Berkeley City Council
April 28, 2026

Support Position on SB 894 (Allen) - California Wildfire Resilience Loan Program

CALENDAR

ALTERNATIVE ACTIONS CONSIDERED
● The City of Berkeley could independently establish a municipal loan loss reserve or interest rate buy-down program for wildfire hardening improvements. While this approach would allow the City to tailor program design to Berkeley's specific needs and move forward on its own timeline, it would require a significant commitment of City capital and administrative resources, and would operate at a much smaller scale than a statewide program. A locally funded program would also face challenges in leveraging private lending partnerships and achieving the critical mass necessary to materially shift the insurance market. The DFSC finds that this alternative should be deferred pending the outcome of SB 894. ● Berkeley could explore partnering with neighboring jurisdictions – such as Oakland, and other East Bay communities participating in the East Bay Wildfire Coalition facing similar wildfire risk, and perhaps in conjunction with agencies with an interest in property improvements for water and energy efficiency such as EBMUD or AVA – to establish a regional financing program modeled on the structure proposed in SB 894. A multi-jurisdictional approach could achieve somewhat greater scale than a purely local program. However, designing, negotiating, and launching a joint program across multiple jurisdictions would be time- and resource-intensive, and would likely take years to operationalize. This alternative should likewise be deferred pending the outcome of SB 894. If the bill does not advance, the City of Berkeley may wish to revisit this option in a subsequent recommendation.

CITY MANAGER
The City Manager concurs with the content and recommendations of the Commission’s Report.

CONTACT PERSON
Keith May, Commission Secretary, Deputy Fire Chief, (510) 510-981-5508 Attachments:
1: Sample Letter of Support

Support Position on SB 894 (Allen) - California Wildfire Resilience Loan Program

CALENDAR

ATTACHMENT A
Draft Letter of Support from the Mayor of Berkeley
[DATE]
The Honorable Ben Allen
California State Senate, District 24
State Capitol, Room 2054
Sacramento, CA 95814
Re: Letter of Support – SB 894 (Allen): California Wildfire Resilience Loan Program Dear Senator Allen:

On behalf of the City of Berkeley, I am pleased to write in strong support of Senate Bill 894, which would establish the California Wildfire Resilience Loan Program. This legislation represents exactly the kind of bold, statewide financial innovation needed to accelerate home hardening and defensible space improvements in wildfire-vulnerable communities across California.

Berkeley is acutely aware of the wildfire risk facing our community. The Berkeley Hills are designated a Very High Fire Hazard Severity Zone, and the memory of the 1991 Tunnel Fire – which destroyed more than 3,300 homes and claimed 25 lives – shapes our ongoing commitment to wildfire preparedness and mitigation. Despite that commitment, we continue to face a fundamental challenge: the upfront cost of home hardening and defensible space improvements is a significant barrier for many residents, particularly those of moderate means who may not qualify for or have access to affordable private financing.

SB 894's approach – leveraging CAEATFA's proven financing expertise to create a loan loss reserve and interest rate buy-down program – is precisely the right model to address this barrier at scale. By reducing the cost and risk of private lending for wildfire resilience improvements, the bill would mobilize investment that neither government grants nor property-tax-based financing alone can achieve. The program's statewide scope and its availability to properties regardless of hazard zone designation would ensure that communities like Berkeley, with significant WUI risk throughout our hillside neighborhoods, can fully participate.

The City of Berkeley has long worked to advance wildfire resiliency. SB 894 would complement and extend these local efforts by providing the affordable financing infrastructure our residents need to take action. We also recognize that improved home hardening at scale is essential to stabilizing the homeowner's insurance market in California's most vulnerable communities, and we strongly support that goal.

Support Position on SB 894 (Allen) - California Wildfire Resilience Loan Program

CALENDAR
The City of Berkeley urges the Legislature to pass SB 894 and respectfully requests the Governor's signature. We look forward to working with your office and with CAEATFA to ensure that Berkeley residents are well-positioned to benefit from this program upon its enactment.

Sincerely,
Mayor, City of Berkeley
cc:

Senator Jesse Arreguín, California State Senate, District 9 Assemblymember Buffy Wicks, California State Assembly, District 14 Berkeley City Council

CONSENT CALENDAR
April 28, 2026
To: Mayor and Members of the City Council
From: Disaster and Fire Safety Commission
Submitted by: Greg Murphy, Chairperson
Subject: Support Position on SB 1076 (Pérez) - Insurance Coverage for Fire-Safe Homes Act

RECOMMENDATION
Adopt an official Support position on Senate Bill 1076 (Pérez), the Insurance Coverage for Fire-Safe Homes Act, and authorize and direct the Mayor or City Manager or designee to send letters of support to Senator Sasha Renée Pérez, Senator Jesse Arreguín, representing Berkeley in the California State Senate, and Assemblymember Buffy Wicks.

FISCAL IMPACTS OF RECOMMENDATION
No direct fiscal costs to the City of Berkeley. The recommended action is limited to communicating a policy position and transmitting letters of support to state legislators; no City appropriation or expenditure is required.

Substantial potential fiscal benefits to the City. SB 1076 would require admitted insurers to offer and renew residential property insurance for homeowners whose properties meet state-defined wildfire mitigation standards, effective January 1, 2028. Stabilizing the residential insurance market in Berkeley's wildfire-vulnerable neighborhoods would be expected to:
• Protect property values in the Berkeley Hills and other areas affected by insurance non-renewals and market withdrawals, reducing the risk of a destabilized local housing market with downstream consequences for the City's property tax base.
• Reduce pressure on the California FAIR Plan as an insurer of last resort, which currently underwrites significant risk in Berkeley's hillside neighborhoods at inadequately capitalized rates – a dynamic that poses systemic financial risk to all California ratepayers, including Berkeley residents. • Create a stronger financial incentive for Berkeley homeowners to invest in home hardening and defensible space improvements, since those investments would now carry a guaranteed path to insurance coverage – thereby reducing the City's wildfire risk exposure and potential emergency response costs. • Complement City investments in wildfire preparedness and mitigation, including the Transfer Tax Rebate program and the Resident Assistance Program, by

Support Position on SB 1076 (Pérez) - Insurance Coverage for Fire-Safe Homes Act

CALENDAR
ensuring that residents who complete hardening improvements can secure and maintain insurance coverage.

Because SB 1076 operates through the state insurance regulatory framework – imposing obligations on admitted insurers rather than requiring direct City expenditure – the City of Berkeley would receive these community protection benefits at no direct cost to the City's General Fund.

CURRENT SITUATION AND ITS EFFECTS
Berkeley faces a serious and ongoing home insurance crisis driven by wildfire risk. The Berkeley Hills are designated a Very High Fire Hazard Severity Zone (VHFHSZ) by the California Department of Forestry and Fire Protection, and the area's steep terrain, dense vegetation, older housing stock, and fire-weather conditions make it among the highest-risk urban communities in California.

In recent years, multiple major admitted insurers have paused or ceased offering homeowners insurance in California, including in Berkeley's hillside neighborhoods.

Statewide, enrollment in the California FAIR Plan – the insurer of last resort – has doubled in just two years as hundreds of thousands of homeowners have lost their original coverage. Berkeley residents have not been immune to this trend, and the insurance availability crisis now threatens property values, home sales, and the financial stability of existing homeowners throughout the hills.

A central and deeply troubling feature of the current insurance market failure is that homeowners who invest in proven fire mitigation measures – home hardening, ember- resistant construction, defensible space – are receiving no meaningful assurance that those investments will secure or restore their access to coverage. Studies from the National Association of Insurance Commissioners, CAL FIRE, and the University of California, Berkeley document broad scientific consensus that home hardening and defensible space significantly reduce the risk of structural damage in a wildfire. Yet insurers have continued to decline coverage and non-renew policies regardless of a property's mitigation status, removing the market incentive for residents to make these investments.

SB 1076 directly addresses this market failure by establishing that, beginning January 1, 2028, an admitted insurer that offers or sells residential property insurance in California may not refuse to offer, sell, or renew a policy for a property that meets minimum home hardening and wildfire mitigation standards as established by the Insurance Commissioner by regulation. The bill provides a limited exception for geographic overconcentration of risk, subject to a public hearing process and six-month renewal requirements, and maintains insurers' ability to apply non-wildfire underwriting criteria. Insurers that habitually violate the bill's requirements, or that elect to exit the residential property market rather than comply, would face a five-year suspension or

Support Position on SB 1076 (Pérez) - Insurance Coverage for Fire-Safe Homes Act

CALENDAR
revocation of their authority to sell both homeowner's and automobile insurance in California.

The bill's enforcement mechanism mirrors a model already operating in California's auto insurance market under Proposition 103, which requires insurers to offer a Good Driver Discount policy to any motorist who meets the state's safe-driving standard. SB 1076 would extend that same principle to homeowners: residents who invest in making their properties fire-safe deserve to know they will be able to insure them.

Action:.

Votes: Ayes: 8
Noe’s: 0
Abstain: 0

Absent: 1

BACKGROUND
The DFSC has maintained an active focus on wildfire resiliency in Berkeley for a number of years. The Commission's Wildfire Resiliency Workgroup has examined a range of policy options aimed at increasing the rate of home hardening and defensible space compliance among Berkeley residents, with particular attention to the challenges of affordability and equitable access to improvement resources.

As part of this ongoing work, the DFSC previously reviewed and discussed potential enhancements to the City's Resident Assistance Program, including proposals to expand financial assistance available to lower-income residents for wildfire mitigation improvements. These discussions underscored a recurring concern: that even when residents are willing and able to complete hardening improvements, the absence of a guaranteed path to insurance coverage undermines the motivation to invest.

Most recently, the DFSC recommended – and the Berkeley City Council approved with modifications – a Transfer Tax Rebate program to incentivize wildfire hardening improvements at the point of residential property sale or in the preceding five years.

That program reflects the Council's recognition that financial incentives are a necessary component of a comprehensive resiliency strategy. However, its reach is limited to properties at or near the time of sale, and it does not address the insurance availability barrier that discourages broader, proactive investment in home hardening.

Senator Pérez introduced SB 1076 in response to concerns raised by survivors of the January 2025 Eaton Fire in Altadena, who reported that even newly rebuilt homes constructed to the highest fire-resistance standards faced the prospect of insurance denial. The bill is co-sponsored by the Eaton Fire Survivors Network and Consumer

Support Position on SB 1076 (Pérez) - Insurance Coverage for Fire-Safe Homes Act

CALENDAR
Watchdog. Polling conducted by Hart Research and FM3 Research found that 85 percent of voters believe home insurers should be required to cover homeowners who meet state fire safety guidelines.

ALTERNATIVE ACTIONS CONSIDERED
● The City of Berkeley could take no position on SB 1076, on the grounds that insurance regulation is primarily a state function outside the City's direct jurisdiction. However, the DFSC finds that the insurance availability crisis in Berkeley's hillside neighborhoods is a direct threat to community safety, housing stability, and the City's wildfire mitigation objectives. SB 1076 directly advances those objectives at no cost to the City, and Berkeley's voice in support of the bill could meaningfully contribute to its prospects for passage.

CITY MANAGER
The City Manager concurs with the content and recommendations of the Commission’s Report.

CONTACT PERSON
Keith May, Commission Secretary, Deputy Fire Chief, (510) 510-981-5508 Attachments:
1: Sample Letter of Support

Support Position on SB 1076 (Pérez) - Insurance Coverage for Fire-Safe Homes Act

CALENDAR

ATTACHMENT A
Draft Letter of Support from the Mayor of Berkeley
[DATE]
The Honorable Sasha Renée Pérez
California State Senate, District 25
State Capitol, Room [Room Number]
Sacramento, CA 95814
Re: Letter of Support – SB 1076 (Pérez): Insurance Coverage for Fire-Safe Homes Act Dear Senator Pérez:

On behalf of the City of Berkeley, I am pleased to write in strong support of Senate Bill 1076, the Insurance Coverage for Fire-Safe Homes Act. This legislation addresses one of the most critical and frustrating failures of the current residential insurance market:
the denial of coverage to homeowners who have done everything right – who have hardened their homes, created defensible space, and invested in making their properties safer – and who are still being turned away by insurers.

Berkeley is intimately familiar with wildfire risk. The Berkeley Hills are designated a Very High Fire Hazard Severity Zone, and our community has lived with the memory of the 1991 Tunnel Fire – which destroyed more than 3,300 homes and claimed 25 lives – as a constant reminder of what is at stake. In recent years, we have watched the insurance market retreat from our hillside neighborhoods, leaving residents with limited or no options for affordable coverage. FAIR Plan enrollment has doubled statewide in just two years, and Berkeley residents are among those most affected.

The core problem SB 1076 addresses is not merely an inconvenience – it is a fundamental breakdown of the incentive structure that should be driving wildfire risk reduction. When homeowners invest in fire-resistant roofing, ember-resistant vents, and defensible space, they reduce risk not just for themselves but for their neighbors and their entire community. If those investments do not guarantee access to insurance, the incentive to make them is severely undermined. SB 1076 restores that incentive by ensuring that meeting state-defined wildfire safety standards translates into a right to coverage.

The City of Berkeley has worked hard to encourage home hardening through local programs including a Transfer Tax Rebate for wildfire hardening improvements and ongoing resident assistance initiatives. SB 1076 would powerfully reinforce those local efforts. We strongly support the bill's balanced approach: requiring coverage for compliant properties while preserving insurers' ability to apply non-wildfire underwriting criteria and to seek temporary waivers for genuine overconcentration of risk through a transparent, public process.

Support Position on SB 1076 (Pérez) - Insurance Coverage for Fire-Safe Homes Act

CALENDAR
The City of Berkeley urges the Legislature to pass SB 1076 and respectfully requests the Governor's signature.

Sincerely,
Mayor, City of Berkeley
cc:

Senator Jesse Arreguín, California State Senate, District 9 Assemblymember Buffy Wicks, California State Assembly, District 14 Berkeley City Council

2180 Milvia Street, Berkeley, CA 94704 ● Tel: (510) 981-6750 ● TDD: (510) 981-6903 E-mail: [email protected] Website: http://www.berkeleyca.gov/your-government/city-audits

CONSENT CALENDAR
Tuesday, April 28, 2026
To: Honorable Mayor and Members of the City Council
From: Jenny Wong, City Auditor
Subject: Berkeley’s Financial Condition (FY 2016-FY 2025): Structural Deficit Poses Risk to Financial Sustainability

RECOMMENDATION
We recommend City Council request that the City Manager report back by Fall 2026, and annually thereafter, regarding the status of our audit recommendations until reported fully implemented by the Finance Department, Budget Office, and other relevant departments. This audit includes 9 recommendations to formalize the use of more sustainable budget strategies, ensure funds withdrawn from the Section 115 Trust are replenished, improve financial reporting, and develop a capital financing plan that proposes future funding mechanisms beyond existing sources to help address the City’s growing unfunded capital needs. City management agreed or partially agreed to our recommendations. Please see our report for their complete response.

FISCAL IMPACTS OF RECOMMENDATION
The audit recommendations intend to help the City achieve long-term financial sustainability and address the financial risks identified in the report. This audit is especially relevant as the City will need to make difficult decisions to close the FY 2027 and FY 2028 structural General Fund deficit.

CURRENT SITUATION AND ITS EFFECTS
This audit assessed Berkeley’s financial condition between FY 2016 and FY 2025 using various financial indicators. Overall, Berkeley’s long-term financial condition is facing ongoing challenges, similar to the findings from our 2022 audit. In the near-term, Berkeley’s structural deficit poses additional risk to the City’s long-term financial sustainability. As we stated in our 2022 audit, it will continue to be important for the City to balance its near-term needs and long- term financial obligations.

Near-Term Financial Indicators

1. Revenues and Expenses: Despite budgetary challenges, the City’s revenues for governmental activities generally covered actual expenses in the past ten fiscal years, except for FY 2020. Berkeley’s largest source of revenue was property taxes. While a smaller portion of revenue, investment earnings saw the largest percentage increase and lease revenue decreased by nearly one half.

Berkeley’s Financial Condition (FY 2016-FY 2025): Structural Deficit Poses Risk to Financial Sustainability CONSENT CALENDAR

Pg. 2 of 3

2. Budgetary Practices: The City’s previous one-time balancing strategies can put the long- term sustainability of some funds at risk. Some enterprise funds also faced structural deficits and received millions of dollars from the General Fund and other funds to balance.

The City is considering placing a sales and use tax measure on the 2026 ballot to generate new revenues to help address its projected General Fund deficit.

3. Demographic and Economic Indicators: The City’s economy improved after the pandemic but experienced recent declines. Property value continues to grow, while median household income has not substantially grown. Unemployment recovered to pre- pandemic levels but has trended upward again.

4. Net Position, Liquidity, and Reserves: The City’s net position increased, and its liquidity ratio is strong. The City is on track to meet its updated General Fund reserves goal.

Long-Term Financial indicators

5. Long-Term Debt and Liabilities: The City’s long-term liabilities have grown. General obligation bond debt per resident peaked in FY 2022 and declined in recent years. The City’s general obligation bond debt remained at or less than one percent of taxable assessed property value.

6. Net Pension and Retiree Healthcare Liabilities: The City’s unfunded pension liability is still considered high risk and totaled $694.8 million as of FY 2025. However, the City made progress in decreasing its unfunded retiree healthcare liability by more than $100 million.

According to the Government Financial Officers Association, Berkeley would have the highest bond rating, and as a result cheaper borrowing, if not for its pension liabilities. The City has not consistently met its annual contribution goal to the Section 115 Trust.

7. Capital Assets: The City’s unfunded capital and deferred maintenance needs have grown to $1.8 billion in FY 2024 despite some increased investment. Compared to other jurisdictions, Berkeley lacks advanced planning to finance capital needs in the long term.

Advanced planning could help the City better anticipate and communicate plans for future bond measures. Without sufficient investment, these unfunded capital needs will continue to grow. To help address some of these capital needs, the City is considering placing a $300 million bond measure on the 2026 ballot.

BACKGROUND
This audit provides an update on Berkeley’s financial condition since our last financial condition audit in 2022. The audit’s purpose is to provide a clear, accessible report for the public and City leadership to better understand the City’s near-term and long-term financial condition and help inform decision making, especially ahead of difficult budget decisions.

ENVIRONMENTAL SUSTAINABILITY
There are no identifiable environmental effects or opportunities associated with this report.

Berkeley’s Financial Condition (FY 2016-FY 2025): Structural Deficit Poses Risk to Financial Sustainability CONSENT CALENDAR

Pg. 3 of 3

RATIONALE FOR RECOMMENDATION
Implementing our recommendations will improve the City’s long-term financial sustainability. If the City uses more sustainable budget strategies rather than one-time solutions to pass future budgets, the City is more likely to have recurring revenues cover recurring expenses to sustain ongoing operations. If the City explicitly requires the Section 115 Trust to be replenished after Trust funds are withdrawn, the City is more prepared to meet its future pension obligations. If the City develops a capital financing plan that includes proposals to raise new funding, the City is more likely to have sufficient funding to address its unfunded capital and deferred maintenance needs.

CONTACT PERSON
Jenny Wong, City Auditor, City Auditor’s Office, 510-981-6750 Attachments:
1: Audit Report: Berkeley’s Financial Condition (FY 2016-FY 2025): Structural Deficit Poses Risk to Financial Sustainability

Audit Report
April 8, 2026
Berkeley’s Financial
Condition (FY 2016-
FY 2025): Structural
Deficit Poses Risk to
Financial
Sustainability
Jenny Wong, City Auditor
Caitlin Palmer, Audit Manager
Manami Suenaga, Auditor I
Promoting transparency and accountability in Berkeley government

Berkeley’s Financial Condition (FY 2016-FY 2025):

Structural Deficit Poses Risk to Financial Sustainability Report Highlights April 8, 2026
Findings
Overall, Berkeley is facing ongoing challenges regarding its long- term financial condition, similar to the findings from our 2022 audit. In the near term, the City faces a structural deficit, which poses additional risk to the City’s long-term financial sustainability.

Near-Term
Revenues and Expenses: Governmental activities revenues generally exceeded expenses, but the General Fund still faced a structural deficit.

Budgetary Practices: The City’s one-time balancing strategies can put the long-term sustainability of some funds at risk. Some enterprise funds also have structural deficits and receive transfers from the General Fund and other funds to balance.

Demographic and Economic Indicators: The City’s economy improved after the pandemic but experienced recent declines.

Property value continues to grow, while median household income has not substantially grown. Unemployment recovered to pre- pandemic levels but has trended upward again.

Net Position, Liquidity, and Reserves: The City’s net position increased, and its liquidity ratio is strong. The City is on track to meet its updated reserves goal.

Long-Term
Long-Term Debt and Liabilities: The City’s long-term liabilities have grown. General obligation bond debt per resident peaked in FY 2022 and declined in recent years. The City’s general obligation bond debt remained at or less than one percent of taxable assessed property value.

Net Pension and Retiree Healthcare Liabilities: The City’s net pension liability is still high risk. Net pension liability peaked in FY 2021 and decreased thereafter. Net retiree healthcare liability decreased. The City set aside resources to pre-fund pension obligations in a Section 115 Trust but has not consistently met its annual contribution goal.

Capital Assets: The City’s unfunded capital and deferred maintenance needs have grown to $1.8 billion despite some increased investment. The City lacks advanced planning to finance its capital plan in the long term. Without sufficient investment, these unfunded capital needs will continue to grow.

Objective
Our objective was to assess Berkeley’s
financial condition using indicators
for the following categories:

1. Revenues and Expenses

2. Budgetary Practices

3. Demographics and Economic
Indicators

4. Net Position, Liquidity, and
Reserves

5. Long-Term Debt and Liabilities

6. Net Pension and Retiree
Healthcare Liabilities

7. Capital Assets

Why This Audit Is Important
The audit’s purpose is to provide a
clear, accessible report for the public
and City leadership to better
understand the City’s near-term and
long-term financial condition and
help inform decision making. This
audit is especially relevant as the City
will need to make difficult decisions to
close the projected $32 million
General Fund deficit in FY 2027 and
$33 million in FY 2028.1

1 This is the structural deficit estimate as
of January 22, 2026.

For the full report, visit the City
Auditor’s website.

Promoting transparency and accountability in Berkeley government

Report Highlights April 8, 2026
Findings
Net Pension Liability Per Plan (in millions, in 2025
dollars)
Source: Finance Department data
Unfunded Capital and Deferred Maintenance Needs
(in 2025 dollars)
$603.5 million
$1.8 billion
Source: Berkeley’s unfunded liability reports (FY 2017-FY 2021); Capital Improvement Program (FY 2024)

Summary of
Recommendations
To help the City pass a structurally
balanced budget, we recommend City
management propose a fiscal policy to
City Council to assess whether
recurring revenues and recurring
expenditures are balanced, and to
formalize developing the baseline
budget using the prior year’s actual
expenditures and projected needs.

To improve the financial
sustainability of enterprise funds, we
recommend the City adopt a citywide
policy to regularly evaluate enterprise
fees and establish reserves for each
enterprise fund.

To continue to strengthen the Section
115 Trust, we recommend City
management amend the fiscal policies
to explicitly require the City replenish
the Trust after funds are withdrawn.

To improve the City’s ability to
anticipate capital infrastructure
needs, we recommend City
management extend the Capital
Improvement Program (CIP) beyond
five years.

To address the City’s long-term
capital infrastructure needs, we
recommend City management
develop a capital financing plan that
covers a period at least as long as the
CIP and proposes future funding
mechanisms beyond existing sources.

City management agreed or partially
agreed with these recommendations.

For the full report, visit the City
Auditor’s website.

Promoting transparency and accountability in Berkeley government

Berkeley’s Financial Condition (FY 2016-FY 2025): Structural Deficit Poses Risk to Financial Sustainability 1 Table of Contents
Introduction .......................................................................................................................... 2 Objective .............................................................................................................................. 2 Scope and Methodology ....................................................................................................... 2 Background .......................................................................................................................... 3 Revenues and Expenses: Governmental activities revenues generally exceeded expenses, but the General Fund still faced a structural deficit. .............................................................. 5 Budgetary Practices: One-time balancing strategies can put the long-term sustainability of some funds at risk. .............................................................................................................. 13 Demographic and Economic Indicators: Berkeley’s economy improved after the pandemic but experienced recent declines. ....................................................................................... 18 Net Position, Liquidity, and Reserves: Berkeley’s net position, liquidity, and reserves indicate improvements. ...................................................................................................... 21 Long-Term Debt and Liabilities: Long-term debt and liabilities have grown overall but general obligation bond debt per resident has decreased in recent years. ........................ 25 Net Pension and Retiree Healthcare Liabilities: Berkeley’s net pension liability is still high risk and retiree healthcare liability decreased. .................................................................. 30 Capital Assets: Unfunded capital needs have grown despite some increased investment. .. 34 Management Response ....................................................................................................... 39 Methodology and Compliance ............................................................................................ 43

Berkeley’s Financial Condition (FY 2016-FY 2025): Structural Deficit Poses Risk to Financial Sustainability 2 Introduction
This audit provides an update on Berkeley’s financial condition since our last financial condition audit in 2022.1 The audit’s purpose is to provide a clear, accessible report for the public and City leadership to better understand the City’s near-term and long-term financial condition and help inform decision making, especially ahead of difficult budget decisions. This audit does not assess the state of the national economy or project the potential impact of recent economic events.

Overall, Berkeley is facing ongoing challenges regarding its long-term financial condition, similar to the findings from our 2022 audit. Berkeley’s net pension liability is still considered high risk. The City’s unfunded capital and deferred maintenance need has grown to $1.8 billion.

In the near-term, the City faces a structural deficit, which poses additional risk to the City’s long-term financial sustainability. As we stated in our 2022 audit, it will continue to be important for the City to balance its near-term needs and long-term financial obligations.

Throughout the report, we compared some of Berkeley’s financial indicators to other California cities with similar characteristics. For all the financial indicators that we benchmarked to peer cities, Berkeley is not an outlier and mostly falls in the middle of the range.

Objective
Our objective was to assess Berkeley’s financial condition using financial indicators for the following categories:

1. Revenues and Expenses

2. Budgetary Practices

3. Demographic and Economic Indicators

4. Net Position, Liquidity, and Reserves

5. Long-Term Debt and Liabilities

6. Net Pension and Retiree Healthcare Liabilities

7. Capital Assets
Scope and Methodology
This audit is an update to our previous financial condition audit, and we relied on a similar methodology for consistency. We used financial indicators included in the International

1 Berkeley’s Financial Condition (FY 2012-FY 2021): Pension Liabilities and Infrastructure Need Attention

Berkeley’s Financial Condition (FY 2016-FY 2025): Structural Deficit Poses Risk to Financial Sustainability 3 City/County Management Association’s (ICMA) Evaluating Financial Condition handbook for local governments. We also included some indicators used by peer cities in their financial condition audits. We do not provide an in-depth analysis of causes and impact, but we point out areas of financial risk for the City to evaluate further.

For our audit scope, we examined Berkeley’s financial data within the past 10 fiscal years, from FY 2016 to FY 2025, except for a few indicators for which data was only available for limited years. We relied mainly on data from Berkeley’s Annual Comprehensive Financial Reports (ACFRs). For some indicators, we also analyzed other sources of city financial data. Where appropriate, we adjusted financial indicators for inflation using the Bay Area Consumer Price Index calculated by the U.S. Bureau of Labor Statistics to express values in 2025 dollars.

For some indicators, we benchmarked Berkeley to other California cities. We selected Long Beach, Oakland, Pasadena, Santa Clara, Santa Monica, and Palo Alto because these cities were similar to Berkeley across one or more criteria, such as population, general fund expenditures per resident, services provided, and presence of a large university.

For more information on our methodology, see page 43.

Background
According to the ICMA, financial condition refers to a local government’s ability to finance its services on an ongoing basis. To understand Berkeley’s financial condition, this audit considers a series of financial indicators tracked over time. These indicators reflect Berkeley’s financial decisions as well as external factors outside of Berkeley’s control, such as changes in economic conditions, financial markets, and federal funding decisions.

To provide a broad overview of Berkeley’s financial condition, our primary source was government-wide financial statements from the City’s ACFRs. Government-wide financial statements are also categorized into governmental and business-type activities. This audit report mainly focuses on governmental activities, which fund citywide operations that serve all Berkeley residents and are supported mostly by taxes. Governmental activities include service areas such as general government, public safety, transportation, community development, and culture and leisure. Business-type activities operate like businesses and are supported by enterprise funds, such as the Berkeley Marina and Parking Meter funds.

This audit also takes into consideration Berkeley’s unique characteristics. Berkeley has the highest population density of any city in the East Bay. Berkeley’s economy is shaped by the

Berkeley’s Financial Condition (FY 2016-FY 2025): Structural Deficit Poses Risk to Financial Sustainability 4 presence of the University of California, Berkeley campus, the high assessed value of property, and a diverse tax base. The City provides residents a full range of services beyond those offered by most similarly-sized cities in California. The City offers its own sanitation, sewer, and waste management services; parks, recreation, and the Berkeley Marina; health, housing, and community services, including city-funded health clinics and mental health services; animal control; and library. Berkeley is also a relatively older city and faces challenges with aging infrastructure.

Berkeley’s Financial Condition (FY 2016-FY 2025): Structural Deficit Poses Risk to Financial Sustainability 5 Revenues and Expenses: Governmental
activities revenues generally exceeded
expenses, but the General Fund still faced a
structural deficit.

Berkeley’s governmental activities revenues exceeded expenses for all years in the audit scope except FY 2020. Governmental activities revenues increased overall, primarily from growth in revenues from property taxes, state and local taxes, and investment earnings. Governmental activities expenses also increased overall, primarily from growth in community development and housing as well as health and welfare. However, the General Fund still faced a structural deficit.

Revenues
Governmental activities revenues generally exceeded expenses.

Governmental activities revenues exceeded governmental activities expenses for all years except FY 2020 (Figure 1). The exception in FY 2020 was because of revenue shortfalls due to the COVID-19 pandemic.

Figure 1. Governmental Activities Revenues and Expenses (in millions, in 2025 dollars)

Source: Berkeley ACFRs
Compared to benchmark cities in FY 2024, Berkeley’s governmental revenues per resident were in the middle of the range and nearly the same as Oakland (Figure 2). Similarly, Berkeley was in the middle of the range relative to benchmark cities in our 2022 financial condition audit. $352 $366 $368
$407
$401
$412
$487 $477 $472 $475
$327 $314
$366 $388
$417
$393
$316
$387
$448 $435
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Fiscal Year
Governmental revenues exceeded governmental
expenses for all years surveyed except for FY 2020.

Revenues
Expenses

Berkeley’s Financial Condition (FY 2016-FY 2025): Structural Deficit Poses Risk to Financial Sustainability 6 Figure 2. Governmental Activities Revenues per Resident, FY 2024

Source: Cities’ FY 2024 ACFRs
Note: Not all cities reported population data by fiscal year. Santa Monica and Oakland's ACFR population figures are from calendar year 2024. Pasadena's population figure is from calendar year 2023.

However, the General Fund still faced a structural deficit.

The General Fund is the largest of all governmental funds and is the City’s primary operating fund which pays for services provided by the City. City leaders focus on the General Fund because it is a flexible source of funding and can help address the City’s most pressing needs.

While the City’s governmental activities revenues generally exceeded expenses, the City still faced a structural General Fund deficit, with deficits ranging from $12 million to $40 million.

This is because the City determines whether it has a structural deficit at the start of the budget process. A structural deficit occurs when budgeted revenues are projected to be less than budgeted expenditures. However, Berkeley can balance its budget through one-time measures, such as moving surpluses from other funds into the General Fund. These transfers are recorded as General Fund revenue. The City’s actual revenues generally cover its actual expenditures due in part to these balancing measures and adjustments to the City’s revenues and expenditure over the fiscal year. Therefore, while the General Fund still faced a structural deficit, the City’s governmental activities revenues generally exceeded expenses.

In the next section starting on page 13, we discuss Berkeley’s budgetary practices in the context of the structural budget deficit in further detail.

Where do revenues for Berkeley’s governmental activities come from? In FY 2025, the largest source of revenue was property taxes (49 percent), followed by state and local taxes (23 percent) and operating and capital grants and contributions (10 percent) (Figure 3).

$6,328
$4,124
$3,708
$3,673
$3,493
$2,743
$2,551
Santa Monica
Palo Alto
Berkeley
Oakland
Pasadena
Santa Clara
Long Beach

Berkeley’s Financial Condition (FY 2016-FY 2025): Structural Deficit Poses Risk to Financial Sustainability 7 Figure 3. Revenues for Governmental Activities by Source, FY 2025

Source: Berkeley FY 2025 ACFR
Note: “Other” includes revenues from contributions not restricted to specific programs, revenues (or losses) from the gain or loss on the sale of capital assets, miscellaneous revenues, and revenues from other unrestricted state subventions.

How have revenues changed over time?
In total, governmental activities revenues increased by 35 percent, from $352.0 million in FY 2016 to $474.5 million in FY 2025, adjusted for inflation.

Berkeley’s largest source of revenue was property taxes, which grew substantially and reached a peak in FY 2022. Between FY 2016 to FY 2025, revenue from property taxes increased by 39 percent, from $166.5 million to $231.9 million, adjusted for inflation (Figure 4). The peak in FY 2022 is explained by multiple factors, including increased assessed value of property, increased value of property sales, and the passage of Measure FF in 2020, a special tax to support fire services which was effective in FY 2022, adding more property based tax revenues.

Figure 4. Revenues for Governmental Activities by Source (in millions, in 2025 dollars)

Source: Berkeley ACFRs
Charges for Service
9%
Operating and Capital Grants &
Contributions
10%
Investment Earnings
8%
Other
1%
Property Taxes
49%
State and Local Taxes
23%
-$50
$0
$50
$100
$150
$200
$250
$300
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Millions
Fiscal Year
Property Taxes
State and Local Taxes
Investment Earnings
Other
Operating and Capital Grants
& Contributions
Charges for Service

Berkeley’s Financial Condition (FY 2016-FY 2025): Structural Deficit Poses Risk to Financial Sustainability 8 Berkeley’s next largest source of revenue was state and local taxes, which also grew during the audit period. Between FY 2016 to FY 2025, revenue from state and local taxes increased by 27 percent, from $87.1 million to $110.3 million, adjusted for inflation (Figure 4).

Operating and capital grants and contributions more than doubled from FY 2019 to FY 2022, but these revenues have since declined (Figure 4). The increase was due in large part to the City receiving American Rescue Plan Act (ARPA) grant funds.

Of all revenue streams, revenues from investment earnings had the largest percentage increase (693 percent) between FY 2016 and FY 2025. Investment earnings dipped in FY 2022, due to increased interest rates set by the Federal Reserve, but recovered above pre-pandemic levels by the end of the audit period.

The Finance Department (Finance) updates City Council on the status of the City's investment portfolio through quarterly investment reports. These quarterly investment reports include the City’s investment rate of return for the quarter, indicating the outcomes of the City’s investment approach, policies, and other external factors. The reports evaluate performance changes from quarter to quarter within the past fiscal year and do not cover trends across multiple years.

Other cities cover past trends across years. For example, the City of Palo Alto’s FY 2025 fourth quarter investment report showed their investment portfolio’s rate of return for the past twenty three years.

Berkeley’s Investment Policy requires Finance to provide an annual investment report to Council in addition to quarterly reports. Finance currently does not submit an annual investment report to Council. However, Finance produced annual investment reports to Council in the past that covered key investment results, such as the rate of return on the City’s investments, and compared these results to the previous five fiscal years.

According to the City’s Investment Policy, the City’s primary investment objective is to achieve a reasonable rate of return on public funds while minimizing the potential for losses. Without reporting that covers the City’s investment rate of return over a longer time span, it is difficult for the public to easily access information about past trends in the City’s investment performance.

How have revenues from leases changed over time?
During the audit period, Berkeley’s revenues from leases decreased by nearly one half. The City receives revenue from rent payments from tenants who lease City-owned properties. Between FY 2016 to FY 2025, the City’s revenue from leases decreased by 48 percent, from $4.9 million

Berkeley’s Financial Condition (FY 2016-FY 2025): Structural Deficit Poses Risk to Financial Sustainability 9 to $2.5 million, adjusted for inflation.

While we did not investigate the cause of Berkeley’s decreased lease revenue, we do know that City management has opportunities to improve lease management, such as regularly monitoring leases to prevent them from going into holdover. From our Leases Audit Follow-Up report, released in January 2025, we found that the City lacks a clear approach to lease management and lacks a complete repository of leases.2 By improving tracking of leases, the City could improve revenue generation from leases on City-owned properties.

Where do your property taxes go?
Alameda County collects property tax revenue from Berkeley taxpayers and distributes them among multiple entities. Ad valorem taxes are one part of the property tax bill and are based on a percentage of the assessed value of property. There are two types of ad valorem taxes: the countywide 1 percent tax and voter-approved debt service taxes. The countywide 1 percent ad valorem property tax amounts to roughly one-half of the total property tax bill.3 However, this may differ for individual properties based on a variety of factors, such as assessed value and square footage. The other part of the property tax bill is fixed charges and/or special assessments, which include parcel taxes. In FY 2025, Berkeley received an estimated one-third of the countywide 1 percent ad valorem property tax revenue generated within the City limits (Figure 5).

Figure 5. Berkeley’s Countywide 1 percent Ad Valorem Property Tax Distribution by Entity, FY 2025

Source: Auditor analysis of data from the Alameda County Auditor-Controller/Clerk-Recorder's Office Note: This figure is an estimate of the distribution of countywide 1 percent property tax revenue within City limits. Special districts include AC Transit, East Bay Regional Park, East Bay Municipal Utility District, Bay Area Rapid Transit and other regional entities. According to Alameda County, this does not include any amount that may be shifted due to the dissolution of Berkeley’s former redevelopment agency.

2 2009 Leases Audit Follow-Up: Berkeley Faces the Same Risks 16 Years Later 3 According to a 2025 City management report to Council, this estimate is based on a single -family residence with an assessed value of $550,000 and 1,900 square feet with a $7,000 homeowner’s exemption.

City of Berkeley
33%
County General Fund
15%
Schools
43%
Special Districts
9%

Berkeley’s Financial Condition (FY 2016-FY 2025): Structural Deficit Poses Risk to Financial Sustainability 10 What are your property taxes levied for?
Berkeley receives revenues from property taxes that are levied for specific purposes. For every dollar of property tax revenue Berkeley received in FY 2025, a portion was levied for general purposes, library services, city parks, debt service for voter-approved bond measures, fire department services, and paramedic services. The largest portion was levied for general purposes (Figure 6).

Figure 6. What are your property taxes levied for? (FY 2025)

Source: Berkeley FY 2025 ACFR
Expenses
How have Berkeley’s expenses changed over time?
Overall, Berkeley’s government activities expenses increased by 33 percent from $327.1 million in FY 2016 to $435.0 million in FY 2025, adjusted for inflation. In FY 2025, public safety represented the City’s largest expense by function (Figure 7). Between FY 2016 and FY 2025, City functions with the largest increases in spending were community development and housing (119 percent) and health and welfare (107 percent), adjusted for inflation.

Figure 7. Expenses for Governmental Activities by Function (in millions, in 2025 dollars)

Source: Berkeley ACFRs
$48.9
$152.9
$23.5 $26.4 $46.6 $23.4 $5.6 $6.4
$65.5
$162.2
$25.2
$54.8 $68.7 $51.3
$5.6 $8.3
General
Government
Public Safety Highways and
Streets
Health and
Welfare
Culture and
Recreation
Community
Development
and Housing
Economic
Development
Interest on
Long-Term
DebtFY 2016 FY 2025

Berkeley’s Financial Condition (FY 2016-FY 2025): Structural Deficit Poses Risk to Financial Sustainability 11 How has personnel expenditure changed over time?
Salaries and benefits represent a large portion of Berkeley’s spending and have increased over time. Salaries and benefits represent approximately half of the citywide budget and about two- thirds of the General Fund budget. Between FY 2016 and FY 2025, Berkeley's total personnel expenditure increased by 20 percent from $308.2 million to $370.9 million, adjusted for inflation (Figure 8). Berkeley's budgeted full-time equivalent (FTE) employee count increased by approximately 30 percent from FY 2016 to FY 2025, despite total personnel expenditure only increasing by approximately 20 percent.

Figure 8. Personnel Expenditures by Category (in millions, in 2025 dollars)

Source: Berkeley City Manager, Budget Office data; Berkeley FY 2025 ACFR Note: This graphic includes budgeted FTE counts, which include the number of filled and vacant FTEs. “Salaries and wages” include regular and hourly pay, overtime pay, stipends, and workers’ compensation pay. “Healthcare” includes healthcare benefits, such as medical, dental, and vision insurance. “Retirement benefits” include retirement income, such as pensions, and retiree healthcare benefits. "Other" includes life insurance, commuter benefits, terminal payout, contributions to the workers’ compensation f und, and other fringe benefits.

The City's growth in personnel expenditure is driven by increased spending on salaries and wages, retirement benefits, and healthcare. The City's spending on salaries and wages had the largest dollar increase ($43.3 million) from FY 2016 to FY 2025, followed by retirement benefits ($23.9 million) and healthcare ($10.6 million) (Figure 8).

Salaries and wages increased from FY 2016 to FY 2025 primarily due to a $33.3 million increase in regular salary expenditures for employees other than Police, and a $10.6 million increase in Police and Fire overtime expenditures, adjusted for inflation. Notably, regular salary expenditures for Police decreased by $4.8 million from FY 2016 to FY 2025, adjusted for $181.3
Salaries and Wages
$224.6
$30.3
Healthcare
$40.8
$23.1
Other $7.9
$73.6
Retirement Benefits
$97.6
2016 2025Fiscal Year
$308.2 total
1,336 FTE
$370.9 total
1,747 FTE

Berkeley’s Financial Condition (FY 2016-FY 2025): Structural Deficit Poses Risk to Financial Sustainability 12 inflation. In our 2022 audit of police overtime, we found the Berkeley Police Department (BPD) relied on overtime to achieve its staffing levels.4 Consistent with this audit’s findings, BPD’s actual overtime expenditures exceeded its overtime budget for the last three fiscal years, according to the BPD’s FY 2025 budget presentation to the Budget and Finance Committee.

What is contributing to General Fund expenditure growth? In January 2026, the Budget Office highlighted General Fund expenditures that have substantially grown, including salaries, pension costs, overtime pay, and public liability insurance. However, these costs vary in their contribution to the General Fund baseline overall.

For FY 2027, salaries are projected to represent 34.8 percent of the General Fund baseline, compared to pension costs representing 17.7 percent, overtime pay representing 4.2 percent, and public liability insurance representing 3.6 percent.

According to the City Attorney’s Office, cost increases for public liability insurance reflect a statewide trend of increasing insurance or self-insurance costs for public entities. The City’s public liability insurance is a self-insurance pool administered by the Bay Cities Joint Power Insurance Authority (BCJPIA), whose members consist of cities, towns, and other public agencies located in the Bay Area. In FY 2025, the City’s public liability insurance cost through BCJPIA was $10.46 million, which included risk management support, claims handling, and general liability coverage, involving the payout of general liability claims.

Recommendation

1.1 To present clear information regarding the City’s investment performance, we recommend the Finance Department provide an investment report to Council that compares the City’s investment rate of return for the most recent fiscal year to at least the previous five fiscal years, similar to the City’s past annual investment reports.

4 Berkeley Police: Improvements Needed to Manage Overtime and Security Work for Outside Entities

Berkeley’s Financial Condition (FY 2016-FY 2025): Structural Deficit Poses Risk to Financial Sustainability 13 Budgetary Practices: One-time balancing
strategies can put the long-term sustainability
of some funds at risk.

General Fund Deficit
Berkeley’s General Fund faces a structural deficit. As mentioned previously, a structural deficit occurs when budgeted revenues are projected to be less than budgeted expenditures. Berkeley has faced a structural General Fund deficit for multiple years. The City currently faces a projected structural General Fund deficit that is estimated at $32 million in FY 2027 and $33 million in FY 2028.5
Berkeley relied on one-time balancing measures to address its structural deficit in the past.

Berkeley faces an ongoing structural General Fund deficit due in part to one-time balancing measures. For several years, the City used one-time balancing measures to address the structural deficit rather than making structural changes to budgetary practices. While one-time solutions relying on other funds can be appropriate to balance the General Fund temporarily, they do not address the General Fund structural deficit in the long run and can put long-term sustainability of these other funds at risk.

For example, to help balance the General Fund in FY 2025, the City redirected $4.7 million intended for the workers’ compensation fund to the General Fund. At the time, an external actuarial report had previously stated that the City’s workers’ compensation program did not have enough assets to cover its estimated future liabilities by approximately $2 million as of June 2024. Using funds intended for the workers’ compensation fund put the City at risk of not having enough assets to cover workers’ compensation benefits for employees who have suffered a work-related injury or illness. It also did not help address the structural deficit in the General Fund in the long run.

The City also relied on the Section 115 Trust to help balance the General Fund in FY 2025. The City pulled $3 million from the Section 115 Trust to pay for its pension expenses instead of the General Fund. The Section 115 Trust is a rainy-day fund that allows the City to set aside resources to pay its pension obligations. While the City was authorized to use the Section 115 Trust to pay for pension expenses, it is not sustainable for the City to continuously rely on the

5 This is the structural deficit estimate as of January 22, 2026.

Berkeley’s Financial Condition (FY 2016-FY 2025): Structural Deficit Poses Risk to Financial Sustainability 14 Section 115 Trust to meet its pension obligations. By transferring funds out of the Section 115 Trust, the City may be less prepared to meet its required pension contributions in the long term, which can negatively impact the City’s financial condition. We discuss the Section 115 Trust in further detail on page 32.

City Council’s fiscal policies for budget development can be strengthened.

City Council’s fiscal policies for budget development can be strengthened. By law, the City must pass a balanced budget. However, the City can meet the statutory definition of a balanced budget by using one-time solutions rather than sustainable strategies. In a 2022 risk analysis report commissioned by the City, the Government Finance Officers Association (GFOA) recommended the City adopt a policy that commits to using sustainable strategies to pass a structurally balanced budget, where recurring revenues are equal to or exceed recurring expenditures. GFOA also recommends that city budget policies call for communicating whether recurring revenues and recurring expenditures are balanced. While City Council has a fiscal policy that requires the budget to primarily allocate one-time revenue for one-time expenditures, the Council’s fiscal policies do not require a separate assessment of recurring revenues and recurring expenditures.

Some cities have adopted this GFOA best practice in different ways. For example, the City of Long Beach adopted a policy that requires the General Fund budget to be structurally balanced for the fiscal year. If the General Fund is structurally unbalanced, the policy requires the City to explain their approach and time frame for achieving structural balance in the General Fund.

City management has recently used some more sustainable strategies to develop the budget. For the fiscal year 2027 and 2028 budget, the Budget Office used the prior year’s actual expenditures and projected needs to develop the baseline budget, rather than using the prior year’s adopted budget, which had been the practice for many years. According to the Budget Office, this new baseline budget approach aims to more accurately project the real cost of service. GFOA also states that budgeting based on the estimated cost of services rather than assuming the prior year’s budget helps to avoid mid-year budget increases. However, this initiative from the Budget Office has not yet been formally adopted as a requirement for future budgets.

In addition, the City is considering placing a sales and use tax measure on the 2026 ballot to help address its projected General Fund structural deficit and support essential City services.

The potential 0.5 percent increase in the City’s sales and use tax would provide about $9 to $10

Berkeley’s Financial Condition (FY 2016-FY 2025): Structural Deficit Poses Risk to Financial Sustainability 15 million annually for general governmental use until ended by voters, according to sample ballot language for the proposed sales and use tax measure.

Enterprise Fund Deficits
Some enterprise funds have structural deficits and receive transfers from other funds to balance.

Some enterprise funds have structural deficits. For example, the Off-Street Parking Fund has a deficit due in part to decreased parking revenues because of the pandemic and increased expenditures from debt service costs for the Center Street Garage Reconstruction Project. The Off-Street Parking Fund uses parking fees to support capital, operation, and maintenance costs of three off-street parking facilities owned by the City: the Center Street Garage, the Oxford Garage, and the Telegraph Channing Garage. In addition, some of the City’s parking fees have not been updated in five or more years, which may have slowed down Off-Street Parking Fund revenues. The Off-Street Parking Fund depleted its fund balance in FY 2020 and relies on surplus from the Parking Meter Fund to continue operations. In FY 2025, $1 million was transferred from the Parking Meter Fund to the Off-Street Parking Fund. The Off-Street Parking Fund also received $1.9 million in General Fund support in FY 2022 and a total of $4.1 million in ARPA funds in FY 2022 and FY 2023.

The Marina Fund also has a structural deficit and has received transfers from other funds to help cover operational and capital needs for many years. According to the adopted FY 2025 and FY 2026 budget, the Marina Fund received over $30 million in total capital funding from the T1 Bond Measure, grants, and General Fund over the previous three years.6 While not a transfer, the Marina Fund also received approximately $2.6 million in ARPA funds in FY 2022 and FY 2023 to help balance the fund. According to Parks, Recreation and Waterfront (PRW) leadership, despite an investment in capital funding of more than $50 million over the last 10 years, unfunded capital infrastructure needs at the waterfront still exceed an estimated $163 million. Marina Fund revenues primarily come from fees generated from vessels that berth at the Marina, commercial building and ground leases, and recreation programs. According to PRW leadership, revenues have suffered because several commercial tenants have struggled to pay rent, and berth occupancy has not recovered from a safety- and infrastructure-related exodus starting in 2016.

City Council’s fiscal policies require enterprise funds to balance. Enterprise funds are intended

6 Measure T1 was a $100 million infrastructure bond passed in 2016 to fund improvements to City infrastructure and facilities.

Berkeley’s Financial Condition (FY 2016-FY 2025): Structural Deficit Poses Risk to Financial Sustainability 16 to be primarily self-supporting and are used for activities which charge fees to customers for goods or services. When enterprise funds have structural deficits, they may rely on transfers from the General Fund to balance and may worsen the overall City budget deficit.

Some enterprise funds make annual transfers out to the General Fund.

Some enterprise funds also make annual transfers out to the General Fund. In FY 2025, the Parking Meter Fund transferred approximately $1 million to the General Fund for the Public Commons for Everyone Initiative. This initiative was intended to improve Berkeley’s public areas and increase access to public toilets, public seating, trash cans, as well as housing and outreach services. The annual transfer out of the Parking Meter Fund to the General Fund may not be sustainable when the Parking Meter Fund surplus is also used to help balance the Off- Street Parking Fund. Other transfers from enterprise funds to the General Fund include indirect cost reimbursements related to the operations of the City as a whole, such as administrative support.

The City can further strengthen its policies to address enterprise fund deficits.

The City has taken some steps to address enterprise fund deficits. For example, for the fiscal year 2027 and 2028 budget, the Budget Office required departments to submit structural balancing plans for any fund projecting a deficit. Another example is that the Budget Office asked departments to evaluate current fees and propose adjustments where appropriate.

However, the City does not have a documented citywide policy to regularly evaluate and adjust enterprise fees where appropriate. The City also has not regularly evaluated transfers out of enterprise funds and how these transfers impact the financial sustainability of these funds.

In response to a GFOA recommendation, City management started but did not complete plans to develop reserve policies for enterprise funds. Reserves for enterprise funds can promote operational stability and lessen the need for transfers from other funds. On the other hand, according to department staff and leadership, reserves may not be feasible for some enterprise funds that do not have additional funds to set aside. Some jurisdictions have developed separate reserve goals for their enterprise funds. For example, the City of San Diego has different reserve goals for their enterprise funds based on a percentage of operating revenues or the minimum balance needed to support a specific number of days of operation.

Berkeley’s Financial Condition (FY 2016-FY 2025): Structural Deficit Poses Risk to Financial Sustainability 17 Recommendations

2.1 To help the City pass a structurally balanced budget, we recommend City management propose a fiscal policy to City Council to assess whether recurring revenues and recurring expenditures are balanced, and communicate this information to City Council. We recommend this policy also formalize City management’s initiative to develop the baseline budget using the prior year’s actual expenditures and projected needs.

2.2 To ensure sustainable budgetary strategies continue, we recommend the City publicly report in the adopted budget book that departments are required to submit a structural balancing plan to the Budget Office for enterprise funds that project a deficit. As part of this process, we recommend the Budget Office and departments work together to regularly assess the transfers in and out of these enterprise funds.

2.3 To improve the financial sustainability of enterprise funds, we recommend the City adopt a citywide policy to regularly evaluate enterprise fees and propose adjustments where appropriate to strengthen revenues and help mitigate the future risk of enterprise fund deficits.

2.4 To further improve the financial sustainability of enterprise funds, we recommend the City adopt a policy to establish a reserve for each enterprise fund as appropriate and legally permitted. We recommend the Budget Office and departments work together to determine the appropriate reserve goal for each enterprise fund.

Berkeley’s Financial Condition (FY 2016-FY 2025): Structural Deficit Poses Risk to Financial Sustainability 18 Demographic and Economic Indicators:

Berkeley’s economy improved after the
pandemic but experienced recent declines.

Berkeley’s population returned to pre-pandemic levels and continued to grow.

Berkeley’s population grew during the audit period between FY 2016 and FY 2025 (Figure 9).

Population has exceeded pre-pandemic levels after the decline between FY 2020 and FY 2021 that coincided with the onset of the COVID-19 pandemic.

Figure 9. Population

Source: Berkeley FY 2025 ACFR
UC Berkeley is the City’s largest employer and attracts thousands of students and staff to the City.

During the audit period, University of California, Berkeley (UC Berkeley) brought an average of about 44,000 students to Berkeley each year. Between 2016 and 2025, the student population increased by about 6,000 students. UC Berkeley was the City’s largest employer, employing approximately one-fifth of the City’s workforce, or an average of 14,000 people each year over the audit period. University students and staff have contributed to local consumer spending and increased sales and use tax revenues. The university presence also generates expenses for the City of Berkeley due to students and staff using city services.7 In 2021, UC Berkeley agreed to pay the City $82.6 million over 16 years to support city expenses, including fire and other city services.

7 UC Berkeley is a tax-exempt organization under the Internal Revenue Code Section 501(c)(3). 119,915 121,238 121,874 123,328 122,580
116,761
124,563 123,562 125,327
128,348
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Fiscal Year

Berkeley’s Financial Condition (FY 2016-FY 2025): Structural Deficit Poses Risk to Financial Sustainability 19 Unemployment recovered to pre-pandemic levels but has trended upward again.

The City’s unemployment rate increased more than three-fold from 3.1 to 13.5 percent between FY 2019 and FY 2020. However, the unemployment rate recovered to pre-pandemic levels in FY 2022. More recently, the unemployment rate has trended upward again, from 3.1 percent in FY 2022 to 5.0 percent in FY 2025.

Property value continues to grow, while median household income has not substantially grown.

Property values remain a strong and growing source of city revenues. Between FY 2016 and FY 2025, the assessed value of taxable property in Berkeley increased by 48 percent, from $19.1 billion to $28.2 billion, adjusted for inflation (Figure 10).

Figure 10. Total Taxable Assessed Property Value (in billions, in 2025 dollars)

Source: Berkeley FY 2025 ACFR
Property values are integral to Berkeley’s overall financial health. Growth in taxable assessed property value corresponds to growth in property tax revenues because a portion of property taxes are based on a percentage of the assessed value of property, otherwise known as ad valorem property taxes. Berkeley residents who are renters and do not benefit from increased property values may also face higher rents passed down from property owners as a result of increased taxes on property.

While property value grew, median household income has not substantially grown. The median household income in Berkeley increased by only 1 percent between 2016 and 2024, after adjusting for inflation. In 2024, Berkeley's median household income fell roughly in the middle of benchmark cities (Figure 11). This may mean that some Berkeley households, especially new homeowners, are paying higher ad valorem property taxes while their incomes may have not $19.1 $19.9 $20.2 $21.0 $22.1 $22.8 $23.0 $23.4
$27.1 $28.2
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Fiscal Year

Berkeley’s Financial Condition (FY 2016-FY 2025): Structural Deficit Poses Risk to Financial Sustainability 20 substantially grown after adjusting for inflation. Due in part to Proposition 13, owners of identical properties may pay different amounts of property taxes depending on their time of purchase. Under Proposition 13, the assessed value of property is generally determined by the purchase price and year of purchase. Therefore, new homeowners, whose properties have been recently reassessed at current market value, tend to have higher ad valorem property taxes.

Figure 11. Median Household Income, 2024

Source: 2024 American Community Survey (reported in calendar year)

$228,517
$180,631
$130,928
$105,048 $103,727 $102,235 $91,318
Palo Alto Santa Clara Santa Monica Pasadena Berkeley Oakland Long Beach

Berkeley’s Financial Condition (FY 2016-FY 2025): Structural Deficit Poses Risk to Financial Sustainability 21 Net Position, Liquidity, and Reserves:

Berkeley’s net position, liquidity, and
reserves indicate improvements.

Net position measures the difference between the City’s assets (what it owns) and its liabilities (what it owes). The City’s assets include cash and investments as well as resources such as capital assets that are not easily converted into cash. The City’s liabilities include debt and other obligations, such as accounts payable, accrued salaries and wages, and unfunded pension and retiree healthcare liabilities. Net position reflects a government’s financial condition at a point in time and can be thought of as the City’s remaining resources after its debts are accounted for.

Liquidity measures the City’s cash position, which includes cash on hand and in the bank, as well as other assets that can easily be converted into cash, such as short-term investments.

Liquidity tells us about the City’s ability to pay its short-term obligations, while net position represents a longer-term view of the City’s financial condition because it includes assets not easily converted into cash.

Reserves are funds set aside for future use and are built up over time from operating surpluses.

Strong reserves allow cities to weather economic downturns more effectively, manage the consequences of outside agency actions that may result in revenue reductions, and address unexpected emergencies like natural disasters and other catastrophic events such as pandemics.

The City’s net position related to governmental activities increased, indicating an improvement.

The City’s growth in net position indicates an improvement but may also reflect factors outside of the City’s control, such as changes in the financial market. Between FY 2018 and FY 2025, Berkeley’s net position related to governmental activities increased significantly from -$152.6 million in FY 2018 to $197.8 million in FY 2025. Specifically, the largest change in net position took place between FY 2021 and FY 2022, when the City's net position increased by $169.8 million (Figure 12). The large increase in net position between FY 2021 and FY 2022 was specifically due in part to a decrease in net pension and retiree healthcare liabilities from a gain in net investment income. In a later section of this report, we cover the City’s net pension and retiree healthcare liabilities in greater detail (see page 30).

Berkeley’s Financial Condition (FY 2016-FY 2025): Structural Deficit Poses Risk to Financial Sustainability 22 Figure 12. Governmental Activities Net Position (in millions, in 2025 dollars)

Source: Berkeley ACFRs
Note: We modified the scope of this figure to start in FY 2018, instead of FY 2016, to take into consideration a GASB accounting change that impacted net position beginning in FY 2018.

Berkeley’s liquidity ratio, or cash position, is strong and has increased since a dip in FY 2021.

The liquidity ratio, otherwise known as cash position, measures the City's ability to pay its short- term obligations. According to the ICMA, the liquidity ratio is calculated by dividing cash and short-term investments (assets that can be easily converted to cash) by current liabilities (short- term obligations). A liquidity ratio of greater than one indicates that cash and short-term investments exceed current liabilities. A ratio of one or less than one would be a cause for concern, particularly if this trend persists for more than three years.

Berkeley’s liquidity ratio is strong and has increased since a dip in FY 2021. Between FY 2021 and FY 2025, the liquidity ratio increased because cash and short-term investments increased while current liabilities have decreased. Berkeley’s increased liquidity ratio suggests that Berkeley's capacity to pay its bills in the short term has improved. However, Berkeley’s liquidity ratio in FY 2025 was not as strong as it was in FY 2019, which suggests Berkeley’s capacity to pay its bills in the short-term has not fully recovered to pre-pandemic levels (Figure 13).

Figure 13. Governmental Activities Liquidity Ratio (Current Assets Compared to Current Liabilities)

Source: Berkeley ACFRs
-$152.6 -$124.4 -$139.2 -$117.1
$52.7
$141.5 $162.8 $197.8
2018 2019 2020 2021 2022 2023 2024 2025
Fiscal Year

4.5 5.6 5.9

4.8 3.0

1.7 2.2

4.1 4.3

3.4 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Fiscal Year

Berkeley’s Financial Condition (FY 2016-FY 2025): Structural Deficit Poses Risk to Financial Sustainability 23 Berkeley has contributed annually to its reserves since our 2022 audit.

In FY 2017, the City created the Catastrophic Reserve and the Stability Reserve following a city audit of the General Fund reserve policy. The Catastrophic Reserve is intended to support General Fund operations in the event of a public emergency defined as extreme, one-time events, such as an earthquake, fire, flood, civil unrest, terrorist attack, public health emergencies, and pandemics. The Stability Reserve is intended to help the City maintain services and reduce financial risks associated with unexpected revenue shortfalls during a single fiscal year or prolonged period of recession.

Since our 2022 financial condition audit, the City has contributed annually to its reserves. Our previous audit found that the City was not on track to meet its previous reserve balance goal of 30 percent of budgeted General Fund revenues by FY 2027. This was due in part to the City borrowing from the reserves to balance a General Fund deficit caused by COVID-19. Since then, the City has made annual contributions and increased its overall reserve levels.

The City updated its reserves goal to balance the need to save with the need to use funds for alternative uses.

In July 2025, the City Council passed a resolution to update its General Fund Reserves policy based on a GFOA risk assessment of the City’s reserves. GFOA used a risk model to recommend a reserves goal that would enable Berkeley to cover projected risks within a ten-year period with sufficient confidence. GFOA recommended a range of 20 to 30 percent for the new reserve goal to balance the need to save with the need to use funds for alternative uses. Following GFOA’s recommendation, the City Council set a new reserves goal to achieve 20 to 30 percent of budgeted General Fund revenues within ten years. The new goal starts in FY 2026.

The City is on track to meet its updated reserves goal.

The City is on track to meet its updated reserves goal. As of FY 2025, the reserves level was at

21.3 percent of General Fund revenues (Table 1).

Table 1. The City is on track to meet its new reserves goal in FY 2026.

New reserves level goal FY 2025 reserves level On track to meet goal in FY 2026? 20 – 30 percent of adopted
General Fund revenues

21.3 percent of adopted
General Fund revenues
YES

Source: Berkeley City Manager, Budget Office data; Council Resolution No. 71,908-N.S.

Berkeley’s Financial Condition (FY 2016-FY 2025): Structural Deficit Poses Risk to Financial Sustainability 24 While FY 2026 is outside of our audit scope, City management estimates that the City is on track to achieve its new reserves goal in FY 2026, with reserves projected to be at 22.1 percent of adopted General Fund revenues. However, the City’s reserves level may change before the end of FY 2026 if the City decides to use the Stability Reserve to help address the FY 2027 and FY 2028 structural General Fund deficit.

Berkeley’s Financial Condition (FY 2016-FY 2025): Structural Deficit Poses Risk to Financial Sustainability 25 Long-Term Debt and Liabilities: Long-term
debt and liabilities have grown overall but
general obligation bond debt per resident
has decreased in recent years.
(Not Including Pension and Retiree Healthcare Liabilities) An accounting liability is an obligation to make a payment in the future as a result of a past event. Long-term liabilities include debts, in addition to other long-term obligations like accrued vacation and sick leave, accrued workers’ compensation claims and judgments, and accrued public liability claims and judgments. Long-term liabilities can include unfunded pension and retiree healthcare liabilities, but they are not included in this section and instead discussed starting on page 30.

Berkeley’s long-term liabilities have grown but still fall in the middle of the range compared to benchmark cities.

Between FY 2016 and FY 2025, the City’s total long-term liabilities increased by 60 percent from $208.7 million to $333.8 million, adjusted for inflation (Figure 14).

Figure 14. Governmental Activities Long-Term Liabilities (in millions, in 2025 dollars)

Source: Berkeley ACFRs
In FY 2022, a change in Governmental Accounting Standards Board (GASB) standards required government entities to report leases payable as a long-term liability. In FY 2023, another change in GASB accounting standards required government entities to also report Information Technology (IT) subscriptions, such as software licenses, as a long-term liability. The addition of leases and IT subscriptions did not substantially alter the City's total long-term liabilities, except in FY 2025 when the addition of new leases accounted for more than half of the increase from FY 2024 to FY 2025 (Figure 14).
$208.7
$208.3
$238.9
$229.2
$270.6 $310.9 $331.7 $317.7 $300.0 $333.8
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Fiscal Year
Change in accounting reporting standards
in FY 2022 and FY 2023

Berkeley’s Financial Condition (FY 2016-FY 2025): Structural Deficit Poses Risk to Financial Sustainability 26 Compared to benchmark cities, Berkeley’s long-term liabilities were in the middle of the range at $2,358 per resident in FY 2024 (Figure 15). In our 2022 financial condition audit, Berkeley was also in the middle of the range.

Figure 15. Governmental Activities Long-Term Liabilities per Resident, FY 2024

Source: Cities' FY 2024 ACFRs
Between FY 2016 and FY 2025, Berkeley’s long-term liabilities increased primarily due to increased bond debt from general obligation bonds. General obligation bonds are a form of long- term debt that cities use to finance capital infrastructure projects and are paid back through property taxes based on assessed value. General obligation bonds are approved through bond measures that must have at least two-thirds voter approval to pass.

Most of Berkeley’s debt comes from general obligation bonds.

In FY 2025, debt represented more than three-fourths of Berkeley's long-term liabilities. Eighty percent of Berkeley’s debt comes from general obligation bonds (Figure 16). The remaining twenty percent of Berkeley's debt comes from revenue bonds, building leases, capital equipment leases, loans payable, and IT subscriptions.

Figure 16. Governmental Activities Debt by Type, FY 2025 (in millions)

Source: Berkeley FY 2025 ACFR
Note: This figure does not include unfunded pension and retiree healthcare liabilities, workers' compensation, or other long-term obligations.
$455
$1,557
$2,308
$2,358
$2,775
$3,355
$3,621
Santa Clara
Pasadena
Long Beach
Berkeley
Oakland
Santa Monica
Palo Alto
General
Obligation Bonds
$205.4 (80%)
Revenue Bonds
$17.0 (7%)
Building Leases
$22.2 (9%)
Capital Leases
$8.8 (3%)
Loans Payable
$2.5 (1%)
IT Subscriptions
$2.5 (1%)

Berkeley’s Financial Condition (FY 2016-FY 2025): Structural Deficit Poses Risk to Financial Sustainability 27 Berkeley’s general obligation bond rating remained favorable.

Berkeley’s general obligation bond ratings have been consistently favorable. The City's general obligation bond ratings from Standard and Poor's remained at its second highest rating of AA+ over the audit period (Table 2). The City's general obligation bond ratings from Moody's improved from Aa2 to Aa1 in FY 2019, the second highest rating offered by Moody's. Bond ratings issued by credit agencies are a measure of the certainty that the City will pay all interest and principal owed to investors. The higher the bond rating, the lower the cost of borrowing.

The lower the cost of borrowing, the more savings the City can pass on to taxpayers.

Table 2. Berkeley’s General Obligation Bond Ratings
Fiscal Year
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Standard and Poors' Rating AA+ AA+ AA+ AA+ AA+ AA+ AA+ AA+ AA+ AA+ Moody's Rating Aa2 Aa2 Aa2 Aa1 Aa1 Aa1 Aa1 Aa1 Aa1 Aa1
Source: Berkeley ACFRs
Berkeley’s general obligation bond debt remained at or less than one percent of taxable assessed property value.

To help ensure proper debt management, cities can limit how much general obligation bond debt they issue based on a set percentage of total taxable assessed property value.

During the audit period, the City’s general obligation bond debt remained at or less than one percent of taxable assessed property value. In our previous financial condition audit, Berkeley's general obligation debt as a percentage of taxable assessed property value was significantly lower than the City's threshold of 15 percent at the time. As a result, we recommended the City update its debt management policy to set the general obligation threshold to a more locally appropriate level. The Finance Department then decreased the general obligation bond threshold from 15 percent of assessed value to a more locally appropriate threshold of 6 percent.

Berkeley’s general obligation bond debt per resident peaked in FY 2022 and declined in recent years.

General obligation bond debt per resident peaked in FY 2022 and declined after the City did not issue more general obligation bond debt (Figure 17).

Berkeley’s Financial Condition (FY 2016-FY 2025): Structural Deficit Poses Risk to Financial Sustainability 28 Figure 17. General Obligation Bond Debt per Resident (in 2025 dollars)

Source: Berkeley ACFRs
If Berkeley issued more general obligation bonds, debt service tax rates would increase in the near term.

Debt can be a reasonable financing strategy for local governments. General obligation bond debt allows Berkeley to borrow money for capital projects and spreads the cost burden over time so that taxpayers who will benefit from the asset now and in the future can help pay for it. Debt service is the amount that borrowers are required to pay back for issued debt. Voters approve general obligation bonds that are paid back through specific property tax rates based on assessed value, which are known as voter-approved ad valorem debt service taxes.

With current resources alone, Berkeley does not have sufficient funding to fully address its unfunded capital and deferred maintenance needs, as we will cover in greater detail starting on page 34. The longer the City leaves unfunded capital needs unaddressed, the more expensive they will be to address in the future.

If Berkeley issued more general obligation bonds, debt service tax rates would increase in the near term. City management submitted staff recommendations in December 2025 regarding a potential $300 million bond measure in 2026 to help address unfunded capital needs.

According to City management’s analysis, if Berkeley issued this proposed general obligation bond, the projected 40-year average debt service tax rate for property owners would be less than the historical average debt service tax rate (Figure 18).8 This average debt service tax rate assumes that no other general obligation bonds will be issued other than the proposed $300 million bond. In the near term, Figure 18 shows that debt service tax rates are likely to increase

8 City management’s analysis assumes $100 million would be issued every five years. $958 $977
$1,202 $1,096
$1,385
$1,795 $1,880 $1,786
$1,642 $1,524
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Fiscal Year
Measure M
$15M Debt
Issued
Measure T1
$35M Debt
Issued
Measure O
$38M Debt
Issued
Measure T1
$45M Debt
Issued
Measure O
$40M Debt
Issued

Berkeley’s Financial Condition (FY 2016-FY 2025): Structural Deficit Poses Risk to Financial Sustainability 29 initially. Figure 18 also shows that property owners will not see decreased debt service tax rates in their property tax bill until about 20 years have passed.

Figure 18. Historical and Projected Average Tax Rates to Pay Back General Obligation Bond Debt

Source: City Manager’s Office
Note: The historical and projected average tax rates are per $100,000 in assessed property value.

Berkeley’s Financial Condition (FY 2016-FY 2025): Structural Deficit Poses Risk to Financial Sustainability 30 Net Pension and Retiree Healthcare
Liabilities: Berkeley’s net pension liability is
still high risk and retiree healthcare liability
decreased.

What is a net pension or net retiree healthcare liability? Berkeley contributes to various employee retirement benefit plans including pensions through the California Public Employees Retirement System (CalPERS). Pension benefits are earned by employees each year to be paid out after they retire. In addition, Berkeley provides other post- employment benefits (OPEB), or earned compensation other than pensions, for employees when they retire. In Berkeley, OPEB refers to retiree healthcare coverage.

A net pension or net retiree healthcare liability occurs when the estimated cost of benefits exceeds the value of the assets that have been set aside to pay for those benefits. The net pension liability or net retiree healthcare liability is the unfunded portion of the City’s total pension or retiree healthcare liability, also referred to as an unfunded liability.

Pension and retiree healthcare contributions can place significant pressure on a city’s budget.

Some factors, such as yearly required contributions for CalPERS plans, are set by CalPERS and are outside the City’s control, posing a widespread challenge for California cities. Cities that do not have substantial funds set aside today will likely face impacts to their credit rating and have to make higher contributions to plans later, which could limit funding for other priorities.

Net Pension Liability
Berkeley has three pension plans administered through CalPERS, which are the Miscellaneous Plan, the Public Safety Fire Plan, and the Public Safety Police Plan. Berkeley also has two older city-sponsored plans that are closed to new members and being phased out: the Berkeley Retirement Income Benefit Plan and Safety Members Pension Plan.

The City’s net pension liability reached a peak in FY 2021 and decreased thereafter.

The City’s net pension liability reached a peak in FY 2021, then decreased after the peak as pension assets increased more than pension liabilities. There was also considerable dip in the City’s net pension liability in FY 2022 likely due to a large increase in net investment income from the City's CalPERS pension plans (Figure 19). According to the GFOA, Berkeley would have

Berkeley’s Financial Condition (FY 2016-FY 2025): Structural Deficit Poses Risk to Financial Sustainability 31 the highest bond rating, and as a result cheaper borrowing, if not for its pension liabilities.

Figure 19. Net Pension Liability by Plan (in millions, in 2025 dollars)

Source: Finance Department data
Decisions from the CalPERS Board impact the City’s net pension liability and required pension contributions. According to the City’s 2023 unfunded liability report, the City’s annual pension payment is estimated to increase from $76 million in FY 2025 to $108 million in FY 2034.

Berkeley’s funded ratio is still high risk.

Berkeley’s funded ratio is high risk according to past methodology from the California State Auditor’s Fiscal Health of California Cities dashboard, which is no longer published. The pension funded ratio compares the City’s pension plan assets to its accrued pension liabilities.

Berkeley’s funded ratio, tied with Palo Alto, is ranked the second highest in risk among benchmark cities (Figure 20). In our 2022 financial condition audit, Berkeley’s funded ratio was also at 66 percent in FY 2020.

Figure 20. Funded Ratio of Pension Plans, FY 2024

Source: Cities' FY 2024 ACFRs and previous methodology from C alifornia State Auditor's Fiscal Health Dashboard
Note: Funded ratios from 81 percent to 100 percent are considered low risk according to past criteria from the California State Auditor's dashboard. None of the benchmark cities had funded ratios in this range in FY 2024, so this category is not represented in the figure. $642.7
$702.1 $740.3
$706.6 $741.2 $757.8
$482.5
$720.0 $743.9 $694.8
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Fiscal Year
Safety Members
Pension Plan
Berkeley Retirement
Income Benefit Plan
CalPERS Public Safety
Police Plan
CalPERS Public Safety
Fire Plan
CalPERS
Miscellaneous Plan
78%
78%
74%
68%
66%
66%
63%
Santa Monica
Long Beach
Pasadena
Oakland
Palo Alto
Berkeley
Santa Clara High risk
(0-70%)
Moderate risk
(71-80%)

Berkeley’s Financial Condition (FY 2016-FY 2025): Structural Deficit Poses Risk to Financial Sustainability 32 The City has increased its pension savings but has not consistently met its annual savings goal.

Following a city audit of unfunded liabilities, the City authorized an IRS Section 115 Trust Fund (Trust) in FY 2018 to help pre-fund its pension obligations. The Trust acts as a rainy-day fund that allows the City to set aside resources restricted for payment of pension obligations and is intended to prepare for and partially offset increases in contributions in the coming years.

It is important for the City to meet its Trust contribution goal to adequately prepare for projected increases in required pension contributions in the coming years. While the City has made Trust contributions every year since FY 2019, the City has only met its annual Trust contribution goal two out of the seven years (Figure 21). As of June 2025, the City's Trust had a balance of $29.5 million.

Figure 21. Contributions to the Section 115 Trust (in millions)

Source: Berkeley ACFRs; May 14, 2019 staff report to City Council Since our previous audit, City Council adopted a new fiscal policy to increase Trust contributions. In June 2022, the City Council adopted a new fiscal policy to allocate one-third of additional revenue earned from the City's investments that is over the annual baseline of $6 million to the Trust. Previously, Trust contributions primarily came from annual savings derived from prepayments to CalPERS and transfers from the General Fund and Capital Improvement Fund. This new fiscal policy added a new funding source for Trust contributions starting in FY 2023.

However, City Council’s fiscal policies do not explicitly require the City to replenish the Trust after funds are withdrawn. As previously mentioned, in FY 2025, to help balance the General Fund, the City used $3 million from the Trust to cover CalPERS contributions. This substantially decreased the net contribution made in that year. While the City’s contributions to the Trust are important, the City also needs to balance its contribution goals with operational needs. $5.2
$1.4 $1.5
$3.6
$4.3
$5.7
$2.4
2019 2020 2021 2022 2023 2024 2025
Fiscal Year
Target Contribution
Actual Contribution$4.5
$5.5

Berkeley’s Financial Condition (FY 2016-FY 2025): Structural Deficit Poses Risk to Financial Sustainability 33 Net Retiree Healthcare Liability
Net retiree healthcare liability decreased.

Overall, net retiree healthcare liability decreased by $103.8 million between FY 2016 and FY 2025 (Figure 22). The City’s net retiree healthcare liability decreased because retiree healthcare assets increased while the liabilities decreased from FY 2016 to FY 2025. Notably, the City’s net investment income for retiree healthcare substantially increased within the audit period. If the City does not pay its retiree healthcare obligations, this could negatively impact the retirees receiving these benefits and the City’s bond rating, according to the Finance Director.

Figure 22. Net Retiree Healthcare Liability (in millions, in 2025 dollars)

Source: Finance Department data
Recommendation

3.1 To continue to strengthen the Section 115 Trust, we recommend City management propose an amendment to the current Council fiscal policies to explicitly require the City to replenish the Trust after funds are withdrawn, as long as contributions to the Trust are needed to address increased pension costs and the City’s operational needs are taken into consideration. The policy may be modeled off the City’s General Fund Reserve Policy, which requires repayment to begin no more than five years from the date of withdrawal and to be completed within ten years from the date of withdrawal.

$147.2
$130.7
$116.0
$124.5
$165.5
$132.6
$86.7 $92.4 $84.8
$43.4
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Fiscal Year

Berkeley’s Financial Condition (FY 2016-FY 2025): Structural Deficit Poses Risk to Financial Sustainability 34 Capital Assets: Unfunded capital needs have
grown despite some increased investment.

How do the City’s capital assets impact its financial condition? Capital assets are used in city operations and have a life that extends beyond a single financial reporting period. Berkeley owns a wide range of capital assets, including public buildings, streets, sidewalks, sewers and storm drains, traffic signals, and parking infrastructure. The City’s responsibility for managing capital assets requires considerable resources and ongoing attention, which impacts the City’s financial condition. As a relatively older city, Berkeley faces the added challenges of aging infrastructure.

If a city does not regularly maintain its capital assets, it can face deferred maintenance costs down the line. Addressing capital assets once their condition has severely deteriorated is often more expensive than regular preventative care or maintenance. According to the Metropolitan Transportation Commission, regular maintenance of roads is five to ten times cheaper than allowing roads to fail and then paying for the necessary rehabilitation (Figure 23).

Figure 23. Pavement Maintenance Costs

Source: Metropolitan Transportation Commission, Pothole Report III 2018 As we reported in our 2020 audit of Berkeley’s streets, Berkeley needs significant additional funding to address the growing backlog of deteriorating streets.9 Since this finding, in November 2024, voters approved Measure FF, a parcel tax expected to generate $15 million annually for 14 years, with about 45 percent dedicated to street paving. According to Public Works' analysis,

9 Rocky Road: Berkeley Streets at Risk and Significantly Underfunded

Berkeley’s Financial Condition (FY 2016-FY 2025): Structural Deficit Poses Risk to Financial Sustainability 35 Measure FF would not generate sufficient revenue to help the City achieve the pavement condition index rating of 70 out of 100, which falls within the good condition range.10 Berkeley’s unfunded capital and deferred maintenance needs have grown to $1.8 billion.

Unfunded capital and deferred maintenance needs have grown since our 2022 audit.11 In FY 2024, the City reported about $1.8 billion in unfunded capital and deferred maintenance needs in the FY 2025-FY 2029 Capital Improvement Program (Figure 24). Without sufficient investment, these unfunded capital needs will continue to grow.

Figure 24. Unfunded Capital and Deferred Maintenance Needs, FY 2017 to FY 2024 (in 2025 dollars)

Source: City of Berkeley's Unfunded Liability Reports (FY 2017-FY 2021); FY 2025-FY 2029 Capital Improvement Program (FY 2024)
Note: We did not include IT-related assets due to incomplete data, and these costs would not significantly change the total amount of unfunded capital and deferred maintenance needs. Unfunded needs for sidewalks were reported starting in FY 2019. Similarly, unfunded needs for bike, pedestrian, and transit projects and other infrastructure were reported starting in FY 2024. Unfunded needs for public buildings included fire station rehabilitation projects but did not include full fire station renovations. Library facilities and facilities leased to other entities at the time of analysis were not included.

10 The pavement condition index is a measure that rates segments of paved roadways on a scale of 0 to 100 with condition categories ranging from a low of “failed” to a high of “excellent.” The “good” condition category is the third highest out of seven categories.
11 Capital and deferred maintenance needs refer to a broad range of necessary activities, including investment in new capital assets, improving existing capital assets, replacing existing capital assets, and repairing existing capital assets.

FY 2017 FY 2019 FY 2021 FY 2024
Other Infrastructure
Bike, Pedestrian, and Transit
Projects
Traffic Signals
Storm Drains
Sewers
Streets and Roads
Sidewalks
Public Buildings
Parks, Park Buildings, Pools,
Waterfront, and Camps
$603.5 million
$1.8 billion

Berkeley’s Financial Condition (FY 2016-FY 2025): Structural Deficit Poses Risk to Financial Sustainability 36 Berkeley has increased investment in capital infrastructure, but it is not enough to cover all its unfunded capital needs.

Overall, Berkeley has increased investment in capital infrastructure. Over the last ten years, Berkeley spent an average of $63.4 million each fiscal year on capital assets (Figure 25). In FY 2025, Berkeley spent $93.3 million on capital assets, which was the highest level of investment in capital assets compared to prior fiscal years in our audit scope (Figure 25). While the City has overall increased its investment in capital assets since FY 2016, it does not cover the $1.8 billion in unfunded capital needs, according to the current Capital Improvement Program.

Figure 25. Capital Investments (in millions, in 2025 dollars)

Source: Berkeley ACFRs
City management did not release an updated unfunded liability report for FY 2025 due to limited staff time.

An important part of Berkeley’s planning process to address its unfunded capital need is City management’s presentation of a biennial unfunded liabilities report to City Council. In 2012, City Council adopted a resolution requiring the City Manager to report every other year on the City’s current liabilities and projections of future liabilities to provide accurate information to Council and the public ahead of the City’s budget deliberations. Due to limited staff time and competing priorities, City management did not release an updated unfunded liability report for FY 2025. As a result, City Council and the public do not have complete information regarding the City’s unfunded liabilities in a clear, easily accessible format to inform upcoming budget deliberations.

$47.3
$69.5
$77.3
$25.8
$78.5 $79.6 $74.8
$38.2
$49.9
$93.3
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Fiscal Year
Ten-Year Average
$63.4

Berkeley’s Financial Condition (FY 2016-FY 2025): Structural Deficit Poses Risk to Financial Sustainability 37 The City lacks advanced planning to finance its capital plan in the long term.

To ensure effective management of capital assets, the GFOA recommends that local governments prepare and adopt multi-year capital plans that cover a period of five to twenty- five years. The City has a Capital Improvement Program (CIP) that identifies capital needs and funding sources over five years, which is on the lower end of the recommended period. Given that capital assets have life cycles that can last decades, capital plans that cover longer time periods can help to anticipate and plan for these long-term costs.

The GFOA also recommends that local governments develop multi-year financing plans covering the multi-year period of their capital plan to ensure that their plan is achievable within expected funding sources. According to the most recent CIP, the City’s local revenues have not kept pace with the investments needed to maintain or update aging infrastructure. This means the City will likely need to raise new funding, through sources such as bonds, to address its unmet capital needs. However, the CIP does not include advanced planning to determine if and when the City should propose new bond measures to address capital needs.

Other jurisdictions have advanced bond planning. For example, San Francisco has a ten-year capital plan that includes a planned general obligation bond schedule that considers the City’s debt capacity, election schedule, and capital needs. Berkeley Unified School District (BUSD) has a ten-year Facilities Master Plan for school building improvements. Historically, BUSD proposes new general obligation bonds to Berkeley taxpayers every ten years, and the Master Plan helps to identify which capital projects will be financed through bond funding.

As mentioned previously, City management submitted staff recommendations in December 2025 regarding a potential $300 million bond measure in 2026 to help address unfunded capital needs. Beyond this, developing a multi-year capital financing plan that includes advanced bond planning could help the City better anticipate and communicate long-term funding needs and the proposed timing of future bond measures.

Recommendations

4.1 To provide clear and accurate information on City’s current liabilities and projections of future liabilities, we recommend City management resume providing the biennial unfunded liability report to City Council and the public ahead of the FY 2029 and FY 2030 budget.

Berkeley’s Financial Condition (FY 2016-FY 2025): Structural Deficit Poses Risk to Financial Sustainability 38 4.2 To improve the City’s ability to anticipate capital infrastructure needs, we recommend City management extend the Capital Improvement Program (CIP) beyond five years, such as a ten-year CIP.

4.3 To address the City’s long-term capital infrastructure needs, we recommend City management develop a capital financing plan that covers a period at least as long as the CIP and proposes future funding mechanisms beyond existing sources. We recommend that the City plan the timing and amount of potential general obligation bonds multiple years in advance, taking into consideration the City’s existing amount of authorized debt and capacity to borrow. The timing and amount of future bonds should aim to prevent sharp changes in debt service tax rates when possible.

Berkeley’s Financial Condition (FY 2016-FY 2025): Structural Deficit Poses Risk to Financial Sustainability 39 Management Response
We provided a draft of this report to the City Manager, Finance, Public Works, and the City Attorney for review and comment. City management agreed or partially agreed with our findings, conclusions, and recommendations.

We will conduct our standard recommendation follow-up process after the audit is issued. We generally expect the City to implement audit recommendations within two years of report issuance. We have not yet confirmed to what extent any recommendations may have been implemented prior to the audit release date.

Recommendation 1.1: To present clear information regarding the City’s investment performance, we recommend the Finance Department provide an investment report to Council that compares the City’s investment rate of return for the most recent fiscal year to at least the previous five fiscal years, similar to the City’s past annual investment reports.

Management Response: Partially Agree
Implementation Date: December 31, 2026
Corrective Action Plan: The city is required to file quarterly investment reports. For all 4th quarter reports, staff will add a table showing the rate of return for the previous 5 years.

Recommendation 2.1: To help the City pass a structurally balanced budget, we recommend City management propose a fiscal policy to City Council to assess whether recurring revenues and recurring expenditures are balanced, and communicate this information to City Council. We recommend this policy also formalize City management’s initiative to develop the baseline budget using the prior year’s actual expenditures and projected needs.

Management Response: Partially Agree
Implementation Date: June 30, 2028
Corrective Action Plan: As part of developing the budget, City management currently assesses projected revenues and expenditures to determine whether or not the budget is balanced. This information is communicated to the City Council as part of the budget adoption process and per the City Charter, the City must adopt a balanced budget. For this biennial budget, City management implemented a data driven approach by developing the baseline budget using prior year actuals and projected needs. This change in the process was included in the City’s Budget Instructions and will remain part of the

Berkeley’s Financial Condition (FY 2016-FY 2025): Structural Deficit Poses Risk to Financial Sustainability 40 budget process going forward. Staff will evaluate whether a formal City Council fiscal policy is necessary or whether the same objectives can be achieved through the Budget Instructions and possibly by adding a dedicated section in the Budget Book.

Recommendation 2.2: To ensure sustainable budgetary strategies continue, we recommend the City publicly report in the adopted budget book that departments are required to submit a structural balancing plan to the Budget Office for enterprise funds that project a deficit. As part of this process, we recommend the Budget Office and departments work together to regularly assess the transfers in and out of these enterprise funds.

Management Response: Agree
Implementation Date: Implemented for the FY 2027 and FY 2028 Biennial Budget Process
Corrective Action Plan: For this Biennial Budget, the City required the Departments that manages special funds experiencing structural deficits or projecting a deficit to submit a balancing plan and a five-year fund forecast. This step is also documented in the Budget Instructions. The Budget Book also has a dedicated section highlighting the City’s major funds. Other funds that are projecting deficits not currently included can be added for better visibility.

Recommendation 2.3: To improve the financial sustainability of enterprise funds, we recommend the City adopt a citywide policy to regularly evaluate enterprise fees and propose adjustments where appropriate to strengthen revenues and help mitigate the future risk of enterprise fund deficits.

Management Response: Agree
Implementation Date: July 1, 2027
Corrective Action Plan: The City can evaluate when it is appropriate for each enterprise fund to adjust its fees by working closely with the relevant departments and fund managers. Because each enterprise fund is unique, establishing a single, coordinated adjustment schedule may not be feasible. However, the City can develop a set of criteria that would trigger a review and potential adjustments of fees.

Berkeley’s Financial Condition (FY 2016-FY 2025): Structural Deficit Poses Risk to Financial Sustainability 41 Recommendation 2.4: To further improve the financial sustainability of enterprise funds, we recommend the City adopt a policy to establish a reserve for each enterprise fund as appropriate and legally permitted. We recommend the Budget Office and departments work together to determine the appropriate reserve goal for each enterprise fund.

Management Response: Agree
Implementation Date: June 30, 2028
Corrective Action Plan: The City can establish a Special Fund Reserve Study Working Group to evaluate and research best practices and industry standards. This group can apply those practices to the City’s needs, fund specific needs and requirements to develop appropriate reserve targets and policies. Since each enterprise fund is unique, establishing a single reserve target for all funds is not feasible.

Recommendation 3.1: To continue to strengthen the Section 115 Trust, we recommend City management propose an amendment to the current Council fiscal policies to explicitly require the City to replenish the Trust after funds are withdrawn, as long as contributions to the Trust are needed to address increased pension costs and the City’s operational needs are taken into consideration. The policy may be modeled off the City’s General Fund Reserve Policy, which requires repayment to begin no more than five years from the date of withdrawal and to be completed within ten years from the date of withdrawal.

Management Response: Agree
Implementation Date: To be determined
Corrective Action Plan: Council Approval Needed
Recommendation 4.1: To provide clear and accurate information on City’s current liabilities and projections of future liabilities, we recommend City management resume providing the biennial unfunded liability report to City Council and the public ahead of the FY 2029 and FY 2030 budget.

Management Response: Agree
Implementation Date: June 30, 2028
Corrective Action Plan: The City will resume providing the biennial Unfunded Liability and Unfunded Capital Needs report to the City Council in the second half of FY 2028 and return to a regular biennial schedule thereafter.

Berkeley’s Financial Condition (FY 2016-FY 2025): Structural Deficit Poses Risk to Financial Sustainability 42 Recommendation 4.2: To improve the City’s ability to anticipate capital infrastructure needs, we recommend City management extend the Capital Improvement Program (CIP) beyond five years, such as a ten-year CIP.

Management Response: Partially Agree
Implementation Date: To be determined, will consider implementation of this recommendation as part of the FY 29 – FY 30 Biennial Budget.

Corrective Action Plan: Developing long-term projections is necessary to plan. For this reason, every two years the City develops a 5 Year Capital Improvement Program.

Projections beyond five years can be unreliable. With that being said, as part of the FY 29 – FY 30 Biennial Budget, staff will evaluate the potential to extend the Capital Improvement Program beyond five years.

Recommendation 4.3: To address the City’s long-term capital infrastructure needs, we recommend City management develop a capital financing plan that covers a period at least as long as the CIP and proposes future funding mechanisms beyond existing sources. We recommend that the City plan the timing and amount of potential general obligation bonds multiple years in advance, taking into consideration the City’s existing amount of authorized debt and capacity to borrow. The timing and amount of future bonds should aim to prevent sharp changes in debt service tax rates when possible.

Management Response: Agree
Implementation Date: June 30, 2028
Corrective Action Plan: There is an existing City Council referral that is similar for the current budget cycle that will be implemented.

Berkeley’s Financial Condition (FY 2016-FY 2025): Structural Deficit Poses Risk to Financial Sustainability 43 Methodology and Compliance
Methodology
We used financial indicators included in the International City/County Management Association’s (ICMA) Evaluating Financial Condition handbook designed for local governments. Additionally, for a few indicators, we adapted methodology from the California State Auditor’s Office used for their Fiscal Health of California Cities dashboard that is no longer available. We also included some indicators used by peer cities in their financial condition audits.

To better understand how some of Berkeley’s financial indicators compared to peer cities, we benchmarked Berkeley to other California cities which were selected during our previous financial condition audit. Specifically, we benchmarked Berkeley against Long Beach, Oakland, Pasadena, Santa Clara, Santa Monica, and Palo Alto because they were similar to Berkeley across one or more criteria, such as population, general fund expenditures per resident, services provided, and presence of a large university. We included Palo Alto and did not include Davis in this audit, unlike our previous financial condition audit, because Davis did not publish a FY 2024 ACFR during the audit period. Due to variation in the availability of comparison cities’ FY 2025 ACFRs, we used FY 2024 data for the comparisons where possible.

To meet our objective, we reviewed the following:
• Berkeley’s Annual Comprehensive Financial Reports (ACFRs), • Budget Office reports (Unfunded Liability Obligations and Unfunded Infrastructure Needs reports, city budgets),
• City Auditor reports on financial condition, leases, streets, and police overtime, • City policies on reserves, debt management, and investments, • Council reports and presentations related to the City’s finances, and • The City’s bond rating in the Moody’s 2025 Annual Comment Report.

We also conducted interviews with:
• The Director of Finance,
• Staff from the Office of Budget and Fiscal Management (Budget Office) responsible for overseeing the City’s budget and spending,
• The Director of Public Works and Public Works staff responsible for overseeing city spending on capital assets and financial management of the Public Works enterprise funds, including the Off-Street Parking Fund and Parking Meter Fund,

Berkeley’s Financial Condition (FY 2016-FY 2025): Structural Deficit Poses Risk to Financial Sustainability 44 • The Director of Parks, Recreation and Waterfront responsible for overseeing the financial management of the Marina Fund, and
• Staff at the City’s external financial auditing firm, Badawi and Associates.

We analyzed financial data from the sources below. For all indicators where we adjusted for inflation, we used the inflation factor as of June 2025 from the Consumer Price Index: San Francisco-Oakland-Hayward Table, 2016-2025, U.S. Department of Labor, Bureau of Labor Statistics.

Report Sources
Revenues and Expenses
Revenues and Expenses (trends)
• City of Berkeley FY 2016 – FY 2025 ACFRs, Government-Wide Financial Statements:

Statement of Activities
Revenue per Resident (benchmark)
• City of Berkeley, Oakland, Long Beach, Pasadena, Santa Clara, Santa Monica, and Palo Alto FY 2024 ACFRs, Government-Wide Financial Statements: Statement of Activities; Statistical Section: Demographic and Economic Statistics
Revenues by Source
• City of Berkeley FY 2025 ACFR, Government-wide Financial Statements: Statement of Activities
Revenues by Source (trends)
• City of Berkeley FY 2016 – FY 2025 ACFRs, Government-wide Financial Statements:

Statement of Activities
Investment Reporting
• City of Berkeley Quarterly Investment Reports FY 2025 • City of Berkeley Annual Investment Reports
• City of Palo Alto and San Jose Investment Reports
Revenues from Leases
• City of Berkeley Finance Department data FY 2016 – FY 2025 Berkeley’s Countywide 1 Percent Ad Valorem Property Tax Distribution • Alameda County Auditor-Controller/Clerk-Recorder’s Office data FY 2025 What are your property taxes levied for?
• City of Berkeley FY 2025 ACFR, Government-wide Financial Statements, Statement of Activities
Expenses by Function
• City of Berkeley FY 2016 and FY 2025 ACFRs, Government-wide Financial Statements:

Statement of Activities
Personnel Expenditures by Category
• City of Berkeley City Manager, Budget Office data FY 2016 and FY 2025 • City of Berkeley FY 2025 ACFR, Statistical Section: Full-time Equivalent City Governmental Employees by Function/Program
General Fund Expenditure Growth
• City of Berkeley City Manager, Budget Office’s presentation to the Budget and Finance Committee (1/22/2026)
Budgetary Practices
General Fund Deficit
• City of Berkeley Budgets: FY 2020 and FY 2021, FY 2022, FY 2023 and FY 2024, FY 2024, FY 2025 and FY 2026
• City Council Resolutions to Adopt Budgets

Berkeley’s Financial Condition (FY 2016-FY 2025): Structural Deficit Poses Risk to Financial Sustainability 45 Report Sources
• City of Berkeley City Manager, Budget Office: FY 2027 and FY 2028 Budget Development Instructions
• Government Finance Officers Association Report: “A Risk-Based Analysis and Stress Test of Long-Term Debt Affordability for the City of Berkeley, California,” 2022 Enterprise Fund Deficits
• City of Berkeley Budgets: FY 2020 and FY 2021, FY 2022, FY 2023 and FY 2024, FY 2024, FY 2025 and FY 2026
• City of Berkeley Departments’ presentations to the Budget and Finance Committee • City of Berkeley City Manager, Budget Office: FY 2027 and FY 2028 Budget Development Instructions
• City of Berkeley FY 2025 ACFR, Financial Section: Notes to Basic Financial Statements, Interfund Transactions
Demographic and Economic Indicators
Population
• City of Berkeley FY 2025 ACFR, Statistical Section: Demographic and Economic Statistics UC Berkeley Presence
• University of California website
• University of California Berkeley: Office of the Vice Chancellor website • City of Berkeley Office of Economic Development 2024 Dashboard Unemployment
• City of Berkeley FY 2025 ACFR, Statistical Section: Demographic and Economic Statistics Assessed Property Value
• City of Berkeley FY 2025 ACFR, Statistical Section: Assessed Value and Estimated Values of Taxable Property
Median Household Income (benchmark)
• 2016 American Community Survey, City of Berkeley
• 2024 American Community Survey, City of Berkeley, Oakland, Long Beach, Pasadena, Santa Clara, Santa Monica, and Palo Alto
Net Position, Liquidity, and Reserves
Net Position
• City of Berkeley FY 2018 – FY 2025 ACFRs, Government-Wide Financial Statements:

Statement of Net Position
Liquidity Ratio
• City of Berkeley FY 2016 – FY 2025 ACFRs Government-Wide Financial Statements:

Statement of Net Position
General Fund Reserves
• City of Berkeley City Manager, Budget Office data, FY 2017 – FY 2025 • City of Berkeley City Manager, Budget Office, First Amendment to the FY 2026 Annual Appropriations Ordinance Presentation to Budget and Finance Committee • City Council Resolution Amending the General Fund Reserve Policy (7/29/2025) Long-Term Debt and Liabilities
Governmental Activities Long-Term Liabilities
• City of Berkeley FY 2016 – FY 2025 ACFRs, Notes to Basic Financial Statements:

Governmental Activities Long-Term Liabilities Summary
Governmental Activities Long-Term Liabilities per Resident (benchmark) • City of Berkeley, Oakland, Long Beach, Pasadena, Santa Clara, Santa Monica, and Palo Alto FY 2024 ACFRs, Government-Wide Financial Statements: Statement of Net Position Debt by Type
• City of Berkeley FY 2025 ACFR, Notes to Basic Financial Statements: Governmental Activities Long-Term Liabilities Summary
Bond Ratings
• City of Berkeley FY 2016 – FY 2025 ACFRs, Introductory Section

Berkeley’s Financial Condition (FY 2016-FY 2025): Structural Deficit Poses Risk to Financial Sustainability 46 Report Sources
• Standard and Poor’s Ratings Guide
• Moody’s Rating Definitions
General Obligation Bond Debt as a Proportion of Assessed Property Value • City of Berkeley FY 2025 ACFR, Statistical Section: Ratios of General Bonded Debt Outstanding
• City of Berkeley FY 2025 ACFR, Statistical Section: Assessed Value and Estimated Values of Taxable Property
• City of Berkeley Debt Management and Disclosure Policy General Obligation Bond Debt per Resident
• City of Berkeley FY 2021 and FY 2025 ACFR, Statistical Section: Ratios of General Bonded Debt Outstanding
• City of Berkeley FY 2021 and FY 2025 ACFR, Statistical Section: Demographic and Economic Statistics
General Obligation Debt Service
• City Council Special Meeting Item (12/02/2025), “Discussion Regarding Potential Ballot Measures for the November 3, 2026, General Municipal Election” Net Pension and Retiree Healthcare Liabilities
Net Pension Liability by Plan
• City of Berkeley Finance Department data FY 2016 – FY 2025 Funded Ratio Risk Level (benchmark)
• City of Berkeley, Oakland, Long Beach, Pasadena, Santa Clara, Santa Monica, and Palo Alto FY 2024 ACFRs, Required Supplementary Information: Schedule of Changes in the Net Pension Liability and Related Ratios
Section 115 Trust Fund
• City of Berkeley FY 2016 – FY 2025 ACFRs, Combining Financial Statements and Schedules:

Schedule of Revenue, Expenditures, and Changes in Fund Balances – Budget and Actual PERS Savings Fund – Budgetary Basis
• City of Berkeley, May 14, 2019 staff report to City Council Net Retiree Healthcare Liability
• City of Berkeley Finance Department data FY 2016 – FY 2025 Capital Assets
Pavement Maintenance Costs
• Metropolitan Transportation Commission, The Pothole Report: Bay Area Roads at Risk, September 2018
Unfunded Capital and Deferred Maintenance Needs
• City of Berkeley Unfunded Liability Reports (FY 2017, FY 2019, FY 2021) • City of Berkeley FY 2025 – FY 2029 Capital Improvement Program Capital Investments
• City of Berkeley FY 2016 – FY 2025 ACFRs, Notes to the Basic Financial Statements: Capital Assets
Throughout the report, we use the terms expenses and expenditures. Government-wide financial statements (including governmental and business-type activities) use the accrual basis of accounting and refer to expenses. The accrual basis of accounting reports revenues and expenses in the period in which the underlying event occurs, regardless of the timing of cash flows. This means that revenues are recorded when earned and expenses are recorded when the liability is incurred, instead of when cash is actually received or disbursed. Governmental fund financial statements (including the General Fund) use the modified accrual basis of accounting and refer to expenditures. Under the modified accrual basis of accounting, revenues are recorded when

Berkeley’s Financial Condition (FY 2016-FY 2025): Structural Deficit Poses Risk to Financial Sustainability 47 measurable and available, and expenditures are recorded when the liability is incurred, except for interest on long-term debt, judgments and claims, workers’ compensation, and compensated absences, which are recorded when paid.

Data Reliability
We reviewed information for reasonableness and consistency, and we researched data that needed additional explanation. We did not, however, audit the accuracy of all source documents or the reliability of the data in computer-based systems. As nearly all financial information presented is from the City’s ACFRs, we relied on the work performed by the City’s external financial auditors.

Statement of Compliance
We conducted this performance audit in accordance with Generally Accepted Government Auditing Standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objective. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objective.

Mission Statement
Promoting transparency and accountability in Berkeley government.

Contributors
Erin Mullin, Audit Manager
Caitlin Palmer, Audit Manager
Kendle Kuechle, Auditor II
Pauline Miller, Auditor II
Manami Suenaga, Auditor I
Katie Wysong, Auditor I

City Auditor
Jenny Wong

Office of the City Auditor
Phone: (510) 981-6750
Email: [email protected]
Website: https://berkeleyca.gov/your-government/city-audits

Copies of our audit reports are available on our website.

Cover photograph designed by Freepik

Internal

CONSENT CALENDAR
April 28th, 2026
To: Honorable Mayor and Members of the City Council
From: Councilmember Terry Taplin
Subject: Luna Dance Creativity: Relinquishment of Council Office Budget Funds from General Funds and Grant of Such Funds

RECOMMENDATION
Adopt a Resolution approving the expenditure of an amount not to exceed $500 per Councilmember, including $500 from Councilmember Taplin, to support Luna's May Day Gathering and Bazaar event.

FISCAL IMPACTS OF RECOMMENDATION
No General Fund impacts. Up to $500 is available from contributing Councilmember’s Council Office Budget discretionary accounts.

CURRENT SITUATION AND ITS EFFECTS
In the past year, Luna Dance served 130 families; 1,894 teachers, artists, and caregivers; and nearly 29,000 students, including more than 4,000 young people with disabilities. Programs reached twelve public school districts, six independent schools, and three institutions of higher education, across eleven counties nationwide, reflecting both the depth and growing national reach of Luna’s work.

Luna’s mission is to bring creativity, equity, and community to every child’s life through dance. Grounded in its Theory of Change—children embody the future, dance cultivates creativity, and policy centers equity—Luna asks: what becomes possible when we commit to advancing children’s freedom?
At the heart of their work is collective action. Through partnerships with artists, educators, caregivers, schools, and social service networks, Luna expands access to high-quality dance education, especially for communities historically and systemically excluded from the arts.

Luna's creativity-based pedagogy continues to integrate research and practice in play theory, neuroscience, child development, and anti-bias, culturally responsive teaching.

BACKGROUND

Internal
Luna Dance Creativity

CONSENT CALENDAR
April 28th, 2026
Luna Dance & Creative was founded in Oakland, California, on International Women’s Day, March 8th, 1992. Since then, they have grown from a local community dance center with a strong children’s program, to a nationally recognized organization that ignites the field of dance education with expectations of increased creativity, equity, and inclusion. Luna Dance’s programs bring dance to more than 30,000 children and 400 artists, teachers, and social service providers each year. They work together to develop future choreographers, leaders, and visionaries.

Studio Lab-Kids was their first program, and it remains the only choreography-centered children’s dance program in California. Since purchasing and renovating their Berkeley space in 2022, Studio Lab has expanded to serve artists (Studio Lab-Artists) by providing rehearsal space and piloting residency programs. Studio Lab-Community offers public education through showcasing artistic research and scholarship in dynamic ways that challenge the limitations of academia.

ENVIRONMENTAL SUSTAINABILITY AND CLIMATE IMPACTS
None.

CONTACT PERSON
Councilmember Terry Taplin, Council District 2 - 510-981-7120 Attachments:
1: Resolution

RESOLUTION NO. ##,###-N.S.

AUTHORIZING THE EXPENDITURE OF SURPLUS FUNDS FROM THE OFFICE EXPENSE

ACCOUNTS OF THE MAYOR AND COUNCILMEMBERS FOR A GRANT TO PROVIDE

PUBLIC SERVICES FOR A MUNICIPAL PUBLIC PURPOSE
WHEREAS, Councilmember Taplin has surplus funds in his office expenditure account (budget code 011-11-102-100-0000-000-411); and
WHEREAS, a private 501(c)(3) non-profit tax-exempt corporation Luna Dance Creativity seeks funds in the amount of $500 to support their continued fundraising; and WHEREAS, the provision of such services would fulfill the following municipal public purpose:
continuing the education of Berkeley residents in acts of self-expression and the continue teaching observation, inquiry, accessibility, and interconnectivity; NOW THEREFORE, BE IT RESOLVED by the Council of the City of Berkeley that funds relinquished by the Mayor and Councilmembers from their Council Office Budget up to $500 amount per office shall be granted to Luna Dance Creativity to support Luna's May Day Gathering and Bazaar event.

Brent Blackaby
Councilmember District 6
2180 Milvia Street, Berkeley, CA 94704 ● Tel: (510) 981-7160 ● TDD: (510) 981-6903 ● Fax: (510) 981-7166 E-Mail: [email protected]

CONSENT CALENDAR
April 28, 2026
To: Honorable Mayor and Members of the City Council
From: Councilmember Blackaby (Author), Mayor Ishii (Co-Sponsor), Councilmember O’Keefe (Co-Sponsor), Councilmember Humbert (Co-Sponsor) Subject: Resolution Supporting Megafire Prevention Package

RECOMMENDATION
Adopt a Resolution supporting the 2026 Joint Megafire Prevention Package in the California Legislature supported by Megafire Action, FireWERX, California Fire Safe Council, and the Karuk Tribe, among others. Send a copy of the Resolution to the six authors, Senator Jesse Arreguín, Assemblymember Buffy Wicks, and Governor Gavin Newsom.

FINANCIAL IMPLICATIONS
None

CURRENT SITUATION AND ITS EFFECTS
The legislative package includes 13 bills from California State Senators Allen, Becker and Stern, alongside California Assemblymembers Bennett, Connolly and Rogers. The bills include resilience loan financing, home hardening, expansion of existing fire mitigation programs, reducing barriers to beneficial fire and more. They are as follows:

1. SB 894 (Allen): Wildfire Mitigation Affordability Act

2. SB 973 (Becker): Wildfire County Coordinator Program

3. SB 911 (Becker): Transfer of real property: compliance documentation

4. SB 1079 (Stern): Fire Innovation Unit Act

5. SB 1404 (Stern): Wildfire and Forest Resilience Action Plan: Implementation Strategy

6. AB 1699 (Rogers): Good Fire Act

7. AB 1891 (Connolly): Beneficial Fire Capacity Program

8. AB 1934 (Bennett): Home Hardening Certification Program

9. AB 1960 (Bennett): Wildfire Prevention Grants Program

10.AB 1964 (Bennett): County Recorder: Home Hardening

11.AB 1971 (Bennett) Home Hardening Retrofitting Improvements

12.AB 1986 (Bennett): Residential Property Insurance – Home Hardening

13.AB 2013 (Bennett): Water Suppliers – Emergency Preparedness Program

Resolution Supporting Megafire Prevention Package CONSENT CALENDAR April 28, 2026

BACKGROUND
Wildfire mitigation is becoming increasingly critical as climate change intensifies fire risk. Fire seasons are growing longer, and wildfires are becoming more frequent and destructive. As a result, many homeowners have lost access to traditional home insurance due to wildfire risk. Many are left with California’s FAIR Plan—the insurer of last resort—which often costs significantly more while providing far less coverage.

A wildfire in the Berkeley Hills would have devastating consequences not only for the surrounding neighborhoods but for all of Berkeley and the broader region. The environmental damage, economic disruption, and potential loss of human life would be profound.

For these reasons, it is prudent for government to implement effective strategies to reduce the risk of destructive megafires. Berkeley has long been committed to wildfire mitigation through decades of programs supporting residents, including the Chipper Program and property inspections, as well as newer initiatives such as Firewise Communities, Effective Mitigations for Berkeley’s Ember Resilience (EMBER), and the Residential Assistance Program (RAP).

By supporting the Joint Megafire Prevention Package of legislative bills, Berkeley affirms its commitment to comprehensive wildfire mitigation and homeowner assistance for defensible space and home hardening efforts. This package will help restore resilience to our landscapes, provide homeowners with clear guidance and resources to reduce wildfire risk, and accelerate the adoption of new technologies that give firefighters and communities better tools to protect lives and property—here in Berkeley and statewide.

ENVIRONMENTAL SUSTAINABILITY AND CLIMATE IMPACTS
Wildfire has detrimental effects on air, water and the environment. Passage of legislation to reduce the chances of a wildfire align with the City’s goals in environmental sustainability and reducing climate impacts.

CONTACT PERSON
Councilmember Brent Blackaby Council District 6 510-981-7160 Attachments:
1: Resolution

RESOLUTION NO. ##,###-N.S.

RESOLUTION SUPPORTING MEGAFIRE PREVENTION PACKAGE
WHEREAS, the City of Berkeley is no stranger to destructive wildfire, including the 1923 wind-driven fire that burned from the eastern slope of the Berkeley Hills down to the corner of Shattuck and Hearst, destroying 640 structures on the northside of the UC campus, leaving thousands homeless, as well as the 1991 Oakland Hills Firestorm, which included the Berkeley Hills, and killed 25 people; and
WHEREAS, the City of Berkeley is steadfast in its wildfire prevention actions including programs for vegetation management, home hardening, and financial assistance; and WHEREAS, the 2026 Joint Megafire Prevention Package represents one of the most comprehensive wildfire mitigation efforts in recent years—providing homeowners with clear guidance and resources to reduce risk, restoring resilience to our landscapes, and accelerating the adoption of new technologies that equip firefighters and communities to better protect lives and property -- here in Berkeley and statewide; and WHEREAS, California State Senators Allen, Becker and Stern, and California Assemblymembers Bennett, Connolly and Rogers introduced a comprehensive package of 13 bills, aimed at mitigating destructive megafires; and WHEREAS, Senator Allen introduced SB 894: Wildfire Mitigation Affordability Act; and WHEREAS, Senator Becker introduced SB 973: Wildfire County Coordinator Program and SB 911: Transfer of real property: compliance documentation; and WHEREAS, Senator Stern introduced SB 1079: Fire Innovation Unit Act and SB 1404:

Wildfire and Forest Resilience Action Plan: Implementation Strategy; and WHEREAS, Assemblymember Rogers introduced AB 1699: Good Fire Act; and WHEREAS, Assemblymember Connolly introduced AB 1891: Beneficial Fire Capacity Program; and
WHEREAS, Assemblymember Bennett introduced AB 1934: Home Hardening Certification Program, AB 1960: Wildfire Prevention Grants Program, AB 1964: County Recorder: Home Hardening, AB 1971: Home Hardening Retrofitting Improvements , AB 1986: Residential Property Insurance – Home Hardening, and AB 2013: Water Suppliers – Emergency Preparedness Program.

NOW THEREFORE, BE IT RESOLVED by the Council of the City of Berkeley that the Council strongly supports all of these bills, collectively called the Megafire Prevention Package, urging them to be passed and signed into law this year.

BE IT FURTHER RESOLVED that the Berkeley City Council thanks the six authors, Senators Allen, Becker and Stern, and Assemblymembers Bennett, Connolly and Rogers.

The City Council also thanks all who were instrumental in developing the legislation, including Megafire Action, FireWERX, California Fire Safe Council, and the Karuk Tribe.

BE IT FURTHER RESOLVED by the Council of the City of Berkeley that this Resolution be sent to the six authors, Senator Jesse Arreguín, Assemblymember Buffy Wicks, and Governor Gavin Newsom.

Office of the City Manager
2180 Milvia Street, Berkeley, CA 94704 ● Tel: (510) 981-7000 ● TDD: (510) 981-6903 ● Fax: (510) 981-7099 E-Mail: [email protected] Website: https://berkeleyca.gov/

PUBLIC HEARING
April 28, 2026
To: Honorable Mayor and Members of the City Council
From: Paul Buddenhagen, City Manager
Submitted by: Scott Gilman, Director, Health, Housing, and Community Services Subject: Submission of the Program Year 2026 Annual Action Plan Containing Allocations of Federal Funds

RECOMMENDATION
Conduct a public hearing on the Program Year (PY) 20261 Annual Action Plan (AAP) and upon conclusion, adopt a Resolution that authorizes the City Manager or his designee to:

1. Execute any resultant agreements and amendments for agencies receiving funding under the Community Development Block Grant (CDBG), Emergency Solutions Grant (ESG), or Home Investment Partnerships Program (HOME) Program in accordance with the proposal approved hereunder. If the federal government does not allocate sufficient funds to cover the allocations attached to this resolution in this year or subsequent years, the City may either terminate the resultant agreements with agencies without any liability occurring to the City. A record copy of said contracts and any amendments are on file in the Office of the City Clerk; and

2. Adjust reporting due dates for Community Agency grantees for all Program Reports and Statement of Expenses for FY 2027 and FY 2028 contracts.

Authorize new dates for Program Reports to be due on October 15, January 15, April 15, and July 15 and Statement of Expenses due on October 15, January 15, April 15, July 31; and

3. Allocate 20% of the PY 2026 (FY 2027) CDBG funds to Planning and Administration, up to 17.83% for public services, and the remaining to be distributed to Housing Services and Community Facility Improvements as outlined in Exhibit A with the Public Facility Improvements being a flexible line item should the HUD allocation differ than the amount currently allocated; and

4. Allocate the allowable 7.5% of the PY 2026 (FY 2027) ESG to Administration, $6,676 to the Homeless Management Information System (HMIS), and the 1 PY 2026 is the federal program year coinciding with the City’s Fiscal Year 2027.

Submission of the PY 2026 Annual Action Plan PUBLIC HEARING Containing Allocations of Federal Funds April 28, 2026

remaining amount to Rapid Re-housing, and shelter activities (not to exceed 60% of PY 2026 ESG entitlement); and

5. Allocate the allowable 10% of PY 2026 (FY 2027) HOME funds for program administration, up to the allowable 5% for Community Housing Development Organization (CHDO) operating support, and allocate the remainder to the Housing Trust Fund; and

6. Finalize the PY 2026 Annual Action Plan, including responses to public comments received until May 1, 2026, adding required U.S. Department of Housing and Urban Development (HUD) application forms and certifications, and including other HUD required information, submit it to HUD, and execute all documents necessary to receive the City’s entitlement grants under the CDBG, ESG, and HOME Programs.

SUMMARY
The City is required to submit an AAP to HUD by mid-May to receive its annual allocation of CDBG, ESG, and HOME funds. The AAP contains the funding allocations (estimates) for the second year of the City’s five-year Consolidated Plan and the City’s plan to implement its housing and community development programs.

For the PY 2026 AAP, the Health, Housing, and Community Services Department (HHCS), recommends allocating entitlement funds as follows:
 $2,608,121 in CDBG entitlement funds, $694,424 in prior year funds (estimated), and $600,000 in program income (estimated), $1,597,776.25 of which would be used for housing services activities, $453,921 for public services, and $1,329,223.55 for public and community facility improvements program; and  $227,900 in ESG funds, to be used to support people who are literally homeless; and
 $571,566.31 in HOME funds, $485,831.36 of which would be allocated to the Housing Trust Fund.

This report includes authorization for the required submission of the AAP (Attachment 2), which details the City’s plans for implementing the CDBG, ESG, and HOME programs in PY 2026.

FISCAL IMPACTS OF RECOMMENDATION
Approval of the PY 2026 AAP does not have an impact on the General Fund as it is solely committing the City’s entitlement grant allocations under the Federal Department of Housing and Urban Development’s CDBG, ESG, and HOME programs. General funds, including required leveraged funds for HUD programs, are awarded separately.

Federal funding allocations for PY 2026 were released by HUD on April 3, 2026.

Submission of the PY 2026 Annual Action Plan PUBLIC HEARING Containing Allocations of Federal Funds April 28, 2026

The City’s CDBG entitlement allocation for PY 2026 is $2,608,121. CDBG program income from CDBG-funded activities that the City receives, such as loan repayments, is an estimate because the number represented is the number at the time of writing this report and is not the final PY 2026 number. The current estimate of CDBG program income available to use in PY 2026 is $600,000.

Additionally, staff anticipate having $694,424 in unexpended funds from prior years available for allocation, which will give the City a total of $3,902,545 in CDBG funds to allocate for PY 2026. Unexpended prior year funds cannot be used for public services or administration, which are both capped funding categories. These additional funds can be used, however, on housing services, public facility projects, Senior and Disabled Rehabilitation Loan Program (SDRLP), and the Housing Trust Fund.

Table 1: CDBG
PY 2026 (FY 2027)
HUD Award
Program
Income
(estimated)
Prior Year
Funds
(estimated)
Total
Funds Available $2,608,121 $600,000 $694,424 $3,902,545

Proposed Funding Plan
Housing Services

$1,265,776.25
$332,000 $1,597,776.25
Public Services (17.83% cap) $453,921 $453,921
Public & Community Facility
Improvements

$366,799.55 $600,000 $362,424 $1,329,223.55
Planning and Admin (20%
cap)
$521,624.20 $521,624.20
Total Expenditures $2,608,121 $600,000 $694,424 $3,902,545 The City’s ESG entitlement for PY 2026 is $227,900. It is recommended that the City utilize the maximum possible for administration (7.5% of the grant), allocate $6,676 to HMIS support, and allocate the remaining funds for rapid re-housing and shelter operations at the Stair Navigation Center (with shelter not to exceed 60% of the allocation, which is the HUD cap for shelter activities).

Table 2: ESG
PY 2026 (FY 2027)
HUD Award
Funds Available $227,900

Submission of the PY 2026 Annual Action Plan PUBLIC HEARING Containing Allocations of Federal Funds April 28, 2026

Proposed Funding Plan
Rapid Re-housing $67,391.50
Emergency Shelter Operations (60% cap) $136,740
Homeless Management Information System $6,676
Administration (7.5% cap) $17,092.50
Total Expenditures $227,900
The City will receive $571,566.31 in HOME funds and $115,000 in unexpended funds from prior years, for a total of $686,566.31 in HOME funds available for allocation for PY 2026. Staff recommend that the City utilize up to the maximum possible for administration (10%) and CHDO operations (up to 5%) and place the remainder into the Housing Trust Fund. Up to 10% of Program Income received within the program year may be used for program administration.

Table 3: HOME
PY 2026 (FY 2027)
HUD Award Prior Year
Funds Total
Funds Available
(estimated)
$571,566.31 $115,000 $686,566.31

Proposed Funding Plan
CHDO Operations (5% cap) $28,578.32 $28,578.32
HTF Projects $485,831.36 $485,831.36
HTF Project Delivery $115,000 $115,000
Administration (10% cap) $57,156.63 $57,156.63
Total Expenditures $571,566.31 $115,000 $686,566.31
Proposed expenditures of CDBG, ESG, and HOME Funds are detailed in Exhibit A.

CURRENT SITUATION AND ITS EFFECTS
The City is required to submit an Annual Action Plan to HUD by mid-May to receive its annual allocation of CDBG, ESG, and HOME funds. The AAP contains the anticipated funding allocations for the second year of the City’s five-year Consolidated Plan and the plan to implement housing and community development programs.

Submission of the PY 2026 Annual Action Plan PUBLIC HEARING Containing Allocations of Federal Funds April 28, 2026

The proposed PY 2026 AAP includes the following estimated funding sources and proposed activities:

PY 2026 AAP - Community Development Block Grant (CDBG)
The City’s CDBG entitlement allocation for PY 2026 is $2,608,121. Projected program income is $600,000 and it is anticipated to have $694,424 in unexpended prior year funds. CDBG funds are proposed to be used for Public Services, Housing Services, and Public & Community Facilities Improvements. Of the funds available, the City will allocate an estimated $521,624.20, a capped amount at 20%, to Planning and Administration, $453,921, also a capped amount at no more than 17.83% to public services, $1,597,776.25 to Housing Services and $1,329,223.55 to Public & Community Facility Improvements.

Detailed CDBG proposed allocations are summarized in Exhibit A.

PY 2026 AAP - Emergency Solutions Grant (ESG)
ESG funds can be used for homeless emergency shelter renovations, operations and services, homeless street outreach, the operation and development of a Homeless Management Information System, rapid re-housing, homeless prevention, and administration. The City’s ESG entitlement allocation for PY 2026 is $227,900, and should Council approve this recommendation the majority of the ESG funds will be used to continue to fund rapid re-housing and emergency shelter activities (capped at 60% of entitlement award). The Stair Navigation Center operator, BACS, will administer the rapid re-housing program to eligible shelter participants.

ESG funds in the amount of $6,676 will continue to support the County-wide HMIS, and

7.5% of the overall allocation will be allocated to HHCS to administer the funds (see Exhibit A).

PY 2026 AAP - Home Investment Partnerships Program (HOME) HUD allocated $571,566.31 in HOME funds to the City of Berkeley for PY 2026.

Unexpended prior years’ funds are estimated for PY2026 at $115,000. Of the funds available, approximately 85% is recommended for the Housing Trust Fund, up to 5% for CHDO operating and 10% for program administration (Exhibit A).

Failure to approve the PY 2026 AAP for submission to HUD by mid-May could result in delays or loss of this funding.

Lastly, the Annual Action Plan is a Strategic Plan Priority Project, advancing our goal to create affordable housing and housing support service for our most vulnerable community members.

BACKGROUND
The City of Berkeley is an entitlement jurisdiction which receives HUD funds. HUD regulations governing CDBG, ESG, and HOME funds require that the City of Berkeley

Submission of the PY 2026 Annual Action Plan PUBLIC HEARING Containing Allocations of Federal Funds April 28, 2026

submit a five-year Consolidated Plan including an AAP for each of the five-years. The Consolidated Plan examines housing needs and establishes funding priorities in the areas of affordable housing and services for a wide range of low-income populations over the next five-year period. The Annual Action Plans are submitted on an annual basis and detail specific activities the City will take to address the goals outlined in the Consolidated Plan.

The PY 2026 AAP, covering the period July 1, 2026 through June 30, 2027, describes the City’s strategy for developing and maintaining a viable urban community through the provision of decent housing and a suitable living environment, while expanding economic, health and educational opportunities principally for households with incomes at or below 80% of Area Median Income. The PY 2026 AAP is based on goals contained in the City’s Five Year (2025 – 2030) Consolidated Plan2. HUD requires the involvement of the public in the creation of the Consolidated Plan and each of the five AAP under the Consolidated Plan period. Berkeley’s public participation process for the PY 2026 AAP began on September 4, 2025, with a public hearing convened by the Housing Advisory Commission (HAC), and culminates in the April 28, 2026 public hearing/Council Meeting and closure of public comment period on May 1, 2026.

At its March 5, 2026, meeting, the HAC voted unanimously to recommend that City Council adopt the Draft PY 2026 Annual Action Plan (as outlined below and in Attachment 2), (M/S/C: Potter/Mirvish. Vote: Ayes: Bell, Chupina (alternate for Twu), Micael, Mirvish, Potter, Shere, and Simon-Weisberg. Noes: None. Abstain: None.

Absent: Haycox [excused]).

ENVIRONMENTAL SUSTAINABILITY AND CLIMATE IMPACTS
Projects funded with CDBG, ESG, and HOME are required to follow state and local regulations, including those related to building and energy. CDBG funding for community facility projects place a priority on projects that promote efficiency and improve accessibility. Additionally, each program funded by HUD funds undergoes an Environmental Review to understand and mitigate possible environmental impacts.

RATIONALE FOR RECOMMENDATION
Submission of the PY 2026 AAP is required to continue to receive CDBG, ESG, and HOME funds.

Community Development Block Grant (CDBG) Allocations
Staff recommend that Council approve the HUD allocations for PY 2026. In 2024, Council made recommendations for four-year (FY 2025-FY2028) funding for community agencies funded by CDBG funds, under the Housing and Community Services 2 The Consolidated Plan can be found at: https://berkeleyca.gov/community-recreation/community- services/hud-planning-performance-reports

Submission of the PY 2026 Annual Action Plan PUBLIC HEARING Containing Allocations of Federal Funds April 28, 2026

Community Agency RFP. PY 2026 will be the third year of the four-year period, and funding to community agencies will continue at levels FY 2026 (PY 2025).

Emergency Solutions Grant (ESG) Allocations
Staff continue to propose allocating the vast majority of the PY 2026 ESG funds to the Stair Navigation Center operated by BACS to support the rapid re-housing placement of literally homeless people living in Berkeley.

HOME Allocations
Staff propose to use the maximum amount of HOME funds for program administration, maintain CHDO operating support at the PY 2025 funded amount, and place the remainder in the City’s Housing Trust Fund.

ALTERNATIVE ACTIONS CONSIDERED
The PY 2026 AAP includes public and Housing Advisory Commission input and comments. Comments are considered throughout the processes and are reflected in the plan. No other alternative actions are currently being considered.

Failure to approve the PY 2026 AAP for submission to HUD by the due date could result in delays or loss of this funding.

CONTACT PERSON
Kat Larrowe, Community Service Specialist III, HHCS, (510) 981-7555.

Attachments:
1: Resolution
Exhibit A: PY 2026 (FY 2027) CDBG/ESG/HOME Allocation Recommendations 2: City of Berkeley PY 2026 Annual Action Plan
3: Public Hearing Notice

RESOLUTION NO. ##,###-N.S.

SUBMISSION OF THE PROGRAM YEAR (PY) 2026 ANNUAL ACTION PLAN,

INCLUDING ALLOCATIONS OF FEDERAL COMMUNITY DEVELOPMENT BLOCK

GRANT (CDBG), EMERGENCY SOLUTIONS GRANT (ESG), AND HOME

INVESTMENT PARTNERSHIPS PROGRAM (HOME) FUNDS
WHEREAS, the submission of the PY 2026 Annual Action Plan is a requirement the City must meet to receive its allocation of CDBG, ESG, and HOME funds, available for the period July 1, 2026, through June 30, 2027; and
WHEREAS, on May 7, 2024, the City Council made funding recommendations on the CDBG, ESG, and HOME Programs for the FY25-FY28 Community Agency RFP as contained in Exhibit A attached to this resolution; and WHEREAS, on March 5, 2026, the Housing Advisory Commission voted to recommend that Council adopt the draft Annual Action Plan; and
WHEREAS, the City has established the following ERMA budget codes CDBG: 128 - various, ESG: 311 - various, HOME: 310 – various; and
WHEREAS, the City will continue to 1) utilize the full allowable (20%) portion of CDBG funds for program administration; 2) allocate up to 17.83% for public services; and 3) allocate the remainder of the CDBG allocation and any program income into housing services and community/public facility improvements; and WHEREAS, the City will continue to 1) utilize the full allowable (7.5%) portion of ESG funds for program administration; 2) allocate $6,676 to the Homeless Management Information System (HMIS); 3) allocate up to 60% to shelter activities; and 4) allocate the remainder of the ESG entitlement allocation to rapid re-housing; and WHEREAS, the City will continue to 1) utilize the full allowable (10%) portion of the HOME funds for program administration; 2) allocate up to 5% for Community Housing Development Organization (CHDO) operating support; and 3) allocate the remainder of the HOME entitlement allocation, any program income into the Housing Trust Fund, and prior years unexpended funds to Housing Trust Fund project delivery.

NOW THEREFORE, BE IT RESOLVED by the Council of the City of Berkeley that the City Manager or designee is authorized to:

1. Execute any resultant agreements and amendments for agencies receiving funding under the CDBG, ESG, or HOME Program in accordance with the proposal approved hereunder. If the federal government does not allocate sufficient funds to cover the allocations attached to this resolution in this year or subsequent years, the City may either terminate the resultant agreements with agencies without any liability occurring to the City. A record copy of said contracts and any amendments are on file in the Office of the City Clerk; and

2. Adjust reporting due dates for Community Agency grantees for all Program Reports and Statement of Expenses for FY 2027 and FY 2028 contracts.

Authorize new dates for Program Reports to be due on October 15, January 15, April 15, and July 15 and Statement of Expenses due on October 15, January 15, April 15, July 31.

3. Allocate 20% of the PY 2026, (FY 2027) CDBG funds to the Planning and Administration, up to 17.83% for public services, and the remaining to be distributed to Housing Services and Community Facility Improvements as outlined in Exhibit A with the Public Facility Improvements being a flexible line item should the HUD allocation differ than the amount currently allocated; and

4. Allocate the allowable 10% of PY 2026 (FY 2027) HOME funds for program administration, up to the allowable 5% for CHDO operating support, allocate the remainder to the Housing Trust Fund; and prior years unexpended funds to Housing Trust Fund project delivery.

5. Allocate the allowable 7.5% of the PY 2026 (FY 2027) ESG to Administration, $6,676 to the HMIS system and the remaining amount to Rapid Re-housing, and shelter activities (with shelter not to exceed 60% of PY 2026 ESG entitlement); and

6. Finalize the PY 2026 Annual Action Plan, including responses to public comments received until May 1, 2026, adding required HUD application forms and certifications, and including other HUD required information, submit it to the federal Department of Housing and Urban Development (HUD), and execute all documents necessary to receive the City’s entitlement grants under the CDBG, ESG, and HOME Programs.

BE IT FURTHER RESOLVED that the City manager or designee is authorized to execute or amend contracts with agencies receiving funding under the CDBG, ESG, or HOME Program in accordance with the proposals approved hereunder. A record copy of said contracts and any amendments are on file in the Office of the City Clerk.

BE IT FURTHER RESOLVED that the City Manager or designee is authorized to use the following invoicing/reporting system in contract administration, but maintains the discretion of requiring more frequent invoices and reports from new grantees or in contracts deemed to require closer scrutiny, and also maintains the discretion to terminate contracts based on factors outlined in the contract boilerplate, including, but not limited to, the contractor’s failure to fulfill obligations:

Fiscal Reports:

All agencies, regardless of funding level, are required to submit quarterly statements of expense and quarterly requests for advance payment. The final statement of expense for each fiscal year must be accompanied by a copy of the agency’s General Ledger and a Statement of Revenues and Expenditures for each program.

 October 15, for the 3-month period ending September 30  January 15, for the 3-month period ending December 31  April 15, for the 3-month period ending March 31
 July 31, for the 3-month period ending June 30. The final statement of expense for each fiscal year must be accompanied by a copy of the agency’s General Ledger and a Statement of Revenues and Expenditures for each program.

Program Reports:
 Agencies funded with non-federal funding: End-of-year narrative summary of accomplishments for the following types of programs, due by July 31: 1) Drop-In Services only with no intensive case management attached, 2) Meal Programs, and 3) Recreation Services.
 All other agencies with non-federal funding: Two program reports, due by January 15 and July 15.
 Agencies with federal funding (any amount): Four program reports, due by October 15, January 15, April 15, and July 15.

BE IT FURTHER RESOLVED that the City Manager or designee is authorized to refuse to execute a contract with any agency that has not provided required contract exhibits and documentation within 90 days of award of funding.

BE IT FURTHER RESOLVED that the City Manager or designee is authorized to recapture any unspent CDBG, ESG, HOME, or HOME Investment Partnerships American Rescue Plan Program (HOME-ARP) funds awarded to an agency if the funds are not spent by June 30, 2026. Any unused PY 2025 HOME-ARP funds not expended in PY 2025 will also be carried forward to the PY 2026 allocation or subsequent procurement.

Exhibits
A: PY 2026 (FY 2027) CDBG/ESG/HOME Allocation Recommendations

Exhibit A: PY 2026 (FY 2027) CDBG/ESG/HOME Allocation Recommendations – Listed in the Annual Action Plan as Attachment 1
Annual Action Plan for PY2026 - City of Berkeley CDBG, ESG and HOME Projects for 07/01/2026 – 06/30/2027 (Estimated allocations)
Recommended Allocation for CDBG – Housing Projects
Project.
# Agency Project Name PY26 Allocation
1 Center for Independent Living Residential Access $211,600.00 2 HHCSD* Loan Services $70,848.28
3 HHCSD Senior and Disabled Rehab Program $389,126.97
4 HHCSD Rehab Loans $432,000.00
5 HHCSD Housing Development: M/F Rehab $494,201.00
**Subtotal Housing Projects $1,597,776.25
Recommended Allocation for CDBG – Public Services Projects Project.
# Agency Project Name PY26 Allocation
6 Bay Area Community Services Coordinated Entry System $418,921.00 7 Eden Housing for Hope and
Oppor. Fair Housing $35,000.00
Subtotal Public Services Projects $453,921.00
Recommended Allocation for CDBG – Public Facilities Projects Project.
# Agency Project Name PY26 Allocation
8 Rebuilding Together East Bay
North Community Facilities $93,780.00
9 HHCSD Community Facility Improvements $181,525.10
10 HHCSD PY25 (FY26) Community Facility
Improvement NOFA $1,053,918.45
**Subtotal Public Facilities
Projects $1,329,223.55
Recommended Allocation for CDBG – Planning & Admin. Projects Project.
# Agency Project Name PY26 Allocation
11 HHCSD CDBG Planning and Administration $521,624.20
Subtotal Planning & Admin Projects $521,624.20
The grand total for recommended allocations for all CDBG Projects is $3,902,545.

Exhibit A: PY 2026 (FY 2027) CDBG/ESG/HOME Allocation Recommendations

Recommended Allocation for ESG Projects
Project.
# Agency Project Name PY26 Allocation
12 Berkeley CES Provider - BACS Rapid Re-Housing Project $67,391.50 13 Berkeley CES Provider - BACS Emergency Shelter/Street Outreach $136,740.00 14 HHCSD Homeless Management Information
System $6,676.00
15 HHCSD Program Planning and Administration $17,092.50

GRAND TOTAL ALL ESG
PROJECTS $227,900.00
Recommended Allocation for HOME Projects
Project.
# Agency Project Name PY26 Allocation
16 HHCSD HOME Administration $57,156.63
17 CHDO Operating Funds CHDO Operating Funds $28,578.32 18 HHCSD Housing Trust Fund $485,831.36
19 HHCSD Project Delivery $115,000.00
***GRAND TOTAL ALL HOME
PROJECTS $686,566.31
Notes:
*HHCSD = City of Berkeley Health, Housing & Community Services Department **Assumes estimated amounts for Program Income ($600,000) and $694,424 in prior year funds.

Estimated prior year funds applied to Rehab Loans ($332,000) and Community Facility NOFA ($362,424).
***Assumes estimated $115,000 in prior year funds.

City of Berkeley
Annual Action Plan – Pg 1
PY 2026

CITY OF BERKELEY

ANNUAL ACTION PLAN

FOR HOUSING AND COMMUNITY

DEVELOPMENT
JULY 1, 2026 – JUNE 30, 2027 (PY 2026)
For the U.S. Department of Housing and Urban
Development
San Francisco Field Office of Community
Planning and Development
May 2026

City of Berkeley
Annual Action Plan – Pg 2
PY 2026
Table of Contents
Executive Summary..........................................................................................................3 AP-05 Executive Summary - 24 CFR 91.200(c), 91.220(b) ..........................................3 PR-05 Lead & Responsible Agencies – 91.200(b)........................................................7 AP-10 Consultation – 91.100, 91.200(b), 91.215(l).......................................................8 AP-12 Participation – 91.105, 91.200(c) .....................................................................12 Expected Resources.......................................................................................................15 AP-15 Expected Resources – 91.220(c)(1,2)..............................................................15 Annual Goals and Objectives .........................................................................................19 AP-20 Annual Goals and Objectives ...........................................................................19 Projects...........................................................................................................................21 AP-35 Projects – 91.220(d) .........................................................................................21 AP-38 Project Summary..............................................................................................22 AP-50 Geographic Distribution – 91.220(f) .................................................................26 Affordable Housing .........................................................................................................27 AP-55 Affordable Housing – 91.220(g) .......................................................................27 AP-60 Public Housing – 91.220(h) ..............................................................................28 AP-65 Homeless and Other Special Needs Activities – 91.220(i)...............................29 AP-75 Barriers to affordable housing – 91.220(j) ........................................................33 AP-85 Other Actions – 91.220(k) ................................................................................34 Program Specific Requirements.....................................................................................39 AP-90 Program Specific Requirements – 91.220(l)(1,2,4) ..........................................39 Attachment 1: Allocations City of Berkeley CDBG, ESG, and HOME Projects Attachment 2: Public Notice and Community Participation Summary Attachment 3: City of Berkeley Emergency Solutions Grant Rapid Rehousing Policies and Procedures Manual; and Systemwide Performance Targets for Rapid Re‐Housing Services and Emergency Shelters.

City of Berkeley
Annual Action Plan – Pg 3
PY 2026
Executive Summary
AP-05 Executive Summary - 24 CFR 91.200(c), 91.220(b)

1. Introduction
This Annual Action Plan is the 2nd Annual Action Plan for the current Consolidated Planning period.

2. Summarize the objectives and outcomes identified in the Plan This could be a restatement of items or a table listed elsewhere in the plan or a reference to another location. It may also contain any essential items from the housing and homeless needs assessment, the housing market analysis or the strategic plan.

The City of Berkeley has ambitious objectives for spending its federal entitlement grant funding. Berkeley allocates these and other state and local funds to maximize assistance for its low and moderate-income households through:
 Housing acquisition, rehabilitation, repair, and accessibility improvements;  Assisting homeless adults and families including those with disabilities and other special needs, through emergency shelter, transitional housing, and service- enriched affordable, supportive housing; and
 Funding public facilities improvements to protect and sustain the infrastructure critical to community services and economic vitality in Berkeley.

The City of Berkeley has long placed a high priority on affordable housing and community services. The City is committed to maintaining high-quality programs for those in need but faces challenges due to limited resources to meet those needs. The City of Berkeley has been able to backfill some of the ongoing reductions in federal funding for affordable housing and critical community services with local investments.

Local investments, however, do not begin to meet the need for more affordable housing and resources to prevent and end homelessness. At the same time, the Emergency Solutions Grant (ESG), HOME Investment Partnerships (HOME), and Community Development Block Grant (CDBG) programs come with considerable administrative requirements, all of which impact the City’s ability to address all the many needs identified.

Approved Allocations. As summarized in AP-38 and detailed in Attachment 1, the City of Berkeley plans to allocate $2,608,121 in CDBG funds together with $600,000 (estimated) in CDBG program income and $694,424 (estimated) prior year carryover to fund. Any program income received will be applied as follows: 1) up to 15% of the program income received in PY25 for public services, 2) up to 20% of the program income received in PY26 for program administration, and 3) all remaining program income will be applied to the City of Berkeley public facility improvement program.

City of Berkeley
Annual Action Plan – Pg 4
PY 2026
Further, any earlier unused funding from the Public Facility Improvement program will remain in the program and up to $332,000 of earlier unused funds Program will be allocated to Senior Disabled Loan Rehabilitation Program for the PY 2026 year.

The PY2026 CDBG entitlement allocation, including estimated program income and earlier unused funds, will be distributed for the following program areas:
 $1,597,776.25 in housing projects and programs;
 $453,921.00 in public services (provided this does not exceed the cap. Amount of community agency contract will be adjusted accordingly);  $1,329,223.55 for community and public facilities activities; and  $521,624.20 to administer all facets of the City’s CDBG program.

The City will utilize its PY26 ESG allocation of $227,900 to serve literally homeless people through the City’s Pathways STAIR Program ($204,131.50), support the countywide Homeless Management Information System (HMIS) ($6,676.00), and support planning and administration activities at 7.5% ($17,092.50). The City ensures the shelter and outreach activities do not exceed 60% of our annual ESG grant. For PY26, the City’s ESG program allocation has been split with $67,391.50 allocated to Rapid Re-Housing and $136,740.00 allocated to Shelter and Outreach. This is evidenced in Attachment 1.

The City will utilize its PY26 HOME allocation of $571,566.31 and $115,000 (projected) in prior year funds for program administration at 10% ($57,156.63), Community Housing Development Organization (CHDO) operations ($28,578.32), project delivery ($115,000.00), and will allocate the remaining balance to its Housing Trust Fund ($485,831.36 estimate). Up to 10% of Program Income received within the program year may be used for program administration.

3. Evaluation of past performance
This is an evaluation of past performance that helped lead the grantee to choose its goals or projects.

The City reviews and evaluates its performance through its annual submission of the Consolidated Annual Performance and Evaluation Report (CAPER).

The City tracks single family and multi-family housing rehabilitation efforts and housing development efforts. The City's Single-Family Rehabilitation (SFR) program comprised of the City's Senior and Disabled Rehabilitation Loan Program (SDRLP) and community agency Center for Independent Living, which are evaluated on an ongoing basis to ensure that the most significant health and safety improvements are prioritized and that sufficient outreach is occurring to increase the number of unduplicated households served overtime.

The City currently operates the public facility improvement program as a Request For Proposal (RFP)/Notice of Funding Availability (NOFA) as funds become available.

City of Berkeley
Annual Action Plan – Pg 5
PY 2026
Earlier unused funds are awarded to non-profits or City agencies that serve low-income communities. At present, there are three active public facility projects that are focused on rehabilitating shelters, recovery centers, or local community centers. Improvements are focused on health, safety, and efficiency. In addition, the City funds Rebuilding Together East Bay Network’s (RETBN) Community Facility Improvement Program, recognizing its critical role in delivering essential health and safety improvements to community-serving facilities that primarily serve low-income clientele.

The City funds two community agencies to provide public services through housing retention and fair housing counseling. Outcomes for all public services community agency programs funded with federal funds are tracked, and prior outcomes are used to inform funding decisions.

The City uses countywide Homeless Count and program outcome data to inform its goals on homelessness.

4. Summary of Citizen Participation Process and consultation process Summary from citizen participation section of plan.

The City typically completes a fall public hearing with one or more commissions to obtain input on community needs. In preparation for the PY26 Annual Action Plan, the City satisfied the Citizen Participation Plan public hearing requirement by conducting two public hearings (September 2025 and April 2026).

The draft Annual Action Plan was posted on the City's website and shared with the Housing Advisory Commission (HAC) March 5, 2026 meeting. At its March meeting, the HAC recommended that Council adopt the PY26 Draft Annual Action Plan for submission to HUD. A Public Hearing on the PY26 Draft Annual Action Plan was held on April 28, 2026, before the Berkeley City Council. Outreach was accomplished via electronic flyer mailings to interested parties, including Alameda County-wide Homeless Continuum of Care, community agencies serving low-income people, and public buildings such as recreation centers, senior centers, libraries and other government buildings.

5. Summary of public comments
This could be a brief narrative summary or reference an attached document from the Citizen Participation section of the Con Plan.

At the September 2025 public hearing meeting at the Housing Advisory Commission, the commissioners and public commented on the positive impact of the streamlining in the Senior and Disabled Rehabilitation Loan Program (SDRLP), which was implemented in PY25.

There was one public comment and a discussion among commissioners at the Housing Advisory Commission (HAC) meeting on March 5, 2026. The comment highlighted the need for more funding for emergency shelters. Following the public comment, a

City of Berkeley
Annual Action Plan – Pg 6
PY 2026
discussion by members of the HAC ensued to finalize the recommendations on the PY26 Annual Action Plan, including questions on details of the proposed projects and how allocations are estimated. The HAC commented on the importance of coordination with Berkeley Housing Authority to increase affordable housing supply and quality.

Public comment at the April 28,2026 City Council Public Hearing included testimony from XX individual(s). The public and Council discussion included:
 [add summary of public comments]
 Members of the City Council discussed [add summary of Council discussion].

6. Summary of comments or views not accepted and the reasons for not accepting them
All comments were accepted and/or addressed and will remain recorded in this report should additional HUD funds become available for public services and housing. None of the comments received resulted in changes to the Plan.

7. Summary
None.

City of Berkeley
Annual Action Plan – Pg 7
PY 2026
PR-05 Lead & Responsible Agencies – 91.200(b)

1. Agency/entity responsible for preparing/administering the Consolidated Plan
Describe the agency/entity responsible for preparing the Consolidated Plan and those responsible for administration of each grant program and funding source.

Agency Role Name Department/Agency
CDBG Administrator Berkeley Health, Housing, and Community Services Department HOME Administrator Berkeley Health, Housing, and Community Services Department ESG Administrator Berkeley Health, Housing, and Community Services Department Table 1 – Responsible Agencies
Narrative (optional)
The Health, Housing, and Community Services (HHCS) Department is the lead agency for overseeing the development of the plan. The Housing and Community Services (HCS) Division coordinates the City’s funding allocation process and monitoring for community-based organizations, administration of the Housing Trust Fund, and operation of other housing and community services programs such as the Shelter Plus Care Program and Senior and Disabled Rehabilitation Loan Program. The Department also includes the Environmental Health, Mental Health, Public Health, and Aging Services divisions, all of which provide direct services to the community.

Consolidated Plan Public Contact Information
Margot Ernst, Manager, Housing and Community Services Division City of Berkeley Health, Housing and Community Services Department 2180 Milvia Street, 2nd Floor
Berkeley, CA 94704
Phone: (510) 981-5427
Email: [email protected]
Kat Larrowe, Community Service Specialist III, Housing and Community Services Division
City of Berkeley Health, Housing and Community Services Department 2180 Milvia Street, 2nd Floor
Berkeley, CA 94704
Phone: (510) 981-7555
Email: [email protected]

City of Berkeley
Annual Action Plan – Pg 8
PY 2026
AP-10 Consultation – 91.100, 91.200(b), 91.215(l)

1. Introduction
During the next year, the City of Berkeley will continue to coordinate the housing and community services activities within the department through regular senior staff meetings, such as regular Housing and Homeless Services Team meetings, emergency services for vulnerable and low-income populations meetings, and will continue to coordinate with other City Departments on specific topics such as, but not limited to, affordable housing and homelessness. It will also consult with EveryOne Home, the countywide coordinating body and plan to end homelessness, and its partners at Alameda County Behavioral Health Care Services and Social Services Agency as well as community stakeholders in Berkeley.

Provide a concise summary of the jurisdiction’s activities to enhance coordination between public and assisted housing providers and private and governmental health, mental health and service agencies (91.215(l)) The City of Berkeley coordinates the housing and community services activities within the HHCS department through regular senior staff meetings and coordination on specific topics. City staff also participate in the implementation of EveryOne Home, the countywide plan to end homelessness. EveryOne Home spearheads Alameda County’s Continuum of Care. Staff will continue to participate in the initiative’s Leadership Board, which includes most public funders of housing and homeless services in the county, as well as leadership from key community-based organizations. Leadership Board membership helps to coordinate efforts across the county. Staff also participate in other committees composed of other funders (such as Alameda County Behavioral Health Care Services and the Social Services Agency) as well as many community-based organizations.

Describe coordination with the Continuum of Care and efforts to address the needs of homeless persons (particularly chronically homeless individuals and families, families with children, veterans, and unaccompanied youth) and persons at risk of homelessness
The City of Berkeley works closely with the Alameda County Continuum of Care (CoC) in numerous ways including as members of various CoC committees that meet to review and provide recommendations for system improvements. The City also works closely with Alameda County Behavioral Health Care Services, Social Service Agency, Office of Housing and Homelessness (OHH). In PY21, the City endorsed the Alameda County Home Together 2026 Community Plan, a five-year strategic initiative. The City will participate in preparing the Home Together Update this year. The City continues to work closely with OHH to implement the North County Coordinated Entry System (CES), which includes Berkeley, Emeryville, and Albany. The redesigned screening process implementing housing problem-solving and crisis and housing assessments is now utilized across the County, including at the new transition age youth (TAY) Housing Resource Center (HRC). The addition of the crisis queue, which asks if someone is

City of Berkeley
Annual Action Plan – Pg 9
PY 2026
interested in shelter, has increased the number of successful matches to shelter resources in Berkeley. Additionally, the City attends and participates in the CoC’s Housing Stability and Homelessness Prevention and System Impact Committee meetings. The City also funds the Eviction Defense Center (EDC) to deliver targeted housing retention assistance to Berkeley households at imminent risk of homelessness, including rental assistance and eviction defense services. Through strategic prioritization and flexible funding tools, the City and EDC focus resources on households with the highest need to prevent housing loss and reduce entries into the homeless services system.

Describe consultation with the Continuum(s) of Care that serves the jurisdiction's area in determining how to allocate ESG funds, develop performance standards for and evaluate outcomes of projects and activities assisted by ESG funds, and develop funding, policies and procedures for the operation and administration of HMIS
Consultation with the Alameda-Countywide CoC, the City of Oakland, and the Alameda County Housing and Community Services Department was initiated in 2012 to discuss the use of ESG funds. The discussion focused on how to implement the new ESG requirements in a way that would be consistent countywide and would continue the collaboration launched in 2009 with American Recovery and Reinvestment Act (ARRA) Homelessness Prevention and Rapid Re-housing (HPRP) funds. The group held several meetings in PY12, resulting in the development of a policies and procedures manual that was used to implement the Priority Home Partnership Program. In PY25, the City updated its ESG Policies and Procedures Manual and provided training to Bay Area Community Services, the community agency that administers ESG Rapid Re- housing assistance. The City continues to use the CoC’s results-based accountability (RBA) system performance measures and targets to evaluate emergency shelter, outreach and rental assistance programs funded by ESG.

2. Describe Agencies, groups, organizations and others who participated in the process and describe the jurisdiction’s consultations with housing, social service agencies and other entities

1. City of Berkeley Housing Advisory Commission
Item Description
Agency/Group/Organization Type Other government - Local What section of the Plan was addressed by
Consultation?
Housing Need Assessment
Homelessness Strategy
Homeless Needs - Chronically homeless
Homeless Needs - Families with children
Homelessness Needs - Veterans
Homelessness Needs - Unaccompanied youth
Non-Homeless Special Needs
Market Analysis
Anti-poverty Strategy

City of Berkeley
Annual Action Plan – Pg 10
PY 2026
Item Description
How was the Agency/Group/Organization
consulted and what are the anticipated
outcomes of the consultation or areas for
improved coordination?
Draft copies of the plan were presented to the
Housing Advisory Commission (HAC) at its March
2026 meetings for comments.

2. City of Berkeley Homeless Services Panel of Experts (HSPOE) Item Description
Agency/Group/Organization Type Other government - Local What section of the Plan was addressed by
Consultation?
Homelessness Strategy
Homeless Needs - Chronically homeless
Homeless Needs - Families with children
Homelessness Needs - Veterans
Homelessness Needs - Unaccompanied youth
How was the Agency/Group/Organization
consulted and what are the anticipated
outcomes of the consultation or areas for
improved coordination?
The HSPOE provides their expertise and
recommendations for funding for community
agencies including the portion of CDBG public
services funding that supports the homeless
population.

Table 2 – Agencies, groups, organizations who participated Identify any Agency Types not consulted and provide rationale for not consulting No Agency Types were knowingly excluded.

Other local/regional/state/federal planning efforts considered when preparing the Plan
Name of Plan Lead Organization How do the goals of your Strategic Plan overlap with the goals of each plan?
Home Together 2026
Community Plan
Alameda County's
Continuum of Care
The Alameda County Home Together 2026 Community Plan, the countywide plan to end homelessness, was endorsed by the City in PY2021. Berkeley activities to end homelessness, including those supported by federal monies as articulated in this plan, align with the Home Together 2026 Community Plan.

Housing Element 2023-
2031
City of Berkeley The Housing Element addresses housing production and preservation in the City of Berkeley and includes issues related to affordable housing that overlap with this report goal to increase affordable housing supply and quality.

Health Report of 2018 Health, Housing,
and Community
Services; Public
Health Division
The goal of the Health Status Report is to provide a picture of the health status of people living in Berkeley. The report helps define goals and objectives for improving Berkeley resident health outcomes. The Health Status Report highlights overlapping health and housing needs for low-income individuals that are addressed in the Consolidated Plan.

City of Berkeley
Annual Action Plan – Pg 11
PY 2026
Name of Plan Lead Organization How do the goals of your Strategic Plan overlap with the goals of each plan?
YEP Collaboration
between various
local agencies
Formerly Berkeley 2020 Vision, now known as YEP, is a citywide partnership that seeks to close Berkeley educational opportunity gap through a shared community commitment to this goal: that all young people in Berkeley grow up with opportunities to achieve high outcomes and realize their full potential. Public agency, education, nonprofit, and other partners lend content expertise, shape the direction of this initiative, and represent the students and families they serve. This is consistent with goals of increasing economic opportunities for Berkeley residents. The Consolidated Plan works toward these shared goals by
supporting housing and public services for low-income residents.

Age-Friendly Berkeley
Action Plan
Health, Housing,
and Community
Services; Aging
Division
This report focuses on the aging population in Berkeley and the fact that the vast majority of older adults want to age in their homes and local Berkeley community. The Age-Friendly Berkeley initiative helps prepare Berkeley for its rapidly aging population by gathering input from the community and pulling together public and private leaders, resources, ideas, and strategies to address the issues raised. Age-Friendly Berkeley is a collective effort whose goal is to ensure that all Berkeley residents are connected, healthy, and engaged in their environments. The Consolidated Plan speaks directly to affordable housing goals that support low-income persons, specifically including seniors and persons with disabilities.

City of Berkeley
Strategic Plan
City of Berkeley The strategic plan identifies the City governments long-term goals on behalf of the Berkeley community. The plan was approved in 2018, and included numerous priorities, which are short-term projects or programs that support a specific goal.

Goals include creating affordable housing and housing supportive services for low-income community members.

Alameda County
Regional Analysis of
Impediments to Fair
Housing
Alameda County This report summarizes the impediments to fair housing across Alameda County. The report was approved for 2025-2029.

California All Home
Regional Action Plan
(RAP), 2024
All Home The City’s strategic plans for addressing homelessness align with the priorities in the RAP.

Alameda County Point-
in-Time Report, 2024
Alameda County
EveryOne Home
The Point-in-Time (PIT) Count is a biennial census of people experiencing homelessness on a single night. This report includes additional information about the experiences of people who are homeless in the Berkeley community which assist in developing our programmatic activities to end
homelessness. The 2026 PIT Count was completed in January 2026, and results will be available later in the year.

Table 3 – Other local / regional / federal planning efforts Narrative (optional)

City of Berkeley
Annual Action Plan – Pg 12
PY 2026
AP-12 Participation – 91.105, 91.200(c)

1. Summary of citizen participation process/Efforts made to broaden citizen participation
Summarize citizen participation process and how it impacted goal-setting The City’s Housing Advisory Commission (HAC) reviewed the PY24 Consolidated Annual Performance and Evaluation Report (CAPER) at their September 2025 public hearing. The HAC and members of the public had the opportunity to comment on the City’s impact and make recommendations about how federal funds are spent in the City.

The City’s Housing Advisory Commission (HAC) reviewed the draft plan during a public meeting on March 5, 2026, that was advertised on the City’s website and calendar.

The City published a public hearing notice on March 27, 2026, in the Berkeley Voice in accordance with its citizen participation plan for an April 28, 2026, Public Hearing at the Berkeley City Council meeting. It also sent the notification to public and assisted housing, users of community and senior centers, libraries, and residents being served by over 50 community-based agencies funded by the City of Berkeley.

City of Berkeley
Annual Action Plan – Pg 13
PY 2026
Citizen Participation Outreach
Sort
Order
Mode of
Outreach
Target of
Outreach
Summary of
response/
attendance
Summary of
comments received
Summary of
comments not
accepted and reasons
URL (If applicable)
1 Public
Hearing
Non-
targeted,
broad
community
September 4, 2025
7 members of the public
attended the public
hearing, including
commissioners.

There were no comments
from community
members. A
commissioner
commented that the
streamlining in SDRLP
seems to be working
based on PY24 CAPER.

All comments were
accepted.
https://berkeleyca.gov/yo
ur-government/boards-
commissions/housing-
advisory-commission
2 Public
Meeting
Non-
targeted,
broad
community
March 5, 2026
Seven members of the
HAC discussed the Draft
Annual Action Plan, and
one member of the public
made public comment.

Over 11 persons,
including commissioners,
were present.

The members of HAC
voted to approve the
Draft AAP for Council
consideration.

HAC members reviewed
and discussed the Draft
of the AAP at its March 5,
2026, meeting.

Comments and questions
pertaining to the AAP
focused on the planned
projects and coordination
with the Berkeley
Housing Authority.

All comments were
accepted.
https://berkeleyca.gov/yo
ur-government/boards-
commissions/housing-
advisory-commission

City of Berkeley
Annual Action Plan – Pg 14
PY 2026
Sort
Order
Mode of
Outreach
Target of
Outreach
Summary of
response/
attendance
Summary of
comments received
Summary of
comments not
accepted and reasons
URL (If applicable)
3 Public
Hearing
Non-
targeted,
broad
community
This hybrid Public
Hearing was held on
April 28, 2026, at a City
of Berkeley Council
Meeting.

XX comments received
via email.

More than XX persons
in attendance at the
April 28, 2026 meeting.

XX member(s) of the
public spoke at the
April 28, 2026 public
hearing on the PY26
Annual Action Plan in
front of the City
Council. Comments
from the public and
Council discussion
included: [add summary
of comments].

All comments were
accepted.
https://berkeleyca.gov/
your-government/city-
council/city-council-
agendas
Table 4 – Citizen Participation Outreach

City of Berkeley
Annual Action Plan – Pg 15
PY 2026
Expected Resources
AP-15 Expected Resources – 91.220(c)(1,2)
Introduction
Berkeley is an entitlement jurisdiction.

Anticipated Resources
Progra
m
Sourc
e of
Fund
s
Uses of
Funds
Year 2
Estimated
Annual
Allocation
: $
Year 2
Estimated
Program
Income: $
Year 2
Estimated
Prior Year
Resources:
$
Year 2
Estimated
Total: $
Expected
Amount
Available
Remainde
r of
ConPlan:
$
Narrative
Descripti
on
CDBG
public
-
federa
l
Acquisition
Admin and
Planning
Economic
Development
Housing
Public
Improvements
Public
Services
2,608,121 600,000
(estimated)
694,424
(anticipated)
3,902,545
(estimated)
11,726,908
(estimated)
See
below
HOM
E
public
-
federa
l
Acquisition
Homebuyer
assistance
Homeowner
rehab
Multifamily
rental new
construction
Multifamily
rental rehab
New
construction
for ownership
TBRA
571,566.31

0 (estimated)
115,000
(anticipated)
686,566.31
(estimated)
2,401,265.
24 (estimated)
See
below

City of Berkeley
Annual Action Plan – Pg 16
PY 2026
Progra
m
Sourc
e of
Fund
s
Uses of
Funds
Year 2
Estimated
Annual
Allocation
: $
Year 2
Estimated
Program
Income: $
Year 2
Estimated
Prior Year
Resources:
$
Year 2
Estimated
Total: $
Expected
Amount
Available
Remainde
r of
ConPlan:
$
Narrative
Descripti
on
ESG
public
-
federa
l
Conversion
and rehab for
transitional
housing
Financial
Assistance
Overnight
shelter
Rapid re-
housing (rental
assistance)
Rental
Assistance
Services
Transitional
housing
227,900 0 0
(anticipated)
227,900
(estimated)
911,600
(estimated)
See
below
Table 5 - Expected Resources – Priority Table
Explain how federal funds will leverage those additional resources (private, state and local funds), including a description of how matching requirements will be satisfied
Many of the housing and community services programs described in the Consolidated Plan will continue to be delivered by nonprofit community-based organizations. The City contracts with a wide range of housing and service providers using CDBG, HOME, ESG, Community Services Block Grant (CSBG), General Fund, and other sources of funding. These organizations leverage significant financial and in-kind support from individual community members, foundations, and private organizations that help meet the needs identified in this plan.

In addition to leveraging at the individual agency level, the City has historically matched the investment of CDBG, HOME, and ESG dollars with the investment of General Funds. In PY25 over three quarters of the funding for community agency programs came from General Funds. The City anticipates using all of its HOME funds for multifamily residential new construction and rehabilitation. These types of projects virtually always require multiple sources of federal, state, and other funding, which project sponsors leverage with a commitment of local funds, including HOME. The City will use local funds, such as those from the City’s Measure O housing bond and mitigation fee revenue in the Housing Trust Fund to ensure continued compliance with the HOME match requirements. The City meets the dollar-for-dollar match requirements for the ESG program by allocating General Funds to various homeless services

City of Berkeley
Annual Action Plan – Pg 17
PY 2026
providers. Shelter programs alone receive over $348,489 in City General Funds each year.

If appropriate, describe publicly owned land or property located within the jurisdiction that may be used to address the needs identified in the plan The City has long-term leases of City-owned property with non-profit organizations that address the needs identified. Programs operating in leased City-owned properties include:
 Dorothy Day House – a year-round and two emergency winter shelters and a daytime Community Resource Center;
 BOSS’ Harrison House Shelter for unhoused men, women and families;  BOSS’ Sankofa House – emergency shelter for unhoused families;  Women’s Daytime Drop-In Center’s Bridget House – transitional housing for homeless families;
 Women’s Daytime Drop-in Center - a daytime center for unhoused women and children;
 Bay Area Community Services Pathways Stair Center – a year-round shelter for unhoused adults;
 Options Recovery Services – substance use treatment services; and  LifeLong Medical Care/Berkeley Free Clinic – healthcare services for unhoused Berkeley residents.

The City also has long-term ground leases for affordable permanent housing at:
 Ocean View Gardens;
 UA Cooperative Housing;
 William Byron Rumford Senior Plaza; and
 The Hope Center and Berkeley Way.

The City is working closely with Bay Area Rapid Transit (BART) on the redevelopment of the Ashby and North Berkeley BART sites, which are projected to include affordable housing equivalent to at least 35-50% of the total units at each site. For the North Berkeley BART site, the City and BART selected a team of developers through a competitive process; three of which are nonprofit affordable housing developers. The first of the four proposed North Berkeley BART affordable housing projects are expected to start construction in 2027. The City and BART selected a development team for the Ashby west lot site in PY25 that includes one nonprofit affordable housing developer and are in the early planning stages for the Ashby east lot site. The City will own the east lot property and expects to select a development team in early PY26. In total the North Berkeley and Ashby BART sites are expected to create at least 1,500 new market rate and affordable housing units in Berkeley. Ocean View Gardens, an existing 63-unit multifamily affordable housing development, has undergone substantial rehabilitation. In 2024, Orbach Affordable Housing Strategies (OAHS) acquired the property and secured tax credit and bond financing for the rehabilitation. OAHS

City of Berkeley
Annual Action Plan – Pg 18
PY 2026
assumed the City‘s ground lease, extending the affordability period until June 2089. No City funds were required to complete the rehabilitation. The rehabilitation at Ocean View Gardens is scheduled to be completed before the end of PY2025, and the project will be monitored according to the City’s compliance monitoring procedures, including annual reporting and routine on-site monitoring visits which are completed after the first year of operations under the new owner and every three years over the life of the project until the end of the compliance period.

Discussion
N/A

City of Berkeley
Annual Action Plan – Pg 19
PY 2026
Annual Goals and Objectives
AP-20 Annual Goals and Objectives
Goals Summary Information
Sort
Order Goal Name Start
Year
End
Year Category Geographic
Area
Needs
Addressed Funding Goal Outcome
Indicator
1 Increase
Affordable
Housing
Supply and
Quality
2025 2029 Affordable
Housing
BERKELEY Affordable
Housing
CDBG:
$1,597,776.
25 HOME:
$629,409.68
Rental units constructed:
0 Household Housing
Unit
Rental units
rehabilitated: 13 Units
Homeowner Housing
Rehabilitated: 13
Household Housing
Unit
2 Improve
Public &
Community
Facilities and
Public
Services
2025 2029 Non-
Housing
Community
Developme
nt
BERKELEY Non-Housing
Community
Development

CDBG:
$1,783,144.
55 Public & Community
Facility or Infrastructure
Activities other than
Low/Moderate Income
Housing Benefit:
500 Persons Assisted
Public service activities
other than
Low/Moderate Income
Housing Benefit:
370 Persons Assisted
3 Provide
Homeless
Prev.,
Shelter, and
RRH
2025 2029 Homeless BERKELEY Homelessne
ss
ESG:
$204,131.50
Tenant-based rental
assistance / Rapid
Rehousing: 28
Households
Assisted (plus additional
served with earlier
unused funds)
Homeless Person
Overnight Shelter: 96
Persons Assisted
Table 6 – Goals Summary

City of Berkeley
Annual Action Plan – Pg 20
PY 2026
Goal Descriptions
Goal 1: Increase Affordable Housing Supply and Quality.

Description: CDBG and HOME funds will be used for affordable housing acquisition and rehabilitation, and single-family rehabilitation programs.

Goal 2: Improve Public Facilities and Public Services.

Description: CDBG funds will be used to rehabilitate public facilities and homeless and fair housing public services.

Goal 3: Provide Homeless Prev., Shelter, Outreach and RRH.

Description: ESG funds will be used to provide outreach, services emergency shelter and/or rapid re-housing to literally homeless households.

City of Berkeley
Annual Action Plan – Pg 21
PY 2026
Projects
AP-35 Projects – 91.220(d)
Introduction
With its CDBG, HOME, and ESG funds, the City of Berkeley will fund eligible projects in the following categories: housing development, rehabilitation and services projects, public services, public/community facility improvement projects, emergency shelter grant programs, program planning and administration, and the Housing Trust Fund.

Projects
# Project Name
1 City of Berkeley Planning and Administration
2 Housing Loan Services
3 Single Family Rehabilitation Programs
4 Housing Trust Fund
5 Public Services
6 Community Facility Rehabilitation
7 ESG26-Berkeley-Emergency Shelter, Rapid Rehousing and HMIS Activities Table 7 - Project Information
Describe the reasons for allocation priorities and any obstacles to addressing underserved needs
The City continues to fund activities that have been identified as a need in the Consolidated Plan.

City of Berkeley
Annual Action Plan – Pg 22
PY 2026
AP-38 Project Summary
Project Summary Information

1. City of Berkeley Planning and Administration
Item Description
Target Area BERKELEY
Goals Supported Increase Affordable Housing Supply and Quality Improve Public Facilities and Public Services
Provide Homeless Prev., Shelter, Outreach and RRH
Needs Addressed Affordable Housing
Homelessness
Non-Housing Community Development
Funding CDBG: $521,624.20
HOME: $57,156.63
Description The project will fund City staff to plan and administer CDBG and HOME projects. HOME Admin based on projected entitlement is 10%.

Target Date 6/30/2027
Estimate the number
and type of families
that will benefit from
the proposed activities
Location Description Citywide.

Planned Activities Information about the planned activities is included in Section AP- 38 Project Summaries.

2. Housing Loan Services
Item Description
Target Area BERKELEY
Goals Supported Increase Affordable Housing Supply and Quality Needs Addressed Affordable Housing
Funding CDBG: $70,848.28 (estimate)
Description City staff provide loan services to support single family rehabilitation, housing trust fund projects, and other federally funded housing related activities.

Target Date 6/30/2027
Estimate the number
and type of families that
will benefit from the
proposed activities
City staff provide loan services to support single family rehabilitation, housing trust fund projects, and other federally funded housing related activities. The project will serve approximately 68 active loans.

Location Description Various locations within the City of Berkeley.

Planned Activities Services provided under this project will include accounting, processing loan payments and loan payoff demands, deeds of reconveyance, lien releases and loan subordination requests, collections, personal financial analysis, and structuring of temporary repayment agreements.

Commented [KL1]: Include (estimate) next to all the
funding amounts

City of Berkeley
Annual Action Plan – Pg 23
PY 2026

3. Single Family Rehabilitation Programs
Item Description
Target Area BERKELEY
Goals Supported Increase Affordable Housing Supply and Quality Needs Addressed Affordable Housing
Funding CDBG: $1,032,726.97 (estimate)
Description This project will fund activities related to single-family home rehabilitation. Eligible rehabilitation work will include health and safety repairs as well as ADA accessibility improvements, such as the installation of ramps and lifts, for low-income residents.

Target Date 6/30/2027
Estimate the number
and type of families that
will benefit from the
proposed activities
The project will benefit an estimated 13 low-income households annually.

Location Description Various locations within the City of Berkeley.

Planned Activities Activities include health and safety upgrades, ADA-compliant improvements, and efficiency enhancements. The Center for Independent Living’s program reduces barriers to housing for 9 low- income homeowners with disabilities by installing ramps, lifts, and other interior and exterior modifications to ensure safe and accessible entry to their homes. City staff collaborate with senior and/or homeowners with a disability to provide an estimated four to six deferred, interest-free loans annually through the Senior & Disabled Home Rehabilitation Loan Program and to complete approximately four homeowners’ rehabilitation projects each year.

4. Housing Trust Fund
Item Description
Target Area BERKELEY
Goals Supported Increase Affordable Housing Supply and Quality Needs Addressed Affordable Housing
Funding CDBG: $494,201.00 (estimate)
HOME: $600,831.36 (estimate)
Description Activities that provide funding for City staff in support of projects funded with City of Berkeley Housing Trust Fund dollars, includes funding for projects and CHDO operating funds.

Target Date 6/30/2027

City of Berkeley
Annual Action Plan – Pg 24
PY 2026
Item Description
Estimate the number
and type of families that
will benefit from the
proposed activities
10 units (households) will be directly supported with federal funding during the 5-year Consolidated Plan period, for an average of 2 per year. During the same time period, staff will also support the development of an additional 1,168 units with local funding. The proposed new construction housing includes units for seniors and formerly homeless households.

A total of 112 low-income housing units and rooms will be rehabilitated under the City’s Housing Trust Fund (HTF) program, including four existing housing projects (92 units/rooms) and two new rehabilitation projects which would add 20 units to the City’s existing affordable housing portfolio.

Location Description Citywide.

Planned Activities City staff actively facilitate development, rehabilitation and/or preservation of affordable housing through working with developers, other city staff, lenders and other public agencies for the acquisition and rehabilitation of multi-family housing.

This is the City of Berkeley’s Housing Trust Fund, and the funds support Housing Development staff. 570.201 (k) “provides that CDBG funds may be used to pay costs in support of activities eligible for funding under the HOME program. This includes services such as housing counseling in connection with tenant-based rental assistance and affordable housing projects, energy auditing, preparation of work specifications, loan processing, inspections, tenant selection, management of tenant-based rental assistance, and other services related to assisting owners, tenants, contractors, and other entities participating or seeking to participate in the HOME program.” Funded activities include working with funded projects throughout predevelopment, supporting public participation in project selection and development, preparing and executing loan agreements, and conducting federally required environmental review. Staff are currently working with 10 affordable housing developments in varying stages of predevelopment with reservations totaling over $72M in City funds, including HOME funds.

In PY26, the City will continue to work with nonprofit housing developers on the rehabilitation of the following properties: MLK House (11 rooms), 2207 Haste Street (8 rooms), Ashby Lofts (54 units), Adeline Street Apartments (19 units), 2321 Tenth Street (8 units), and California Street Apartments (12 units). Adeline Street Apartments is partially funded with HOME funds.

5. Public Services
Item Description
Target Area BERKELEY
Goals Supported Improve Public Facilities and Public Services Needs Addressed Homelessness
Non-Housing Community Development
Funding CDBG: $453,921.00 (estimate)

City of Berkeley
Annual Action Plan – Pg 25
PY 2026
Item Description
Description Services including the North County Coordinated Entry System (CES) and fair housing services are funded under this project.

Target Date 6/30/2027
Estimate the number
and type of families that
will benefit from the
proposed activities
300 low-income and homeless households are expected to be served through these activities annually through coordinated entry. 70 households will be supported with fair housing services.

Location Description Citywide.

Planned Activities Bay Area Community Services operates Berkeley's Coordinated Entry System which will screen, conduct intakes, and provide housing navigation services to approximately 300 people. Eden Council for Hope and Opportunity will provide outreach, training, fair housing counseling services to up to 70 households, investigation of an estimated 25 fair housing complaints, 10 tenant/landlord mediations, and 10 fair housing testing/audits with follow-up training for non-compliant property owners.

6. Public & Community Facility Rehabilitation
Item Description
Target Area BERKELEY
Goals Supported Improve Public & Community Facilities and Public Services Needs Addressed Non-Housing Community Development
Funding CDBG: $1,329,223.55 (estimate)
Description Activities that fund the rehabilitation of public and community facilities are funded under this project.

Target Date 6/30/2027
Estimate the number
and type of families that
will benefit from the
proposed activities
It is projected that public facility improvements provided by the City of Berkeley’s administered program and Rebuilding Together East Bay Network will benefit an estimated 500 people. The number of beneficiaries may increase as new public facility projects are identified through the acceptance of new applications.

Location Description Various locations within the City of Berkeley.

Planned Activities Activities include improving public facilities by funding substantial rehabilitation to applicants of the City-administered Public Facility Improvement Program and the Rebuilding Together East Bay Network program. In PY26 the City is anticipating having a minimum of $91,494 in entitlement, estimated $600,000 in program income, and $362,424 in prior year funds available for the public facility notice of funding availability (NOFA). The three current projects, Ala Costa Centers, BOSS’s Ursula Sherman Village, and Options Recovery Center, are anticipated to serve 100 persons. Additional projects throughout the year may increase the numbers served. The Rebuilding Together East Bay Network program will use $93,780 to support four projects throughout the community serving an estimated total of 400 persons.

City of Berkeley
Annual Action Plan – Pg 26
PY 2026

7. ESG26-Berkeley-Emergency Shelter, Rapid Rehousing, and HMIS Activities Item Description
Target Area BERKELEY
Goals Supported Provide Shelter, and RRH
Needs Addressed Homelessness
Funding ESG: $227,900
Description ESG funds will be used for Emergency Shelter, and Rapid Re- Housing, HMIS and administrative costs.

Target Date 6/30/2027
Estimate the number
and type of families that
will benefit from the
proposed activities
ESG:
28 households will be served with rapid rehousing financial assistance.
96 persons will be with Emergency Shelter. Additional households will be served using earlier unused funds.

Location Description Various locations within the City of Berkeley.

Planned Activities ESG funds will be used to provide financial assistance and housing relocation and stabilization services to rapidly re-house approximately 28 households, and support approximately 96 people through emergency shelter.

Table 8 - Project Summary
AP-50 Geographic Distribution – 91.220(f)
Description of the geographic areas of the entitlement (including areas of low- income and minority concentration) where assistance will be directed As discussed in MA-50 of the Consolidated Plan, the City does not have areas of low income or minority concentration and therefore does not allocate federal funds geographically.

Geographic Distribution
Target Area Percentage of Funds
BERKELEY 100
Table 9 - Geographic Distribution
Rationale for the priorities for allocating investments geographically N/A
Discussion
N/A

City of Berkeley
Annual Action Plan – Pg 27
PY 2026
Affordable Housing
AP-55 Affordable Housing – 91.220(g)
Introduction
This section includes HOME-funded units only. The City has one HOME-funded project that was completed during PY24. The Grinnell project (formerly called Blake Apartments) has 63 units in total, ten of which are HOME-assisted units. As of this writing in January 2026, the City has a robust housing development pipeline that includes at least one HOME-funded project in this Consolidated Plan period. The pipeline consists of 13 new construction projects either under way or in predevelopment, two acquisition/rehabilitation projects, and four portfolio rehabilitation projects (rehab of existing affordable housing projects). The City’s pipeline represents 1,188 newly created or newly restricted affordable housing units, plus 92 units in existing affordable housing projects. The City has committed over $140M to the pipeline projects. Because the City has an aging portfolio of occupied affordable housing projects, HOME funds will be used to support the renovation of an existing affordable housing project – Adeline Street Apartments (19 units total).

One Year Goals for the Number of Households to be Supported Homeless: 0
Non-Homeless: 9
Special-Needs: 0
Total: 9
One Year Goals for the Number of Households Supported Through Rental Assistance: 0
The Production of New Units: 0
Rehab of Existing Units: 9
Acquisition of Existing Units: 0
Total: 9
Discussion
N/A

City of Berkeley
Annual Action Plan – Pg 28
PY 2026
AP-60 Public Housing – 91.220(h)
Introduction
The Berkeley Housing Authority (BHA) is not a department of the City of Berkeley. BHA Board members are appointed by the Mayor and confirmed by the City Council.

Actions planned during the next year to address the needs of public housing N/A. The BHA no longer owns any public housing.

Actions to encourage public housing residents to become more involved in management and participate in homeownership
N/A
If the PHA is designated as troubled, describe the manner in which financial assistance will be provided or other assistance
N/A
Discussion
N/A

City of Berkeley
Annual Action Plan – Pg 29
PY 2026
AP-65 Homeless and Other Special Needs Activities – 91.220(i) Introduction
The City uses a variety of approaches to support homeless and other populations.

Describe the jurisdictions one-year goals and actions for reducing and ending homelessness including reaching out to homeless persons (especially unsheltered persons) and assessing their individual needs The City has received three State of California Encampment Resolution Fund (ERF) grants, the latest grant being received in November 2024. This new ERF funding will support a non-congregate shelter. Additionally, Berkeley will complete the conversion of an existing congregate interim shelter into non-congregate units and will continue a contract and lease to support the 39 units of modular housing for unhoused residents of Berkeley. The City is funding a newly created Berkeley Trust Clinic, a clinic that provides both primary and behavioral health services to people who are unhoused or previously unhoused in Berkeley.

The City will continue to fund and otherwise support the North County Berkeley/Albany/Emeryville Housing Resource Center (HRC) – the front door to the homeless Coordinated Entry System (CES) which provides outreach, assessments, housing problem-solving, housing navigation and tenancy sustaining services to unhoused residents; congregate and non-congregate shelter and interim housing programs to move unhoused residents into permanent housing; housing retention grants to reduce the number of households becoming homeless in Berkeley, and incorporate the 2026 Berkeley Point In Time Count data into program planning and implementation strategies. HRC staff will continue to implement the updated assessment process.

The CES continues to include three phases: housing problem solving (HPS), crisis assessment, and housing assessment. This phased approach coupled with HPS flex funds will result in more varied households having proximity to needed supports. Staff will provide these assessments through 211 referrals, during HRC drop-in and by phone, and at street-based locations throughout Berkeley. Street-based outreach staff will continue to engage people and provide basic necessities, such as water and hygiene kits.

The HRC will provide housing navigation services tied to rapid-rehousing and flexible financial assistance to support additional people in moving to permanent housing.

Housing navigators support participants in a variety of ways from housing problem solving to assisting with identification documents and housing search activities. Once permanently housed, HRC staff will work with participants to maintain housing.

City of Berkeley
Annual Action Plan – Pg 30
PY 2026
Addressing the emergency shelter and transitional housing needs of homeless persons
Over the past couple of years, the City of Berkeley has leveraged State funding to increase the number of non-congregate shelter beds. The City will continue to provide funding for shelter and transitional housing. Additionally, the City has worked with shelter providers to reduce some barriers to shelter, such as curfews and allowing pets and is partnering with Alameda County’s Age Friendly Council and Alameda County Healthy Brain Initiative to support older (50+) shelter participants. This partnership will provide ongoing trainings and resources to support staff with working with participants who may be experiencing cognitive decline.

The City currently funds multiple agencies to provide 324 year-round shelter beds, 65 seasonal shelter beds and 27 transitional housing beds/units.

Helping homeless persons (especially chronically homeless individuals and families, families with children, veterans and their families, and unaccompanied youth) make the transition to permanent housing and independent living, including shortening the period of time that individuals and families experience homelessness, facilitating access for homeless individuals and families to affordable housing units, and preventing individuals and families who were recently homeless from becoming homeless again
The North County HRC, operated by Bay Area Community Services (BACS), conducts Coordinated Entry System (CES) intakes and assessments, which prioritize people who are homeless for resources that best meet their needs, including rapid re‐housing placements and placement on the County’s Permanent Supportive Housing (PSH) Housing Queue. In both cases, the goal is to rapidly re‐house households and support them for as long as retention services are needed and allowed.

The HRC’s Housing Navigation resources will be allocated to people across the new CES housing queue, with focus on households that can be rapidly rehoused with little to no services support. Housing Navigators will help collect documents needed to apply for housing opportunities, housing searches and linking participants to services that will help to retain housing.

The North County HRC and the BACS Stair Program have flexible and rapid rehousing funds, which assist in reducing people’s length of homelessness. The City will allocate ESG and local funds to support these efforts. While funding is available, there continues to be a lack of available units, within HUD’s Fair Market Rent (FMR) to support households with extremely low incomes making it difficult to rapidly re-house households in the County. Often, households are being housed in neighboring cities and counties making it challenging to provide ongoing housing retention services. This has resulted in some delays in spending City of Berkeley ESG funds for rapid re- housing. The HRC has incorporated more shared housing opportunities through the use of larger units. This has provided people with limited income and a willingness to share housing more opportunities to be permanently housed.

City of Berkeley
Annual Action Plan – Pg 31
PY 2026
The City’s Shelter Plus Care (S+C) program is funded through two Continuum of Care grants, Supportive Housing Collaborative (SHC) and a contract with Alameda County, Alameda County Collaborative (ACC). The S+C Program serves approximately 280 households. The program combines federal housing subsidies with Tenancy Sustaining Services (TSS) provided by Berkeley Mental Health, Berkeley Aging Services and Adult Case Management. The City also funds community agencies to provide TSS to assigned participants.

The Shelter Plus Care portfolio also includes Square One, a locally funded permanent housing subsidy that serves vulnerable households that are literally homeless. Potential participants to this program would still demonstrate their need by establishing eligibility to the program by tracking of lengths of homelessness history and demonstrated needs.

Once qualifications are established, the Square One program connects these participants to housing navigators to help support their application to housing placement, as units become available.

Other than the Square One Program, the S+C Program fills all of its openings through Home Stretch and prioritizes moving people into housing as quickly as possible. When an opening occurs, Home Stretch prioritizes unhoused people based on chronicity, need and date of referral, and provides participant information to the City of Berkeley to be matched with a partner service agency that will provide case management and housing stabilization support. The case manager will support the participant to obtain and retain their housing, although services are not required to qualify for the rental assistance. Along the way, case managers work with participants to address issues that may have contributed to their housing instability or present obstacles to obtaining rental housing (such as poor credit, a lack of income, missing documents like a picture ID, outstanding legal issues, etc.).

Helping low-income individuals and families avoid becoming homeless, especially extremely low-income individuals and families and those who are:
being discharged from publicly funded institutions and systems of care (such as health care facilities, mental health facilities, foster care and other youth facilities, and corrections programs and institutions); or, receiving assistance from public or private agencies that address housing, health, social services, employment, education, or youth needs
The City uses General Funds to fund services that prevent people who are not literally homeless but are at imminent risk of homelessness per the HUD Homeless definition (Category 2) from becoming homeless. Prevention assistance may include support to a household to retain its current housing or to move to other housing without having to become literally homeless. While the ESG regulations allow for federal funds to be provided to those categorized as “at-risk” but not necessarily at “imminent risk”, the City uses its ESG funds for rapidly re-housing people who are literally homeless.

The City funds prevention assistance for people who meet “immediate risk” criteria defined as:

City of Berkeley
Annual Action Plan – Pg 32
PY 2026
“An individual or family who will imminently lose their primary nighttime residence, provided that:
 The primary night-time residences will be lost within 14 days of the day of application for homeless assistance;
 No subsequent residence has been identified; and,
 The individual or family lacks the resources of support networks, e.g., family, friends, faith-based or other social networks, needed to obtain other permanent housing.”
Alameda County has mental health, foster youth, health care, and corrections discharge policies intended to prevent discharges of individuals from these systems into homelessness, described in detail in the Consolidated Plan.

The City is working with local hospitals to share information about the North County HRC and available homeless services in Berkeley to reduce discharges to local daytime drop-in centers and shelters that cannot support the needs of medically fragile people with severe disabling conditions. The City will continue to participate in countywide and regional efforts to reduce discharges into homelessness.

Discussion
The City of Berkeley supports a wide range of homeless programs, including emergency/crisis drop-in centers and shelters, transitional housing, permanent supportive housing, prevention and rapid re-housing services. All contracted service providers report outcomes based on the countywide outcome standards developed by EveryOne Home, to inform future adjustments to the service system.

City of Berkeley
Annual Action Plan – Pg 33
PY 2026
AP-75 Barriers to affordable housing – 91.220(j)
Introduction
N/A
Actions it planned to remove or ameliorate the negative effects of public policies that serve as barriers to affordable housing such as land use controls, tax policies affecting land, zoning ordinances, building codes, fees and charges, growth limitations, and policies affecting the return on residential investment The City took significant steps over the past year to remove and/or ameliorate affordable housing constraints in Berkeley, including:
 Adopting amendments to the zoning code to facilitate “middle housing” development in neighborhoods formerly zoned exclusively for single-family development;
 Adopting objective design standards for middle housing developments;  Adopting objective design standards for mixed-income development at North Berkeley BART transit station; and
 Conducting a study and adopting an updated inclusionary housing in-lieu fee to facilitate middle housing and mitigate any negative impacts on potential development, while continuing to promote local affordable housing.

Additionally, the work to up zone Priority Development Areas (PDAs), Commercial and Transit Corridors is in progress and is scheduled to be complete in PY26.

Discussion
N/A
Introduction
N/A

City of Berkeley
Annual Action Plan – Pg 34
PY 2026
AP-85 Other Actions – 91.220(k)
Introduction:

The City of Berkeley uses a range of strategies to address the housing, homeless, and community development goals identified in the Consolidated Plan. This section discusses actions planned to foster and maintain affordable housing, to reduce lead- based paint hazards, to reduce the number of poverty-level families in Berkeley, and to coordinate activities in these areas with other entities.

Actions planned to address obstacles to meeting underserved needs One of Berkeley’s major obstacles to meeting underserved needs is the limited amount of federal, state, and local resources available given the needs in the community and high cost of housing in the Bay Area. The City of Berkeley will continue to pursue new State, Federal, and local resources as available to meet the needs.

Actions planned to foster and maintain affordable housing The City has several on-going programs which foster and maintain affordable housing in Berkeley:
 Rent Stabilization Program. The Rent Stabilization and Eviction for Good Cause Ordinance regulates a portion of residential rents in Berkeley, provides tenants with increased protection against unwarranted evictions and is intended to maintain affordable housing and preserve community diversity.  Inclusionary Housing Ordinance. This ordinance requires developers of new market rate housing to provide up to 20% of new construction units as on-site Below Market Rate (BMR) units. BMR units serve Very Low Income (50% Area Median Income) and Low Income (80% Area Median Income) households.

Applicants may opt to pay an in-lieu fee into the Housing Trust Fund instead of providing on-site units. The fee adjusts every two years to reflect the California Construction Cost Index.
 Condominium Conversion Ordinance (CCO). The CCO regulates the conversion of rental apartments and tenancy-in-common buildings to condominiums, and other types of mutual or cooperative housing. A mitigation fee for the production of permanently affordable housing is collected for each unit converted.  Commercial Linkage Fee. This ordinance requires an affordable housing mitigation fee on new commercial construction for gross floor area over 7,500 square feet. This fee is deposited in the Housing Trust Fund.  Housing Trust Fund (HTF). The City of Berkeley maintains an HTF to facilitate the construction and preservation of affordable housing. The HTF program pools funds from a variety of sources with different requirements, makes them available through one single application process to local developers, and monitors the development and operation of the funded housing.
 Senior and Disabled Rehabilitation Loan Program. HHCS administers the program as an effort in 1.) assisting low-income households living in Berkeley

City of Berkeley
Annual Action Plan – Pg 35
PY 2026
with completing home repairs and ADA access improvements so residents can safely age in place without causing financial strains; 2) preserving the City’s aging housing stock, thereby reducing the risk of further deterioration of property and the surrounding neighborhood; and 3) assisting low-income households with building generational wealth, which is funded by CDBG and CalHOME. The applicants receive a zero-interest deferred loan, secured by a deed of trust on their home, which is repaid at the loan maturity or when a repayment clause(s) is met, whichever occurs first.

Actions planned to reduce lead-based paint hazards
The City will continue to comply with the Environmental Protection Agency’s The Lead- Safe Certified Guide To Renovate Right in its Senior and Disabled Rehabilitation Loan Program. Similarly, organizations working with the City of Berkeley on single family rehabilitation will work with the City and Alameda County Lead Poisoning Prevention Programs to increase awareness of lead issues among their clients and incorporate lead safe work practices into their activities.

The City of Berkeley Public Health Division and the Alameda County Lead Poisoning Prevention Program will work together to increase awareness and knowledge about lead poisoning prevention in Berkeley. The City of Berkeley Childhood Lead Poisoning Prevention Program collaborates with the Berkeley Health, Housing & Community Services Department’s Registered Environmental Health Specialist on responding to resident inquiries on housing lead concerns. Berkeley’s program provides education, information, and resources through community outreach events and presentations to parenting/family groups, community organizations, and health education and resource fairs.

The Alameda County Healthy Homes Department (ACHHD) works collaboratively with the City to promote comprehensive lead safety, provide technical consultations, training and education to the public, property owners and renovators by working in community and stakeholders’ collaborations to leverage existing resources, develop infrastructures and promote system change to provide coordinated, cost-effective support for healthy housing.

ACHHD’s proactive healthy homes strategy is the incorporation of a lead visual assessment on all homes where staff is conducting a site visit (in person), regardless of reason for the initial port of entry. This strategy is a proactive primary prevention approach that increases the number of homes where a lead assessment is done. These services are funded by the local County Service Area (CSA) service charge for owners of pre-1978 properties in Berkeley.

Additionally, ACCHD is increasing outreach throughout Alameda County through social media platforms, newspapers, radio, TV, e-mails, literature distribution to include program services brochures in permit offices, hardware stores, paint stores, and venues visited by homeowners and rental housing providers. ACCHD also provides and continuously updates video library on multiple lead safety and healthy housing topics on

City of Berkeley
Annual Action Plan – Pg 36
PY 2026
the ACHHD website and provide RRP training slots to property owners/rental property owners or their designees in Berkeley. ACHHD has the capacity, knowledge and expertise to conduct healthy housing assessments and provide technical assistance to residents living in Berkeley Housing Authority housing units. ACCHD responds to complaints related to lead and moisture conditions as requested by Berkeley Housing Authority and Rental Housing Safety Program with a contracted MOU as well as conduct healthy housing assessments in Berkeley Housing Authority housing units and Rental Housing Safety Inspection programs. ACCHD provides technical assistance to the local jurisdictions on proactive rental inspections for lead hazards and reactive inspection programs under new state mandate (AB 838) as well as provide training opportunities to code enforcement officers in regard to State and EPA lead safety rules.

Actions planned to reduce the number of poverty-level families The City funds a wide variety of social service programs designed to assist households with poverty level incomes. These programs include childcare and a range of services for special needs populations, which are outlined in other sections of this Plan. This section will highlight the City’s strategies to increase livable wage employment opportunities by supporting related community services and working with public and private regional partners. Strategies include:
 Funding and refinement of anti-poverty programs provided by community-based organizations and by the City. Federally funded community agency contracts are outlined in the Annual Action Plan.
 Continuing to enforce the City of Berkeley’s Living Wage Ordinance.  Coordinating job placement to benefit Berkeley residents in the construction trades.
 Supporting community agencies that provide employment training and placement opportunities to low-income people and people experiencing homelessness.

The City has contracted with workforce development programs to provide training, education, and job placement for low income, under-employed, and unemployed residents in addition to administering local hire policies and a youth employment program. The following programs are funded with General Funds from the City:
 Inter-City Services (ICS) provides employment, training, and education to residents in Berkeley. ICS workforce development program prepares participants for high-tech careers through digital courses.
 Biotech Partners operates the Biotech Academy at Berkeley High School for students interested in exploring a career in biotechnology. Students complete a six to eight-week paid internship at a biotech company and learn job skills.  The Bread Project provides job training and placement assistance for low/no- income individuals with multiple barriers to employment. They operate a social enterprise (wholesale bakery) that creates opportunities for trainees to obtain crucial on-the-job experience.

City of Berkeley
Annual Action Plan – Pg 37
PY 2026
 BANANAS operates the Berkeley LaunchPad program which provides support for new and launching Family Child Care home businesses in Berkeley, specifically targeting new business owners.
 The Multicultural Institute provides education and assistance to laborers within the City of Berkeley through its Life Skills Program.

The City's anti-poverty strategy continues to be closely tied to the funding of approximately 50 community agencies to provide services as described above to enable people in poverty to attain self-sufficiency, support at-risk youth to succeed in school and graduate, and protect the health and safety of low-income people. The City also funds anti-poverty programs with general funds for job training and creation/job placement agencies.

Actions planned to develop institutional structure
During the next year, the City of Berkeley will continue to coordinate the housing and community services activities within the department through regular senior staff meetings and coordination on specific topics. The City’s Health & Human Services and its Housing Departments merged in Program Year (PY) 2012. Since that time, senior leadership of all Divisions meets weekly to share information on Division activities, which promotes closer coordination. For example, in PY2019, the Housing & Community Services Division and the Aging Services Division collaborated to hire two new staff who will provide supportive services to house homeless residents who are assisted through Continuum of Care Rental Assistance administered by the Housing & Community Services Division. Housing and Community Services has also grown in staff in large part due to a staffing study that was prepared and finalized in PY23. Positions assist all programs across the division, including the HUD programs. Additionally, in PY24, HCS began engaging in a results-based accountability (RBA) as part of a department-wide initiative. Results of the RBA work will support HCS in showcasing administered programs and community impact. The Division leadership will continue to seek opportunities to increase coordination and impact understanding during PY26 and beyond.

Actions planned to enhance coordination between public and private housing and social service agencies
City staff will also continue to participate in Alameda County’s Continuum of Care (CoC). Staff will continue to participate in the initiative’s Leadership Board, which includes most public funders of housing and homeless services in the county, as well as leadership from key community-based organizations. Leadership Board membership helps coordination efforts across the county. Staff also participate in other committees composed of other funders (such as Alameda County Behavioral Health Care Services and the Social Services Agency) as well as many community-based organizations.

Countywide collaboration efforts include regular meetings regarding the Coordinated Entry System, endorsement of the Alameda County Home Together 2026 Community

City of Berkeley
Annual Action Plan – Pg 38
PY 2026
Plan, and coordination and approval of countywide performance measures aligned with HUD priorities.

Discussion:

The majority of Berkeley’s activities furthering the goals of the Consolidated Plan are provided by community agency partners. This will continue to be the case in PY26.

City of Berkeley
Annual Action Plan – Pg 39
PY 2026
Program Specific Requirements
AP-90 Program Specific Requirements – 91.220(l)(1,2,4)
Introduction:

N/A
Community Development Block Grant Program (CDBG)
Reference 24 CFR 91.220(l)(1)
Projects planned with all CDBG funds expected to be available during the year are identified in the Projects Table. The following identifies program income that is available for use that is included in projects to be carried out.

Description of CDBG Expected Funds Amount
Expected

1. The total amount of program income that will have been received before the start of the next program year and that has not yet been reprogrammed $600,000

2. The amount of proceeds from section 108 loan guarantees that will be used during the year to address the priority needs and specific objectives identified in the grantee's strategic plan.
0 3. The amount of surplus funds from urban renewal settlements 0

4. The amount of any grant funds returned to the line of credit for which the planned use has not been included in a prior statement or plan 0

5. The amount of income from float-funded activities 0
Total Program Income: $600,000
Other CDBG Requirements Percentage

1. The amount of urgent need activities 0

2. The estimated percentage of CDBG funds that will be used for activities that benefit persons of low and moderate income. Overall Benefit - A consecutive period of one, two or three years may be used to determine that a minimum overall benefit of 70% of CDBG funds is used to benefit persons of low and moderate income. Specify the years covered that include this Annual Action Plan.
87%

City of Berkeley
Annual Action Plan – Pg 40
PY 2026
HOME Investment Partnership Program (HOME)
Reference 24 CFR 91.220(l)(2)

1. A description of other forms of investment being used beyond those identified in Section 92.205 is as follows:

The City of Berkeley uses no forms of investment other than ones described in §92.205(b).

2. A description of the guidelines that will be used for resale or recapture of HOME funds when used for homebuyer activities as required in 92.254, is as follows:

No homeownership or tenant-based rental assistance activities are anticipated.

3. A description of the guidelines for resale or recapture that ensures the affordability of units acquired with HOME funds? See 24 CFR 92.254(a)(4) are as follows:

No homeownership activities are anticipated.

4. Plans for using HOME funds to refinance existing debt secured by multifamily housing that is rehabilitated with HOME funds along with a description of the refinancing guidelines required that will be used under 24 CFR 92.206(b), are as follows:

The City of Berkeley’s HTF Guidelines apply to any project using HOME funds to refinance existing debt.  Per the Guidelines, Project owners submit funding requests to the City, or reply to the City’s Requests for Proposals for funding, with the following information, among other things:
a. As a condition precedent to funding, Owners must demonstrate an extension of affordability term. For new HOME funds invested in the Project, the minimum affordability term is the term required by 24 CFR 92 et seq., but, typically, the required extension of affordability is 55 years.
b. As a condition precedent to funding, Owners must demonstrate that the refinancing preserves the affordable Project through rehabilitation.

1. Minimum rehab costs/unit must correspond to at least the value identified in a current physical needs assessment to ensure that the long-term needs of the Project can be met.

2. Typical rehab/unit costs are no less than $15,000/unit, the minimum rehab value required by the California Debt Limit Allocation Committee Regulations. c. Owners indicate if their refinancing request includes new construction that adds net new units to the Project

City of Berkeley
Annual Action Plan – Pg 41
PY 2026
d. Owners provide extensive Project data, including audited financial statements, cash flows, rent rolls, services plans, PNAs, and rehabilitation proformas to demonstrate that:

1. The project is sound financially and disinvestment has not occurred

2. The long-term needs of the Project and residents will be met by the rehab

3. The proposed rehab is financially feasible, includes no barriers to refinancing existing mortgage loans, does not include the refinancing of any existing federal or federally-insured loans, and leverages other non-federal funds to the greatest extent possible

5. If applicable to a planned HOME TBRA activity, a description of the preference for persons with special needs or disabilities. (See 24 CFR 92.209(c)(2)(i) and CFR

91.220(l)(2)(vii)).

N/A

6. If applicable to a planned HOME TBRA activity, a description of how the preference for a specific category of individuals with disabilities (e.g. persons with HIV/AIDS or chronic mental illness) will narrow the gap in benefits and the preference is needed to narrow the gap in benefits and services received by such persons. (See 24 CFR

92.209(c)(2)(ii) and 91.220(l)(2)(vii)).

N/A

7. If applicable, a description of any preference or limitation for rental housing projects. (See 24 CFR 92.253(d)(3) and CFR 91.220(l)(2)(vii)). Note: Preferences cannot be administered in a manner that limits the opportunities of persons on any basis prohibited by the laws listed under 24 CFR 5.105(a).

The City may consider leasing preferences for new construction pending any requirements are consistent with Fair Housing law.

City of Berkeley
Annual Action Plan – Pg 42
PY 2026
Emergency Solutions Grant (ESG)
Reference 91.220(l)(4)

1. Include written standards for providing ESG assistance (may include as attachment) The City’s standards for providing ESG assistance are attached as Attachment 3:

City of Berkeley ESG Manual.

2. If the Continuum of Care has established centralized or coordinated assessment system that meets HUD requirements, describe that centralized or coordinated assessment system.

The Alameda County Continuum of Care has established its coordinated entry system (CES).  The CES has regional Housing Resource Centers that provide a range of services and resources.  Each HRC conducts assessments using a standardized tool that prioritizes individuals and families based on need. The people with the highest needs are matched to appropriate and available services and resources including housing navigation, emergency shelter, transitional housing, rapid rehousing and permanent supportive housing.

3. Identify the process for making sub-awards and describe how the ESG allocation available to private nonprofit organizations (including community and faith-based organizations) will be allocated.

The City of Berkeley was allocated in ESG funding. Funds will be used primarily for rapid re-housing and emergency shelter. The City of Berkeley will utilize the maximum amount possible for administration (Seven and a half percent of the grant) and allocate funds to support the countywide Homeless Management Information System.

ESG funds were allocated to the Bay Area Community Services through the FY25- 28 Community Agency Request for Proposals (RFP) allocation process.  Bay Area Community Services will continue to operate the Stair Navigation Shelter and will provide rapid rehousing resources to shelter participants using ESG funding.

4. If the jurisdiction is unable to meet the homeless participation requirement in 24 CFR 576.405(a), the jurisdiction must specify its plan for reaching out to and consulting with homeless or formerly homeless individuals in considering policies and funding decisions regarding facilities and services funded under ESG.

The policy-making entity for the City of Berkeley which makes decisions regarding the facilities, services, and other programs to receive funding under the Emergency Solutions Grant (ESG) is the Berkeley City Council. The Berkeley City Council is elected by the citizens of Berkeley. The City cannot mandate that a homeless or formerly homeless individual be on the City Council. Therefore, the City must develop and implement a plan to consult with homeless or formerly homeless individuals in making policies and decisions regarding programs that receiving funding under ESG.

City of Berkeley
Annual Action Plan – Pg 43
PY 2026

5. Describe performance standards for evaluating ESG.

The performance standards to be applied to ESG activities is attached as an image labeled Outcome Measures. Berkeley participated in the development and approval of the service performance goals and targets through EveryOne Home (the Continuum of Care) Committee membership. This matrix presents outcome standards for each type of program in the Continuum of Care. Most were established as a percentage of the average outcomes achieved by all County programs (for example, the average permanent housing placement rate of all emergency shelters) and will be adjusted over time to ensure continued improvement.

Outcomes Alameda County System-wide / Berkeley
Outcome Target
Average length of time from enrollment to
move in
60% within 2 months
% of participants gained or increased
income from start
50%
% of participants accessing mainstream
benefits
85%
% of participants enrolled in health
insurance
85%
% of participants successfully moving into
permanent
80%
% of people exiting to homeless
destinations?
<5%
Data entry within 3 days of enrollment 100%
% of adult participants with income
information recorded in HUD Element at
entry and annual/exit assessments
90%
Table 10 – Outcome Measures
Systemwide Performance Targets for Rapid Re-Housing Services Together Priority Home Partnership and the Housing Retention program make up the housing retention and rapid re-housing segment of the City’s continuum of services. The City will continue to work with EveryOne Home and community agencies to ensure that prevention and rapid re-housing funds are fully utilized and play an important role in ending homelessness in Berkeley.

City of Berkeley
Annual Action Plan – Pg 44
PY 2026
Attachments
Attachment 1:

Annual Action Plan for PY2026
City of Berkeley CDBG, ESG and HOME Projects for 07/01/2026 – 06/30/2027 (Estimated allocations)
Recommended Allocation for CDBG – Housing Projects
Project.
# Agency Project Name PY26 Allocation
1 Center for Independent Living Residential Access $211,600.00 2 HHCSD* Loan Services $70,848.28
3 HHCSD Senior and Disabled Rehab Program $389,126.97
4 HHCSD Rehab Loans $432,000.00
5 HHCSD Housing Development: M/F Rehab $494,201.00
**Subtotal Housing Projects $1,597,776.25
Recommended Allocation for CDBG – Public Services Projects Project.
# Agency Project Name PY26 Allocation
6 Bay Area Community Services Coordinated Entry System $418,921.00 7 Eden Housing for Hope and
Oppor. Fair Housing $35,000.00
Subtotal Public Services Projects $453,921.00
Recommended Allocation for CDBG – Public Facilities Projects Project.
# Agency Project Name PY26 Allocation
8 Rebuilding Together East Bay
North Community Facilities $93,780.00
9 HHCSD Community Facility Improvements $181,525.10
10 HHCSD PY25 (FY26) Community Facility
Improvement NOFA $1,053,918.45
**Subtotal Public Facilities
Projects $1,329,223.55
Recommended Allocation for CDBG – Planning & Admin. Projects Project.
# Agency Project Name PY26 Allocation
11 HHCSD CDBG Planning and Administration $521,624.20
Subtotal Planning & Admin Projects $521,624.20
The grand total for recommended allocations for all CDBG Projects is $3,902,545.00.

Attachment 1
City of Berkeley – CDBG, ESG and HOME Projects

City of Berkeley
Annual Action Plan – Pg 45
PY 2026
Recommended Allocation for ESG Projects
Project.
# Agency Project Name PY26 Allocation
12 Berkeley CES Provider - BACS Rapid Re-Housing Project $67,391.50 13 Berkeley CES Provider - BACS Emergency Shelter/Street Outreach $136,740.00 14 HHCSD Homeless Management Information
System $6,676.00
15 HHCSD Program Planning and Administration $17,092.50

GRAND TOTAL ALL ESG
PROJECTS $227,900.00
Recommended Allocation for HOME Projects
Project.
# Agency Project Name PY26 Allocation
16 HHCSD HOME Administration $57,156.63
17 CHDO Operating Funds CHDO Operating Funds $28,578.32 18 HHCSD Housing Trust Fund $485,831.36
19 HHCSD Project Delivery $115,000.00
***GRAND TOTAL ALL HOME
PROJECTS $686,566.31
Notes:
*HHCSD = City of Berkeley Health, Housing & Community Services Department **Assumes estimated amounts for Program Income ($600,000) and $694,424 in prior year funds.

Estimated prior year funds applied to Rehab Loans ($332,000) and Community Facility NOFA ($362,424).
***Assumes estimated $115,000 in prior year funds.

City of Berkeley
Annual Action Plan – Pg 46
PY 2026

CITY OF BERKELEY

NOTICE OF PUBLIC HEARING
and

REQUEST FOR COMMENTS ON ITS
PROGRAM YEAR 2026 ANNUAL ACTION PLAN (JULY 1, 2026 - JUNE 30, 2027) The Health, Housing, and Community Services Department is requesting public comments on its Program Year (PY) 2026 Annual Action Plan.

Beginning March 27, 2026, the public is invited to review and comment on the City of Berkeley’s PY 2026 Annual Action Plan, which covers the period July 1, 2026, through June 30, 2027.

The City of Berkeley, and all jurisdictions receiving certain types of federal funds, are required to submit an Annual Action Plan to the U.S. Department of Housing and Urban Development (HUD). The City of Berkeley’s Annual Action Plan is based on the needs and goals contained in the City’s five-year Consolidated Plan and presents the City’s plan for funding housing and community services. In PY 2026, the Annual Action Plan contemplates funding entitlements of approximately $2,541,165 in Community Development Block Grant (CDBG) funds, approximately $227,452 in Emergency Solutions Grant (ESG) funds; and approximately $566,445.30 in HOME Investment Partnerships Program (HOME) funds. The period for public comment on this plan closes May 1, 2026, at 5:00 p.m. The City must complete the plan and submit it to HUD, including City responses to all written public comments, by mid-May.

A public hearing will be held on the PY 2026 Annual Action Plan with the proposed CDBG, ESG, and HOME allocations for funding, on April 28, 2026, 6 p.m. in the School District Board Room, 1231 Addison Street, Berkeley, CA 94702. The public may participate in this hearing virtually or in-person. Starting April 16, 2026, a copy of the agenda material for this public hearing will be posted on the City’s Council Agendas1 web page.

The draft PY 2026 Annual Action Plan will be available for public review and written comment at the Health, Housing, and Community Services Department on the second floor at 2180 Milvia Street and at the Berkeley Public Library Reference Desk at 2090 Kittredge Street, 2nd floor, during normal business hours, and on the City’s HUD Planning and Performance Reports2 web page beginning March 27, 2026.

For more information or to submit written comments, contact Jiro Arase (email:
[email protected]) at the Health, Housing and Community Services Department 2180 Milvia Street, 2nd Floor, Berkeley, 94704. Written comments must be received by no later than May 1, 2026, at 5:00pm.

Accommodations Provided Upon Request. To request a disability-related accommodation(s) to participate in the meeting, including auxiliary aids or services, 1 https://berkeleyca.gov/your-government/city-council/city-council-agendas 2 https://berkeleyca.gov/community-recreation/community-services/hud-planning-performance-reports

Attachment 2

City of Berkeley
Annual Action Plan – Pg 47
PY 2026
please contact the Disability Services specialist at (510) 981-6418 (V) or (510) 981- 6347 (TDD) at least three business days before the meeting date.

Published: March 27, 2026
Public noticing requirements set by the Citizen Participation Plan3 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ I hereby certify that the Notice for this Public Hearing of the Berkeley City Council was posted at the display case located near the walkway in front of the Maudelle Shirek Building, 2134 Martin Luther King Jr. Way, as well as on the City’s website, on [Enter Date].
__________________________________
Mark Numainville, City Clerk
3 https://berkeleyca.gov/sites/default/files/documents/FINAL_CitizenParticipationPlan_2020.pdf

City of Berkeley
Annual Action Plan – Pg 48
PY 2026
PY26 City of Berkeley Annual Action Plan
Summary of Citizen Participation Outreach & Comments
Including the April 28, 2026, Hybrid Public Hearing
Meeting Type Mode of
Outreach
Target of
Outreach
Summary of
Response/
Attendance
Summary of
Comments Received
Summary of
Comments
Not Accepted
and Reasons
September 4,
2025
Public
Hearing
Commission
Members
City of Berkeley
Community
Calendar
Housing
Advisory
Commission
webpage
Community
Members
7 members of the
public attended
the public hearing,
including
commissioners.

There were no comments from
community members. A
commissioner commented that
the streamlining in SDRLP
seems to be working based on
PY24 CAPER.

All comments
were accepted.

March 5, 2026
Public
Meeting
Housing
Advisory
Commission
Commission
Members
City of Berkeley
Community
Calendar
Housing
Advisory
Commission
webpage
Housing
Advisory
Commission
(HAC)
representatives
Seven members of
the HAC
discussed the
Draft Annual
Action Plan, and
one member of the
public made public
comment. Over 11
people, including
commissioners,
were present.

The members of
HAC voted to
approve the Draft
AAP for Council
consideration.

HAC members reviewed and
discussed the Draft of the AAP
at its March 5, 2026 meeting.

Comments and questions
pertaining to the AAP focused
on the planned projects and
coordination with the Berkeley
Housing Authority.

All comments
were accepted.

Attachment 3
City of Berkeley
Annual Action Plan – Pg 49
PY 2026
Meeting Type Mode of
Outreach
Target of
Outreach
Summary of
Response/
Attendance
Summary of
Comments Received
Summary of
Comments
Not Accepted
and Reasons
April 28, 2026
Hybrid Public
Hearing
&
Public Noticing
Newspaper
posting in
Berkeley Voice
on March 27,
2026.

City of Berkeley
Community
Calendar.

Electronic flyer
email
distribution on
April XX, 2026.

Electronic flyer
email
distribution on
April XX, 2026
Electronic flyer
email
distribution on
April XX, 2026
Electronic flyer
email
distribution on
April XX, 2026
Electronic flyer
email
distribution on
April XX, 2026
Electronic flyer
email
distribution on
April XX,2026
General Public
General Public
City of Berkeley
Libraries
City of Berkeley
Commissions
EveryOne Home
– Alameda
County
Homeless
Continuum of
Care
Local
Businesses
Local Affordable
Housing
Developers
Faith-based
Organizations
XX comments
received via email.

Over XX members
of the public
attended the
public hearing,
and XX of them
spoke on a variety
of topic areas
related to the Draft
AAP.

Emailed comments included:
[add summary].

XX members of the public
spoke at the April 28, 2026,
public hearing on the PY26
Annual Action Plan in front of
the City Council. Comments
from the public and Council
discussion included:
[add summary]
All comments
were accepted.

Attachment 3
City of Berkeley
Annual Action Plan – Pg 50
PY 2026
Meeting Type Mode of
Outreach
Target of
Outreach
Summary of
Response/
Attendance
Summary of
Comments Received
Summary of
Comments
Not Accepted
and Reasons
April 28, 2026
Hybrid Public
Hearing
&
Public Noticing
Electronic flyers
distributed to
Recreation
Centers on
April XX, 2026
Electronic flyers
distributed to
Affordable
Housing
Development on
April XX, 2026
Electronic flyers
distributed to
over 50 non-
profit agencies
serving low-
income people
on April XX,
2026
Electronic flyers
distributed to two
Berkeley Senior
Centers on April
XX, 2026
South & West
Berkeley
Residents of
Affordable
Housing
Low-income
Population,
including seniors
and persons
with disabilities
Seniors

CITY OF BERKELEY

NOTICE OF PUBLIC HEARING
and

REQUEST FOR COMMENTS ON ITS
PROGRAM YEAR 2026 ANNUAL ACTION PLAN (JULY 1, 2026 - JUNE 30, 2027) The Health, Housing, and Community Services Department is requesting public comments on its Program Year (PY) 2026 Annual Action Plan.

Beginning March 27, 2026, the public is invited to review and comment on the City of Berkeley’s PY 2026 Annual Action Plan, which covers the period July 1, 2026, through June 30, 2027.

The City of Berkeley, and all jurisdictions receiving certain types of federal funds, are required to submit an Annual Action Plan to the U.S. Department of Housing and Urban Development (HUD). The City of Berkeley’s Annual Action Plan is based on the needs and goals contained in the City’s five-year Consolidated Plan and presents the City’s plan for funding housing and community services. In PY 2026, the Annual Action Plan contemplates funding entitlements of approximately $2,541,165 in Community Development Block Grant (CDBG) funds, approximately $227,452 in Emergency Solutions Grant (ESG) funds; and approximately $566,445.30 in HOME Investment Partnerships Program (HOME) funds. The period for public comment on this plan closes May 1, 2026, at 5:00 p.m. The City must complete the plan and submit it to HUD, including City responses to all written public comments, by mid-May.

A public hearing will be held on the PY 2026 Annual Action Plan with the proposed CDBG, ESG, and HOME allocations for funding, on April 28, 2026, 6 p.m. in the School District Board Room, 1231 Addison Street, Berkeley, CA 94702. The public may participate in this hearing virtually or in-person. Starting April 16, 2026, a copy of the agenda material for this public hearing will be posted on the City’s Council Agendas1 web page.

The draft PY 2026 Annual Action Plan will be available for public review and written comment at the Health, Housing, and Community Services Department on the second floor at 2180 Milvia Street and at the Berkeley Public Library Reference Desk at 2090 Kittredge Street, 2nd floor, during normal business hours, and on the City’s HUD Planning and Performance Reports2 web page beginning March 27, 2026.

For more information or to submit written comments, contact Jiro Arase (email:
[email protected]) at the Health, Housing and Community Services Department 2180 Milvia Street, 2nd Floor, Berkeley, 94704. Written comments must be received by no later than May 1, 2026, at 5:00pm.

Accommodations Provided Upon Request. To request a disability-related accommodation(s) to participate in the meeting, including auxiliary aids or services, 1 https://berkeleyca.gov/your-government/city-council/city-council-agendas 2 https://berkeleyca.gov/community-recreation/community-services/hud-planning-performance-reports

please contact the Disability Services specialist at (510) 981-6418 (V) or (510) 981- 6347 (TDD) at least three business days before the meeting date.

Published: March 27, 2026
Public noticing requirements set by the Citizen Participation Plan3 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ I hereby certify that the Notice for this Public Hearing of the Berkeley City Council was posted at the display case located near the walkway in front of the Maudelle Shirek Building, 2134 Martin Luther King Jr. Way, as well as on the City’s website, on [Enter Date].
__________________________________
Mark Numainville, City Clerk3 https://berkeleyca.gov/sites/default/files/documents/FINAL_CitizenParticipationPlan_2020.pdf

Office of the City Manager
2180 Milvia Street, Berkeley, CA 94704 ● Tel: (510) 981-7000 ● Fax: (510) 981-7099 E-Mail: [email protected] Website: https://berkeleyca.gov/

PUBLIC HEARING
April 28, 2026
To: Honorable Mayor and Members of the City Council
From: Paul Buddenhagen, City Manager
Submitted by: Scott Gilman, Director, Health, Housing, and Community Services Subject: California Municipal Finance Authority Bond Financing for Ephesian Legacy Court Apartments Project

RECOMMENDATION
Conduct the public hearing on April 28, 2026, under the requirements of Tax and Equity Fiscal Responsibility Act (“TEFRA”) and the Internal Revenue Code of 1986, as amended (the “Code”), and upon conclusion:

Adopt a Resolution approving the issuance of the Bonds by the California Municipal Finance Authority (“CMFA”) for the benefit of Ephesian Legacy Court Limited Partnership, a California limited partnership (the “Borrower”), to provide for the financing of Ephesian Legacy Court (the “Project”). The adoption is intended to solely satisfy the requirements of TEFRA, the Code and the California Government Code Section 6500 (and following).

FISCAL IMPACTS OF RECOMMENDATION
The Bonds to be issued by the CMFA for the Project will be the sole responsibility of the Borrower, and the City will have no financial, legal, moral obligation, liability or responsibility for the Project or the repayment of the Bonds for the financing of the Project. All financing documents with respect to the issuance of the Bonds will contain clear disclaimers that the Bonds are not obligations of the City or the State of California but are to be paid for solely from funds provided by the Borrower.

The Board of Directors of the California Foundation for Stronger Communities, a California non-profit public benefit corporation (the “Foundation”), acts as the Board of Directors for the CMFA. Through its conduit issuance activities, the CMFA shares a portion of the issuance fees it receives with its member communities and donates a portion of these issuance fees to the Foundation for the support of local charities. With respect to the City of Berkeley, it is expected that a portion of the issuance fee attributable to the City will be granted by the CMFA and while such grant may be used for any lawful purpose of the City, Staff recommend this funding be applied to the HTF program.

California Municipal Finance Authority Bond Financing for Ephesian Legacy Court PUBLIC HEARING April 28, 2026

CURRENT SITUATION AND ITS EFFECTS
Community Housing Development Corporation of North Richmond (CHDC) is the sponsor of an 80-unit rental housing project for low-income and very low-income senior tenants, to be located at 1708 Harmon St. This project received a $3,556,400 Housing Trust Fund (HTF) predevelopment loan from the City, which was authorized on April 20, 2021, in resolution 69,795-N.S., and on December 14, 2021, in resolution 70,135-N.S.

Additionally, on February 10th, 2026, with resolution 72,124-N.S., the City Council extended the approval of a $14,531,301 HTF loan to support the development financing of this project. The Borrower requested that the CMFA serve as the municipal issuer of tax-exempt revenue bonds in an aggregate principal amount not to exceed $30,000,000 (the “Bonds”). The proceeds of the Bonds will be used to finance and refinance the acquisition, construction, development and equipping of the Project, to be owned and operated by the Borrower.

For the bonds to qualify as tax-exempt bonds, the City must conduct a public hearing (the “TEFRA Hearing”) to provide members of the community an opportunity to speak in favor of or against the use of tax-exempt bonds for the Project’s financing. Prior to the TEFRA Hearing, reasonable notice must be provided to the members of the community.

Following the close of the TEFRA hearing, an “applicable elected representative” of the government hosting the Project must provide its approval of the issuance of bonds for its financing. This adoption is intended to solely satisfy the requirements of TEFRA, the Internal Revenue Code, and the California Government Code Section 6500.

BACKGROUND
The CMFA was created on January 1, 2004, pursuant to a joint exercise of powers agreement to promote economic, cultural, and community development through the financing of economic development and charitable activities throughout California. To date, over 330 municipalities, including the City of Berkeley, have become members of CMFA.

The CMFA was formed to assist local governments, non-profit organizations and businesses with the issuance of taxable and tax-exempt financing aimed at improving the standard of living in California. The CMFA’s representatives and its Board of Directors have considerable experience in bond financings.

ENVIRONMENTAL SUSTAINABILITY AND CLIMATE IMPACTS
Developing infill, affordable housing is widely accepted as a best practice for reducing greenhouse gas emissions associated with vehicle miles traveled.

RATIONALE FOR RECOMMENDATION
The proposed project is eligible for tax-exempt bonds. The Council’s approval of the CMFA’s issuance will help the Project access tax-exempt financing to support the City’s supply of low- and very-low income units in accordance with the City’s Regional Housing Needs Allocation and Strategic Plan goals. The City has previously invested

California Municipal Finance Authority Bond Financing for Ephesian Legacy Court PUBLIC HEARING April 28, 2026

HTF funds to support this project’s financing, which will be leveraged in conjunction with these tax-exempt bonds to support the Project’s completion.

ALTERNATIVE ACTIONS CONSIDERED
The City may decline to hold a TEFRA hearing at all, or to hold the hearing but not approve the bonds. While it is preferable for the City to hold the TEFRA hearing and approve the use of bonds, CMFA could approach Alameda County to fill this role if the City declined. Alternatively, the project would need to identify a new funding plan that does not include bond funds if the City Council does not approve the issuance. The resulting delays and/or additional expenses would negatively impact the Project’s feasibility.

CONTACT PERSON
Kelly deWolfe, Community Development Project Coordinator, HHCS, (510) 981-5424 Attachments:
1: Resolution
2: Public Hearing Notice

RESOLUTION NO. ##,###-N.S.

APPROVING A PLAN OF FINANCE OF THE CALIFORNIA MUNICIPAL FINANCE

AUTHORITY TO ISSUE AND REISSUE REVENUE BONDS FOR A QUALIFIED

RESIDENTIAL RENTAL PROJECT FOR THE BENEFIT OF EPHESIAN LEGACY

COURT LIMITED PARTNERSHIP
WHEREAS, Community Housing Development Corporation of North Richmond, a California nonprofit public benefit corporation (the “Developer”), on behalf of Ephesian Legacy Court Limited Partnership, a California limited partnership, or another ownership entity created by its general partners CHDC Ephesian Legacy Court Berkeley LLC, a California limited liability company, and Ephesian Legacy Court Berkeley LLC, a California limited liability company (the “General Partners”), or by another affiliate of the Developer (such limited partnership or other ownership entity, the “Borrower”), has requested that the California Municipal Finance Authority (the “Authority”) undertake a proposed plan of finance to issue and reissue from time to time one or more series of revenue bonds in an outstanding principal amount not to exceed $30,000,000 (the “Bonds”) to finance and refinance the acquisition, construction, development and equipping of an 80-unit qualified residential rental project (the “Project”) to be owned and operated by the Borrower and located at 1708 Harmon Street within the City of Berkeley, California (the “City”); and
WHEREAS, an “applicable elected representative” of the jurisdiction in which the Project is to be located is required to approve the proposed plan of finance for the Project under Section 147(f) of the Internal Revenue Code of 1986, as amended (the “Code”); and WHEREAS, the City Council of Berkeley (the “City Council”) is the elected legislative body of the City and is an “applicable elected representative” for purposes of Section 147(f) of the Code; and
WHEREAS, the Authority has advised that the Bonds may be issued pursuant to a “plan of finance” to issue an original issue of Bonds and to issue or reissue one or more additional series of Bonds from time to time after the original issue of Bonds, if necessary or desirable to comply with applicable legal requirements, all in an aggregate principal amount not to exceed $30,000,000 to finance the Project, and all within the three-year period commencing on the date of the issuance of the first series of Bonds pursuant to this resolution; and
WHEREAS, the Authority has requested that the City Council approve the proposed plan of finance in order to satisfy the public approval requirement of Section 147(f) of the Code and the requirements of Section 4 of the Joint Exercise of Powers Agreement Relating to the California Municipal Finance Authority, dated as of January 1, 2004 (the “Agreement”), among certain local agencies, including the City; and WHEREAS, pursuant to Section 147(f) of the Code, the City Council has, following notice duly given, held a public hearing regarding the issuance of the Bonds, and now desires to approve the proposed plan of finance for the Project.

NOW THEREFORE, BE IT RESOLVED by the Council of the City of Berkeley as follows:

Section 1. The foregoing recitals are true and correct.

Section 2. The City Council hereby approves the proposed plan of finance of the Authority to issue and reissue from time to time of one or more series of revenue bonds in an outstanding principal amount not to exceed $30,000,000. It is the purpose and intent of the City Council that this resolution constitute approval of the proposed plan of finance for the Project for the purposes of (a) Section 147(f) of the Code by the applicable elected representative of a governmental unit having jurisdiction over the area in which the Project is to be located, in accordance with said Section 147(f) and (b) Section 4 of the Agreement.

Section 3. The officers of the City are hereby authorized and directed, jointly and severally, to do any and all things and to execute and deliver any and all documents which they deem necessary or advisable in order to carry out, give effect to and comply with the terms and intent of this resolution and the financing transaction approved hereby.

Section 4. The City Clerk shall forward a certified copy of this Resolution to the Authority in care of its counsel:

Ronald E. Lee, Esq.

Jones Hall LLP
4 West 4th Avenue, Suite 406
San Mateo, CA 94402
Section 5. This resolution shall take effect immediately upon its adoption.

NOTICE OF PUBLIC HEARING

BERKELEY CITY COUNCIL

CALIFORNIA MUNICIPAL FINANCE AUTHORITY MULTIFAMILY
HOUSING REVENUE BONDS FOR 1708 HARMON STREET
The public may participate in this hearing by remote video or in-person.

The Department of Health, Housing, and Community Services is proposing a public hearing as required by Section 147(f) of the Internal Revenue Code of 1986, which will be held with respect to a proposed plan of finance of the California Municipal Finance Authority (the “Authority”) to issue and reissue from time to time, one or more series of revenue bonds in an outstanding principal amount not to exceed $30,000,000 (the “Bonds”), to finance and refinance the acquisition, construction, development and equipping of an 80-unit qualified low-income residential rental project located at 1708 Harmon Street (the “Project”) in the City of Berkeley, California (the “City”). The Project is to be owned and operated by Ephesian Legacy Court Limited Partnership, a California limited partnership, or by another ownership entity to be created by its general partners, CHDC Ephesian Legacy Court Berkeley LLC, a California limited liability company, and Ephesian Legacy Court Berkeley LLC, or by another affiliate of Community Housing Development Corporation of North Richmond, a California nonprofit public benefit corporation (such limited partnership or other ownership entity, the “Borrower”).

The Bonds and the obligation to pay principal thereof and interest thereon and any redemption premium with respect thereto do not constitute indebtedness or an obligation of the City, the Authority, the State of California or any political subdivision thereof, within the meaning of any constitutional or statutory debt limitation, or a charge against the general credit or taxing powers of any of them. The Bonds shall be limited obligations of the Authority, payable solely from certain revenues duly pledged therefore and generally representing amounts paid by the Borrower.

The hearing will be held on APRIL 28, 2026, at 6:00 pm or as soon thereafter as the matter can be heard in the School District Board Room, located at 1231 Addison Street, Berkeley CA 94702.

A copy of the agenda material for this hearing will be available on the City’s website at https://berkeleyca.gov/ as of April 16, 2026. Once posted, the agenda for this meeting will include a link for public participation using Zoom video technology, as well as any health and safety requirements for in-person attendance.

For further information, please contact Kelly deWolfe, Community Development Project Coordinator at (510) 981-5424.

Written comments should be mailed or delivered directly to the City Clerk, 2180 Milvia Street, Berkeley, CA 94704, or e-mailed to
[email protected] in order to ensure
delivery to all Councilmembers and inclusion in the agenda packet.

Communications to the Berkeley City Council are public record and will become part of the City’s electronic records, which are accessible through the City’s website. Please note: e-mail addresses, names, addresses, and other contact information are not required, but if included in any communication to the City Council, will become part of the public record. If you do not want your e-mail address or any other contact information to be made public, you may deliver communications via U.S. Postal Service or in person to the City Clerk. If you do not want your contact information included in the public record, please do not include that information in your communication. Please contact the City Clerk at (510) 981-6900 or [email protected] for further information.

Published: April 17, 2026 - The Berkeley Voice
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ I hereby certify that the Notice for this Public Hearing of the Berkeley City Council was posted at the display case located near the walkway in front of the Maudelle Shirek Building, 2134 Martin Luther King Jr. Way, as well as on the City’s website, on April 16, 2026.
__________________________________
Mark Numainville, City Clerk