are true and correct.

SECTION 2. Findings. Pursuant to the Bond Law, and based on the information provided to the City Council by City staff and consultants, all as set forth in the proceedings and

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documents providing for the issuance and delivery of the Notes, the City Council hereby finds and determines that the issuance of the Notes and the transactions related thereto will result in significant public benefits within the contemplation of Section 6586 of the Bond Law, namely, demonstrable savings in note preparation, note underwriting and note issuance costs.

SECTION 3. Issuance of Notes. The City Council hereby approves the issuance of the Notes by the Authority under the Bond Law in the maximum principal amount set forth in Section 5, for the purpose of providing funds to finance the Project.

SECTION 4. Approval of Related Financing Agreements. The City Council hereby approves each of the following agreements required for the issuance and sale of the Notes, in substantially the respective forms on file with the City Clerk together with any changes therein or additions thereto deemed advisable by the Mayor, the City Manager, the Deputy City Manager or the Finance Director (each, an “Authorized Officer”); execution of the agreements by the City Manager (or the City Manager’s designee) shall be conclusive evidence of the approval of any such changes or additions. The City Manager (or the City Manager’s designee), acting alone, is hereby authorized and directed for and on behalf of the City to execute, and the City Clerk is hereby authorized and directed to attest, if applicable, the final form of each such agreement, as follows:
 Site Lease, between the City as lessor and the Authority as lessee, under which the City leases the Leased Property to the Authority in consideration of the payment of an amount which will be applied by the City to finance the Project.
 Lease Agreement, between the Authority as lessor and the City as lessee, under which the Authority leases the Leased Property back to the City and the City agrees to pay semiannual lease payments which are sufficient to provide revenues with which to pay interest on the Notes when due and the debt service coming due and payable on any bonds, notes or other obligations issued by the Authority to refinance the Notes.  Continuing Disclosure Certificate, to be executed by the City for the purpose of providing continuing disclosure to owners of the Notes.

SECTION 5. Method of Sale of Notes. The City Council hereby approves the competitive sale of the Notes by the Authority. The Notes shall be sold in accordance with the Notice or Sale in substantially the form approved by the Authority and in accordance with the resolution adopted by the Authority Commission with respect to the issuance and sale of the Notes, provided that the aggregate principal amount of the Notes may not exceed $11,000,000, the true interest cost may not exceed 8.00% and the aggregate price of the Notes may not be less than 98%.

In order to provide greater flexibility for the sale of the Notes if staff determines that it is not in the best interests of the City for the Notes to be sold in a competitive sale, the City

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Council further hereby authorizes an Authorized Officer to direct the City’s municipal advisor, NHA Advisors, LLC, to contact a limited number of underwriters and negotiate the sale of the Notes (including through a private placement). An Authorized Officer is hereby authorized to cause Jones Hall, A Professional Law Corporation, as bond counsel to the City, to prepare and to execute and deliver a Note Purchase Agreement in connection with a negotiated sale of the Notes in such form (including designation of the underwriter) as an Authorized Officer shall approve, such approval to be conclusively evidenced by the execution and delivery thereof by the City Manager (or the City Manager’s designee).

SECTION 6. Official Statement. The City Council hereby approves the preliminary Official Statement describing the Notes in substantially the form on file with the City Clerk.

An Authorized Officer is hereby authorized and directed to approve any changes in or additions to the preliminary Official Statement and to execute an appropriate certificate stating the Authorized Officer’s determination that the preliminary Official Statement (together with any changes therein or additions thereto) has been deemed nearly final within the meaning of Rule 15c2-12 of the Securities Exchange Act of 1934. Distribution of the preliminary Official Statement by the underwriter of the Notes is hereby approved.

An Authorized Officer is hereby authorized and directed to approve any changes in or additions to a final form of said Official Statement, and the execution thereof by the Authorized Officer shall be conclusive evidence of approval of any such changes and additions. The City Council hereby authorizes the distribution of the final Official Statement by the underwriter of the Notes. The final Official Statement shall be executed on behalf of the City by an Authorized Officer.

SECTION 7. California Environmental Quality Act (CEQA). Use Permit #ZP2024-0136 for the Project was granted by the Zoning Adjustments Board and took effect on January 21, 2025. The Project was determined to be exempt from CEQA (Public Resources Code Section 21000 et seq.) pursuant to the categorical exemption in Section 15301 (Existing Facilities) of the CEQA Guidelines (California Code of Regulations, Title 14, Section 15000 et seq.) because the Project involves demolition of two accessory structures and conversion of existing residential buildings to nonresidential use, and none of the exceptions to the CEQA categorical exemptions in CEQA Guidelines Section 15300.2 apply. A Notice of Exemption was filed with the County Clerk on January 23, 2025. No further environmental review is required because there have been no changes to the Project that involve the application of the categorical exemption in Section 15301 or the exceptions from the CEQA categorical exemptions in Section 15300.2.

SECTION 8. Official Actions. The City Manager (or the City Manager’s designee) is authorized and directed on behalf of the City to make any and all leases, assignments, certificates, requisitions, agreements, notices, consents, instruments of conveyance or termination, warrants and other documents, which they or any of them deem necessary or appropriate in order to consummate any of the transactions contemplated by the agreements and documents approved under this Resolution, including any agreements required to purchase a debt service reserve fund insurance policy or a municipal bond

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insurance policy. An Authorized Officer may revise the identity of the Leased Property as necessary in order to accomplish the purposes of this Resolution. Whenever in this Resolution any officer of the City is authorized to execute or countersign any document or take any action, such execution, countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf in the case such officer is absent or unavailable.

SECTION 9. Approval of Professional Services. The City Council hereby appoints the firm of Jones Hall, A Professional Law Corporation, as bond counsel and disclosure counsel to the City in connection with the issuance of the Notes, and the City Attorney is authorized to execute an agreement with said firm in substantially the form of the agreement on file with the City Clerk.

The City Council hereby appoints the firm of NHA Advisors, LLC, as municipal advisor to the City in connection with the issuance of the Notes, and the City Manager (or the City Manager’s designee) is authorized to execute an agreement with said firm in substantially the form of the agreement on file with the City Clerk.

SECTION 10. Effective Date. This Resolution shall take effect immediately upon its passage and adoption.

The foregoing Resolution was adopted by the Berkeley City Council on May 20, 2025 by the following vote:

Ayes:

Noes:

Absent:
_______________________
Adena Ishii, Mayor
Attest: ______________________
Mark Numainville, City Clerk

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APPENDIX A

REQUIRED DISCLOSURES PURSUANT TO
GOVERNMENT CODE SECTION 5852.1
The following estimates have been provided by NHA Advisors, LLC, the City’s municipal advisor, as of April 16, 2025:

1. Estimated True Interest Cost of the Notes: 4.80%

2. Estimated finance charge of the Notes, being the sum of all fees and charges paid to third parties, in the amount of approximately $265,046. Such amount consists of costs of issuing the Notes in the amount of approximately $216,196 together with estimated underwriter’s compensation in the amount of $48,850.

3. Estimated proceeds of the Notes expected to be received by or on behalf of the City for deposit to the Project Fund, net of proceeds for Costs of Issuance in (2) above to paid, capitalized interest and reserves (if any) from the principal amount of the Notes: $10,000,000.

4. Estimated Total Payment Amount for the Notes, being the sum of all debt service to be paid on the Notes to final maturity: $12,284,147.

*All amounts and percentages are estimates, and are made in good faith by the City based on information available as of the date of adoption of this Resolution. Estimates include certain assumptions regarding federally taxable interest rates available in the bond market at the time of pricing the Notes.
1914972.3

PRELIMINARY OFFICIAL STATEMENT DATED ________, 2025
NEW ISSUE - FULL BOOK-ENTRY RATING: S&P: “___”
See “RATING.”
Bond Counsel observes that interest on the Notes (as defined herein) is not intended to be excluded from gross income for federal income tax purposes. In the opinion of Bond Counsel, such interest is exempt from California personal income taxes. See “TAX MATTERS.” $_________*

BERKELEY JOINT POWERS FINANCING AUTHORITY
2025 LEASE REVENUE NOTES
(Fire Administration and Training Project)
(Federally Taxable)
Dated: Date of Delivery Due: October 1, as shown on inside cover Authority for Issuance. The lease revenue notes captioned above (the “Notes”) are being issued by the Berkeley Joint Powers Financing Authority (the “Authority”) under a resolution adopted by the Board of Directors of the Authority on May 20, 2025, and an Indenture of Trust dated as of June 1, 2025 (the “Indenture”), by and between the Authority and The Bank of New York Mellon Trust Company, N.A. as trustee (the “Trustee”). See “THE NOTES – Authority for Issuance.” Purpose. The Notes are being issued primarily to finance the construction of certain tenant improvements of the City of Berkeley (the “City”), within the fire administration and training building and such other improvements that may be identified from time to time by the City . In addition, the proceeds of the Notes will be used to pay the costs of issuing the Notes. See “FINANCING PLAN.” Security. Under the Indenture, the Notes are payable from and secured by a first pledge of and lien on “Revenues” (as defined in this Official Statement) received by the Authority under the Lease Agreement, dated as of June 1, 2025 , by and between the Authority, as lessor, and the City, as lessee (the “Lease” ), consisting primarily of lease payments (the “Lease Payments ”) made by the City under the Lease with respect to the lease of certain real property, as further described in this Official Statement . The Notes are also secured by certain funds on deposit under the Indenture. Neither the Authority nor the City is establishing a reserve fund for the Notes. See “SECURITY FOR THE NOTES.” Covenant to Refinance the Notes. The Lease Payments are payable in an amount sufficient to provide for payment of interest on the Notes when due, but not to provide for payment of the principal of the Notes at maturity. In order to provide for the payment of the Notes at maturity, the Authority has covenanted to, no later than April 1, 2029, institute proceedings to refinance the Notes at maturity. See “SECURITY FOR THE NOTES – Covenant to Issue Refunding Obligations.” Book-Entry Only. The Notes will be issued in book -entry form only, and will be initially issued and registered in the name of Cede & Co. as nominee of The Depository Trust Company, New York, New York (“DTC”) . The Notes are issuable as fully registered securities in denominations of $5,000 or any integral multiple of $5,000. Purchasers of the Notes (the “Beneficial Owners”) will not receive physical certificates representing their interest in the Notes. See “THE NOTES” and “APPENDIX F – DTC AND THE BOOK-ENTRY ONLY SYSTEM.” Payments. Interest on the Notes accrues from the date of delivery and is payable semiannually on April 1 and October 1 of each year, commencing April 1, 2026. Payments of principal and interest on the Notes will be paid by the Trustee to DTC for subsequent disbursement to DTC Participants, which will remit such payments to the Beneficial Owners of the Notes . See “THE NOTES – General Provisions.” Redemption. The Notes are subject to optional redemption and special mandatory redemption from insurance or condemnation proceeds prior to maturity. See “THE Notes – Redemption.”

NONE OF THE NOTES, THE OBLIGATION OF THE AUTHORITY TO PAY PRINCIPAL OF OR INTEREST THEREON, OR THE

OBLIGATION OF THE CITY TO MAKE THE LEASE PAYMENTS CONSTITUTE A DEBT OR A LIABILITY OF THE AUTHORITY, THE CITY,

THE STATE OF CALIFORNIA OR ANY OF ITS POLITICAL SUBDIVISIONS WITHIN THE MEANING OF ANY CONSTITUTIONAL LIMITATION ON INDEBTEDNESS, OR A PLEDGE OF THE FULL FAITH AND CREDIT OF THE CITY . THE NOTES ARE SECURED SOLELY BY THE PLEDGE OF REVENUES AND CERTAIN FUNDS HELD UNDER THE INDENTURE . THE NOTES ARE NOT SECURED BY A PLEDGE OF THE TAXING POWER OF THE CITY.

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

MATURITY SCHEDULE
(see inside cover)
Cover Page. This cover page contains certain information for general reference only. It is not a summary of all the provisions of the Notes.

Prospective investors must read the entire Official Statement to obtain information essential to making an informed investmen t decision.

The Notes will be sold and awarded pursuant to a competitive bidding process to be held on June 3, 2025, as set forth in the Official Notice of Sale. The Notes are offered when, as and if issued and received by the Purchaser, and subject to the approval as to their legality by Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel . Certain legal matters will also be passed upon for the Authority and the City by Jones Hall, A Professional Law Corporation, as Disclosure Counsel . Certain legal matters will be passed upon for the City by the City Attorney. It is anticipated that the Notes will be delivered in book-entry form through the facilities of DTC on or about June 17, 2025.

The date of this Official Statement is: ______________, 2025 * Preliminary; subject to change.

This Preliminary Official Statement and the information contained herein are subject to completion or amendment . These securities may not be sold nor may offers to buy be accepted prior to the time the Official Statement is delivered in final form . Under no circumstances will this Preliminary Official Statement constitute an offer to sell or a solicitation of an offer to buy nor will there be any sale of these securities in any jurisdiction in which such offer solicitation or sale would be unlawful .

Agenda VersionPage 11 of 219

BERKELEY JOINT PUBLIC FINANCING AUTHORITY
2025 Lease Revenue Notes
(Fire Administration and Training Project)
(Federally Taxable)

MATURITY SCHEDULE*
(Base CUSIP:† _______)

$__________ Lease Revenue Notes

Maturity Date Principal Interest
(October 1) Amount Rate Yield Price CUSIP†
2026
2027
2028
2029

* Preliminary; subject to change .
† CUSIPÒ is a registered trademark of the American Bankers Association. CUSIP data herein is provided by CUSIP Global Services, which is owned by FactSet Research Systems Inc. (“FactSet”). FactSet will manage the CUSIP system on behalf of the American Bankers Association. Neither the City nor the Underwriter takes any responsibility for the accuracy of the CUSIP data .

BERKELEY JOINT PUBLIC FINANCING AUTHORITY

CITY OF BERKELEY
(ALAMEDA COUNTY, CALIFORNIA)

BOARD OF DIRECTORS OF THE AUTHORITY

AND MEMBERS OF THE CITY COUNCIL

Adena Ishii, Mayor
Rashi Kesarwani, Councilmember District 1
Terry Taplin, Councilmember District 2
Ben Bartlett, Councilmember District 3
Igor Tregub, Councilmember District 4
Shoshana O’Keefe, Councilmember District 5
Brent Blackaby, Councilmember District 6
Cecilia Lunaparra, Councilmember District 7
Mark Humbert, Councilmember District 8

CITY OFFICIALS AND STAFF

Paul Buddenhagen
City Manager

Henry Oyekanmi
Director of Finance
David White
Deputy City Manager

Farimah Brown
City Attorney
Jenny Wong
City Auditor

PROFESSIONAL SERVICES

B

OND AND DISCLOSURE COUNSEL

Jones Hall, A Professional Law Corporation
San Francisco, California

MUNICIPAL ADVISOR

NHA Advisors, LLC
San Rafael, California

Trustee

The Bank of New York Mellon Trust Company, N.A.

Los Angeles, California

GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT

Use of Official Statement . This Official Statement is submitted in connection with the sale of the Notes referred to herein and may not be reproduced or used, in whole or in part, for any other purpose . This Official Statement is not a contract between any note owner and the Authority or the Purchaser.

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

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

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

Estimates and Forecasts. When used in this Official Statement and in any continuing disclosure by the Authority in any press release and in any oral statement made with the approval of an authorized officer of the City or the Authority or any other entity described or referenced herein, the words or phrases “will likely result,” “are expected to”, “will continue”, “is anticipated”, “estimate”, “project” , “forecast”, “expect”, “intend” and similar expressions identify “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 . Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward -looking statements . Any forecast is subject to such uncertainties. Inevitably, some assumptions used to develop the forecasts will not be realized and unanticipated events and circumstances may occur. Therefore, there are likely to be differences between forecasts and actual results, and those differences may be material. The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, give rise to any implication that there has been no change in the affairs of the City, Authority or any other entity described or referenced herein since the date hereof.

Involvement of Purchaser. The following statement has been included in this Official Statement on behalf of the Purchaser of the Notes: The Purchaser has reviewed the information in this Official Statement in accordance with, and as a part of, its responsibilities to investors under the Federal Securities Laws as applied to the facts and circumstances of this transaction, but the Purchaser does not guarantee the accuracy or completeness of such information.

Stabilization of and Changes to Offering Prices . The Purchaser may overallot or take other steps that stabilize or maintain the market prices of the Notes at levels above that which might otherwise prevail in the open market. If commenced, the Purchaser may discontinue such market stabilization at any time. The Purchaser may offer and sell the Notes to certain securities dealers, dealer banks and banks acting as agent at prices lower than the public offering prices stated on the inside cover page of this Official Statement, and those public offering prices may be changed from time to time by the Purchaser.

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

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

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

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

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TABLE OF CONTENTS

INTRODUCTION ............................................... 1 FINANCING PLAN ............................................. 4 The Project ..................................................... 4 Estimated Sources and Uses of Funds .......... 4
THE LEASED PROPERTY ................................ 5
Description and Location ................................ 5 Modification of Leased Property ..................... 5 Substitution .................................................... 5 Release of Leased Property ........................... 6 THE NOTES ...................................................... 7 Authority for Issuance .................................... 7 General Provisions ......................................... 7 Redemption .................................................... 8 Book-Entry Only System .............................. 10 Transfer, Registration and Exchange ........... 10
DEBT SERVICE SCHEDULE .......................... 11
SECURITY FOR THE NOTES ......................... 12
Revenues; Pledge of Revenues ................... 12
Allocation of Revenues by Trustee;
Application of Funds ................................ 13 Lease Payments; Covenant to Appropriate . 14
Limited Obligation ........................................ 15 Abatement .................................................... 15 No Reserve Fund ......................................... 16 Property Insurance ....................................... 16 THE AUTHORITY ............................................ 17

CONSTITUTIONAL AND STATUTORY

LIMITATIONS ON TAXES AND
APPROPRIATIONS ..................................... 18 Article XIIIA of the State Constitution ........... 18
Legislation Implementing Article XIIIA .......... 18
Article XIIIB of the State Constitution ........... 19
Articles XIIIC and XIIID of the State
Constitution .............................................. 19 Proposition 62 .............................................. 20 Proposition 1A; Proposition 22 ..................... 21 Possible Future Initiatives ............................ 21 NOTE OWNERS’ RISKS ................................. 22 No Pledge of Taxes ...................................... 22 Limitations on Taxes and Fees .................... 22
Additional Obligations of the City ................ 23
Default ......................................................... 23 Abatement ................................................... 24 No Debt Service Reserve Fund ................... 24
Property Taxes ............................................ 24 Natural Calamities ....................................... 26 Public Health Emergencies ......................... 27
Limitations on Remedies Available to Note
Owners .................................................... 27 Cyber Security ............................................. 28 Secondary Market for Notes ........................ 28
TAX MATTERS ............................................... 28 CERTAIN LEGAL MATTERS .......................... 29
LITIGATION .................................................... 29 RATING ........................................................... 29 CONTINUING DISCLOSURE ......................... 30
MUNICIPAL ADVISOR .................................... 30 COMPETITIVE SALE OF NOTES .................. 31
PROFESSIONAL SERVICES ......................... 31
EXECUTION ................................................... 32 APPENDIX A ..................................................... 1

FINANCIAL, ECONOMIC AND
DEMOGRAPHIC INFORMATION ................. 1

FOR THE CITY OF BERKELEY AND
ALAMEDA COUNTY ..................................... 1
Accounting Policies and Financial
Reporting ................................................... 2 Comparative Financial Statements ............... 3
Five-Year Forecast ........................................ 7 Ad Valorem Property Taxes ........................ 11
Other General Fund Revenues and
Transfers ................................................. 18 Retirement Programs .................................. 23 Labor Relations ........................................... 29 Risk Management ....................................... 29 Employment ................................................ 31 ALAMEDA COUNTY ....................................... 33

APPENDIX A - FINANCIAL, ECONOMIC AND DEMOGRAPHIC INFORMATION FOR THE CITY OF

BERKELEY AND ALAMEDA COUNTY

APPENDIX B - SUMMARY OF PRINCIPAL LEGAL DOCUMENTS
APPENDIX C - ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR YEAR ENDED JUNE 30, 2024

APPENDIX D - PROPOSED FORM OF OPINION OF BOND COUNSEL

APPENDIX E - FORM OF CONTINUING DISCLOSURE CERTIFICATE

APPENDIX F - DTC AND THE BOOK-ENTRY ONLY SYSTEM

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__________________________________

OFFICIAL STATEMENT
__________________________________

$_________
*

BERKELEY JOINT PUBLIC FINANCING AUTHORITY
2025 Lease Revenue Notes
(Fire Administration and Training Project)
(Federally Taxable)

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

INTRODUCTION

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

Authority for Issuance. The Authority is issuing the Notes under the following:

(a) Article 4 of Chapter 5, Division 7, Title 1 of the California Government Code, as amended, commencing with Section 6584 (the “Law”);

(b) resolutions adopted by the Board of Directors (the “Board”) of the Authority on [May 20], 2025, (the “Authority Resolution” ), and by the City Council (the “City Council”) of the City of Berkeley (the “City”) on [May 20], 2025, (the “City Resolution”); and

(c) an Indenture of Trust (the “Indenture”) dated as of June 1, 2025, by and between the Authority and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”).

The City. The City is located in Alameda County (the “ County”) on the east side of the San Francisco Bay, approximately 10 miles northeast of San Francisco. The City encompasses a total area of approximately 19 square miles and had a population of 125,327 as of January 1, 2024, giving it the highest population density of any city in the East Bay. The City is defined to a large degree, both culturally and economically, by the presence of the University of California campus located on the eastern side of the City. The University of California is a major component

* Preliminary; subject to change.

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of the City's economy, employing more than 265,000 full and part -time workers across all University of California campuses.

The City is among the oldest in California. The City was founded in 1864, incorporated as a town in 1878, and incorporated as a city in 1909. The City's charter was adopted in 1895. For more information regarding the City and its finances, see APPENDIX A a nd APPENDIX C. For additional general, financial and demographic information regarding the City, see “APPENDIX A – FINANCIAL, ECONOMIC AND DEMOGRAPHIC INFORMATION FOR THE CITY OF BERKELEY AND ALAMEDA COUNTY.” See also “THE CITY.”

The City is currently facing significant budget deficits. See “APPENDIX A – FINANCIAL,

ECONOMIC AND DEMOGRAPHIC INFORMATION FOR THE CITY OF BERKELEY AND ALAMEDA COUNTY – General Fund Budget – Adopted Biennial Budget.” The Authority. The Authority was established on January 11, 1994, to provide for the financing of public capital improvements to public entities, including the City. See “THE AUTHORITY.”

Purpose of the Notes. The Notes are being issued primarily to finance the construction of certain tenant improvements of the City within the fire administration and training building, and such other improvements that may be identified from time to time by the City. In addition, proceeds of the Notes will be used to pay the costs of issuing the Notes. See “FINANCING PLAN.”

Security for the Notes and Pledge of Revenues . Under the Indenture, the Notes are payable from and secured by a first pledge of and lien on “Revenues” (as defined in this Official Statement) received by the Authority under the Lease Agreement dated as of June 1, 2025, between the Authority, as lessor, and the City, as lessee ( the “Lease”), consisting primarily of lease payments (the “Lease Payments”) made by the City under the Lease. The Notes are also secured by certain funds on deposit under the Indenture. See “SECURITY FOR THE NOTES.”

The City and the Authority will enter into a Site Lease dated as of June 1, 2025 (the “Site Lease”). Under the Site Lease, the City will lease certain real property to the Authority, consisting of two City fire stations (as described herein, the “Leased Property”). Concurrently, the City and the Authority will enter into the Lease, under which the Authority will lease the Leased Property back to the City. See “THE LEASED PROPERTY.”

Form of Note s; Book -Entry Only . The Notes will be issued in fully registered form, registered in the name of The Depository Trust Company, New York, New York (“ DTC”), or its nominee, which will act as securities depository for the Notes. Purchasers of the Notes will not receive certificates representing the Notes that are purchased. See “THE NOTES – Book-Entry Only System” and “APPENDIX F – DTC AND THE BOOK-ENTRY ONLY SYSTEM.”

Redemption. The Notes are subject to optional redemption and special mandatory redemption from the proceeds of insurance or condemnation proceeds prior to their stated maturity dates. See “THE Notes – Redemption.”

Abatement. The Lease Payments are subject to complete or partial abatement in the event and to the extent that there is substantial interference with the City ’s use and possession of the Leased Property or any portion thereof. If the Lease Payments are abated under the Lease, the Owners of the Notes would receive less than the full amount of principal of and interest on the Notes. To the extent proceeds of rental interruption insurance are available (as described below),

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Lease Payments (or a portion thereof) may be made from those proceeds during periods of abatement. See “SECURITY FOR THE NOTES – Abatement” and “NOTE OWNERS’ RISKS.”

Covenant to Refinance the Notes. The Lease Payments are payable in an amount sufficient to provide for payment of interest on the Notes when due, but not to provide for payment of the principal of the Notes at maturity. In order to provide for the payment of the Notes at maturity, the Authority has covenanted in the Indenture to, no later than April 1, 2029, institute proceedings to refinance the Notes at maturity. Under the Lease Agreement, the City covenants to pay lease payments in an amount equal to regularly scheduled installments of debt service on all obligations issued by the Authority to refund the Notes and any future refunding obligations.

See “SECURITY FOR THE NOTES.”
Legal Opinion. Upon delivery of the Notes, Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel (“Bond Counsel”), will release its final approving legal opinion with respect to the Notes, regarding the validity of the Notes, in the form attached hereto as APPENDIX D.

Risks of Investment. Debt service on the Notes is payable only from Lease Payments and other amounts payable by the City to the Authority under the Lease. For a discussion of some of the risks associated with the purchase of the Notes, see “NOTE OWNERS’ RISKS.”

NONE OF THE NOTES, THE OBLIGATION OF THE AUTHORITY TO PAY PRINCIPAL

OF OR INTEREST THEREON, OR THE OBLIGATION OF THE CITY TO MAKE THE LEASE

PAYMENTS CONSTITUTE A DEBT OR A LIABILITY OF THE AUTHORITY, THE CITY, THE

STATE OR ANY OF ITS POLITICAL SUBDIVISIONS WITHIN THE MEANING OF ANY

CONSTITUTIONAL LIMITATION ON INDEBTEDNESS, OR A PLEDGE OF THE FULL FAITH AND CREDIT OF THE CITY. THE NOTES ARE SECURED SOLELY BY THE PLEDGE OF REVENUES AND CERTAIN FUNDS HELD UNDER THE INDENTURE. THE NOTES ARE NOT SECURED BY A PLEDGE OF THE TAXING POWER OF THE CITY.

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FINANCING PLAN

The Project

A portion of the proceeds of the Notes will be used primarily to finance the construction of certain tenant improvements within the fire administration and training building in the City (the “Project”).

The proposed Project is __________. The Project is expected to commence in __________ 20__ and be completed in ________ 20__.

Estimated Sources and Uses of Funds

The estimated sources and uses of funds relating to the Notes are as follows:

Sources of Funds:

Principal Amount of Notes $
Plus: Net Original Issue Premium
TOTAL SOURCES $

Uses of Funds:

Deposit to Project Fund $
Deposit to Costs of Issuance Fund (1)
Underwriter’s Discount
TOTAL USES $

(1) Represents funds to be used to pay Costs of Issuance, which include legal fees, printing costs, rating agency fees, and other costs of issuing the Notes.

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THE LEASED PROPERTY

Description and Location

Lease Payments will be made by the City under the Lease for the use and occupancy of the Leased Property, which consists of two City fire stations .

[Additional information to come]

Modification of Leased Property

Under the Lease, the City has the right, at its own expense, to make additions, modifications and improvements to the Leased Property or any portion thereof . All additions, modifications and improvements to the Leased Property will thereafter comprise part of the Leased Property and become subject to the provisions of the Lease.

Such additions, modifications and improvements may not in any way damage the Leased Property, or cause the Leased Property to be used for purposes other than those authorized under the provisions of state and federal law; and the Leased Property, upon comp letion of any additions, modifications and improvements made thereto under this provision of the Lease, must be of a value which is not substantially less than the value thereof immediately prior to the making of such additions, modifications and improvements.

The City will not permit any mechanic’s or other lien to be established or remain against the Leased Property for labor or materials furnished in connection with any remodeling, additions, modifications, improvements, repairs, renewals or replacements made by the City under this provision of the Lease ; except that if any such lien is established and the City first notifies or causes to be notified the Authority of the City’s intention to do so, the City may in good faith contest any lien filed or establishe d against the Leased Property, and in such event may permit the items so contested to remain undischarged and unsatisfied during the period of such contest and any appeal therefrom and will provide the Authority with full security against any loss or forfeiture which might arise from the nonpayment of any such item, in form satisfactory to the Authority. The Authority will cooperate fully in any such contest, upon the request and at the expense of the City.

Substitution

Under the Lease, the City has the option at any time and from time to time, to substitute other real property (the “Substitute Property”) for the Leased Property or any portion thereof (the “Former Property”), upon satisfaction of all of the requirements set forth in the Lease, which includes (among others) the following:
• The City has filed with the Authority and the Trustee (or the trustee, fiscal agent or paying agent for any Refunding Obligations), and caused to be recorded in the office of the County Recorder, sufficient memorialization of an amendment of the Lease, the Site Lease and the Assignment Agreement that adds the legal description of the Substitute Property and deletes therefrom the legal description of the Former Property , and has filed and caused to be recorded corresponding amendments to the Site Lease and Assignment Agreement.

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• The City has obtained a CLTA policy of title insurance insuring the City’s leasehold estate under the Lease in the Substitute Property, subject only to Permitted Encumbrances (as defined in the Lease), in an amount at least equal to the estimated value thereof.
• The City has certified in writing to the Authority and the Trustee (or the trustee, fiscal agent or paying agent for any Refunding Obligations) that the Substitute Property serves the municipal purposes of the City and constitutes property which the City is permitted to lease under the laws of the State of California, and has been determined to be essential to the proper, efficient and economic operation of the City and to serve an essential governmental function of the City. • The City has filed with the Authority and the Trustee (or the trustee, fiscal agent or paying agent for any Refunding Obligations) a written certificate of the City or other written evidencing stating that the useful life of the Substitute Property at least extends to the final maturity date of the Notes, that the estimated value of the Leased Property, after substitution of the Substitute Property and release of the Former Property, is at least equal to the aggregate Outstanding principal amount of the Notes, and the fair rental value of the Leased Property, after substitution of the Substitute Property and release of the Former Property, is at least equal to the Lease Payments thereafter coming due and payable under the Lease.

See “APPENDIX B – SUMMARY OF PRINCIPAL LEGAL DOCUMENTS.”

Upon the satisfaction of all such condit ions precedent, the Term of the Lease will thereupon end as to the Former Property and commence as to the Substitute Property, and all references to the Former Property will apply with full force and effect to the Substitute Property.

The City is not entitled to any reduction, diminution, extension or other modification of the Lease Payments whatsoever as a result of any substitution of property under this provision of the Lease.

Release of Leased Property

Under the Lease, the City has the option at any time and from time to time to release any portion of the Leased Property from the Lease (the “Released Property”) provided that the City has satisfied all of the requirements under the Lease that are conditions precedent to such release, which include (among others) the following:
• The City has filed with the Authority and the Trustee (or the trustee, fiscal agent or paying agent for any Refunding Obligations), and caused to be recorded in the office of the County Recorder sufficient memorialization of an amendment of the Lease, the Site Lease and the Assignment Agreement (or any Refunding Documents) which removes the Released Property from the Lease, the Site Lease and the Assignment Agreement (or such Refunding Documents).

• The City has certified in writing to the Authority and the Trustee (or the trustee, fiscal agent or paying agent for any Refunding Obligations) that the value of the property which remains subject to th e Lease following such release is at least equal to the aggregate Outstanding principal amount of the Notes or the outstanding principal amount of the Refunding Obligations, as applicable, and the fair rental value of the property which remains subject to the Lease following such

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release is at least equal to the Lease Payments thereafter coming due and payable thereunder.

See “APPENDIX B – SUMMARY OF PRINCIPAL LEGAL DOCUMENTS.”

THE NOTES

This section provides summaries of the Notes and certain provisions of the Indenture. See APPENDIX B for a more complete summary of the Indenture . Capitalized terms used but not defined in this section have the meanings given in APPENDIX B.

Authority for Issuance

The Notes are being issued under the Law, the Authority Resolution, City Resolution and Indenture. Under the Authority Resolution and City Resolution, the Notes may be issued in a principal amount not to exceed $________.

General Provisions

Note Terms. The Notes will be dated their date of delivery and issued in fully registered form without coupons in integral multiples of $5,000, and will mature on October 1, 2029.

Interest on the Notes will be payable on April 1 and October 1 in each year, commencing April 1, 2026 (each an “Interest Payment Date”). The Notes will mature in the amounts and on the dates, and bear interest at the rate of ___%.

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

(a) a Note is authenticated on or before an Interest Payment Date and after the close of business on the preceding Record Date, in which event it will bear interest from such Interest Payment Date;

(b) a Note is authenticated on or before the first Record Date, in which event interest thereon will be payable from the Closing Date; or

(c) interest on any Note is in default as of the date of authentication thereof, in which event interest thereon will be payable from the date to which interest has been paid in full, payable on each Interest Payment Date.

Interest with respect to the Notes will be computed on the basis of a 360 -day year composed of 12 months of 30 days each.

Record Date. Under the Indenture, “Record Date” means, with respect to any Interest Payment Date, the 15th calendar day of the month preceding such Interest Payment Date, whether or not such day is a Business Day.

Payments of Principal and Interest. Interest is payable on each Interest Payment Date to the persons in whose names the ownership of the Notes is registered on the Registration Books at the close of business on the immediately preceding Record Date, except as provided below .

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Interest on any Note which is not punctually paid or duly provided for on any Interest Payment Date is payable to the person in whose name the ownership of such Note is registered on the Registration Books at the close of business on a special record date for the payment of such defaulted interest to be fixed by the Trustee, notice of which is given to such Owner by first-class mail not less than 10 days prior to such special record date.

The Trustee will pay interest on the Notes by check of the Trustee mailed by first class mail, postage prepaid, on each Interest Payment Date to the Owners of the Notes at their respective addresses shown on the Registration Books as of the close of business on the preceding Record Date. At the written request of the Owner of Notes in an aggregate principal amount of at least $1,000,000, which written request is on file with the Trustee as of any Record Date, the Trustee will pay interest on such Notes on each succeeding Interest Payment Date by wire transfer in immediately available funds to such account of a financial institution within the United States of America as specified in such written request, which will remain in effect until rescinded in writing by the Owner.

The Trustee will pay principal of the Notes in lawful money of the United States of America by check of the Trustee upon presentation and surrender thereof at the Office of the Trustee.

While the Notes are subject to the book -entry system, the principal, interest and any redemption premium with respect to the Notes will be paid by the Trustee to DTC for subsequent disbursement to beneficial owners of the Notes. See “– Book-Entry Only System” below.

Redemption
*

Make-Whole Optional Redemption. The Notes are subject to optional redemption , in whole or in part, on any date prior to their stated maturity, at the option of the Authority, at a redemption price equal to the greater of the following:

(a) 100 percent of the principal amount of Notes to be redeemed, plus interest thereon to the redemption date; and

(b) the sum of the present value of the remaining scheduled payments of principal and interest on the Notes to be redeemed, not including any portion of those payments of interest accrued and unpaid as of the date on which such Notes are to be redeemed, discounted to the date on which such Notes are to be redeemed on a semiannual basis, assuming a 360-day year consisting of twelve 30-day months, at the Treasury Rate plus 15 basis points, plus, in each case, accrued and unpaid interest on the Notes to be redeemed to the date fixed for redemption.

“Treasury Rate” means, with respect to any redemption date for the Notes, the yield to maturity as to such redemption date of United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistic al Release H.15 (519) that has become publicly available on a date selected by the City that is at least two Business Days prior to the redemption date (excluding inflation indexed securities) or, if such Statistical Release is no longer published, any publicly available source of similar market data) most nearly equal to the period from the redemption date to the maturity date of the Notes to be redeemed; provided however, that if the period from the redemption date to such maturity date is less than

* Preliminary; subject to change.

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one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year will be used.

Special Mandatory Redemption from Insurance or Condemnation Proceeds . The Notes are subject to redemption as a whole or in part, on any date, from any Net Proceeds required to be used for such purpose as provided in the Indenture, at a redemption price equal to 100% of the principal amount thereof plus interest accrued thereon to the date fixed for redemption, without premium.

As long as the Refunding Obligations are outstanding, the City shall prepay the principal components of the Lease Payments allocable to the Leased Property in whole or in part on any date, from and to the extent of any Net Proceeds of insurance award or em inent domain award with respect to the Leased Property theretofore deposited in the Redemption Fund for that purpose under the Lease and the Refunding Documents.

Selection of Notes for Redemption. Whenever provision is made in the Indenture for the redemption of less than all of the Notes, the Trustee will select the Notes of that maturity to be redeemed from all Notes to be redeemed by lot in any manner which the Trustee in its sole discretion deems appropriate. For purposes of such selection, the Trustee shall treat each Note as consisting of separate $5,000 portions and each such portion shall be subject to redemption as if such portion were a separate Note.

Notice of Redemption. The Trustee shall mail notice of redemption of the Notes by first class mail, postage prepaid, not less than 20 nor more than 60 days before any redemption date, to the respective Owners of any Notes designated for redemption at their addresses appearing on the Registration Books and to one or more Securities Depositories and to the Municipal Securities Rulemaking Board as provided in the Continuing Disclosure Certificate.

Neither the failure to receive any notice nor any defect therein will affect the sufficiency of the proceedings for such redemption or the cessation of accrual of interest from and after the redemption date.

Rescission of Redemption. The Authority has the right to rescind any notice of optional redemption of the Notes by written notice to the Trustee on or prior to the date fixed for redemption.

Any notice of redemption will be cancelled and annulled if for any reason funds will not be or are not available on the date fixed for redemption for the payment in full of the Notes then called for redemption, and such cancellation will not constitute an Event of Default under the Indenture.

The Authority and the Trustee have no liability to the Note Owners or any other party related to or arising from such rescission of redemption. The Trustee will mail notice of such rescission of redemption in the same manner as the original notice of redemption was sent under the Indenture.

No Partial Redemption of Notes. The Notes may only be redeemed in whole based on the principal amount of the outstanding Notes, and shall not be subject to redemption in part.

Effect of Redemption. If notice of redemption has been duly given as provided in the Indenture, and moneys for payment of the redemption price of, together with interest accrued to the date fixed for redemption on, including any applicable premium, the Notes (or portions thereof)

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so called for redemption being held by the Trustee, on the redemption date designated in such notice, the Notes (or portions thereof) so called for redemption will become due and payable, interest on the Notes so called for redemption will cease to accrue, said Notes (or portions thereof) will cease to be entitled to any benefit or sec urity under the Indenture, and the Owners of said Notes will have no rights in respect thereof except to receive payment of the redemption price thereof.

Book-Entry Only System

The Notes will be issued as fully registered Notes in book- entry only form, registered in the name of Cede & Co. as nominee of DTC, and will be available to ultimate purchasers in the denomination of $5,000 or any integral multiple of $5,000, under the book -entry system maintained by DTC. While the Notes are subject to the book-entry system, the principal, interest and any redemption premium with respect to a Note will be paid by the Trustee to DTC, which in turn is obligated to remit such payment to its DTC Participants for subsequent disbursement to Beneficial Owners of the Notes. Purchasers of the Notes will not receive certificates representing their interests therein, which will be held at DTC.

See “APPENDIX F – DTC AND THE BOOK -ENTRY ONLY SYSTEM” for further information regarding DTC and the book-entry system.

Transfer, Registration and Exchange

The following provisions regarding the exchange and transfer of the Notes apply only during any period in which the Notes are not subject to DTC’s book-entry system. While the Notes are subject to DTC’s book-entry system, their exchange and transfer will be effected through DTC and the Participants and will be subject to the procedures, rules and requirements established by DTC. See “APPENDIX F – DTC AND THE BOOK-ENTRY ONLY SYSTEM.”

Note Register. The Trustee will keep or cause to be kept, at the Office of the Trustee, sufficient records for the registration and transfer of ownership of the Notes, which shall upon reasonable notice as agreed to by the Trustee, be open to inspection during regular business hours by the Authority; and, upon presentation for such purpose, the Trustee shall, under such reasonable regulations as it may prescribe, register or transfer or cause to be registered or transferred, on such records, the ownership of the Notes as provided in the Indenture.

Transfer of Notes. Any Note may, in accordance with its terms, be transferred, upon the Registration Books, by the person in whose name it is registered, in person or by a duly authorized attorney of such person, upon surrender of such Note to the Trustee at its Office for cancellation, accompanied by delivery of a written instrument of transfer in a form acceptable to the Trustee, duly executed. The Trustee will require the Owner requesting such transfer to pay any tax or other governmental charge required to be paid with respect to such transfer.

Whenever any Note or Notes are surrendered for transfer, the Authority will execute and the Trustee will authenticate and deliver to the transferee a new Note or Notes of like series, interest rate, maturity and aggregate principal amount. The Authority will pay the cost of printing Notes and any services rendered or expenses incurred by the Trustee in connection with any transfer of Notes.

Exchange of Notes. The Notes may be exchanged at the Office of the Trustee for a like aggregate principal amount of Notes of other authorized denominations and of the same series,

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interest rate and maturity. The Trustee will require the Owner requesting such exchange to pay any tax or other governmental charge required to be paid with respect to such exchange. The Authority will pay the cost of printing Notes and any services rendered or expenses incurred by the Trustee in connection with any exchange of Notes.

Limitations on Transfer and Exchange . The Trustee may refuse to transfer or exchange, under these provisions of the Indenture, any Notes selected by the Trustee for redemption under the Indenture, or any Notes during the period established by the Trustee for the selection of Notes for redemption.

DEBT SERVICE SCHEDULE

The table below shows annual debt service payments on the Notes, assuming no optional or mandatory redemption thereof.

Year Ending
October 1

Principal

Interest
Total
Debt Service
2025
2026
2027
2028
2029
Total:

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SECURITY FOR THE NOTES

The principal of and interest on the Notes are not a debt of the Authority or the City, nor a legal or equitable pledge, charge, lien or encumbrance, upon any of their respective property, or upon any of their income, receipts, or revenues except the Revenues and other amounts pledged under the Indenture.

This section provides summaries of the security for the Notes and certain provisions of the Indenture, the Lease and the Site Lease . See “APPENDIX B – SUMMARY OF PRINCIPAL LEGAL DOCUMENTS” for a more complete summary of the Indenture, the Lease and the Site Lease. Capitalized terms used but not defined in this section have the meanings given in APPENDIX B.

Revenues; Pledge of Revenues

Pledge of Revenues and Other Amounts. Subject only to the provisions of the Indenture permitting the application thereof for the purposes and on the terms and conditions set forth therein, all of the Revenues and all amounts (including proceeds of the sale of the Notes) held in any fund or account established under the Indenture are pledged to secure the payment of the principal of and interest and premium (if any) on the Notes in accordance with their terms and the provisions of the Indenture. Said pledge constitutes a lien on and security interest in the Revenues and such amounts and will attach, be perfected and be valid and binding from and after the Closing Date, without the need for any physical delivery thereof or further act.

“Revenues” are defined in the Indenture to mean:

(a) all amounts received by the Authority or the Trustee under or with respect to the Lease, including, without limiting the generality of the foregoing, all of the Lease Payments (including both timely and delinquent payments, any late charges, and whether paid from any source), but excluding any Additional Rental Payments (consisting of certain administrative costs due to the Authority and the Trustee under the Lease), and

(b) all interest, profits or other income derived from the investment of amounts in any fund or account established under the Indenture.

Assignment to Trustee. Under the Assignment Agreement, the Authority has transferred to the Trustee all of the rights of the Authority in the Lease (other than the rights of the Authority under the provisions of the Lease regarding Additional Rental Payments, advances, release and indemnification covenants, and agreement to pay attorneys’ fees).

The Trustee is entitled to collect and receive all of the Revenues, and any Revenues collected or received by the Authority will be deemed to be held, and to have been collected or received, by the Authority as the agent of the Trustee and will forthwith be paid by the Authority to the Trustee.

The Trustee is also entitled to and required to, subject to the provisions of the Indenture regarding rights of the Trustee, take all steps, actions and proceedings which the Trustee determines to be reasonably necessary in its judgment to enforce, either jointly with the Authority or separately, all of the rights of the Authority and all of the obligations of the City under the Lease.

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Covenant to Issue Refunding Obligations

In order to provide for the payment of principal of the Notes coming due at the maturity thereof on the maturity date, the Authority has covenanted in the Indenture that if it has not deposited with the Trustee, on or before April 1, 2029, an amount of funds sufficient to pay in full the principal of the Notes coming due on the maturity date, the Authority will immediately institute proceedings for the issuance of its notes, bonds or other obligations (the “ Refunding Obligations”) which are secured by Revenues and any other legally available funds, in an amount sufficient to provide for payment of each series of Notes at maturity. The Authority has further covenanted to authorize, execute and deliver any and all documents, including but not limited to any amendment to the Lease and the Site Lease, as may be required in order to (a) provide Revenues when and as required for payment of the Refunding Obligations, and (b) issue, sell and otherwise provide adequate security for the Refunding Obligations.

The principal amount of all series of Refunding Obligations which are outstanding at any time shall not exceed the estimated value of the Leased Property, as such value is determined by the Authority and the City as of the date of issuance of the final series of Refunding Obligations

In the event Refunding Obligations are issued to refund the Notes, all Lease Payments will be assigned under the means the indenture of trust, trust agreement or other document entered into by the Authority, authorizing the issuance of any Refunding Obliga tions (the “Refunding Documents”).

Allocation of Revenues by Trustee; Application of Funds

Deposit of Revenues in Debt Service Fund. All Revenues will be promptly deposited by the Trustee upon receipt thereof in a special fund designated as the “Debt Service Fund,” which the Trustee will establish, maintain and hold in trust; except that all moneys received by the Trustee and required under the Indenture or under the Lease to be deposited in the Redemption Fund or the Insurance and Condemnation Fund will be promptly deposited in such funds.

All Revenues deposited with the Trustee will be held, disbursed, allocated and applied by the Trustee only as provided in th e Indenture. Any surplus remaining in the Debt ServiceFund, after payment in full of the principal (including the principal amount of any Term Bonds that is subject to mandatory sinking fund redemption , if any) of and interest on the Notes or provision therefore under Indenture, and any applicable fees and expenses to the Trustee, will be withdrawn by the Trustee and remitted to the City.

Allocation of Revenues . On or before each Interest Payment Date, the Trustee will transfer from the Debt Service Fund and deposit into the following respective accounts (each of which the Trustee will establish and maintain within the Debt Service Fund), the following amounts in the following order of priority:

(a) Deposit to Interest Account. The Trustee will deposit in the Interest Account an amount required to cause the aggregate amount on deposit in the Interest Account to be at least equal to the amount of interest becoming due and payable on such Interest Payment Date on all Notes then Outstanding.

(b) Deposit to Principal Account . The Trustee will deposit in the Principal Account an amount required to cause the aggregate amount on deposit in the Principal

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Account to equal the principal amount of the Notes coming due and payable on such Interest Payment Date.

Lease Payments; Covenant to Appropriate

Obligation to Pay . Under the Lease, s ubject to the provisions of Lease regarding abatement and prepayment, the City agrees to pay to the Authority, its successors and assigns, the Lease Payments in the respective amounts specified in the Lease, to be due and payable in immediately available funds on the Interest Payment Dates immediately following each of the respective Lease Payment Dates specified in the Lease (as it shall be revised by the Authority and the City in connection with the issuance any Refunding Obligations), and to be deposited by the City with the Trustee on each of the Lease Payment Dates specified in the Lease (as it shall be amended in revised by the Authority and the City in connection with the issuance of any Refunding Obligations).

Any amount held in the Debt Service Fund, the Interest Account and the Principal Account under the Indenture (and all amounts on deposit in the respective funds established under the Refunding Documents for payment of current debt service on the related issue of Refunding Obligations) on any Lease Payment Date (other than amounts resulting from the prepayment of the Lease Payments in part but not in whole under the Lease, and amounts required for payment of past due principal or interest on any Notes or Refunding Obligations not presented for payment) will be credited towards the Lease Payment then required to be paid under the Lease. The City is not required to deposit any Lease Payment with the Trustee (or the trustee, fiscal agent or paying agent for any Refunding Obligations) on any Lease Payment Date if the amounts then held in the Debt Service Fund, the Interest Account and the Principal Account (or all amounts on deposit in the respective funds established under the Refunding Documents for payment of current debt service on the related issue of Refunding Obligations) are at least equal to the Lease Payment then required to be deposited with the Trustee.

The Lease Payments payable in any Rental Period are for the use of the Leased Property during that Rental Period.

Fair Rental Value. The aggregate amount of the Lease Payments and Additional Rental Payments coming due and payable during each Rental Period constitute the total rental for the Leased Property for such Rental Period, and are payable by the City in each Rental Period for and in consideration of the right of the use and occupancy of, and the continued quiet use and enjoyment of the Leased Property during each Rental Period.

The City and the Authority have agreed and determined that the total Lease Payments represent the fair rental value of the Leased Property. In making that determination, consideration has been given to the estimated value of the Leased Property, other obligations of the City and the Authority under this Lease, the uses and purposes which may be served by the Leased Property and the benefits therefrom which will accrue to the City and the general public.

Source of Payments; Covenant to Budget and Appropriate . Under the Lease, the Lease Payments are payable from any source of available funds of the City, subject to the provisions of the Lease regarding abatement. See “ – Abatement” below.

The City covenants in the Lease to take all actions required to include the Lease Payments in each of its budgets during the Term of the Lease and to make the necessary appropriations for all Lease Payments and Additional Rental Payments. This covenant of the City constitutes a duty

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imposed by law and each and every public official of the City is required to take all actions required by law in the performance of the official duty of such officials to enable the City to carry out and perform the covenants and agreements agreed to be carried out and performed by the City under the Lease.

Limited Obligation

THE OBLIGATION OF THE CITY TO MAKE THE LEASE PAYMENTS DOES NOT

CONSTITUTE A DEBT OF THE CITY, THE AUTHORITY OR THE STATE OR OF ANY

POLITICAL SUBDIVISION THEREOF WITHIN THE MEANING OF ANY CONSTITUTIONAL OR

STATUTORY DEBT LIMIT OR RESTRICTION, AND DOES NOT CONSTITUTE AN

OBLIGATION FOR WHICH THE CITY IS OBLIGATED TO LEVY OR PLEDGE ANY FORM OF

TAXATION OR FOR WHICH THE CITY HAS LEVIED OR PLEDGED ANY FORM OF TAXATION.

Abatement

Termination or Abatement Due to Eminent Domain . Under the Lease, i f the Leased Property is taken permanently under the power of eminent domain or sold to a government threatening to exercise the power of eminent domain, the Term of th e Lease thereupon ceases as of the day possession is taken. If less than all of the Leased Property is taken permanently, or if the Leased Property is taken temporarily, under the power of eminent domain, then:

(a) the Lease will continue in full force and effect with respect thereto and does not terminate by virtue of such taking, and the parties waive the benefit of any law to the contrary; and

(b) the Lease Payments are subject to abatement in an amount determined by the City such that the resulting Lease Payments represent fair consideration for the use and occupancy of the remaining usable portions of the Leased Property.

Abatement Due to Damage or Destruction. Under the Lease, the Lease Payments are subject to abatement during any period in which by reason of damage or destruction (other than by eminent domain as described above) there is substantial interference with the use and occupancy by the City of the Leased Property or any portion thereof.

The Lease Payments are subject to abatement in an amount determined by the City such that the resulting Lease Payments represent fair consideration for the use and occupancy of the remaining usable portions of the Leased Property not damaged or destroyed. Such abatement will continue for the period commencing with such damage or destruction and ending with the substantial completion of the work of repair or reconstruction.

In the event of any such damage or destruction, the Lease continues in full force and effect and the City waives any right to terminate the Lease by virtue of any such damage and destruction.

Notwithstanding the foregoing, there will be no abatement of Lease Payments under the Lease to the extent that the proceeds of hazard insurance or rental interruption insurance are available to pay Lease Payments that would otherwise be abated under the Lease, it being declared that such proceeds and amounts constitute a special fund for the payment of the Lease Payments.

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No Reserve Fund

No debt service reserve fund has been established with respect to the Notes. See “NOTE OWNERS’ RISKS – No Debt Service Reserve Fund.”

Property Insurance

Liability and Property Damage Insurance . Under the Lease, the City is required to maintain or cause to be maintained throughout the Term of the Lease, but only if and to the extent available from reputable insurers at reasonable cost in the reasonable opinion of the City, a standard commercial general liability insurance policy or policies in protection of the Authority, the City, and their respe ctive members, officers, agents, employees and assigns . Said policy or policies shall provide for indemnification of said parties against direct or contingent loss or liability for damages for bodily and personal injury, death or property damage occasioned by reason of the operation of the Leased Property.

Such policy or policies shall provide coverage in such liability limits and be subject to such deductibles as the City deems adequate and prudent. Such insurance may be maintained as part of or in conjunction with any other insurance coverage carried by the City, and may be maintained in whole or in part in the form of self-insurance by the City, subject to the provisions of the Lease, or in the form of the participation by the City in a joint powers agency or other program providing pooled insurance.

The proceeds of such liability insurance must be applied toward extinguishment or satisfaction of the liability with respect to which paid.

Casualty Insurance. Under the Lease, the City is required to procure and maintain, or cause to be procured and maintained, throughout the Term of th e Lease, casualty insurance against loss or damage to all buildings situated on the Leased Property, in an amount at least equal to the lesser of (a) 100% of the replacement value of the insured buildings, or (b) 100% of the aggregate principal amount of the Outstanding Notes.

Such insurance must, as nearly as practicable, cover loss or damage by explosion, windstorm, riot, aircraft, vehicle damage, smoke and such other hazards as are normally covered by such insurance, and must include earthquake insurance if available at reasonable cost from reputable insurers in the judgment of the City.

Such insurance may be subject to such deductibles as the City deems adequate and prudent. Such insurance may be maintained as part of or in conjunction with any other insurance coverage carried by the City, and may be maintained in whole or in part in the form of the participation by the City in a joint powers agency or other program providing pooled insurance; provided that such insurance may not be maintained by the City in the form of self-insurance. The Net Proceeds of such insurance must be applied as provided in the Lease and described below.

Rental Interruption Insurance. Under the Lease, the City is required to procure and maintain, or cause to be procured and maintained, throughout the Term of the Lease, rental interruption or use and occupancy insurance to cover loss, total or partial, of the use of any portion of the Leased Property constituting buildings or other improvements as a result of any of the hazards covered in the casualty insurance described above, in an amount at least equal to the

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maximum such Lease Payments coming due and payable during any consecutive two fiscal years.

Such insurance may be maintained as part of or in conjunction with any other insurance coverage carried by the City, and may be maintained in whole or in part in the form of the participation by the City in a joint powers agency or other program providing pooled insurance; provided that such insurance may not be maintained by the City in the form of self-insurance.

The Net Proceeds of such insurance, if any, must be paid to the Trustee and deposited in the Debt Service Fund, to be applied as a credit towards the payment of the Lease Payments allocable to the insured improvements as the same become due and payable.

Application of Net Proceeds. The Trustee, as assignee of the Authority under the Assignment Agreement, has the right to receive all Net Proceeds . As provided in the Indenture, the Trustee will deposit all Net Proceeds in the Insurance and Condemnation Fund to be applied to the redemption of Notes as set forth in the Indenture.

So long as the Refunding Obligations are outstanding, the trustee, fiscal agent or paying agent, as assignee of the Authority, under the Refunding Documents, will have the right to receive all Net Proceeds. The trustee, fiscal agent or paying agent will deposit all Net Proceeds as directed in the Refunding Documents.

THE AUTHORITY

The Authority was originally established as a joint exercise of powers authority organized and existing under and pursuant to a Joint Exercise of Powers Agreement dated January 11, 1994, by and between the City and the Berkeley Redevelopment Agency (the “Original Agreement”). Following the dissolution of redevelopment agencies pursuant to the 2011 California Budget Act, the City subsequently revised the Original Agreement pursuant to an Amended and Restated Joint Exercise of Powers Agreement dated as of October 2, 2012, by and among the City, the Berkeley Redevelopment Successor Agency, as successor agency to the Berkeley Redevelopment Agency, and the California Municipal Finance Authority, a joint exercise of powers authority. The Authority is authorized pursuant to Article 4 (commencing with Section 6584) of the Act to borrow money for the purpose of financing the acquisition of bonds, notes and other obligations of, or for the purpose of making loans to, public entities, including the City and to provide financing for public capital improvements for lease to public entities, including the City. The members o f the City Council of the City also sit as the Board of Directors of the Authority.

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CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS

The constitutional and statutory provisions discussed in this section have the potential to affect the ability of the City to levy taxes and spend tax proceeds for operating and other purposes.

Article XIIIA of the State Constitution

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

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

Legislation Implementing Article XIIIA

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

The formula apportions the tax roughly in proportion to the relative shares of taxes levied prior to 1989.

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

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

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Article XIIIB of the State Constitution

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

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

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

Articles XIIIC and XIIID of the State Constitution

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

On November 2, 2010, California voters approved Proposition 26, entitled the “Supermajority Vote to Pass New Taxes and Fees Act.” Section 1 of Proposition 26 declares that Proposition 26 is intended to limit the ability of the State Legislature and local government to circumvent existing restrictions on increasing taxes by defining the new or expanded taxes as “fees.” Proposition 26 amended Articles XIIIA and XIIIC of the State Constitution. The amendments to Article XIIIA limit the ability of the State Legislature to impose higher taxes (as defined in Proposition 26) without a two-thirds vote of the Legislature. The amendments to Article XIIIC define “taxes” that are subject to voter approval as “any levy, charge, or exaction of any kind imposed by a local government,” with certain exceptions.

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Taxes. Article XIIIC requires that all new local taxes be submitted to the electorate before they become effective. Taxes for general governmental purposes of the City ( “general taxes”) require a majority vote; taxes for specific purposes (“special taxes”), even if deposited in the City’s General Fund, require a two-thirds vote.

Property-Related Fees and Charges. Article XIIID also adds several provisions making it generally more difficult for local agencies to levy and maintain property -related fees, charges, and assessments for municipal services and programs.

Reduction or Repeal of Taxes, Assessments, Fees and Charges . Article XIIIC also removes limitations on the initiative power in matters of reducing or repealing local taxes, assessments, fees or charges. No assurance can be given that the voters of the City will not, in the future, approve an initiative or initiatives which reduce or repeal local taxes, assessments, fees or charges currently comprising a substantial part of the City’s General Fund. If such repeal or reduction occurs, the City’s ability to pay debt service on the Notes could be adversely affected.

Burden of Proof . Article XIIIC provides that local government “bears the burden of proving by a preponderance of the evidence that a levy, charge, or other exaction is not a tax, that the amount is no more than necessary to cover the reasonable costs of the governmental activity, and that the manner in which those costs are allocated to a payor bear a fair or reasonable relationship to the payor ’s burdens on, or benefits received from, the governmental activity. ” Similarly, Article XIIID provides that in “any legal action contesting the validity of a fee or charge, the burden shall be on the agency to demonstrate compliance” with Article XIIID.

Judicial Interpretation of Proposition 218. The interpretation and application of Articles XIIIC and XIIID will ultimately be determined by the courts, and it is not possible at this time to predict with certainty the outcome of such determination.

Impact on City’s General Fund. The City does not believe that any material source of General Fund revenue is subject to challenge under Proposition 218 or Proposition 26.

The approval requirements of Articles XIIIC and XIIID reduce the flexibility of the City to raise revenues for the General Fund, and no assurance can be given that the City will be able to impose, extend or increase the taxes, fees, charges or taxes in the future that it may need to meet increased expenditure needs.

Proposition 62

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

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

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

Proposition 1A; Proposition 22

Proposition 1A. Proposition 1A, proposed by the Legislature in connection with the State’s fiscal year 2004-05 Budget, approved by the voters in November 2004 and generally effective in fiscal year 2006-07, provided that the State may not reduce any local sales tax rate, limit existing local government authority to levy a sales tax rate or change the allocation of local sales tax revenues, subject to certain exceptions . Proposition 1A generally prohibited the State from shifting to schools or community coll eges any share of property tax revenues allocated to local governments for any fiscal year, as set forth under the laws in effect as of November 3, 2004. Any change in the allocation of property tax revenues among local governments within a county had to be approved by two-thirds of both houses of the Legislature.

Proposition 22. Proposition 22, entitled “The Local Taxpayer, Public Safety and Transportation Protection Act, ” was approved by the voters of the State in November 2010.

Proposition 22 eliminates or reduces the State ’s authority to (i) temporarily shift property taxes from cities, counties and special districts to schools, (ii) use vehicle license fee revenues to reimburse local governments for State-mandated costs (the State will have to use other revenues to reimburse local governments), (iii) redirect property tax increment from redevelopment agencies to any other local government, (iv) use State fuel tax revenues to pay debt service on State transportation bonds, or (v) borrow or change the distribution of State fuel tax revenues.

Possible Future Initiatives

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

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NOTE OWNERS’ RISKS

The following describes certain special considerations and risk factors affecting the payment of and security for the Notes. The following discussion is not meant to be an exhaustive list of the risks associated with the purchase of any Notes and does not necessarily reflect the relative importance of the various risks. Potential investors in the Notes are advised to consider the following special factors along with all other information in this Official Statement in evaluating the Notes. There can be no assurance that other considerations will not materialize in the future.

No Assurances on Issuance of Refunding Obligations

As described above, the Lease Payments have been calculated to be sufficient to pay interest coming due on the Notes, but will not provide for payment of the principal of the Notes at maturity. Payment of the principal of the Notes is dependent on the issu ance of Refunding Obligations by the Authority. Although the Authority has covenanted to issue Refunding Obligations as required to pay principal of the Notes at or before the maturity thereof, such issuance is dependent upon a variety of factors over whic h neither the Authority or the City has control.

Factors which could affect the ability of the Authority to issue Refunding Obligations include the financial condition of the City at the time the Authority institutes proceedings to issue Refunding Obligations, the presence of conditions prevailing in the bond market which could make it difficult or impossible for the Authority to issue Refunding Obligations, and the difficulty of obtaining municipal bond insurance or other credit enhancement or a liquidity facility for the Refunding Obligations. No assur ances can be given that the Authority will be able to issue Refunding Obligations when and as required to provide for payment of the principal of the Notes at or before maturity.

No Pledge of Taxes

The obligation of the City to pay the Lease Payments and Additional Rental Payments does not constitute an obligation of the City for which the City is obligated to levy or pledge any form of taxation or for which the City has levied or pledged any form of taxation. The obligation of the City to pay Lease Payments and Additional Rental Payments does not constitute a debt or indebtedness of the Authority, the City, the State of California or any of its political subdivisions within the meaning of any constitutional or statutory debt limitation or restriction.

The City is currently liable on other obligations payable from general revenues, which are described above under “APPENDIX A – FINANCIAL, ECONOMIC AND DEMOGRAPHIC INFORMATION FOR THE CITY OF BERKELEY AND ALAMEDA COUNTY – Long-Term General Fund Obligations.”

Limitations on Taxes and Fees

Limitations on Taxes and Fees. Certain taxes, assessments, fees and charges presently imposed by the City could be subject to the voter approval requirements of Article XIIIC and Article XIIID of the State Constitution. Based upon the outcome of an election by the voters, such fees, charges, assessments and taxes might no longer be permitted to be imposed, or may be reduced or eliminated and new taxes, assessments fees and charges may not be approved. The City has assessed the potential impact on its financial condition of the provisions of Article XIIIC and Article XIIID of the State Constitution respecting the imposition and increase of taxes, fees, charges and

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assessments and does not believe that an election by the voters to reduce or eliminate the imposition of certain existing fees, charges, assessments and taxes would substantially affect its financial condition. However, the City believes that if the initiative power was exercised so that all local taxes, assessments, fees and charges that may be subject to Article XIIIC and Article XIIID of the State Constitution are eliminated or substantially reduced, the financial condition of the City, including its General Fund, could be materially adversely affected.

Although the City does not currently anticipate that the provisions of Article XIIIC and Article XIIID of the State Constitution would adversely affect its ability to pay Lease Payments and its other obligations payable from the General Fund, no assurance can be given regarding the ultimate interpretation or effect of Article XIIIC and Article XIIID of the State Constitution on the City’s finances. See “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS.”

Additional Obligations of the City

There is some risk that failure to complete a project that is part of the Leased Property before any capitalized interest has been fully expended could result in the fair rental value of the Leased Property being less than the scheduled Lease Payments and, in such a situation, if the proceeds of rental interruption insurance are exhausted and the reserve fund (if any) is fully depleted, abatement of the Lease Payments may occur. However, the City believes that the requirement for capitalized interest to established through a date that is not less than six months after the anticipated completion date should provide sufficient protection against this risk.

The City has existing obligations payable from its General Fund. See “APPENDIX A –

FINANCIAL, ECONOMIC AND DEMOGRAPHIC INFORMATION FOR THE CITY OF BERKELEY AND ALAMEDA COUNTY – Long-Term General Fund Obligations .” The City is permitted to enter into other obligations which constitute additional charges against its revenues without the consent of Owners of the Notes. To the extent that additional obligations are incurred by the City, the funds available to pay Lease Payments may be decreased.

The Lease Payments and other payments due under the Lease (including payment of costs of repair and maintenance of the Leased Property, taxes and other governmental charges levied against the Leased Property) are payable from funds lawfully available to the City. If the amounts that the City is obligated to pay in a fiscal year exceed the City’s revenues for such year, the City may choose to make some payments rather than making other payments, including Lease Payments and Additional Rental Payments, based on the perceived needs of the City. The same result could occur if, because of California Constitutional limits on expenditures, the City is not permitted to appropriate and spend all of its available revenues or is required to expend available revenues to preserve the public health, safety and welfare.

Default

Whenever any event of default referred to in the Lease happens and continues, the Authority is authorized under the terms of the Lease to exercise any and all remedies available under law or granted under the Lease. See “APPENDIX B – SUMMARY OF PRINCIPAL LEGAL DOCUMENTS” for a detailed description of available remedies in the case of a default under the Lease.

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If a default occurs, there is no remedy of acceleration of the total Lease Payments due over the term of the Lease. The Trustee is not empowered to sell the Leased Property and use the proceeds of such sale to prepay the Notes or pay debt service on the Notes.

The City will be liable only for Lease Payments on an annual basis and, in the event of a default, the Trustee would be required to seek a separate judgment each year for that year ’s defaulted Lease Payments. Any such suit for money damages would be subject to limitations on legal remedies against municipalities in the State, including a limitation on enforcement of judgments against funds of a fiscal year other than the fiscal year in which the Lease Payments were due and against funds needed to serve the public welfare and interest.

Abatement

Under certain circumstances related to damage, destruction, condemnation or title defects which cause a substantial interference with the use and possession of the Leased Property, the City’s obligation to make Lease Payments will be subject to full or partial abatement and could result in the Trustee having inadequate funds to pay the principal and interest on the Notes as and when due . See “SECURITY FOR THE NOTES – Abatement” and “APPENDIX B – SUMMARY OF PRINCIPAL LEGAL DOCUMENTS.”

There will be no abatement of Lease Payments under the Lease Agreement to the extent that the proceeds of hazard insurance or rental interruption insurance are available to pay Lease Payments that would otherwise be abated . See “SECURITY FOR THE NOTES – Abatement.” However, there is no assurance that the Authority will receive proceeds of hazard insurance or rental interruption insurance in time to make debt service payments on the Notes when due.

Although the City is required under the Lease to maintain property and liability insurance with respect to the Leased Property, the required insurance coverage is subject to certain conditions and restrictions. See “SECURITY FOR THE NOTES – Property Insurance.”

In addition, the Authority is required to use the proceeds of rental interruption insurance maintained under the Lease to make debt service payments on the Notes during any period of abatement. See “SECURITY FOR THE NOTES – Property Insurance.” However, there is no assurance that the Authority will receive proceeds of rental interruption insurance in time to make debt service payments on the Notes when due.

No Debt Service Reserve Fund

The Authority will not fund a debt service reserve fund for the Notes. If Revenues are insufficient for the Authority to pay debt service on the Notes when due, no debt service reserve will be available under the Indenture for the Authority to make such payments.

Property Taxes

Levy and Collection. The City does not have any independent power to levy and collect property taxes. Any reduction in the tax rate or the implementation of any constitutional or legislative property tax decrease could reduce the City’s property tax revenues, and accordingly, could have an adverse impact on the ability of the City to make Lease Payments. Likewise, delinquencies in the payment of property taxes could have an adverse effect on the City’s ability to pay principal of and interest on the Notes when due.

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Reduction in Inflationary Rate. Article XIIIA of the California Constitution provides that the full cash value base of real property used in determining assessed value may be adjusted from year to year to reflect the inflationary rate, not to exceed a 2% increase for any given year, or may be reduced to reflect a reduction in the consumer price index or comparable local data .

See “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS.” Such measure is computed on a calendar year basis. Because Article XIIIA limits inflationary assessed value adjustments to the lesser of the actual inflationary rate or 2%, there have been years in which the assessed values were adjusted by actual inflationary rates, which were less than 2% . Since Article XIIIA was approved, the annual adjustment for inflation has fallen below the 2% limitation a limited number of times.

The City is unable to predict if any adjustments to the full cash value base of real property within the City, whether an increase or a reduction, will be realized in the future.

Appeals of Assessed Values. There are two types of appeals of assessed values that could adversely impact property tax revenues:

Proposition 8 Appeals. Most of the appeals that might be filed in the City would be based on Section 51 of the Revenue and Taxation Code, which requires that for each lien date the value of real property must be the lesser of its base year value annually adjusted by the inflation factor pursuant to Article XIIIA of the State Constitution or its full cash value, taking into account reductions in value due to damage, destruction, depreciation, obsolescence, removal of property or other factors causing a decline in value.

Under California law, property owners may apply for a reduction of their property tax assessment by filing a written application, in form prescribed by the State Board of Equalization, with the appropriate county board of equalization or assessment appeals board. In most cases, the appeal is filed because the applicant believes that present market conditions (such as residential home prices) cause the property to be worth less than its current assessed value. These market-driven appeals are known as Proposi tion 8 appeals.

Any reduction in the assessment ultimately granted as a Proposition 8 appeal applies to the year for which application is made and during which the written application was filed. These reductions are often temporary and are adjusted back to their original values when market conditions improve . Once the property has regained its prior value, adjusted for inflation, it once again is subject to the annual inflationary factor growth rate allowed under Article XIIIA.

Base Year Appeals. A second type of assessment appeal is called a base year appeal, where the property owners challenge the original (basis) value of their property.

Appeals for reduction in the “base year” value of an assessment, if successful, reduce the assessment for the year in which the appeal is taken and prospectively thereafter . The base year is determined by the completion date of new construction or the date of change of ownership. Any base year appeal must be made within four years of the change of ownership or new construction date.

No assurance can be given that property tax appeals in the future will not significantly reduce the City’s property tax revenues.

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Natural Calamities

From time to time, the City could be subject to natural calamities that may adversely affect economic activity in the City, which could have a negative impact on the City’s finances .

Additionally, a natural calamity adversely affecting the Leased Property could have a negative impact of the City’s use of such property, which could result in abatement of Lease Payments .

See “– Abatement” above.

Seismic. Major earthquake fault zones in the vicinity of the City include the Hayward fault, a member of the San Andreas fault system, among others. The 1989 Loma Prieta earthquake on the San Andreas fault was centered about 60 miles south of San Francisco and registered 6.9 on the Richter scale of earthquake intensity, and caused fires and collapses of and structural damage to buildings, highways, and bridges in the San Francisco Bay region. In 2015, the 2014 Working Group on California Earthquake Probabilities (a collaborative effort of the United States Geological Survey, the California Geological Society and the Southern California Earthquake Center) updated the 30-year earthquake forecast for California and concluded that there is a 72% probability that at least one earthquake of magnitude 6.7 or greater will strike somewhere in the San Francisco Bay region before the year 2043 . Such an earthquake would likely be very destructive and property within the City could sustain significant damage in a major earthquake, and the area’s economic activity could be adversely affected.

The City cannot predict how much damage may occur within the City to the Leased Property, specifically, and how much reduction in assessed valuation in the City may result from an earthquake.

Under the Lease Agreement, the City is not required to obtain earthquake insurance on the Leased Property.

Flood. In the City, three types of flooding typically occur: coastal flooding, creek flooding and storm drain overflow. Creek flooding in the City has the potential to affect an estimated 675 structures, mainly in the western, industrial area of the City. It is unlikely that floodwaters will reach higher than three feet, but damages to homes, businesses, and their contents could total over $201 million. Storm drain creates localized flooding in many known intersections in the City. With few properties covered by flood insurance, these costs would be borne primarily by City residents and businesses.

Fire Hazards. In recent years, wildfires have caused extensive damage throughout the State. Certain of these fires have burned thousands of acres and destroyed hundreds and in some cases thousands of homes . In some instances, entire neighborhoods have been destroyed.

Several fires which occurred in 2017 damaged or destroyed property in areas that were not previously considered to be at risk from such events. In November 2018, the Camp Fire occurred in Butte County, California. Climate change is expected to lead to even more frequent and damaging wildfires in the future.

The land within the City may be susceptible to wildland fires due to a combination of factors including winds, temperatures, humidity levels, fuel moisture content of vegetation and topography. The risk to the community is increased in some areas because of the combustibility of building materials including roofs, adequacy of access roads, water supply duration, and pressure and maintenance of flammable vegetation surrounding structures.

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To quantify this potential hazard, the California Department of Forestry and Fire Protection (“Cal Fire”) has developed a fire modeling and mapping process that utilizes three main criteria in order to evaluate and recommend potential fire hazards in wildland areas. The criteria are type of vegetation, fire weather, and topography . The maps developed by Cal Fire currently identify certain areas within the City as Fire Hazard Severity Zones.

In the event taxable property within the City were destroyed by wildfires, the assessed valuation of such property would be reduced. Such reduction of assessed valuations could result in a reduction of property tax revenues to the City.

Droughts. California is subject to droughts from time to time. In October, 2021, the Governor declared a Statewide drought state of emergency and requested that all water users voluntarily reduce water use by 15%. The declaration encouraged water agencies to draw upon supplies other than groundwater and to implement their water shortage contingency plans and authorized the State Water Resources Control Board to adopt regulations that prohibit wasteful water use. While some drought-related water restrictions were eased in May 2023, no assurance can be given that drought conditions will not return in the future.

Public Health Emergencies

In recent years, public health authorities have warned of threats posed by outbreaks of disease and other public health threats. For example, in 2020 the WHO announced that COVID- 19, an upper respiratory tract illness, was a pandemic as it spread across the globe, having significant adverse health and financial impacts throughout the world. The spread of the COVID- 19 coronavirus pandemic, and responses intended to slow its spread, resulted in negative health and economic impacts to various communities, including the City (on a temporary basis).

Although the COVID-19 pandemic is now in decline, future pandemics may arise in the future with similar or event more adverse economic impacts. Uncertain too are the actions that may be taken by federal, State and local governmental authorities to contain or mitigate the effects of any such future outbreak.

Limitations on Remedies Available to Note Owners

The ability of the City to comply with its covenants under the Lease may be adversely affected by actions and events outside of the control of the City, and may be adversely affected by actions taken (or not taken) by voters, property owners, taxpayers or payers of assessments, fees and charges. See “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS” above. Furthermore, any remedies available to the owners of the Notes upon the occurrence of an event of default under the Lease or the Indenture are in many respects dependent upon judicial actions, which are often subject to discretion and delay and could prove both expensive and time consuming to obtain.

In addition to the limitations on Note owner remedies contained in the Lease and the Indenture, the rights and obligations under the Notes, the Lease and the Indenture may be subject to the following: the United States Bankruptcy Code and applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or affecting the enforcement of creditors ’ rights generally, now or hereafter in effect; usual equity principles which may limit the specific enforcement under State law of certain remedies; the exercise by the United States of America of the powers delegated to it by the Federal Constitution; and the reasonable and necessary exercise, in certain exceptional situations, of the police power inherent in the sovereignty of the

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State and its governmental bodies in the interest of serving a significant and legitimate public purpose. Bankruptcy proceedings, or the exercise of powers by the federal or state government, if initiated, could subject the Owners of the Notes to judicial discretion and interpretation of their rights in bankruptcy or otherwise, and consequently may entail risks of delay, limitation or modification of their rights.

The opinion to be delivered by Bond Counsel, concurrently with the issuance of the Notes, will include a qualification that the rights of the owners of the Notes and the enforceability of the Notes and the Indenture, the Lease and the Site Lease may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights heretofore or hereafter enacted and may also be subject to the exercise of judicial discretion in accordance with principles of equity or otherwise in appropriate cases . See “APPENDIX D – PROPOSED FORM OF OPINION OF BOND COUNSEL.”

Cyber Security

The City, like many other public and private entities, relies on computer and other digital networks and systems to conduct its operations. As a recipient and provider of personal, private or other sensitive electronic information, the City is potentially subject to multiple cyber threats, including without limitation hacking, viruses, ransomware, malware and other attacks . No assurance can be given that the City’s efforts to manage cyber threats and attacks will be successful in all cases, or that any such attack will not materially impact the operations or finances of the City. The City is also reliant on other entities and service providers in connection with the administration of the Notes, including without limitation the County tax collector for the levy and collection of property taxes, and the Trustee. No assurance can be given that the City and these other entities will not be affected by cyber threats and attacks in a manner that may affect the Note owners.

Secondary Market for Notes

There can be no guarantee that there will be a secondary market for the Notes or, if a secondary market exists, that any Notes can be sold for any particular price . Occasionally, because of general market conditions or because of adverse history or economic prospects connected with a particular issue, secondary marketing practices in connection with a particular issue are suspended or terminated. Additionally, prices of issues for which a market is being made will depend upon then-prevailing circumstances. Such prices could be substantially different from the original purchase price.

TAX MATTERS

Federal Tax Status. The interest on the Notes is not intended by the Issuer to be excluded from gross income for federal income tax purposes. However, in the opinion of Bond Counsel, interest on the Notes is exempt from California personal income taxes. The proposed form of opinion of Bond Counsel with respect to the Notes to be delivered on the date of issuance of the Notes is set forth in APPENDIX E.

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

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CERTAIN LEGAL MATTERS

Jones Hall, A Professional Law Corporation, Bond Counsel, will render an opinion with respect to the validity of the Notes, the form of which is set forth in APPENDIX D. Certain legal matters will also be passed upon for the City and the Authority by Jones Hall, as Disclosure Counsel. Certain legal matters will be passed upon for the City and the Authority by the City Attorney.

LITIGATION

To the best knowledge of the City, there is no action, suit, proceeding, inquiry or investigation before or by any court or federal, state, municipal or other governmental authority pending and notice of which has been served on and received by the City or, to the knowledge of the City, threatened against or affecting the City or the assets, properties or operations of the City which, if determined adversely to the City or its interests, would have a material and adverse effect upon the consummation of the transactions contemplated by or the validity of the Lease, the Site Lease or the Indenture, or upon the financial condition, assets, properties or operations of the City, and the City is not in default with respect to any order or decree of any court or any order, regulation or demand of any federal, state, muni cipal or other governmental authority, which default might have consequences that would materially adversely affect the consummation of the transactions contemplated by the Lease, the Site Lease or t he Indenture, or the financial conditions, assets, properties or operations of the City, including but not limited to the payment and performance of the City’s obligations under the Lease.

RATING

S&P Global Ratings, a business unit of Standard & Poor's Financial Services LLC (“S&P”), has assigned its municipal Note rating of “___” to the Notes.

This rating reflects only the views of S&P, and an explanation of the significance of this rating, and any outlook assigned to or associated with this rating, should be obtained from S&P.

Generally, a rating agency bases its rating on the information and materials furnished to it and on investigations, studies and assumptions of its own. There is no assurance that this rating will continue for any given period of time or that this rating will not be revised downward or withdrawn entirely by the rating agency, if in the judgment of the rating agency, circumstances so warrant. Any such downward revision or withdrawal of any rating on the Notes may have an adverse effect on the market price or marketability of the Notes.

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CONTINUING DISCLOSURE

The City (on behalf of the Authority and itself) will covenant for the benefit of owners of the Notes to provide certain financial information and operating data relating to the City (the “Annual Report”), by not later than nine months after the end of the City's fiscal year (presently June 30) and commencing April 1, 2026, with the report for the fiscal year ending June 30, 2025, and to provide notices of the occurrence of certain listed events.

The specific nature of the information to be contained in an Annual Report or the notices of enumerated events is set forth in the form of Continuing Disclosure Certificate attached as APPENDIX E. These covenants will be made in order to assist the Purchaser (as defined below) in complying with Securities and Exchange Commission Rule 15c2-12(b)(5) (the “Rule”).

The City and its related governmental entities have previously entered into numerous disclosure undertakings under the Rule in connection with the issuance of long -term obligations See Note 8 of the City’s Annual Comprehensive Financial Report attached to this Official Statement as APPENDIX C.

In the previous five years, the City failed to timely file a material event notice in connection with [the failure to meet its debt service coverage covenant for one series of the City’s Notes. To ensure future compliance with its continuing disclosure undertakings, the City has developed procedures for including all required continuing disclosure information in the supplementary section of its audited financial statements. In addition, the City has engaged NHA Advisors, LLC, to review this information annually to ensure compliance with its continuing disclosure undertakings, including the undertaking to be entered into in connection with the Notes.

MUNICIPAL ADVISOR

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

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COMPETITIVE SALE OF NOTES

The Notes will be sold pursuant to a competitive bidding process held on June 3, 2025, pursuant to the terms set forth in the Official Notice of Sale for the Notes (the “Official Notice of Sale”).

The Notes were awarded to _____________ (the “Purchaser”), whose proposal represented the lowest trust i nterest cost for the Notes as determined in accordance with the Official Notice of Sale. The Purchaser has agreed to purchase the Notes at a purchase price of $________________ (which is equal to the par amount of the Notes, less a Purchaser’s discount of $_____________, and plus a net original issue premium of $____________).

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

PROFESSIONAL SERVICES

In connection with the issuance of the Notes, fees payable to the following professionals involved in the offering are contingent upon the issuance and delivery of the Notes: Jones Hall, A Professional Law Corporation, as Bond Counsel and Disclosure Counsel; the Municipal Advisor; and the Trustee.

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EXECUTION

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

BERKELEY JOINT PUBLIC FINANCING

AUTHORITY

By:

Treasurer

CITY OF BERKELEY

By:

Director of Finance

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APPENDIX A

FINANCIAL, ECONOMIC AND DEMOGRAPHIC INFORMATION

FOR THE CITY OF BERKELEY AND ALAMEDA COUNTY

Introduction

The City of Berkeley, California (the “City”) is located in Alameda County (the “County”) on the east side of the San Francisco Bay, approximately 10 miles northeast of San Francisco.

The City encompasses a total area of approximately 19 square miles and had an estimated population of 125,327 as of January 1, 2024, giving it the highest population density of any city in the East Bay. The City is defined to a large degree, both culturally and economically, by the presence of the University of California campus located on the eastern side of the City. The University of California is a major component of the City's economy, employing more than 265,000 full and part-time workers across all University of California campuses statewide.

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

Population

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

CITY OF BERKELEY
Population Estimates
As of January 1

Year
City of
Berkeley
County of
Alameda
State of
California
2020 127,659 1,681,337 39,535,623
2021 120,950 1,666,341 39,327,868
2022 124,054 1,643,683 39,114,785
2023 125,181 1,50,656 39,061,058
2024 125,327 1,641,869 39,128,162

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

City Government

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

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

Current members of the City Council are shown below:

Member District Term Expires
Adena Ishii Mayor 11/30/2028
Rashi Kesarwani 1 11/30/2026
Terry Taplin 2 11/30/2028
Ben Bartlett 3 11/30/2028
Igor Tregub 4 11/30/2026
Shoshana O’Keefe 5 11/30/2028
Brent Blackaby 6 11/30/2024
Cecilia Lunaparra 7 11/30/2026
Mark Humbert 8 11/30/2026

Accounting Policies and Financial Reporting

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

The City Council employs, at the beginning of each fiscal year, an independent certified public accountant who, at such time or times as specified by the City Council, at least annually, and at such other times as he or she shall determine, examines the combined financial statements of the City in accordance with generally accepted auditing standards, including such tests of the accounting records and such other auditing procedures as such accountant considers necessary.

As soon as practicable after the end of the fiscal year, a final audit and report is submitted by such accountant to the City Council and a copy of the financial statements as of the close of the fiscal year is published.

The City, all its funds and the funds of certain other component entities of the City are audited annually by a certified public accounting firm. The firm of Badawi and Associates, Certified Public Accounts, Berkeley , California, is the City’s current auditor (the “ Auditor”). The annual comprehensive financial report of the City for fiscal year 2023-24 is attached hereto as APPENDIX C. The City’s financial statements are public documents and are included within this Official Statement without the prior approval of the Auditor.

The Governmental Accounting Standards Board (“GASB”) published its Statement No. 34 “Basic Financial Statements – and Management’s Discussion and Analysis – for State and Local Governments” on June 30, 1999. Statement No. 34 provides guidelines to auditors, state and local governments and special purpose governments such as school districts and public utilities, on new requirements for financial reporting for all governmental agencies in the United States.

Generally, the basic financial statements and required supplementary information should include (i) Management’s Discussion and Analysis; (ii) government -wide financial statements prepared

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using the economic measurement focus and the accrual basis of accounting and fund financial statements prepared using both the current financial resources measurement focus and the modified accrual method of accounting (governmental funds) and funds using the economic measurement focus and the accrual basis of accounting (proprietary funds) and (iii) required supplementary information. The City’s financial statements are prepared in conformance with the requirements of Statement No. 34.

Comparative Financial Statements

The following tables provide a recent history of the City’s Comparative Balance Sheet, and both a recent history of General Fund revenues, expenditures, transfers, and ending fund balances and recently budgeted amounts.

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CITY OF BERKELEY

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

Actual Actual Actual Actual
2020-21 2021-22 2022-23 2023-24
ASSETS:

Cash and investments in treasury* $146,849 $171,955 $160,249 $134,929 Receivables (net of allowance as
applicable):

Accounts 4,782 5,384 9,314 10,228
Interest 834 1,078 2,000 2,620
Taxes 13,092 10,795 9,083 9,915
Subventions/grants 1 -- -- 50
Due from other funds 12,814 17,740 16,034 16,362
Notes receivable 6,197 13,818 15,954 31,326
Other 5 5 4 5
Prepaid Items -- -- -- --
Total assets 184,574 220,776 212,640 205,434

LIABILITIES:

Accounts payable 10,444 7,094 6,147 9,368
Accrued salaries and wages 8,081 8,934 3,541 4,672
Accrued interest payable 740 445 1,117 1,178
Advances from other funds 1,760 814 814 --
Deposits held 921 886 935 1,118
Unearned revenue -- -- -- --
Tax and revenue anticipation notes 42,405 44,660 28,000 23,620 Other liabilities 4,955 6,129 6,515 4,693
Total liabilities 69,307 68,962 47,070 44,649

Deferred Inflows of Resources 3,385 3,770 7,103 7,756

FUND BALANCES
Reserved for:

Assigned to 19,577 12,163 16,753 31,326
Nonspendable -- -- -- 61,788
Restricted and Committed 35,941 60,697 71,799 92,455
Unreserved/Unassigned, report in:

General fund 56,364 75,184 69,915 29,577
Total fund balances 111,882 148,043 158,467 153,029

Total liabilities and fund balances $184,574 $220,776 $212,640 $205,434

* Cash and investments in treasury includes restricted cash and investments.

Source: City of Berkeley, Annual Comprehensive Financial Reports.

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CITY OF BERKELEY

STATEMENT OF GENERAL FUND

REVENUES, EXPENDITURES, TRANSFERS AND BALANCES
(Fiscal Year Ending June 30)
(Dollar amounts in thousands)

Actual

Actual

Actual

Actual
2020-21 2021-22 2022-23 2023-24
REVENUES:

Taxes $187,395 $225,100 $216,259 $216,040
Licenses and Permits 1,805 1,580 1,471 1,457
Subvention and Grants/Intergovernmental 3,700 652 1,589 833 Service Fees 6,990 7,806 9,812 11,952
Fines and Forfeitures 3,579 4,967 6,117 5,947
Rents 189 294 233 273
Franchises 1,714 1,713 1,811 1,987
Private contribution 184 45 134 150
Interest 8,110 (10,069) 3,261 22,319
Other 74 506 560 826
TOTAL REVENUES 213,740 232,595 241,248 $261,783

EXPENDITURES:

General Government 27,357 29,693 32,732 42,002
Public Safety 120,179 124,901 128,306 137,522
Highways and Streets 3,163 3,833 3,055 2,224
Health and Human Services 19,320 17,897 15,695 15,531
Culture-Recreation 7,362 8,708 9,291 10,632
Community Development 9,258 12,693 16,592 22,499
Economic Development 2,534 3,005 3,643 3,271
Debt Service 139 98 496 2,347
Capital Outlay -- -- 1,494 5,850
TOTAL EXPENDITURES 189,313 200,827 211,304 241,875

Excess Revenues Over (Under) Expenditures 24,427 31,767 29,944 19,908

Transfers In(out)/Other (10,614) 4,394 (19,520) (25,345)

Net Change in Fund Balance 13,813 36,161 10,424 (5,438)

Fund Balance, July 1 98,069 111,882 148,043 158,467
Prior Period Adjustment -- - - --

Fund Balance, June 30* $111,882 $148,043 $158,467 $153,029

* Totals may not sum due to rounding.

Source: City of Berkeley Annual Comprehensive Financial Reports.

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General Fund Budget

Budgetary Process and Administration. The City employs a two-year budget process.

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

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

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

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

Adopted Biennial Budget. The City adop ted its fiscal years 2024-25 and 2025- 26 biennial budget on June 25, 2024 . For fiscal year 2024-25, the City authorized operating and capital budget expenditures of $776.2 million based on revenues of approximately $667.1 million.

For fiscal year 2025-26, the City authorized operating and capital budget expenditures of $717.0 million based on revenues of approximately $692.6 million. In both fiscal years, prior year savings (accumulated fund balance), bond proceeds collected in prior fiscal years and/or anticipated grant funding offset the net increase in expenditures among the different funds to balance the budget.

The General Fund comprises less than one-half of the total budget, with the remainder of the budget consisting of various special funds that are restricted in purpose. Approximately fifty- five percent of the City’s General Fund revenue is derived from real and unsecured property, sales and soda taxes, and business license taxes.

For fiscal year 2024-25, baseline revenues for the General Fund are projected to be $273.4 million, while baseline expenditures are projected to be $285.5 million, resulting in a deficit of $12.1 million. For fiscal year 2025-26, baseline revenues for the General Fund are projected to be $284 million, which baseline expenditures are projected to be $ 296.1 million, resulting in a deficit of $12 million. These projected deficits are based on revenue data received through the third quarter of the current fiscal year.

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The City is unable to predict the impact that certain federal policies may have on its finances and operations, including uncertain tariff and trade policies, the impact of reduced federal funding on some City services and programs, and the impending possibilities of increased unemployment and an economic recession. In an effort to maintain a balanced budget and to prepare for these potential ities, on April 21, 2025, the City imposed a hiring freeze, effective immediately, noting that the action is intended to slow down deficit spending, and that the City continues to discuss additional steps to balance the City budget, including transfers bet ween funds, restricting certain General Fund contributions, maintaining vacant positions and using certain current fund balances.

The City has utilized balancing measures to ensure the current budget is balanced, as has been its historical practice. Some of the measures used include increasing salary savings for the public safety employees from 5% to 9%, utilizing the section 115 pension trust fund to fund a portion of the increased pension cost, and utilizing certain fund balances to balance other funds.

Through these one-time measures, the budget is balanced for both fiscal years.

Five-Year Forecast

Also on June 25, 2024, the Budget and Finance Policy Committee was presented with a five-year forecast, showing a structural annual deficit in fiscal years 2023-24 through 2027-28.

The following table shows the projected revenues and expenditures over the next five fiscal years for the City’s General Fund and Special Funds.

CITY OF BERKELEY
Five-Year Forecast
Fiscal Years 2023-24 through 2027-28

2023-24 2024-25 2025-26 2026-27 2027-28
Beginning Fund Balance $85,414,113 $73,516,703 $61,370,747 $49,297,696 $38,716,143 Total Revenues 273,448,848 273,404,097 284,047,718 296,147,777 302,488,599 Total Expenditures 285,346,258 285,550,053 296,120,769 306,729,330 317,787,520 Annual Surplus/(Shortfall) (11,897,410) (12,145,956) (12,073,051) (10,581,553) (15,298,921) Projected Ending Balance $73,516,703 $61,370,747 $49,297,696 $38,716,143 $23,417,222

Source: City of Berkeley Annual Comprehensive Financial Reports

Given the decreasing level of precision to be expected in the later years of a multi -year forecast, the significance of the projections in the out years is not so much in terms of their absolute amounts, but rather in the relative size of the decrease or increase from the prior year .

This information should be used to provide a multi-year perspective to budgetary decision-making, rather than as a precise prediction of what will occur.

General Fund Reserves

Establishment of General Fund Reserve . On January 24, 2017 , the City Council adopted a General Fund reserve policy, establishing a General Fund reserve (the “Reserve”), to prepare for the impact of economic cycles and catastrophic events and assure fluctuations in

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revenue do not impede the City’s ability to meet expenditure obligations. When revenues fail to meet the City’s normal operating requirements, or the need for disbursements temporarily exceeds receipts, the Reserve, upon a 2/3 vote of the City Council, may be used in accordance with the standards set forth therein.

The Reserve is composed of two elements, a Stability Reserve and a Catastrophic Reserve:

1) A Stability Reserve is maintained to mitigate loss of service delivery and financial risks associated with unexpected revenue shortfalls during a single fiscal year or during a prolonged recessionary period. The purpose of the Stability Reserve is to provide fiscal stability in response to unexpected downturns or revenue shortfalls, and not to serve as a funding source for new programs or projects.

2) A Catastrophic Reserve is maintained for the purpose of sustaining General Fund operations in the case of a public emergency, such as a natural disaster or other catastrophic event. The Catastrophic Reserve will be used to respond to extreme, onetime events, such as earthquakes, fires, floods, civil unrest, and terrorist attacks. The Catastrophic Reserve will not be accessed to meet operational shortfalls or to fund new programs or projects.

The Reserve is accounted for in the Restricted and Committed fund balance of the City’s balance sheet.

Target Reserve Levels. 55% of the Reserve is allocated to the Stability Reserve and 45% to the Catastrophic Reserve.

The long-term goal for the Reserve is a minimum of 30% of the adopted General Fund revenues, to be achieved within no more than 10 years (“Long-Term Goal”). Based on a risk assessment (according to best practices), to be updated at least every five years, the City Council may consider increasing or lowering the Reserve level.

As of July 1, 2025, the Stability Reserve is projected to have $ 32,798,073, and the Catastrophic Reserve is projected to have $25,516,697, which total 21.33% of adopted General Fund revenues, below the long-term goal of 30% in 2027.

Replenishment of the General Fund Reserve . The City Manager will recommend a replenishment schedule for all monies proposed for appropriation from the Reserve. The replenishment schedule will be adopted simultaneous with the appropriation to withdraw Reserve funds or, if infeasible due to emergency circumstances, no more than three months from the date of the withdrawal appropriation. Repayment shall begin no more than five years from the date of withdrawal and be completed within 10 years from the date of withdrawal.

While staff envisions that, in most cases, repayment will start as soon as possible, the repayment guidelines are meant to reflect a commitment to maintain a sufficient Reserve, while also recognizing that a use of Reserve amounts may occur during an econo mic downturn and it may be necessary to postpone repayment while the economy improves. In fiscal year 2023-24, the City repaid $7.5 million to the Stability Reserve, and $2.2 million is expected to be repaid in fiscal year 2024-25. In fiscal year 2023-24, the City repaid $6.1 million to the Catastrophic Reserve and $1.8 is expected to be repaid in fiscal year 2024-25.

Unfunded Liability Obligations and Unfunded Infrastructure Needs

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General. On April 11, 2024, the City Manager presented a biennial report of the City’s unfunded liability obligations and unfunded infrastructure needs (the “ Report”). The Report includes, among other things:

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.

3. A summary of all current City obligations including:
a. general obligation bonds;
b. certificates of participation;
c. loans;
d. all other current long-term obligations.

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, projecting costs to bring streets and roads condition to an average Pavement Condition Index 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.

Certain provisions of the Report are described herein. The Report, which is not incorporated by reference herein, is available on the City’s internet website at :
https://berkeleyca.gov/sites/default/files/documents/2023-05-23%20Special%20Item%2001%20 Unfunded%20Liability%20Obligations_0.pdf. The City takes no responsibility for the continued accuracy of the Internet addresses or for the accuracy or timeliness of information posted there, and such information is not incorporated in this Official Statement by these references.

The Report concludes that 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, and reports that liabilities tied to pension benefits total $1,971 million (of which only 77.4% is funded). For OPEB benefits, net liabilities is $146 million (of which only 26.17% is funded). The City’s unfunded infrastructure needs total $2.52 billion.

Unfunded Liabilities. Due to projected increases in expenses, primarily pension and medical expenses, the City is projecting a General Fund structural deficit.

The City provides retirement benefits to its employees through three plans in the California Public Employees’ Retirement System (“ CalPERS”). See “- Retirement Programs” below for additional information . The City has a significant pension liability that is anticipated to grow, increasing by more than $40 million over the next ten years, which will put a strain on resources and services.

In addition, the City’s retiree health plans are significantly underfunded, as detailed in the Report.

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Unfunded Infrastructure Needs. The City has an extensive portfolio of capital assets and infrastructure, including 95 buildings, 254 miles of public sanitary mains and 130 miles of sewer laterals, 216 centerline miles (450 lane miles) of public streets, 52 parks, 2 pools, 3 camps and 42 facilities served by the City’s IT systems. In addition, Berkeley is a relatively older city, and faces related challenges with its aging infrastructure. Despite the passage of several local bond measures to support capital facilities, there are significant unfunded needs related to parks, pools, camps, waterfront property, streets, sidewalks, storm drain/watershed, sewer, transportation and buildings/facilities. As needed improvements continue to be deferred, operating and maintenance costs rise and rehabilitation and replacement costs increase substantially . The Report details available annual funding and unfunded needs for capital and major maintenance.

As a result of the age of the City’s infrastructure and limited resources allocated to infrastructure, the projected costs of the City’s aging infrastructure needs are anticipated to reach more than $2.52 billion by fiscal year 2027-28.

The Report also highlights that the City is located on the east side of the San Francisco bay, and has waterfront property with docks, pilings, parking lots and streets that have reached the end of their useful life. The City’s mechanism for managing its waterfront revenues and expenditures (the “Marina Fund”) is projected to have insufficient funding due to decreasing revenues and increasing expenditures, a trend that could be aggravated by failure to maintain the marina infrastructure. The City has created the Berkeley Marina Area Specific Plan to address an estimated $113 million in infrastructure repairs but has not identified any specific funding sources.

The City is currently facing significant budget deficits. See “General Fund Budget - Adopted Biennial Budget” above.

State Budget and its Impact on the City

Fiscal Year 2025-26 State Budget. The Governor sent the fiscal year 2025 -26 budget proposal to the legislature on January 10, 2025 (the “ 2025-26 State Budget Proposal ”). The 2025-26 State Budget Proposal presents a balanced budget with what are noted as significant reserves in the coming fiscal year, resulting in an upgrade to the State’s financial forecast in the near term and modest upward revisions in the long term. A stronger-than-anticipated performance of the economy, stock market, and cash receipts, combined with an improved economic outlook, are noted as contributors to an upgraded revenue forecast, with General Fund revenues, before accounting for transfers and tax policy proposals, projected to be higher by approximately $16.5 billion (2.7%) than was assumed in the 2024 -25 State Budget for the three-year budget window of fiscal years 2023-24 through 2025-26.

Voters approved Proposition 1A in November 2004 to amend the State Constitution to place constraints on the State’s ability to divert certain specified revenues from local agencies to the State. Subsequently, in November 2010, voters approved Proposition 22 to amend the State Constitution to further constrain or eliminate the State’s ability to redirect revenues from local agencies. “CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING CITY REVENUES AND APPROPRIATIONS – Proposition 1A” and “– Proposition 22.”

Additional Information. Information about the 2025-26 State Budget Proposal and other State budgets is available at www.dof.ca.gov or www.ebudget.ca.gov. An impartial analysis of the budget is posted by the Legislative Analyst Office at www.lao.ca.gov. In addition, various State official statements, many of which contain a summary of the current and past State budgets, may be found at the website of the Sta te Treasurer, www.treasurer.ca.gov. The information referred

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to in this paragraph is prepared by the respective State agency maintaining each website and not by the City. The City takes no responsibility for the continued accuracy of the Internet addresses or for the accuracy or timeliness of information posted there, and such information is not incorporated in this Official Statement by these references.

Federal Revenues

General. The federal government provides annual funding for several City programs, including funding from the Housing of Urban Development through the Community Block Grant, Emergency Solutions Grant, and HOME Investment Partnership in addition to other health and human services programs.

In January 2025, the federal government indicated that it was considering the reduction of federal funding to a number of programs, including programs that impact City programs. The City is unable to predict whether the federal government’s review of spending may eventually impact its receipt of federal funding, and whether any such impact would have a material effect on the finances or operations of the City. The City is reviewing mitigation plans for federal funding changes that may impact the City in the future.

Sanctuary Cities. On January 21, 2025, the City Council adopted a resolution reaffirming the City’s status as a sanctuary city and to reassert policies and procedures to guide and support staff should U.S. Immigration and Customs Enforcement (“ICE”) contact City officials or visit City offices.

In January 2025, President Trump signed an executive order directing the Department of Homeland Security and the Department of Justice to explore denying federal funds to sanctuary jurisdictions and to pursue civil or criminal actions against them. Additio nally, the United States Congress is considering bill H.R. 32, the “No Bailout for Sanctuary Cities Act,” that would empower the president to withhold federal funding from cities, counties and states with sanctuary city status.

Multiple lawsuits have been filed by local governments challenging the executive order.

The City is unable to predict the outcome of ongoing litigation against the sanctuary cities executive order or whether the federal government’s restriction of funding for sanctuary cities may eventually impact its receipt of federal funding, and whether any such impact would have a material effect on the finances or operations of the City. The City is reviewing mitigation plans to deal with any ongoing litigation that may impact City financials.

Ad Valorem Property Taxes

Tax Levies and Collections . Property taxes collected by the City decreased by $1.2 million, or 1.0%, to $117.8 million in fiscal year 2023 -24 from $119.0 million in fiscal year 2022- 23, primarily as a result of increases/decreases in the following revenue sources:

• Property Transfer Tax revenue in fiscal year 2023 -24 was $18.0 million, $4.0 million less than the fiscal year 2022 -23 total of $22.0 million. This decline was primarily as a result of a 26.2% decrease in the dollar value of property sales and a 10.0% decrease in the number of property sales transactions.

• Measure P Property Tax revenue in fiscal year 2023-24 was $6.8 million, $2.9 million or 29.9% less than the fiscal year 2022-23 total of $9.7 million.

This decline was primarily due to a 40.0% decrease in the dollar value of property sales, a 34.1% decrease in the number of property sales

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transactions, and significantly less property sales of $10 million or more in fiscal year 2023-24 than there were in fiscal year 2022-23;

• Secured Property Taxes increased by $5.6 million from $79.3 million in fiscal year 2022 -23 to $84.9 million in fiscal year 2023 -24, due to an increase in assessed value of 7.256% in the City.

• Secured Property Taxes increased $5.6 million due to an increase in assessed value of 7.256% in the City.

• Vehicle In-Lieu Taxes increased $1.2 million or 7.3% in fiscal year 2023-24 from $16.7 million in fiscal year 2022-23 to $17.9 million in fiscal year 2023- 24, due to increase in assessed value of 7.256% in the City.

Taxes are levied for each fiscal year on taxable real and personal property that is situated in the City as of the preceding January 1. A supplemental roll is developed when property changes hands, which produces additional revenue.

A ten percent penalty attaches to any delinquent payment for secured roll taxes. In addition, property on the secured roll with respect to which taxes are delinquent becomes tax - defaulted. Such property may thereafter be redeemed by payment of the delinquent taxes and the delinquency penalty, plus a redemption penalty to the time of redemption. If taxes are unpaid for a period of five years or more, the property is subject to auction sale by the County Tax Collector.

In the case of unsecured property taxes, a 10% penalty attaches to delinquent taxes on property on the unsecured roll, and an additional penalty of 1.5% per month begins to accrue beginning November 1 of the fiscal year, and a lien is recorded against the assessee. The taxing authority has four ways of collecting unsecured personal property taxes: (1) a civil action against the taxpayer; (2) filing a certificate in the office of the County Clerk specifying certain facts in order to obtain a judgment lien on specific property of the taxpayer; (3) filing a certificate of delinquency for recording in the County Recorder’s office in order to obtain a lien on specified property of the taxpayer; and (4) seizure and sale of personal property, improvements or posses sory interests belonging or assessed to the assessee.

The County levies (except for levies to support prior voter -approved indebtedness) and collects all property taxes for property falling within that county’s taxing boundaries.

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

CITY OF BERKELEY
Assessed Valuations of All Taxable Property
Fiscal Years 2015-16 to 2024-25

Fiscal Year
Local
Secured(1) Utility Unsecured Total

Percent Change
2015-16 $15,224,697,461 $388,860 $702,428,523 $15,927,514,844 --% 2016-17 16,200,483,693 388,860 711,062,469 16,911,935,022 6.18 2017-18 17,376,072,698 443,960 809,921,331 18,186,437,989 7.54 2018-19 18,696,664,672 443,960 731,012,747 19,428,121,379 6.82 2019-20 19,926,615,530 424,880 860,872,387 20,787,912,797 7.00 2020-21 21,450,331,604 424,880 931,765,413 22,382,521,897 7.67 2021-22 22,405,866,300 513,120 950,013,132 23,356,392,552 4.35 2022-23 24,817,832,049 513,120 1,110,901,185 25,929,246,354 11.02 2023-24 26,609,636,419 513,120 1,211,900,795 27,822,050,334 7.30 2024-25 28,302,520,996 513,120 1,270,511,989 29,573,546,105 6.30

(1) Amounts are net of homeowners’ exemption.

Source: California Municipal Statistics, Inc.

Factors Relating to Increases/Decreases in Assessed Value . As indicated in the previous table, assessed valuations are subject to change in each year. Increases or decreases in assessed valuation result from a variety of factors including but not limited to general economic conditions, supply and demand for real property in the area, government regulations such as zoning, and disasters such as wildfires, earthquakes, droughts, floods, climate change and pandemics, among others. The City cannot predict or make any representations regarding the effects that natural disasters or other conditions have or may have on the value of taxable property within the City, or to what extent the effects said disasters might have on economic activity in the City or throughout the State.

Wildfires. According to the State, fire season is starting earlier and ending later each year, with the increased length of the season corresponding to an increase in the extent of forest fires across the State. In addition to destroying land and structures, there have been human fatalities and negative impacts on air quality throughout the State. Fires in the State and neighboring states have threatened the region’s power grids, making some power lines unreliable . The City cannot predict or make any representations regarding the effects that wildfires and related conditions have or may have on the City, or to what extent the effects said disasters might have on economic activity in the City or throughout the State.

Seismic Events. The City is located in a seismically active region. An earthquake of large magnitude could result in extensive damage to property within the City and could adversely affect the assessed valuation of property within the City, or more generally the region’s economy.

Drought. The State has experienced drought conditions in recent years, including a period of drought followed by record- level precipitation, which resulted in related severe flooding and mudslides in certain regions . As of February 11, 2025 , the U.S. Drought Monitor indicates that the State is classified as experiencing no drought conditions in the northern part of the State, some abnormally dry, moderate and severe drought conditions, with pockets of severe and extreme drought conditions on the southeast border , with the County experiencing no drought conditions.

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During 2021, the Governor of the State proclaimed a drought state of emergency for all counties in the State, culminating with an October 19, 2021, proclamation, urging Californians to step up their water conservation efforts. In January 2022, the State Water Board adopted emergency regulations aimed at saving water and raising drought awareness, with prohibitions focused on reducing outdoor water use, enforceable by local agencies and the State Water Board, generally with warning letters, mandatory water use audits, and fines. In January 2023, the State Water Board adopted its first five -year temporary groundwater recharge permit, in addition to adopting new statewide sanitary sewer orders and appointing eleven members to the Advisory Group on Safe Drinking Water Funding. Local agencies can impose and enforce their own drought conservation rules.

Climate Change. In addition to the events described above, climate change caused by human activities may have adverse effects on the assessed value of property within the City. As greenhouse gas emissions continue to accumulate in the atmosphere as a result of economic activity, many scientists expect that climate change will intensify, increasing the frequency, severity and timing of extreme weather events such as coastal storm surges, drought, wildfires, floods, heat waves, and rising sea levels. Projections of the impact of global climate change are complex and depend on a variety of factors outside of the City’s control. The various scientific studies that forecast the amount and timing of adverse impacts of climate change are based on assumptions contained in such studies, but actual events may vary materially. In addition, the scientific understanding of climate change and its effects continues to evolve. Accordingly, the City is unable to forecast with certainty when or if adverse impacts of climate ch ange will occur or the extent of such impacts.

Public Health Emergencies . In recent years, public health authorities have warned of threats posed by outbreaks of disease and other public health threats. On February 11, 2020, the World Health Organization announced the official name for the outbreak of the disease known as COVID-19 (“COVID-19”), an upper respiratory tract illness, that spread across the globe . The ultimate impact of COVID-19 on the City’s operations and finances and the economy, real estate market, development within the City and tax collections may not be fully known, and it may be some time before the full adverse impact of the COVID-19 outbreak is known. Further, there could be future COVID- 19 outbreaks or other public health emergencies that could have material adverse effects on the City’s operations and finances. In addition, the City cannot predict whether future pandemics will occur and whether any such pandemics may impact its finances or operations. As of this date, several vaccines have been provided approval by federal health authorities and are widely avai lable, and both the national emergency and state of emergency have officially ended, and the World Health Organization declared an end to the COVID-19 global health emergency.

Property Tax Base Transfer Ballot Measure . On November 3, 2020, State voters approved a constitutional amendment entitled Property Tax Transfers, Exemptions and Revenue for Wildfire Agencies and Counties Amendment (“Proposition 19”), which will: (i) expand special rules that give property tax savings to homeowners that are over the age of 55, severely disabled, or whose property has been impacted by a natural disaster or contamination, when they buy a different home; (ii) narrow ex isting special rules for i nherited properties; and (iii) broaden the scope of legal entity ownership changes that trigger reassessment of properties. The City cannot make any assurance as to what effect the implementation of Proposition 19 will have on assessed valuation of real property in the City.

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

The property tax levies and collections for the City for fiscal years 2017-18 through 2023- 24 are shown in the following table:

CITY OF BERKELEY

SECURED TAX CHARGES AND DELINQUENCIES
2017-18 TO 2023-24
(Dollar amounts in thousands)

Fiscal Year Secured Tax Charge(1)
Amount Delinquent
June 30
% Delinquent
June 30
2017-18 $56,317,983.19 $488,950.31 0.87%
2018-19 59,739,122.88 512,267.28 0.86
2019-20 63,775,410.84 663,946.24 1.04
2020-21 68,573,256.97 647,280.27 0.94
2021-22 71,841,268.69 816,482.41 1.14
2022-23 79,749,223.16 906,881.07 1.14
2023-24 85,366,082.98 1,059,277.48 1.24

(1) 1% General Fund apportionment.

Source: California Municipal Statistics, Inc.

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Major Taxpayers. The following table shows the twenty largest taxpayers in the City as determined by their secured assessed valuations in 2024-25.

CITY OF BERKELEY
Largest 2024-25 Local Secured Taxpayers

2024-25 % of
Property Owner Primary Land Use Assessed Valuation Total (1)

1. Bayer Healthcare LLC Industrial $ 439,329,442 1.55%

2. CA AG Logan Park Property Owner LLC Apartments 167,132,007 0.59

3. Berkeley Multifamily I Property Owner LLC Apartments with Retail 160,806,953 0.57

4. Mark at Berkeley LLC Apartments 152,520,052 0.54

5. MCREF Acheson LLC Apartments 149,273,988 0.53

6. Foundry31 Owner DE LLC Industrial 147,427,512 0.52

7. Kaiser Foundation Health Plan Inc. Medical Offices 140,640,881 0.50

8. Aquatic Park Science Center II LLC Industrial 122,272,400 0.43

9. Berkeley Downtown Hotel Owner LLC Hotel 106,000,000 0.37

10. 1500 San Pablo LLC Apartments 98,638,253 0.35

11. Hanumandla R. & Hanumandla J. Reddy, Trustees Apartments 90,686,301 0.32

12. CVBAF ACQ LLC Apartments 82,320,286 0.29

13. 2176 Kittredge Owner LLC Apartments 81,955,369 0.29

14. Redwood Gardens Renewal LP Apartments 76,515,932 0.27

15. 1951 Shattuck LLC Apartments 73,331,266 0.26

16. GEDR Hillside LLC Apartments 69,360,606 0.25

17. Berkeley VQOF II SPE LLC Apartments 68,610,714 0.24

18. Core Berkeley Bancroft LLC Apartments 67,912,092 0.24

19. Parkershattuck Owner LLC Apartments 66,359,703 0.23

20. John K. Gordon J and Janis L. Mitchell, Trust Commercial Properties 62,367,885 0.22 $2,423,461,642 8.56%
_____________________
(1) 2024-25 Local Secured Assessed Valuation: $28,302,520,996.

Source: California Municipal Statistics, Inc.

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

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

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

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

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

In certain recent years, Proposition 8 appeals resulted in changes to assessed valuation, as shown below.

Year Changes in Assessed Valuation
2020-21 $1,233,243,959
2021-22 (1,335,630,976)
2022-23 ___
2023-24 ___
2024-25 ___

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

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Other General Fund Revenues and Transfers

In addition to property taxes, the City has several other major tax and fee revenue sources, as described below. The following table summarizes the City’s actual audited General Fund revenues and transfers from fiscal year 2020-21 through fiscal year 2023-24.

CITY OF BERKELEY

GENERAL FUND REVENUES AND TRANSFERS

Actual

Actual

Actual

Actual
Revenue Revenue Revenue Revenue
FY 2021 FY 2022 FY 2023 FY 2024
Real Property $68,166,155 $70,657,482 $79,260,689 $84,850,061 Unsecured Property 3,448,412 4,422,414 3,830,697 4,506,444 Supplemental Taxes 2,249,517 2,317,723 3,561,752 2,842,273 Property Transfer Tax 21,469,955 42,901,750 22,878,336 17,528,223 Property Transfer Tax-Measure P 10,919,576 20,591,313 10,199,580 6,272,861 Sales Tax 15,792,305 18,928,278 19,194,971 18,717,040
Soda Tax 953,069 1,025,800 1,162,310 1,101,210
Business License 17,809,332 20,324,937 21,854,193 23,754,845 Business License – Cannabis Recreation 1,712,641 1,250,792 997,572 152,834 Measure U1 4,818,740 4,913,872 5,844,564 6,322,118
Utility Users Tax 13,892,200 14,750,065 17,634,565 17,209,441 Hotel Tax 2,292,480 5,727,046 7,477,911 6,979,323
Vehicle In-Lieu 14,380,453 15,006,003 16,659,665 17,875,821 Parking Fines 3,571,391 4,765,819 5,875,858 6,034,002
Moving Violations 131,756 156,253 149,420 166,152
Interest 5,917,722 6,694,122 12,117,025 15,155,999
Ambulance Fees 3,081,204 3,833,730 5,143,120 7,910,668
Franchise Fees 1,726,470 1,720,056 1,822,528 2,008,162
Other Revenue 18,514,060 17,185,630 15,872,263 13,600,820 Transfers and IDC 21,180,762 29,445,571 23,605,162 20,312,614 TOTAL $232,028,200 $286,618,657 $275,142,181 $273,300,911

Source: City of Berkeley Budget Office. Revenues were recorded using the budget basis of accounting (i.e., Cash).

Sales and Use Tax. The sales tax is an excise tax imposed on retailers for the privilege of selling or leasing tangible personal property. The use tax is an excise tax imposed for the storage, use, or other consumption of tangible personal property purchased from any retailer. The total sales tax rate within the City is currently 10.25%. The proceeds of sales and uses taxes imposed within the City are distributed by the State to various agencies, with the City receiving

1.0% of the amount collected.

Collection of the sales and use tax is administered by the California Department of Tax and Fee Administration (the “ CDTFA”). This process was formerly administered by the State Board of Equalization. The Taxpayer Transparency and Fairness Act of 2017, which took effect July 1, 2017, restructured the State Board of Equalization and separated its functions among three separate entities: the State Board of Equalization, the CDTFA and the Office of Tax Appeals.

The State Board of Equalization will continue to perform the duties assigned to it by the state Constitution, while all other duties will be transferred to the newly established CDTFA and the Office of Tax Appeals. CDTFA will handle most of the taxes and fees previously collected by the State Board of Equalization, including sales and use tax . According to the CDTFA, it distributes quarterly tax revenues to local jurisdictions (like the City) using the following method:

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Using the prior year’s like quarterly tax allocation as a starting point, the CDTFA first eliminates nonrecurring transactions such as fund transfers, audit payments and refunds, and then adjusts for growth, in order to establish the estimated base amount. The CDTFA disburses 90% of the base amount to each local jurisdiction in three monthly installments (advances) prior to the final computation of the quarter’s actual receipts. Ten percent is withheld as a reserve against unexpected occurrences that can af fect tax collections (such as earthquakes, fire or other natural disaster) or distributions of revenue such as unusually large refunds or negative fund transfers. The first and second advances each represent 30% of the 90% distribution, while the third advance represents the remaining 40%. One advance payment is made each month, and the quarterly reconciliation payment (clean-up) is distributed in conjunction with the first advance for the subsequent quarter . Statements showing total collections, administra tive costs, prior advances and the current advance are provided with each quarterly clean-up payment.

The CDTFA receives an administrative fee based on the cost of services provided by the Board to the City in administering the City’s sales tax, which is deducted from revenue generated by the sales and use tax before it is distributed to the City.

Sales tax revenues increased approximately $42,822 or 0.2% to $19.97 million in fiscal year 2023-24 from $19.92 million in fiscal year 2022-23. The City currently projects that sales tax revenue will decrease by 1.2% in fiscal year 2024-25 and then increase 2.9% in fiscal year 2025-

26. CITY OF BERKELEY

TAXABLE TRANSACTIONS
(Figures in Thousands)

2019 2020 2021 2022 2023
Retail and Food Services:

Apparel Stores $42,772 $20,385 $37,143 $43,166 $44,187
Gen. Merchandise Stores 21,434 16,902 19,066 22,498 19,762 Food Stores 155,025 169,569 144,467 115,170 115,398
Eating and Drinking Places 391,474 208,146 283,279 366,323 383,140 Home Furnishings and Appliances 66,188 45,479 87,133 59,435 51,568 Bldg. Materials, Farm Implements 101,937 113,116 141,811 152,845 149,126 Auto Dealers, Auto Supplies 119,679 94,927 114,276 135,123 109,251 Gas/Service Stations 94,217 57,950 87,759 110,009 99,486 Other Retail Stores 261,020 188,434 236,279 245,362 224,668 Total Retail and Food Services 1,263,746 914,910 1,151,213 1,249,931 1,196,586 All Other Outlets 372,108 315,081 341,988 431,788 401,687 TOTAL ALL OUTLETS $1,635,854 $1,229,990 $1,493,201 $1,681,719 $1,598,273

Source: State Department of Tax and Fee Administration.

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

Utility Users Tax. The City imposes a 7.5% tax on users of gas, electricity and telephone, as well as cellular telephone services for billing addresses within the City. The tax is not applicable to State, County, or City agencies, or to insurance companies and banks. Some of the factors affecting this revenue stream include consumer demand for these utilities, legislative and regulatory action, rate changes, and the evolution of technology. Utility users taxes decreased $0.8 million or 4.6% from $17.6 million in fiscal year 2022-23 to $16.8 million in fiscal year 2023-

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24. The decrease came primarily from decreases in every category, except electric (increased $0.8 million), as follows: Gas (decreased $1.1 million); telephone (decreased $0.7 million); cellular (decreased $0.04); and cable (decreased $0.05 million). Utility users tax is expected to be flat from fiscal year 2024-25 through fiscal year 2025-26.

Business License Tax. The City requires all businesses within the City to be licensed and imposes a business license tax on all business locations and a new license registration fee on applicants for a new license. The annual tax is generally determined based on the type of business and the business’s gross receipts. The tax rate varies between $0.60 per $1,000 gross receipts for grocers, on the low end, and $50.00 per $1,000 gross receipts for adult cannabis sales on the high end. Most types of businesses are required to pay a minimum tax of at least $51 per year. The overall revenue from this tax is dependent on the number of license renewals each year and the growth of businesses and industries within the City and the Bay Area more generally. Business license taxes revenue decreased $0.7 million or 3.0% from $23.4 million in fiscal year 2021-22 to $23.9 million in fiscal year 2022-23 primarily due to business licenses taxes on recreational cannabis of $1.0 million being added to business license taxes for fiscal year 2022-23 but being included in other revenue categories in fiscal year 2023-24. The City projects an 0.41% decrease in business licenses taxes in fiscal year 2024-25 and a 2% increase in fiscal year 2025-26.

Property Transfer Tax. The City’s transfer tax rate is 1.5% for properties with a consideration up to $1.5 million and 2.5% for transferred properties with a consideration over $1.5 million. The $1.5 million threshold will be adjusted annually to capture approximately the top 33% of such transfers based on transfers that occurred in the 12 months preceding September 1 of the preceding year. However, the threshold cannot be reduced below $1.5 million, meaning that the tax on properties transferred for $1.5 m illion or less would remain at 1.5%, notwithstanding any adjustment. The tax is due when the transfer is recorded with the County. Title companies collect the tax as part of the sale closing process and remit the funds to the County when sales or transfers are finalized. The County remits the amounts due monthly, and the amounts are credited to the General Fund. A buyer of residential housing built before 1989 may voluntarily choose to reserve up to one-third of the transfer tax to perform seismic upgrades. Buyers typically have up to one year to complete the work and file for a rebate. Previously, title companies held the reserved amount in escrow until the work was completed, but since May 2007, the City has held the money in escrow accounts, with the interest going to the City.

Prior to fiscal year 2017 -18, it was the City Council’s policy that property transfer tax in excess of $10.5 million was treated as one -time revenue to be transferred to the Capital Improvement Fund for capital infrastructure needs, but that amount was increased to $12.5 million in fiscal year 2017-18 until fiscal year 2022-23; in fiscal year 2022-23, the City Council increased the baseline for fiscal year 2022 -23 and fiscal year 2023- 24 to $18 million, with a permanent adjustment to $16 million beginning in fiscal year 2024-25.

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

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Vehicle in Lieu Fees. Vehicle license fees (“VLF”) imposed for the operation of vehicles on state highways are collected by the State Department of Motor Vehicles in lieu of personal property taxes on vehicles. In connection with the offset of the VLF, the State Legislature authorized appropriations from the State General Fund to “backfill” the offset so that local governments, which receive all of the vehicle license fee revenues, would not experience any loss of revenues. The legislation that established the VLF offset program also provided that if there were insufficient State General Fund moneys to fully “backfill” the VLF offset, the percentage offset would be reduced proportionately (i.e., the license fee payable by drivers would be increased) to assure that local governments would not be underfunded.

As part of the 2004 Budget Act negotiations, an agreement was made between the State and local government officials under which the VLF rate was permanently reduced from 2% to

0.65%. In order to protect local governments, the reduction in VLF revenue to cities and counties from this rate change was replaced by an increase in the amount of property tax they receive.

Commencing in fiscal year 2004 -05, local governments began to receive their full share of replacement property taxes, and those replacement prop erty taxes now enjoy constitutional protection against certain transfers by the State because of the approval of Proposition 1A at the November 2004 election.

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

Vehicle in-lieu taxes increased $1.2 million or 7.3% in fiscal year 2023 -24 from $16.7 million in fiscal year 2022-23 to $17.9 million in fiscal year 2023-24 due to increases in assessed value of 7.256% in the City.

Other Revenues. The City also collects additional General Fund revenues from franchise fees, transient occupancy taxes, ambulance fees, a tax on sugar -sweetened beverages, and other more minor sources. Under the City’s cable and electric and gas franchise fee arrangements, the local cable provider pays an annual fran chise fee of 5% of gross revenues, and the electricity and gas providers pay the greater of 2% of gross receipts attributable to miles of line operated or 0.5% of gross receipts. The transient occupancy tax, also known as the hotel tax, is a 12% tax on the room charge for rental of transient lodging, which was significantly reduced due to restrictions on travel and events due to COVID -19. The City also has an agreement with the County to be the e xclusive provider of all emergency ground ambulance services within the City; the specific ambulance fee depends on the type of service delivered and is billed to clients or their insurance companies. Finally, other more minor revenue sources include payments for moving violations, interest on existing funds, and other service fees.

Direct and Overlapping Debt

Set forth below is a direct and overlapping debt report (the “Debt Report”) prepared by California Municipal Statistics, Inc., and effective April 1, 2025. The Debt Report is included for general information purposes only. The City has not reviewed the Debt Report for completeness or accuracy and makes no representation in connection therewith.

The Debt Report generally includes long-term obligations sold in the public credit markets by public agencies whose boundaries overlap the boundaries of the City in whole or in part. Such

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long-term obligations generally are not payable from revenues of the City (except as indicated) nor are they necessarily obligations secured by land within the City . In many cases, long -term obligations issued by a public agency are payable only from the general fund or other revenues of such public agency.

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

CITY OF BERKELEY

STATEMENT OF DIRECT AND OVERLAPPING BONDED DEBT
(As of April 1, 2025)

2024-25 Assessed Valuation: $29,573,546,105

DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable Debt 4/1/25 Alameda County 7.031% $ 33,673,217
Bay Area Rapid Transit District 2.822 67,481,357
Peralta Community College District 18.975 74,357,333
Berkeley Unified School District 99.996 355,655,773
City of Berkeley 100.000 195,595,000(1)
East Bay Regional Park District 4.403 6,502,130
City of Berkeley Thousand Oaks Heights AFUU Assessment District 100.000 750,000 TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT $734,014,810

DIRECT AND OVERLAPPING GENERAL FUND DEBT:

Alameda County and Coliseum Obligations 7.031% $44,273,680 Alameda-Contra Costa Transit District Certificates of Participation 8.272 794,112 Peralta Community College District Pension Obligation Bonds 18.975 20,392,015 City of Berkeley Lease Revenue Bonds and COP 100.000 15,700,000 TOTAL DIRECT AND OVERLAPPING GENERAL FUND DEBT $81,159,807

COMBINED TOTAL DEBT $815,174,617 (2)

Ratios 2024-25 Assessed Valuation:

Direct Debt ($195,595,000) ................................................................. 0.66% Total Direct and Overlapping Tax and Assessment Debt ..................... 2.48% Combined Direct Debt ($211,295,000) ............................................... 0.71% Combined Total Debt ............................................................................ 2.76%

(1) Excludes Notes to be sold.
(2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non -bonded capital lease obligations.

Source: California Municipal Statistics, Inc.

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Retirement Programs

PERS Plan Description . The City contributes to three plans in California Public Employees’ Retirement System (“PERS”). The first plan covers all of the City’s full-time and part- time benefited sworn uniformed fire employees and all chiefs (and is referred to as the Safety Fire Plan in this Official Statement). The second covers all of the City’s full-time and part-time benefited sworn uniformed police employees and all chiefs (and is referred to as the Safety Police Plan in this Official Statement). The third plan covers all remaining eligible City employees (and is referred to as the Miscellaneous Plan in this Official Statement). These plans are agent multiple-employer defined benefit pension plans administered by PERS, which acts as a common investment and administrative agent for participating public employers within the State of California.

PERS Plan Eligibility. For a more detailed discussion of the eligibility requirements for the City’s PERS retirement plans, see Appendix C, Note 12.

PERS Plan Contributions. The City is required to contribute the actuarially determined remaining amounts necessary to fund the benefits for its members. The actuarial methods and assumptions used are those adopted by the PERS Board of Administration (the “ Board of Administration”). For the measurement period ended June 30, 2023 (the measurement date), the average active employee contribution rate is 8.0% of annual pay for the Miscellaneous Plan and 9.0% of annual pay for the Safety Plan (Fire and Police), and the employer contribution rate is 23.446% of annual payroll for the Miscellaneous Plan, 48.776% of annual payroll for the Public Safety Fire Plan, and 79.138% of annual payroll for the Public Safety Police Plan. The contribution requirements of the plan members are established by State statute, and the employer contribution rates are established and may be amended by PERS.

Implementation of GASB No. 68 . Commencing with fiscal year ended June 30, 2015, the City implemented the provisions of GASB Statement No. 68, which require certain new pension disclosures in the notes to its audited financial statements commencing with the audit for fiscal year 2014-15. Statement No. 68 generally requires the City to recognize its proportionate share of the unfunded pension obligation by recognizing a net pension liability measured as of a date (the measurement date) no earlier than the end of its prior fiscal year.

For a more detailed discussion of the eligibility requirements for the City’s retirement plans, see Appendix C, Note 12. The City’s fiscal year 2023-24 contributions to the pension plans and the funded status of the pension plans as of June 30, 2023, are set forth below.

Total Pension
Liability
Plan
Fiduciary
Net Position
Net Pension
Liability
Plan
Fiduciary Net
Position as a
Percentage
of the Total
Pension
Liability
Covered
Employee
Payroll
Plan Net
Pension
Liability as a
Percentage
of Covered
Employee
Payroll
Contributions
Employer
PERS – Miscellaneous Plan
$1,256,885,291 $895,078,800 $361,806,491 71.21% $110,614,150 327.09% $34,576,213

PERS – Public Safety Fire Plan
$334,094,804 $233,174,881 $100,919,923 69.79% $18,118,697 556.99% $10,869,629

PERS – Public Safety Police Plan
$518,958,201 $313,908,941 $205,049,260 60.49% $21,578,636 950.24% $19,066,702

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Recent Actions by PERS. On November 15, 2021, the CalPERS Board selected a new asset allocation mix that will guide the fund’s investment portfolio for the next four years, while at the same time retaining the reduction of discount rate from 7.0% to 6.8%. Notable changes for employers include a decrease in median total employer contribution rates, from less than 1% in miscellaneous plans to a decrease of more than 2% in some safety plans. Contribution changes took effect in fiscal year 2023-24 for public agencies.

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

2023-24 2024-25 2025-26 2026-27
Projected
Miscellaneous $25.8 $30.1 $31.9 $34.6
Police 14.1 16.4 17.9 18.9
Fire 6.1 8.0 8.8 9.4
Total $46.0 $54.5 $58.6 $62.9

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

The City’s fiscal year 2023-24 contribution to the BPRIBP and the funded status of the BPRIBP, as of June 30, 2024, is set forth below.

Total Pension
Liability
Plan Fiduciary
Net Position
Plan Net
Pension
Liability
Plan
Fiduciary Net
Position as a
Percentage
of the Total
Pension
Liability
Covered
Payroll
Plan Net
Pension
Liability as
a
Percentage
of Covered
Employee
Payroll
Contributions
Employer
$68,306,425 $3,612,186 $64,694,239 5.29% $21,578,636* 271.89% $2,235,650 ______________
* Estimated.

For a more detailed discussion of the BPRIBP, see APPENDIX C to this Official Statement.

Peace Officers Research Association of California. Effective December 23, 2012, the City established a new sick leave program called Peace Officers Research Association of California (“PORAC”). If a sworn member of the Berkeley Police department has an accrued sick leave balance on December 23, 2012 that exceeds 200 hours, one half of all those hours in excess of 200 shall be maintained in a separate account. The financial value of those hours shall be converted and deposited into the employee’s PORAC medical trust account over five successive years in equal installments commencing on January 1, 2013. The conversion was at the employee’s rate of pay on December 23, 2012. The City may accelerate the payment of hours to be converted. The remaining fifty percent of the sick leave balance in excess of 200 hours was

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credited into the employee’s separate “catastrophic/service time” bank no later than February 1, 2013, up to a maximum of 500 hours.

The City’s contribution to PORAC for the calendar year ending December 31, 2024 was $392,104.

Safety Members Pension Fund. In addition, the City maintains the Safety Members Pension Fund (“ SMPF”), a defined benefit plan for fire and police officers who retired prior to March 1973. In March 1973, all active fire and police officers were transferred from SMPF to PERS. The City pays the benefits to SMPF members on a pay-as-you-go basis, primarily through a Funding Agreement, purchased by the Berkeley Civic Improvement Corporation on behalf of the City in 1989. For the fiscal year ended June 30, 2024, the City’s contribution to SM PF was $74,479.

The funded status of the SMPF as of June 30, 2024, the most recent actuarial date, is set forth below:

Actuarial
Valuation
Date
Plan
Fiduciary Net
Position
Total Pension
Liability
Plan Net
Pension
Liability
Plan
Fiduciary Net
Position as a
Percentage
of the Total
Pension
Liability
Covered
Payroll
Plan Net
Pension
Liability as a
Percentage
of Covered
Employee
Payroll
6/30/2024 -- $146,122 $146,122 --% N/A N/A

For a more detailed discussion of the SMPF, see APPENDIX C of this Official Statement.

Post-Employment Health Benefit

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

The City has adopted Government Accounting Standards Board Statement 75 which requires governmental agencies to change their accounting for Other Post-Employment Benefits (“OPEB”) from pay-as-you-go to an accrual basis.

See Appendix C, Note 3 for information about the City’s OPEB liabilities.

City of Berkeley Fire Employees Retiree Health Plan. The FRFH is a single-employer defined benefit medical plan. To be eligible for benefits, sworn Fire employees must retire from the City on or after July 1, 1997, be vested in a PERS pension, and retire from the City on or after age 50. Benefits commence immediately upon retirement. Benefits are payable for the retiree’s lifetime and continue for his or her covered spouse’s/domestic partner’s lifetime. The amount the City contributes toward the Fire Employ ees Retiree Health Plan is 4.5% per year regardless of the amount of increase in the underlying premium rate. The establishment and amendments of benefit provisions are negotiated between the employee bargaining units and the City Labor Negotiating Team, and are approved by the City Manager and City Council. As of June 30, 2024, there were 138 active employees, 27 retirees deferred and 89 retirees receiving benefits.

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

For the FRFH, the City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB asset for fiscal year 2023-24 and the four preceding years were as follows:

Fiscal Year
Ended Annual OPEB Cost
Percentage of
Annual OPEB Cost
Contributed

Net OPEB
Liability
6/30/2020 $2,104,622 36% $21,177,486
6/30/2021 2,575,970 35 23,873,248
6/30/2022 1,354,619 39 18,507,610
6/30/2023 3,659,767 36 22,908,062
6/30/2024 3,879,000 38 22,235,604

The funded status of the FRFH as of June 30, 2024, the date of the most recent actuarial report, is set forth below:

Actuarial
Valuation
Date
Actuarial
Value of
Assets
Actuarial
Accrued
Liability
(AAL)-Unit
Credit
Unfunded
Actuarial
Accrued
Liability-
UAAL
Funded
Ratio
Covered
Payroll
UAAL
as
Percentage
of covered
Payroll
7/1/2024 $12,665,380 $35,573,442 $22,235,604 38.0% $18,640,673 119.29%

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

Retirees who are at least age 50, with at least 8 years of service with the City at the time of separation from service are eligible to receive retiree health benefits commencing at age 55.

Benefits are payable for the retiree’s lifetime and continue for h is or her covered spouse’s/domestic partner’s lifetime. The City pays the monthly cost of the monthly premiums up to a participant’s applicable percentage of the base dollar amount and subject to annual 4.5% increases regardless of the amount of increase i n the underlying premium rate. As of June 30, 2024, there were 1,140 active employees, 393 inactive employees or beneficiaries currently receiving benefits and 203 inactive employees entitled to but not yet receiving benefits.

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

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For the RHPAP, the City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for fiscal year 2023-24 and the four preceding years were as follows:

Fiscal Year
Ended
Annual
OPEB Cost
Percentage of
Annual OPEB Cost
Contributed
Net OPEB
Obligation
6/30/2020 $5,534,572 32.7% $60,659,492
6/30/2021 4,871,995 42.9 41,895,470
6/30/2022 2,071,289 50.2 29,470,744
6/30/2023 6,017,367 52.3 29,845,739
6/30/2024 6,553,000 56.8 26,807,574

The funded status of the RHPAP as of June 30, 2024, the most recent actuarial report, is set forth below:

Actuarial
Valuation
Date
Actuarial
Accrued
Liability
(AAL)
Actuarial
Value of
Assets
Unfunded
Actuarial
Accrued
Liability-
UAAL
Funded
Ratio
Covered
Payroll
UAAL
as
Percentage
of covered
Payroll
7/1/2024 $62,048,880 $35,241,306 $26,807,574 56.8% $118,898,025 22.55%

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

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

I. A person who is vested in, and
II. Has reached the age of 50, and
III. Has retired from the City at age 50 or thereafter, and IV. Has applied for and is receiving a pension from at the time of retirement.

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

Years of Service City Percentage
10 to 14 25%
15 to 19 50
20 or more 100

Beginning September 19, 2012, each month after the employee retires the City will pay the health care service provider an appropriate percentage based on years of service above an amount equal to $1,200 per month for two -party coverage for the retiree and a qualifying spouse/domestic partner or $600 per month for single party coverage. Upon death of either the

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retiree or the retiree’s spouse, the City will only pay the appropriate percentage of the single party rate to the provider on behalf of the surviving retiree or spouse/domestic partner. If there is no spouse/domestic partner at the time of retirement, the City shall only pay the single party rate.

The retiree and/or surviving spouse/domestic partner will be responsible for payment of the difference between the amount the City contributes toward payment of the premium and the actual premium cost. The funds for this difference will come from the retiree ’s retirement account and the retiree must authorize such withdrawal of funds.

Beginning July 1, 2013 , and effective each July 1 thereafter, the base rates the City contributes toward payment of the premium amount described in the preceding paragraph shall be increased by either the amount Kaiser increases the retiree medical premium for that year, or 6%, whichever is less. The retiree and/or surviving spouse/domestic partner shall pay the difference between the amount the City contributes toward payment of the premium and the actual premium cost. As of July 1, 2024, there were 150 active employees and 47 retirees.

For the retiree health premium assistance plan, the City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB asset for fiscal year 2023-24 and the four preceding years were as follows:

Fiscal Year
Ended Annual OPEB Cost
Percentage of
Annual OPEB Cost
Contributed

Net OPEB
Liability
6/30/2020 $4,432,549 4.0% $57,472,394
6/30/2021 5,076,625 4.0 49,355,501
6/30/2022 4,636,861 6.2 32,429,614
6/30/2023 5,245,557 5.8 35,423,408
6/30/2024 2,591,000 6.0 34,445,786

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

As of July 1, 2024, the most recent actuarial valuation date, the plan was 6.0% funded.

The actuarial accrued liability for benefit was $36.7 million, and the actuarial value of assets was $2.2 million, resulting in an unfunded accrued liability of $34.4 million. The covered payroll (annual payroll of active employees covered by the plan) was approximately $22.6 million. The fair value of the assets was determined using market values as of the date of the actuarial report. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multi -year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. Funded status of the plan as of June 30, 2024, the most recent actuarial valuation date is as follows:

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Actuarial
Value of
Assets
Actuarial
Accrued
Liability (AAL)-
Unit Credit
Unfunded
Actuarial
Accrued
Liability-
UAAL
Funded
Ratio
Covered
Payroll
UAAL
as
Percentage
of covered
Payroll
$2,214,765 $36,660,551 $34,445,786 6.0% $22,582,297 152.5%

Defined Contribution Plans

The City offers certain supplemental retirement and income plans to retirees. See Appendix C, Note 12 for information about the City’s defined contribution plans.

Labor Relations

As of March 31 , 2025, the City employed approximately 1,605 full-time equivalent budgeted employees. There are six employee unions as shown below. In addition, the City employs approximately 155 unrepresented employees that include Executive Management, Confidential professional or Confidential Office support positions. The City has not experienced any work stoppages or strikes by its employees.

CITY OF BERKELEY
Labor Relations
Labor Organization Employees
Contract Expiration
Date
Berkeley Fire Fighters Association/I.A.F.F. Local 1227 164 06/30/2026 Berkeley Police Association 140 06/30/2026
I. B. E. W. Local 1245 11 06/30/2025
Service Employees International Local 1021 Maintenance and Clerical Chapters
460 06/26/2027
Service Employees International Local 1021 Community Services and Part-Time Recreation Leaders Association Chapters
393 06/26/2027
Public Employees Local 1 199 06/26/2027
Unrepresented Employees 131 06/26/2027

Source: City of Berkeley.

Risk Management

The City is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions; injuries to employees; and natural disasters.

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

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

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

At June 30, 2024, $7,229,101 and $40,698,360 have been accrued for public liability, and workers’ compensation claims, respectively. These accruals represent estimates of amounts to ultimately be paid for reported claims and, upon past experience, recent claim settlement trends and other information . It is the City’s practice to obtain an actuarial study on an annual basis.

Although the amount of actual losses incurred through June 30, 2024 are dependent on future developments, based upon information from the administrators and others involved with the administration of the programs, the City’s management believes that the aggregate accrual is adequate to cover such losses.

City Debt Structure

Short-Term Debt. The City has issued Tax and Revenue Anticipation Notes (“TRANs”) in each recent year. The City’s TRANs are a general obligation of the City, payable from the City’s General Fund and any other lawfully available moneys. The fiscal year 2024-25 TRANs have an outstanding principal amount of $35,395,000 and mature on July 29, 2025.

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

Certificates of Participation . On June 2, 2021, Berkeley Joint Powers Financing Authority (the “ Authority”) executed and delivered certificates of participation in the aggregate principal amount of $3,975,000 (the “Certificates of Participation”). The City’s underlying rental obligation is a General Fund obligation of the City. The Notes bear interest at rates between 2.00%-5.00%, and the final maturity date is October 1, 2031. As of May 1, 2025, the principal balance outstanding was $________.

Lease Revenue Bonds. In October 2012, Authority issued lease revenue bonds on behalf of the City in the aggregate principal amount of $27,260,000 to refund the Authority’s 1999 Lease Revenue Bonds and 2003 Certificates of Participation. The City’s underlying rental obligation is a General Fund obligation of the City. The bonds bear interest at rates between 3.00%-5.00%, and the final maturity date is October 1, 2037. As of May 1, 2025, the principal balance outstanding was $________.

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Employment

The unemployment rate in the Oakland -Fremont-Berkeley MD was 4.5 % in February 2025, down from a revised 4.7% in January 2025, and unchanged from the year-ago estimate of

4.5%. This compares with an unadjusted unemployment rate of 5.5% for California and 4.5% for the nation during the same period. The unemployment rate was 4.4 % in Alameda County, and

4.6% in Contra Costa County.

The table below provides information about employment by industry type for Alameda County for calendar years 2020 through 2024.

OAKLAND- FREMONT-BERKELEY MD
(Alameda and Contra Costa Counties)
Civilian Labor Force, Employment and
Unemployment, Unemployment by Industry
(Annual Averages)

2020 2021 2022 2023 2024
Civilian Labor Force (1) 1,425,400 1,414,000 1,432,000 1,448,500 1,448,600 Employment 1,303,300 1,329,500 1,384,800 1,392,800 1,383,700 Unemployment 122,000 84,500 47,200 55,700 64,900
Unemployment Rate 8.6% 6.0% 3.3% 3.8% 4.5%
Wage and Salary Employment: (2)
Agriculture 1,500 1,700 1,900 1,800 1,500
Mining and Logging 200 200 300 300 300
Construction 71,100 74,300 75,600 75,700 74,100
Manufacturing 98,700 106,000 112,300 111,200 104,100
Wholesale Trade 42,100 41,100 41,500 41,200 40,700
Retail Trade 101,500 105,300 106,200 105,300 103,400
Transportation, Warehousing, Utilities 44,600 47,100 51,700 52,200 52,000 Information 25,600 24,700 25,000 24,200 22,400
Finance and Insurance 35,900 34,800 33,600 32,200 31,500 Real Estate and Rental and Leasing 16,800 17,200 18,400 18,500 18,400 Professional and Business Services 184,900 190,700 194,700 188,200 186,000 Educational and Health Services 191,300 198,500 205,800 216,900 229,400 Leisure and Hospitality 84,700 92,500 108,300 111,700 110,800 Other Services 33,100 35,600 39,200 41,500 42,700
Federal Government 14,200 13,400 13,100 13,200 13,300
State Government 38,200 35,900 33,100 33,500 32,300
Local Government 113,500 111,800 115,200 117,700 121,400 Total, All Industries (3) 1,097,900 1,130,800 1,175,800 1,185,100 1,184,300

(1) Labor force data is by place of residence; includes self -employed individuals, unpaid family workers, household domestic workers, and workers on strike.
(2) Industry employment is by place of work; excludes self -employed individuals, unpaid family workers, household domestic workers, and workers on strike.
(3) Calculations may not foot due to rounding.

Source: State of California Employment Development Department.

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

CITY OF BERKELEY
Major Employers
2024

Employer
Number of
Employees
% of Total
Employment
University of California Berkeley 13,847 21.26%
Lawrence Berkeley National Laboratory 3,581 5.50
Sutter East Bay Medical Foundation/Hospitals 2,031 3.12 Berkeley Unified School District 1,767 2.71
City of Berkeley 1,764 2.71
Bayer Corporation 979 1.50
Kaiser Permanente Medical Group 959 1.47
Siemens Corporation/Healthcare Diagnostics, Inc. 594 0.91 Berkeley Bowl Produce 586 0.90
YMCA of The Central Bay Area 542 0.83

Source: City of Berkeley, Annual Comprehensive Financial Report for the Fiscal Year Ended June 30, 2024.

[Remainder of Page Intentionally Left Blank]

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ALAMEDA COUNTY
Major Employers
(Listed Alphabetically)
As of April 2025

Employer Name Location Industry
Alameda County Law Enforcement Oakland Government Offices-County Alameda County Sheriff's Dept San Leandro Government Offices-County Alameda County Sheriff's Ofc Oakland Government Offices-County Alta Bates Summit Med Ctr Alta Berkeley Hospitals
BART PD Oakland Transit Lines
California State Univ East Bay Hayward Schools-Universities & Colleges Academic Cooper Vision Inc Pleasanton Optical Goods-Wholesale
Dell EMC Pleasanton Computer Storage Devices (mfrs)
East Bay Muni Utility Dist Oakland Water & Sewage Companies-Utility Kaiser Permanente Oakland Med Oakland Hospitals
Lawerence Berkeley Lab Berkeley Laboratories-Research & Development Lawrence Livermore Natl Lab Livermore University-College Dept/Facility/Office Peoplesoft Inc Pleasanton Computer Software-Manufacturers Ross Stores Inc Dublin Department Stores
Sanfrancisco Bayarea Rapid Oakland Transit Lines
Stanford Health Care-Vllycr Livermore Clinics
Tesla Fremont Factory Fremont Automobile-Manufacturers
Transportation Dept-California Oakland Government Offices-State UCSF Benioff Children's Hosp Oakland Hospitals
University of CA Berkeley Berkeley Schools-Universities & Colleges Academic University of Ca-Berkeley Berkeley University-College Dept/Facility/Office University-Ca-Berkeley Dept Berkeley University-College Dept/Facility/Office Valley Care Health System Livermore Health Services

Source: California Employment Development Department, extracted from The America's Labor Market Information System (ALMIS) Employer Database, 2025 1st Edition.

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Effective Buying Income

“Effective Buying Income” is defined as personal income less personal tax and nontax payments, a number often referred to as “disposable” or “after -tax” income. Personal income is the aggregate of wages and salaries, other labor-related income (such as employer contributions to private pension funds), proprietor’s income, rental income (wh ich includes imputed rental income of owner -occupants of non- farm dwellings), dividends paid by corporations, interest income from all sources, and transfer payments (such as pensions and welfare assistance).

Deducted from this total are personal taxes (fe deral, state and local), nontax payments (fines, fees, penalties, etc.) and personal contributions to social insurance. According to U.S. government definitions, the resultant figure is commonly known as “disposable personal income.” The following table summarizes the total effective buying income and median household effective buying income for the City, the County, the State and the United States for the period 2021 through 2025.

CITY OF BERKELEY; ALAMEDA COUNTY;
STATE OF CALIFORNIA; UNITED STATES
Effective Buying Income
2021 through 2025

Year

Area
Total Effective
Buying Income
(000’s Omitted)
Median
Household
Effective Buying
Income
2021 City of Berkeley $6,203,796 $79,437
Alameda County 77,794,202 88,389
California 1,290,894,604 67,956
United States 9,809,944,764 56,790

2022 City of Berkeley $6,646,946 $88,676
Alameda County 85,225,529 99,940
California 1,452,426,153 77,058
United States 11,208,582,541 64,448

2023 City of Berkeley $6,074,419 $88,720
Alameda County 80,766,211 98,721
California 1,461,799,662 77,175
United States 11,454,846,397 65,326

2024 City of Berkeley $6,251,098 $89,175
Alameda County 84,213,255 101,689
California 1,510,708,521 80,973
United States 11,987,185,826 67,876

2025 City of Berkeley $6,486,075 $89,591
Alameda County 88,476,678 106,127
California 1,557,429,767 82,725
United States 12,525,577,707 69,687

Source: Claritas, LLC.

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Construction Activity

Provided below are the building permits and valuations for the City and County for calendar years 2019 through 2023.

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

2019 2020 2021 2022 2023
Permit Valuation
New Single-family $9,666.3 $6,444.7 $13,533.1 $9,058.9 $18,885.4 New Multi-family 7,513.6 12,643.5 53,032.6 12,373.6 22,887.6 Res. Alterations/Additions 40,596.9 26,204.9 47,099.2 28,834.2 36,880.3 Total Residential 57,776.8 45,293.1 113,664.9 50,266.7 78,653.3

New Commercial 10,816.3 25,867.1 15,167.2 5,577.0 0.0
New Industrial 0.0 0.0 0.0 0.0 0.0
New Other 4,718.7 272.0 1,760.3 3,501.9 2,024.2
Com. Alterations/Additions 12,885.4 23,290.5 65,213.8 13,158.1 21,111.1 Total Nonresidential 28,420.4 49,429.6 82,141.3 22,237.0 23,135.3

New Dwelling Units
Single Family 46 21 69 40 70
Multiple Family 42 117 286 72 384
TOTAL 88 138 355 112 454

Source: Construction Industry Research Board, Building Permit Summary.

ALAMEDA COUNTY
Total Building Permit Valuations
(Valuations in Thousands)

2019 2020 2021 2022 2023
Permit Valuation
New Single-family $675,129.8 $394,500.3 $407,585.0 $339,046.4 $332,289.9 New Multi-family 782,536.4 722,038.0 829,822.2 795,917.3 507,952.9 Res. Alterations/Additions 512,409.9 293,866.8 222,971.3 323,712.1 425,659.0 Total Residential 1,970,076.1 1,410,405.1 1,460,378.5 1,458,675.8 $1,265,901.8

New Commercial 718,569.0 238,516.5 312,914.6 268,498.1 405,330.0 New Industrial 5,638.5 0.0 600.0 33,740.8 65,576.2
New Other 78,049.8 131,447.0 110,817.0 120,294.6 94,551.2 Com. Alterations/Additions 992,668.1 628,230.5 892,656.8 993,782.1 852,215.1 Total Nonresidential 1,794,925.4 998,194.0 1,316,988.4 1,416,315.6 $1,417,672.5

New Dwelling Units
Single Family 1,871 1,152 1,589 1,175 1,061
Multiple Family 4,145 2,610 4,494 3,366 3,686
TOTAL 6,016 3,762 6,083 4,541 4,747

Source: Construction Industry Research Board, Building Permit Summary.

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APPENDIX B

SUMMARY OF PRINCIPAL LEGAL DOCUMENTS

C-1

APPENDIX C

ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR YEAR ENDED JUNE 30, 2024

D-1

APPENDIX D

PROPOSED FORM OF OPINION OF BOND COUNSEL

E-1

APPENDIX E

FORM OF CONTINUING DISCLOSURE CERTIFICATE

$____________

BERKELEY JOINT PUBLIC FINANCING AUTHORITY
2025 Lease Revenue Notes
(Fire Administration and Training Project)
(Federally Taxable)

This Continuing Disclosure Certificate (this “Disclosure Certificate”) is executed and delivered by the City of Berkeley (the “City”), on behalf of the Berkeley Joint Powers Financing Authority (the “Authority”) and itself, in connection with the issuance by the Authority of the Notes captioned above (the “Notes”). The Notes are being issued under an Indenture of Trust dated as of June 1, 2025 (the “Indenture”), by and between the Authority and The Bank of New York Mellon Trust Company, N.A. , as trustee (the “Trustee”). The City hereby covenants and agrees as follows:

Section 1 . Purpose of the Disclosure Certificate . This Disclosure Certificate is being executed and delivered by the City on behalf of itself and the Authority for the benefit of the holders and beneficial owners of the Notes and in order to assist the Participating Underwriter in complying with S.E.C. Rule 15c2-12(b)(5).

Section 2. Definitions. In addition to the definitions set forth above and in the Indenture, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalized terms shall have the following meanings:

“Annual Report ” means any Annual Report provided by the City pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate.

“Annual Report Date” means nine months after the end of the City's fiscal year (currently April 1, based on the City’s fiscal year-end of June 30).

“Dissemination Agent” means the City, or any successor Dissemination Agent designated in writing by the City and which has filed with the City a written acceptance of such designation.

“Listed Events” means any of the events listed in Section 5(a) of this Disclosure Certificate.

“MSRB” means the Municipal Securities Rulemaking Board, which has been designated by the Securities and Exchange Commission as the sole repository of disclosure information for purposes of the Rule, or any other repository of disclosure information that may be designated by the Securities and Exchange Commission as such for purposes of the Rule in the future.

“Official Statement ” means the final official statement dated _____________, 2025, executed by the City and the Authority in connection with the issuance of the Notes.

“Participating Underwriter” means ____________________, the original purchaser of the Notes required to comply with the Rule in connection with offering of the Notes.

“Rule” means Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time.

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Section 3. Provision of Annual Reports.

(a) The City shall, or shall cause the Dissemination Agent to, not later than the Annual Report Date, commencing April 1, 2026 (the “Initial Reporting Date ”), with the report for the 2024-25 fiscal year, provide to the MSRB, in an electronic format as prescribed by the MSRB, an Annual Report that is consistent with the requirements of Section 4 of this Disclosure Certificate.

Not later than 15 Business Days prior to the Annual Report Date, the City shall provide the Annual Report to the Dissemination Agent (if other than the City) . If by 15 Business Days prior to the Annual Report Date the Dissemination Agent (if other than the City) has not received a copy of the Annual Report, the Dissemination Agent shall contact the City to determine if the City is in compliance with the previous sentence. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 4 of this Disclosure Certificate; provided that the audited financial statements of the City may be submitted separately from the balance of the Annual Report, and later than the Annual Report Date, if not available by that date. If the City’s fiscal year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5(b). The City shall provide a written certification with each Annual Report furnished to the Dissemination Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished by the City hereunder.

(b) If the City does not provide (or cause the Dissemination Agent to provide) an Annual Report by the Annual Report Date, the City shall provide (or cause the Dissemination Agent to provide) to the MSRB, in an electronic format as prescribed by the MSRB, a notice in substantially the form required by the Rule.

(c) With respect to each Annual Report, the Dissemination Agent shall:

(i) determine each year prior to the Annual Report Date the then -applicable rules and electronic format prescribed by the MSRB for the filing of annual continuing disclosure reports; and

(ii) if the Dissemination Agent is other than the City, file a report with the City certifying that the Annual Report has been provided pursuant to this Disclosure Certificate, and stating the date it was provided.

Section 4. Content of Annual Reports . The City’s Annual Report shall contain or incorporate by reference the following:

(a) Financial Statements. Audited financial statements of the City for the preceding fiscal year, prepared in accordance generally accepted accounting principles. If the City’s audited financial statements are not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available.

(b) Other Annual Information. To the extent not included in the audited final statements of the City, the Annual Report shall also include financial and operating data with respect to the City for the preceding fiscal year, substantially similar to that provided in the corresponding tables and charts in the Official Statement, as follows:

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(i) summary of investments held in the City's investment portfolio for the most recently-completed fiscal year, including market value, book value and a description of any investments that do not comply with the City's investment policies;

(ii) General Fund budget for the fiscal year during which the annual report is filed;

(iii) General Fund balance sheet for the most recently-completed fiscal year;

(iv) General Fund summary of revenues and expenditures for the most recently-completed fiscal year;

(v) General Fund tax revenues by source for the most recently-completed fiscal year;

(vi) assessed valuation of property in the City for the most recently-completed fiscal year and, to the extent the City is no longer on the Teeter Plan (or its equivalent) and such information is available from the County, information about property tax levies and collections for the most recently completed fiscal year;

(vii) taxable transactions in the City for the most recently-completed fiscal year available; and

(viii) description of the City's outstanding General Fund debt and lease obligations as of the end of the most recently -completed fiscal year, including long-term General Fund obligations.

(c) Cross References. Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the City or related public entities, which are available to the public through the MSRB. The City shall clearly identify each such other document so included by reference. If the document included by reference is a final official statement, it must be available from the MSRB.

Section 5. Reporting of Significant Events.

(a) The City shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Notes:

(1) Principal and interest payment delinquencies.

(2) Non-payment related defaults, if material.

(3) Unscheduled draws on debt service reserves reflecting financial difficulties.

(4) Unscheduled draws on credit enhancements reflecting financial difficulties.

(5) Substitution of credit or liquidity providers, or their failure to perform.

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(6) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701- TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security.

(7) Modifications to rights of security holders, if material.

(8) Bond calls, if material, and tender offers.

(9) Defeasances.

(10) Release, substitution, or sale of property securing repayment of the securities, if material.

(11) Rating changes.

(12) Bankruptcy, insolvency, receivership or similar event of the City or other obligated person.

(13) The consummation of a merger, consolidation, or acquisition involving the City or an obligated person, or the sale of all or substantially all of the assets of the City or an obligated person (other than in the ordinary course of business), the entry into a definitive agreement to undertake such an action, or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material.

(14) Appointment of a successor or additional trustee or the change of name of a trustee, if material.

(15) Incurrence of a financial obligation of the obligated person, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the obligated person, any of which affect security holders, if material.

(16) Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a financial obligation of the obligated person, any of which reflect financial difficulties.

(b) Whenever the City obtains knowledge of the occurrence of a Listed Event, the City shall, or shall cause the Dissemination Agent (if not the City) to, file a notice of such occurrence with the MSRB, in an electronic format as prescribed by the MSRB, in a timely manner not in excess of 10 business days after the occurrence of the Listed Event . Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(8) and (9) above need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to holders of affected Notes under the Indenture.

(c) The City acknowledges that the events described in subparagraphs (a)(2), (a)(7), (a)(8) (if the event is a bond call), (a)(10), (a)(13), and (a)(14) of this Section 5 contain the qualifier “if material” and that subparagraph (a)(6) also contains the qualifier “material” with respect to

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certain notices, determinations or other events affecting the tax status of the Notes. The City shall cause a notice to be filed as set forth in paragraph (b) above with respect to any such event only to the extent that it determines the event ’s occurrence is material for purposes of U.S. federal securities law. Whenever the City obtains knowledge of the occurrence of any of these Listed Events, the City will as soon as possible determine if such event would be material under applicable federal securities law. If such event is determined to be material, the City will cause a notice to be filed as set forth in paragraph (b) above.

(d) For purposes of this Disclosure Certificate, any event described in paragraph (a)(12) above is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent, or similar officer for the City in a proceeding under the United States Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the City, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement, or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the City.

(e) For purposes of Section 3(a)(15) and (16), “financial obligation” means a (i) debt obligation; (ii) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (iii) guarantee of (i) or (ii). The term financial obligation shall not include municipal securities as to which a final official statement has been provided to the Municipal Securities Rulemaking Board consistent with the Rule.

Section 6. Identifying Information for Filings with the MSRB. All documents provided to the MSRB under the Disclosure Certificate shall be accompanied by identifying information as prescribed by the MSRB.

Section 7 . Termination of Reporting Obligation . The City’s obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Notes. If such termination occurs prior to the final maturity of the Notes, the City shall give notice of such termination in the same manner as for a Listed Event under Section 5(b).

Section 8. Dissemination Agent. The City may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any such Agent, with or without appointing a successor Dissemination Agent.

The initial Dissemination Agent will be NHA Advisors, LLC. Any Dissemination Agent may resign by providing 30 days’ written notice to the City.

Section 9. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the City may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied:

(a) if the amendment or waiver relates to the provisions of Sections 3(a), 4 or 5(a), it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature, or sta tus of an obligated person with respect to the Notes, or type of business conducted;

(b) the undertakings herein, as proposed to be amended or waived, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule

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at the time of the primary offering of the Notes, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and

(c) the proposed amendment or waiver either (i) is approved by holders of the Notes in the manner provided in the Indenture for amendments to the Indenture with the consent of holders, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the holders or beneficial owners of the Notes.

If the annual financial information or operating data to be provided in the Annual Report is amended pursuant to the provisions hereof, the first annual financial information filed pursuant hereto containing the amended operating data or financial informat ion shall explain, in narrative form, the reasons for the amendment and the impact of the change in the type of operating data or financial information being provided.

If an amendment is made to the undertaking specifying the accounting principles to be followed in preparing financial statements, the annual financial information for the year in which the change is made shall present a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. The comparison shall include a qualitative discussion of the differences in the accounting principles and the impact of the change in the accounting principles on the presentation of the financial information, in order to provide information to investors to enable them to evaluate the ability of the City to meet its obligations . To the extent reasonably feasible, the comparison shall be quantitative.

A notice of any amendment made pursuant to this Section 9 shall be filed in the same manner as for a Listed Event under Section 5(b).

Section 10. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the City from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Certificate . If the City chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate, the City shall have no obligation under this Disclosure Certificate to update such information or include it in any future Annual Report or no tice of occurrence of a Listed Event.

Section 11. Default. In the event of a failure of the City to comply with any provision of this Disclosure Certificate, the Participating Underwriter or any holder or beneficial owner of the Notes may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the City to comply with its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an Event of Default under the Indenture, and the sole remedy under this Disclosure Certificate in the event of any failure of the City to comply with this Disclosure Certificate shall be an action to compel performance.

Section 12. Duties, Immunities and Liabilities of Dissemination Agent.

(a) The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and the City agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, e xpense and liabilities

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which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys fees) of defending against any claim of liability, but excluding liabilities due to the Disseminat ion Agent’s negligence or willful misconduct. The Dissemination Agent shall have no duty or obligation to review any information provided to it hereunder and shall not be deemed to be acting in any fiduciary capacity for the City, the Note owners or any other party. The obligations of the City under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Notes.

(b) The Dissemination Agent shall be paid compensation by the City for its services provided hereunder in accordance with its schedule of fees as amended from time to time, and shall be reimbursed for all expenses, legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder.

Section 13. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the City, the Dissemination Agent, the Participating Underwriter and holders and beneficial owners from time to time of the Notes, and shall create no rights in any other person or entity.

Section 14. Counterparts. This Disclosure Certificate may be executed in several counterparts, each of which shall be regarded as an original, and all of which shall constitute one and the same instrument.

Date: ________________, 2025

CITY OF BERKELEY

By:

Finance Director

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APPENDIX F

DTC AND THE BOOK-ENTRY ONLY SYSTEM

The following description of the Depository Trust Company (“DTC”), the procedures and record keeping with respect to beneficial ownership interests in the Notes, payment of principal, interest and other payments on the Notes to DTC Participants or Beneficial Owners, confirmation and transfer of beneficial ownership interest in the Notes and other related transactions by and between DTC, the DTC Participants and the Beneficial Owners is based solely on information provided by DTC. Accordingly, no representations can be made concerning these matters and neither the DTC Participants nor the Beneficial Owners should rely on the foregoing information with respect to such matters, but should instead confirm the same with DTC or the DTC Participants, as the case may be.

Neither the Authority (the “Issuer”) nor the Trustee (the “Agent”) take any responsibility for the information contained in this Appendix.

No assurances can be given that DTC, DTC Participants or Indirect Participants will distribute to the Beneficial Owners (a) payments of interest, principal or premium, if any, with respect to the Notes, (b) certificates representing ownership interest in or other confirmation or ownership interest in the Notes, or (c) redemption or other notices sent to DTC or Cede & Co., its nominee, as the registered owner of the Notes, or that they will so do on a timely basis, or that DTC, DTC Participants or DTC Indire ct Participants will act in the manner described in this Appendix. The current “Rules” applicable to DTC are on file with the Securities and Exchange Commission and the current “Procedures” of DTC to be followed in dealing with DTC Participants are on file with DTC.

1. The Depository Trust Company (“DTC”), New York, NY, will act as securities depository for the securities (the “Securities”). The Securities will be issued as fully -registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Security certificate will be issued for each issue of the Securities, each in the aggregate principal amount of such issue, and will be deposited with DTC. If, however, the aggregate principal amount of any issue exceeds $500 million, one certificate will be issued with respect to each $500 million of principal amount, and an additional certificate will be issued with respect to any remaining principal amount of such issue.

2. DTC, the world’s largest securities depository, is a limited -purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book -entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates . Direct Participants include both U.S. and non -U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations . DTC is a wholly -owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding

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company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others s uch as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has a Standard & Poor’s rating of AA+ . The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission . More information about DTC can be found at www.dtcc.com and www.dtc.org. The information contained on this Internet site is not incorporated herein by reference.

3. Purchases of Securities under the DTC system must be made by or through Direct Participants, which will receive a credit for the Securities on DTC’s records . The ownership interest of each actual purchaser of each Security (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase . Beneficial Owners are, however, expected to receive written confirmations providing details of the transa ction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Securities are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Securities, except in the event that use of the book-entry system for the Securities is discontinued.

4. To facilitate subsequent transfers, all Securities deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Securities with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Securities; DTC’s records reflect only the ident ity of the Direct Participants to whose accounts such Securities are credited, which may or may not be the Beneficial Owners . The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.

5. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Securities may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Securities, such as redemptions, tenders, defaults, and proposed amendments to the Security documents. For example, Beneficial Owners of Securities may wish to ascertain that the nominee holding the Securities for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.

6. Redemption notices shall be sent to DTC . If less than all of the Securities within an issue are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.

7. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Securities unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to Issuer as soon as possible after the record date . The Omnibus Proxy assigns Cede & Co.’s consenting or voting

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rights to those Direct Participants to whose accounts Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy).

8. Redemption proceeds, distributions, and dividend payments on the Securities will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from Issuer or Agent, on payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC, Agent, or Issuer, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of Issuer or Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.

9. A Beneficial Owner shall give notice to elect to have its Securities purchased or tendered, through its Participant, to the Agent, and shall effect delivery of such Securities by causing the Direct Participant to transfer the Participant’s interest in t he Securities, on DTC’s records, to the Agent. The requirement for physical delivery of Securities in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Securities are transferred by Direct Participants on DTC’s records and followed by a book - entry credit of tendered Securities to the Agent’s DTC account.

10. DTC may discontinue providing its services as depository with respect to the Securities at any time by giving reasonable notice to Issuer or Agent. Under such circumstances, in the event that a successor depository is not obtained, Security certificates are required to be printed and delivered.

11. Issuer may decide to discontinue use of the system of book -entry-only transfers through DTC (or a successor securities depository). In that event, Security certificates will be printed and delivered to DTC.

12. The information in this section concerning DTC and DTC’s book- entry system has been obtained from sources that Issuer believes to be reliable, but Issuer takes no responsibility for the accuracy thereof.

4908-8455-6335.2
Jones Hall draft 4-19-25

INDENTURE OF TRUST

Dated as of June 1, 2025

between

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,
as Trustee

and the

BERKELEY JOINT POWERS FINANCING AUTHORITY

Authorizing the Issuance of

$______________
Berkeley Joint Powers Financing Authority
2025 Lease Revenue Notes
(Fire Administration and Training Project)
(Federally Taxable)

4908-8455-6335.2

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TABLE OF CONTENTS

ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
SECTION 1.01. Definitions ........................................................................................................... 2 SECTION 1.02. Authorization ....................................................................................................... 3 SECTION 1.03. Interpretation ....................................................................................................... 3

ARTICLE II
The Notes
SECTION 2.01. Authorization of Notes ......................................................................................... 3 SECTION 2.02. Terms of the Notes ............................................................................................. 3 SECTION 2.03. Transfer and Exchange of Notes ......................................................................... 4 SECTION 2.04. Book-Entry System ............................................................................................. 5 SECTION 2.05. Registration Books .............................................................................................. 7 SECTION 2.06. Form and Execution of Notes .............................................................................. 7 SECTION 2.07. Notes Mutilated, Lost, Destroyed or Stolen ......................................................... 8 SECTION 2.08. Additional Notes ................................................... Error! Bookmark not defined.

SECTION 2.09. Proceedings for the Issuance of Additional Notes Error! Bookmark not defined.

SECTION 2.10. Applicability to Additional Notes ........................... Error! Bookmark not defined.

ARTICLE III
Issuance of Notes; Application of Proceeds
SECTION 3.01. Issuance of the Notes ......................................................................................... 8 SECTION 3.02. Application of Proceeds of Sale of Notes ............................................................ 8 SECTION 3.03. Establishment and Application of Costs of Issuance Fund .................................. 9 SECTION 3.04. Establishment and Application of Project Fund; Notes Account .......................... 9 SECTION 3.-5. Validity of Notes ................................................................................................. 10

ARTICLE IV
Redemption of Notes
SECTION 4.01. Terms of Redemption........................................................................................ 10 SECTION 4.02. Selection of Notes for Redemption .................................................................... 11 SECTION 4.03. Notice of Redemption; Rescission..................................................................... 11 SECTION 4.04. Partial Redemption of Notes ............................................................................. 11 SECTION 4.05. Effect of Redemption ........................................................................................ 11

ARTICLE V
Revenues; Funds and Accounts; Payment of Principal and
Interest
SECTION 5.01. Security for the Notes; Debt Service Fund ........................................................ 12 SECTION 5.02. Allocation of Revenues ..................................................................................... 13 SECTION 5.03. Application of Interest Account .......................................................................... 13 SECTION 5.04. Application of Principal Account ........................................................................ 13 SECTION 5.05. Reserved .......................................................................................................... 13 SECTION 5.06. Application of Redemption Fund ....................................................................... 13 SECTION 5.07. Insurance and Condemnation Fund .................................................................. 14 SECTION 5.08. Investments ...................................................................................................... 15 SECTION 5.09. Valuation and Disposition of Investments .......................................................... 16

ARTICLE VI
Covenants of the Authority
SECTION 6.01. Punctual Payment ............................................................................................. 18 SECTION 6.02. Extension of Payment of Notes ......................................................................... 18

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SECTION 6.03. Against Encumbrances ..................................................................................... 18 SECTION 6.04. Power to Issue Notes and Make Pledge and Assignment ................................. 18 SECTION 6.05. Accounting Records .......................................................................................... 18 SECTION 6.06. Reserved .......................................................................................................... 19 SECTION 6.07. Tax Covenants Applicable to the Notes ............................................................ 19 SECTION 6.08. Enforcement of Lease ....................................................................................... 19 SECTION 6.09. Waiver of Laws ................................................................................................. 19 SECTION 6.10. Further Assurances ........................................................................................... 19

ARTICLE VII
Events of Default and Remedies
SECTION 7.01. Events of Default ............................................................................................... 20 SECTION 7.02. Remedies Upon Event of Default ...................................................................... 20 SECTION 7.03. Application of Revenues and Other Funds After Default ................................... 21 SECTION 7.04. Trustee to Represent Note Owners ................................................................... 22 SECTION 7.05. Limitation on Note Owners' Right to Sue ........................................................... 22 SECTION 7.06. Absolute Obligation of Authority ........................................................................ 23 SECTION 7.07. Termination of Proceedings .............................................................................. 23 SECTION 7.08. Remedies Not Exclusive ................................................................................... 23 SECTION 7.09. No Waiver of Default ......................................................................................... 23 SECTION 7.10. Notice to Note Owners of Default ...................................................................... 23

ARTICLE VIII
The Trustee
SECTION 8.01. Appointment of Trustee ..................................................................................... 24 SECTION 8.02. Acceptance of Trusts; Removal and Resignation of Trustee ............................. 24 SECTION 8.03. Merger or Consolidation .................................................................................... 26 SECTION 8.04. Liability of Trustee ............................................................................................. 26 SECTION 8.05. Right to Rely on Documents.............................................................................. 29 SECTION 8.06. Preservation and Inspection of Documents ....................................................... 30 SECTION 8.07. Compensation and Indemnification ................................................................... 30

ARTICLE IX
Modification or Amendment Hereof
SECTION 9.01. Amendments Permitted ..................................................................................... 31 SECTION 9.02. Effect of Supplemental Indenture ...................................................................... 32 SECTION 9.03. Endorsement of Notes; Preparation of New Notes ............................................ 32 SECTION 9.04. Amendment of Particular Notes ........................................................................ 32

ARTICLE X
Defeasance
SECTION 10.01. Discharge of Indenture .................................................................................... 33 SECTION 10.02. Discharge of Liability on Notes ........................................................................ 33 SECTION 10.03. Deposit of Money or Securities with Trustee ................................................... 34 SECTION 10.04. Unclaimed Funds ............................................................................................ 34

ARTICLE XI
Miscellaneous
SECTION 11.01. Liability of Authority Limited to Revenues ........................................................ 35 SECTION 11.02. Limitation of Rights to Parties and Note Owners ............................................. 35 SECTION 11.03. Funds and Accounts ....................................................................................... 35 SECTION 11.04. Waiver of Notice; Requirement of Mailed Notice ............................................. 35 SECTION 11.05. Destruction of Notes........................................................................................ 36 SECTION 11.06. Severability of Invalid Provisions ..................................................................... 36 SECTION 11.07. Notices ............................................................................................................ 36 SECTION 11.08. Evidence of Rights of Note Owners ................................................................. 36

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SECTION 11.09. Disqualified Notes ........................................................................................... 37 SECTION 11.10. Money Held for Particular Notes ..................................................................... 37 SECTION 11.11. Waiver of Personal Liability ............................................................................. 37 SECTION 11.12. Successor Is Deemed Included in All References to Predecessor .................. 38 SECTION 11.13. Execution in Several Counterparts .................................................................. 38 SECTION 11.14. Payment on Non-Business Day ...................................................................... 38 SECTION 11.15. Governing Law ................................................................................................ 38

APPENDIX A DEFINITIONS

APPENDIX B FORM OF NOTE

APPENDIX C FORM OF PROJECT FUND REQUISITIONS

APPENDIX D FORM OF COSTS OF ISSUANCE FUND REQUISITION