Hercules City Council
January 25, 2022

Accounting estimates are an integral part of the financ ial statements prepared by management and are based on management’s knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimate(s) affecting the City’s financial statements were:

 Management’s estimate of the depreciation on capital assets is based on the industry standard and past experience on actual useful life of the asset groups. We evaluated the key factors and assumptions used to develop the depreciation on capital assets in determining that it is reasonable in relation to the financial statements taken as a whole.

 Management’s estimate of the net pension liability is based on the actuarial valuation on total pension liability and based on financial statements on fiduciary net position for CalPERS plans. We evaluated the key factors and assumptions used to develop the net pension liability in determining that it is reasonable in relation to the financial statements taken as a whole.

 Management’s estimate of the net other postempl oyment benefits (“OPEB”) liability is based on the actuarial valuation on total OPEB liability an d financial statements on fiduciary net position.

We evaluated the key factors and assumptions used to develop the OPEB liability in determining that it is reasonable in relation to the financial statements taken as a whole.

Certain financial statement disclosures are particularly sen sitive because of their signifi cance to financial statement users. The most sensitive disclosure(s) affecting the financial statements was were:

 Note 1 – Summary of Significant Accounting Policies
 Note 8 – Retirement Plans
 Note 10 – Other Postemployment Benefits
 Note 12 – Commitments and Contingencies
 Note 14 – Stewardship, Compliance, and Accountability  Note 16 – Special Items – Settlement Payable to Department of Finance  Note 17 – Prior Period Adjustments

The financial statement disclosures are neutral, consistent, and clear.

Difficulties Encountered in Performing the Audit

We encountered no significant difficulties in dealing with management in performing and completing our audit.

Corrected and Uncorrected Misstatements

Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are clearly trivial, and communicate them to the appropriate level of management. Management has corrected all such misstatements. In ad dition, none of the misstatements det ected as a result of audit procedures and corrected by management were material, either individually or in the aggregate, to each opinion unit’s financial statements taken as a whole.

143
To the Honorable Mayor and the Members of the City Council of the City of Hercules
Hercules, California

Disagreements with Management

For purposes of this letter, a disagreement with management is a financial accounting, repor ting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor’s report.

We are pleased to report that no such disagreements arose during the course of our audit.

Management Representations

We have requested certain representations from management that are included in the management representation letter dated January 19, 2022.

Management Consultations with Other Independent Accountants

In some cases, management may decide to consult with other account ants about auditing and accounting matters, similar to obtaining a “second opinion” on certain situations. If a consultation involves application of an accounting principle to the City’s financial statements or a determina tion of the type of auditor’s opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants.

Other Audit Findings or Issues

We generally discuss a variety of matters, including the a pplication of accounting principles and auditing standards, with management each year prior to retention as the City’s auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention.

Other Matters

We applied certain limited procedures to Management’s Discussions and Analysis (“MD&A”), Budgetary Comparison Schedule, the Schedules of Changes in Net Pension Liability and Related Ratios, the Schedules of Contributions – Pensions, the Schedules of Changes in Net Other Postemployment Benefits Liability a nd Related Ratios, and the Schedule of Contributions – Other Post employment Benefits, which are required supplementary information (“RSI”) that supplements the basic financial statements. Our pro cedures consisted of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We did not audit the RSI and do not express an opinion or provide any assurance on the RSI.

We were engaged to report on the Combining and Individual Nonmajor Fund Financial Statements which accompany the financial statements but are not RSI. With respect to this supplementary information, we made certain inquiries of management and evaluated the form, c ontent, and methods of preparing the information to determine that the information complies with accounting principles generally accep ted in the United States of America, the method of preparing it has not changed from the prior period, and the in formation is appropriate and complete in relation to our audit of the financial statements. We compared and r econciled the supplementary information to the underlying accounting records used to prepare the financial statements or to the financial statements themselves.

We were not engaged to report on the Introductory and Statistical Sections, which accompany the financial statements but are not RSI. Such information has not been subjected to the auditing proced ures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on it.

144
To the Honorable Mayor and the Members of the City Council of the City of Hercules
Hercules, California

Restriction on Use

This information is intended solely for the information and use of the City Council and management of the City and is not intended to be, and should not be, used by anyone other than these specified parties.

Very truly yours,

Santa Ana, California

145


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FISCAL YEAR

CITY OF HERCULES, CALIFORNIA
146
147

CITY OF HERCULES, CALIFORNIA

ANNUAL COMPREHENSIVE

FINANCIAL REPORT

WITH REPORTS ON AUDIT

BY INDEPENDENT

CERTIFIED PUBLIC ACCOUNTANTS

FOR THE YEAR ENDED
JUNE 30, 2021

148

149
City of Hercules
Annual Comprehensive Financial Report
For the Year Ended June 30, 2021

Table of Contents

Page

INTRODUCTORY SECTION

Letter of Transmittal ....................................................................................................................................................... i Public Officials of the City of Hercules ........................................................................................................................ vi Organization Chart ...................................................................................................................................................... vii GFOA Certificate of Achievement for Excellence in Financial Reporting ............................................................... viii

FINANCIAL SECTION

Independent Auditors’ Report on the Financial Statements ................................................................................... 1

Management’s Discussion and Analysis
(Required Supplementary Information) (Unaudited) .............................................................................................. 7

Basic Financial Statements:

Government-Wide Financial Statements:

Statement of Net Position ............................................................................................................................... 23 Statement of Activities ....................................................................................................... ............................ 24

Fund Financial Statements:

Governmental Fund Financial Statements:

Balance Sheet ........................................................................................................................................... 30 Reconciliation of the Governmental Funds Balance Sheet
to the Government-Wide Statement of Net Position ......................................................................... 31 Statement of Revenues, Expenditures, and
Changes in Fund Balances ................................................................................................................. 32 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Government-Wide Statement of Activities ...................................................................................................................... 33

Proprietary Fund Financial Statements:

Statement of Net Position ......................................................................................................................... 36 Statement of Revenues, Expenses, and Changes in Net Position ............................................................ 37 Statement of Cash Flows .......................................................................................................................... 38

Fiduciary Fund Financial Statements:

Statement of Fiduciary Net Position ........................................................................................................ 42 Statement of Changes in Fiduciary Net Position ................................................................................ ..... 43

Notes to the Basic Financial Statements ............................................................................................................ 49

Required Supplementary Information (Unaudited)

Budgetary Principles .......................................................................................................................................... 103

Budgetary Comparison Schedule:

General Fund .................................................................................................................. .............................. 105 150
City of Hercules
Annual Comprehensive Financial Report
For the Year Ended June 30, 2021

Table of Contents (Continued)

Page
FINANCIAL SECTION (Continued)

Required Supplementary Information (Unaudited) (Continued)

Schedule of the City's Proportionate Share of the Plan's Net Pension Liability:

CalPERS Miscellaneous Plans .................................................................................................................... 106 CalPERS Safety Plans .................................................................................................................................. 106

Schedule of the City's Contributions to the Pension Plan:

CalPERS Miscellaneous Plans .................................................................................................................... 107 CalPERS Safety Plans .................................................................................................................................. 107

Schedule of Changes in Net OPEB Liability and Related Ratios:

PEHMCA Plan .................................................................................................................. .......................... 108

Schedule of Changes in Net OPEB Liability and Related Ratios:

SOMAR Plan ................................................................................................................................................ 109

Schedule of the City’s Contributions to the OPEB Plan:

PEHMCA Plan .................................................................................................................. .......................... 110

Schedule of the City’s Contributions to the OPEB Plan:

SOMAR Plan ............................................................................................................................................... 111

Supplementary Information:

Nonmajor Governmental Funds:

Combining Balance Sheet ....................................................................................................... ..................... 118 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances .................................... 123 Schedules of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual:

State Gas Tax Special Revenue Fund .................................................................................................... 128 Measure C Special Revenue Fund ......................................................................................................... 129 C.O.P.S. Program (AB 3299) Special Revenue Fund ............................................................................ 130 Landscape and Lighting Assessment District (LLAD) No. 83-2 Special Revenue Fund ...................... 131 Victoria By the Bay LLAD No. 2002-1 Special Revenue Fund ............................................................ 132 Hercules Village LLAD No. 2002-2 Special Revenue Fund ................................................................. 133 Baywood LLAD No. 2004-1 Special Revenue Fund ............................................................................. 134 Bayside LLAD No. 2005-1 Special Revenue Fund ............................................................................... 135 Arterial Roadways Special Revenue Fund ............................................................................................. 136 Stormwater Special Revenue Fund ........................................................................................................ 137 Development Services Special Revenue Fund ....................................................................................... 138 STMP Traffic Impact Fees Special Revenue Fund ................................................................................ 139 AB939 JPA Special Revenue Fund........................................................................................................ 140 Regional Water Quality Special Revenue Fund ..................................................................................... 141 Asset Forfeiture Special Revenue Fund ................................................................................................. 142 Bart Park and Ride Special Revenue Fund ............................................................................................ 143 City Capital Projects Fund ..................................................................................................................... 144 Development Impact Fees Capital Projects Fund .................................................................................. 145

151
City of Hercules
Annual Comprehensive Financial Report
For the Year Ended June 30, 2021

Table of Contents (Continued)

Page
FINANCIAL SECTION (Continued)

Supplementary Information (Continued)

Internal Service Funds:

Combining Statement of Net Position .......................................................................................................... 149 Combining Statement of Revenue, Expenses, and Changes in Net Position ............................................... 150 Combining Statement of Cash Flows ........................................................................................................... 151

Fiduciary Funds - Custodial Funds:

Combining Statement of Fiduciary Net Position .......................................................................................... 155 Combining Statement of Changes in Fiduciary Net Position ....................................................................... 156

STATISTICAL SECTION (Unaudited)

Description of Statistical Section Contents ...............................................................................................................159

Financial Trends:

Net Position by Component – Last Ten Fiscal Years ......................................................................................... 160 Changes in Net Position – Expenses and Program Revenues – Last Ten Fiscal Years ...................................... 162 Fund Balances of Governmental Funds – Last Ten Fiscal Years ....................................................................... 166 Changes in Fund Balances of Governmental Funds – Last Ten Fiscal Years .................................................... 168

Revenue Capacity:

Assessed and Estimated Actual Value of Taxable Property – Last Ten Fiscal Years ........................................ 170 Assessed Value of Property by Use Code - Last Ten Fiscal Years ..................................................................... 172 Direct and Overlapping Property Tax Rates – Last Two Fiscal Years ............................................................... 174 Principal Property Taxpayers – Last Fiscal Year and Nine Fiscal Years Ago .................................................... 175 Property Tax Levies and Collections - Last Ten Fiscal Years ............................................................................ 176 Principal Sales Tax Producers – Last Ten Fiscal Years ...................................................................................... 177

Debt Capacity:

Ratio of Outstanding Debt by Type – Last Ten Fiscal Years ............................................................................. 178 Computation of Direct and Overlapping Debt .................................................................................................... 181 Legal Debt Margin Information- Last Ten Fiscal Years ..................................................................................... 182 Wastewater Fund Debt Coverage- Last Ten Fiscal Years .................................................................................. 184

Demographic and Economic Information:

Demographic and Economic Statistics ................................................................................................................ 185

Operating Information:

Principal Employers- Current Fiscal Year .......................................................................................................... 186 Full-Time Equivalent City Government Employees by Function – Last Ten Fiscal Years ................................ 187 Operating Indicators by Function/Program – Last Ten Fiscal Years .................................................................. 188 Capital Asset Statistics by Function/Program - Last Ten Fiscal Years ............................................................... 192

152

153
January 19, 2022

To the Honorable Mayor, Members of the City Council and Citizens of the City of Hercules, California:

It is our pleasure to present to you the Fiscal Year (FY) 20-21 Comprehensive Annual Financial Report (CAFR) for the City of Hercules, California. This CAFR has been prepared by the Finance Department in conformance with the principles and standards for financial reporting set forth by the Governmental Accounting Standards Board (GASB). The Finance Department has prepared this report to present the financial position of the City of Hercules at June 30, 2021, and the results of its operations and the cash flows of its proprietary fund types for the year ended in accordance with Generally Accepted Accounting Principles (GAAP).

Responsibility for both the accuracy of the data, and the completeness and fairness of the presentation, including all disclosures, rests with the City. To the best of our knowledge, we believe the data, as presented, is accurate in all material aspects and presented in a manner designed to fairly set forth the City’s financial position and changes in financial position, and that all disclosures necessary to enable the reader to gain an understanding of the City’s financial affairs have been included.

The City’s basic financial statements have been audited by The Pun Group, LLC, a public accounting firm licensed and fully qualified to perform audits of the State and local governments within the State of California. The goal of the independent audit was to provide reasonable assurance that the basic financial statements of the City for the fiscal year ended June 30, 2021, are free of material misstatement. The independent auditors’ report is presented as the first component of the financial section of this report.

Management’s Discussion and Analysis (MD&A) provides a narrative introduction, overview, and analysis to accompany the basic financial statements. This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The MD&A can be found immediately following the report of the independent auditors.

CITY OF HERCULES
111 CIVIC DRIVE, HERCULES CA 94547
PHONE: (510) 799-8200
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CITY PROFILE
The City Hercules has a unique history which has transformed the City from a small company town to a bustling and thriving community. In the late 1800s the Industrial Revolution changed the face of business throughout the country. The California Powder Works company was a part of this revolution and played a key role in the formation of the City now known as Hercules.

The City was organized, formed, and incorporated under the laws of the State of California on December 15, 1900, and is located in western Contra Costa County. Situated on the northeastern shore of San Pablo Bay, Hercules is conveniently located along the I-80 corridor and within minutes of both San Francisco and Napa. The City residents represent a diverse mix of many ethnic groups and is primarily a suburban, family-oriented community, though with an emerging New-Urbanist transit-oriented node on the bayfront.

The City has a “Council -Manager” general law form of government where the City Manager is appointed by the City Council and is the Chief Executive Officer of the municipal corporation.

The Council acts as the board of directors of the municipal corporation and conducts its business in an open and transparent manner where citizens may participate in the governmental process.

The City Council consists of five members, elected at-large on a non-partisan basis, who serve staggered four-year terms. In December of each year, the City Council conducts a reorganization of the Council at which time the Mayor and Vice Mayor are selected for one-year terms.

The City has a permanent staff of 56 full-time employees and currently serves over 26,000 residents with a land area of 19.99 square miles. The City provides a wide range of municipal services, including public safety (police), street maintenance and other public works infrastructure functions, planning, building inspection, parks and recreation, and general administration.

This report includes all organizations and activities for which elected City officials exercise financial accountability. The notes to the financial
statements further discuss the City as a financial
reporting entity.















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ECONOMI

C CONDITION AND OUTLOOK
The City was on-track and expected to exceed budgeted revenues through the third quarter of the fiscal year. With the COVID-19 pandemic shutting down major portions of the national and local economy in mid-March, we did see impacts in the 4
th quarter of the fiscal year. For Hercules, that
mostly manifested itself in a reduction of Parks & Recreation program revenues as most programming was cancelled. Fortunately, the City’s sales tax base has proven to be more resilient than many other communities’ given its concentration in the business-to-business and home improvement categories. As the pandemic continues, we expect that there will be a slow resumption of Parks & Recreation programming until after January 2021. However, operating expenses have been reduced in these areas and at this time we appear to be able to meet the adopted budget. As other business activity resumes, we also expect an uptick in revenues to more normal levels. Other national concerns, including the outcome of the 2020 national election and a change in administration will likely have more influence on any impacts in Hercules than local considerations.

MAJOR INITIATIVES
x The City welcomed the opening of a new retail center including a Safeway grocery store, a 20- pump fuel center, Peet’s Coffee and Chase Bank in March 2021. This will add to the City’s retail tax base.
x The Willow Avenue Auto Service Center & Self Storage facility is nearing completion. The facility is anticipated to open in Q1 2022. Through a unique development agreement, the City will receive 10% of the gross revenue generated once the storage units reach 90% occupancy. x The first phase of the Bayfront project, the Exchange, was completed and opened in August of 2020. The second phase of the project opened in July 2021 and offers 232 apartments, ranging from studios to 2-bedrooms, including 15 units designated for households making 60% of area median income.
x Site preparation and utility relocation for the Sycamore Crossing mixed-use project, including retail, the City’s first hotel, and residential, is expected to commence in mid-2022. x In 2020, the Hilltown community with just under 600 residential units received its final entitlements and looks to start construction in 2022 as well. These projects will all further expand the City’s tax base.
x The Hercules Regional Intermodal Transportation Center received an additional $300K in Subregional Transportation Mitigation Program (STMP) funding from the West Contra Costa Transportation Advisory Committee to advance the Utility Relocation Phase of the project. Design work for this project is also underway using $1.2M in previously awarded grant funds.

x I
nfrastructure investment remained a key focus for the City in FY 20/21 including:
o Completion of Turquoise Way rehabilitation
o Near completion of a pedestrian safety project at Civic and Sycamore 














iii
156
o Design of a traffic calming project for Village Parkway o Design of a grant-funded pedestrian enhancements for Sycamore/Palm/Willow Avenues
o Installation of energy-efficient streetlights on metal poles, replacing failing hollow- core wood poles, in Landscape & Lighting Assessment Districts – Zones 6 (complete) and Zones 3 and 4 (in-progress).

BUDGETARY CONTROL
The City maintains budgetary controls through the City Council ’s adoption of an annual budget.

The objective of these budgetary controls is to ensure compliance with legal provisions embodied in the appropriated budget approved by the City Council. Annually, the departments work with the City Manager and Finance Department to submit an operating budget request. The City Manager and Finance Director review the department request for consideration and then make recommendations to the City Council regarding the budget.

Ultimate budgetary control resides at the fund level, however, the City has adopted a number of budgetary appropriation and transfer procedures to provide strong internal controls while encouraging improved accountability and administrative responsiveness. All budgetary transfers require Finance Director’s or designee’s review and approval. All transfers of appropriations affecting salaries and benefits require City Manager’s or designee’s review and approval.

Budgetary control is established at the following levels: a) General Fund – Department level; b) Other Funds – Fund level; and Capital Projects – at Project level with City Manager signature approval. The City Manager may authorize line item budget transfers within a General Fund department, or within a fund other than the General Fund, consistent with the budget resolution.

The City also uses encumbrance accounting as another technique for accomplishing budgetary control. An encumbrance is a commitment of a future expenditure earmarked for a particular purpose that reduces the amount of budgetary authority available for general spending. At the end of the fiscal year, encumbered appropriations, appropriations for uncompleted capital, Participatory Budgeting, and grant projects are carried forward and become part of the following year’s budget while appropriations that have not been encumbered lapse.

The City continues to meet its responsibility for sound financial management as demonstrated by the statements and schedules included in the financial section of this report.

INTERNAL CONTROL
The management of the City is responsible for establishing and maintaining internal controls designated to ensure that the assets of the City are protected from loss, theft or misuse, and that adequate accounting data is compiled to allow for the preparation of financial statements in conformity with GAAP. Internal controls are designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that: the cost of a control should not exceed the benefits likely to be derived; and the evaluation of costs and benefits requires estimates and judgments by management. All internal control evaluations occur within the stated framework. City management believes the City’s internal accounting controls adequately safeguard assets and provide reasonable assurance of proper recording of financial transactions.















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ACKNOWLEDGEMENTS

The preparation and publication of this Comprehensive Annual Financial Report was made possible by the outstanding efforts, dedication, and teamwork throughout the year of the entire Finance Department and with the cooperation and assistance of all City departments.

Specifically, we would like to express special thanks to our Finance staff Deysi Ortega, Senior Accountant; Jenny Le, Accounts Payable Technician; and, Kimberley Walker, former Payroll Technician; as they have worked closely with our auditors in finalizing this report. Additionally, we would like to acknowledge the City’s audit firm The Pun Group, LLC for the professional support and guidance they have given us. Finally, we would like to express our gratitude to the Honorable Mayor, and the members of the City Council for their vision and continued support in leading the City to economic viability and the pursuit of the of goal of attaining long-term fiscal stability.

Respectfully submitted,

Dante Hall Edwin Gato
City Manager Finance Director















v
158

DAN ROMERO
Council Member
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DION BAILEY
Vice Mayor

CHRIS KELLEY
Mayor

ALEXANDER

WALKER-GRIFFIN
Council Member

TIFFANY GRIMSLEY
Council Member
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159
Robert Reber
Community
Development
Director
*Staff – 2
Functions:
•L o n g R a n g e
Planning
• Short Range
Planning
• Planning
Counter
• Housing
Element
• General Plan
• Zoning
Ordinance
• CEQA Mgmt.
• Planning
Commission
• Permits
• Building
Inspection
• Plan Checking
• Code
Enforcement

ORGANIZATIONAL CHART
ORGANIZATION CHART SENIOR MANAGEMENT

CITIZENS OF HERCULES

HERCULES CITY COUNCIL

CITY ATTORNEY
Patrick Tang

INTERIM CITY MANAGER
Steve Falk

BOARDS, COMMISSIONS
& COMMITTEES
Lori Martin
Administrative
Services Director/
City Clerk
*Staff – 5
Functions:
• City Clerk
• Elections
• Agendas
• Council Mtgs.
• Cable/Web
Broadcasts
• Human
Resources
• Risk
management
• Records Admin.
• Contract Mgmt.
• Reception
• Meeting
Coordinate
• IT Services
• PIO
Edwin Gato
Finance Director
*Staff – 4
Functions:
• Accounts
Payable
• Accounts
Receivable
• Payroll
• Budget
• Audits
• Investment
Mgmt.
• Cash Mgmt.

Steve Falk
Interim City
Manager
*Staff –

2PT
Functions:
• Executive Mgmt.
• Real Estate
(Incl. RITC)
• Franchises
• RDA Successor
• Economic
Development
• Legislative
• Inter-
Governmental
Michael
Roberts
Public Works
Director
*Staff – 11
Functions:
• Engineering
• Streets
• Facility
Maintenance
• Solid Waste
• Wastewater
• Sewer
Maintenance
• Lighting/
Landscaping
• Clean Water
Program
Christopher
Roke
Parks & Rec.

Director
*Staff - 4
55 PT
Functions:
• CLS
Commission
• Facility Rentals
• Child Cares
• Sports
• Rec Classes
• Seniors
• Tiny Tots
• Camps
• Youth/Teen
• Swim Center
• Library
• Rec. Volunteers
William
Imboden
Police Chief
*Staff –
26 Sworn
2 Non-Sworn
1 PT
Functions:
• Patrol and
Special Enforce.
• School Safety
(SRO)
• Criminal/ Int.

Invest
• Records/ Evid
Mgmt.
• Police Reserve
• Explorer
Program
• City Volunteer
Coord.
• Emergency

OPS/SRT
• Crime
Prevention
• Allied agency
Liaison
• Council
Meetings
• Training /
certification
• Grants
• PD Finance
CITY

CLERK &

ADMINISTRATION

PARKS &

RECREATION
POLICE

DEPARTMENT
PUBLIC
WORKS,

ENGINEERING &

MAINTENANCE

OFFICE OF THE
CITY

MANAGER

FINANCE COMMUNITY

DEVELOPMENT
*includes department heads
vii
160
Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Hercules
California
For its Comprehensive Annual
Financial Report
For the Fiscal Year Ended
June 30, 2020
Executive Director/CEO
viii
161
ix

FINANCIAL SECTION
162

ix

163

INDEPENDENT AUDITORS’ REPORT

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

Report on the Financial Statements

We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of City of Hercules, California (the “City”) as of and for the year ended June 30, 2021, and the related notes to the basic financial statements , which collectively comprise the City’s basic financial statements as listed in the table of contents.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the prepara tion and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express opinions on these financial stat ements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of Am erica, and the standards applicable to financial audits contained in Government Auditing Standards , issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit ev idence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal contro l. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting polic ies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is su fficient and appropriate to provide a basis for our audit opinions.

Opinions

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City, as of June 30, 2021, and the respective changes in financial position, and, where applicable, cash flows thereof fo r the year then ended in accordance with accounting principles generally accepted in the United States of America.
200 E. Sandpointe Ave., Suite 600, Santa Ana, California 92707 Tel: 949-777-8800 • Fax: 949-777-8850
www.pungroup.cpa
3939352 Pun & McGeady_L_final.pdf 2 1/14/14 3:48 PM 164
To the Honorable Mayor and the Members of the City Council of the City of Hercules
Hercules, California

2 Emphasis of Matter

Implementation of GASB 84

As discussed in Note 1V to the basic financial statements, the City implemented Governmental Accounting Standards Board (“GASB”) Statement No. 84, Fiduciary Activities. The adoption of the standard r esulted in the custodial funds reporting beginning fiduciary net deficit in the amount of $476,962, and governmental activities and governmental funds reporting net position prior period adjustments of $22,903 and $476,962, respectively (Note 17). Our opinion is not modified with respect to this matter.

Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis, the Budgetary Comparison Schedule – General Fund, Budgetary Information, the Schedules of Changes in Net Pension Liability and Related Ratios, the Schedules of Contributions – Pensions, the Schedule of Changes in Net Other Postemployment Benefits Liability and Relate d Ratios, and the Schedule of Contributions – Other Postemployment Benefits on pages 7 to 17 and 103 to 111 be presented to supplement the basic financial statements.

Such information, although not a part of the basic financ ial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential pa rt of financial reporting for placing the basic financial statements in an appropriate operationa l, economic, or historical context. We have applied certain limited procedures to the Required supplementary Information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of manage ment about the methods of preparing the information and comparing the information for consistency with manageme nt’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic fina ncial statements. We do not express an opinion or provide any assurance on the information because the limited procedur es do not provide us with sufficient evidence to express an opinion or provide any assurance.

Other Information

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The Introductory Section, the Combining and Individual Nonmajor Fund Financial Statements, and the Statistical Section are pr esented for purposes of additiona l analysis and are not a required part of the basic financial statements.

The Combining and Individual Nonmajor Fund Financial Statements are the responsibility of management and were derived from and relate directly to the underlying accounti ng and other records used to prepare the basic financial statements. Such information has been s ubjected to the auditing procedures applie d in the audit of the basic financial statements and certain additional procedures, including comp aring and reconciling such in formation directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other add itional procedures in accordance with au diting standards generally accepted in the United States of America. In our opinion, the Combining and Individual Nonmajor Fund Financial Statements and the Schedules of Revenues, Expenditures and Changes in Fund Ba lance are fairly stated, in all material respects, in relation to the basic financial statements as a whole.

The Introductory and the Statistical Sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them.

165
To the Honorable Mayor and the Members of the City Council of the City of Hercules
Hercules, California

3 Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards , we have also issued our repor t dated January 19, 2022 on our consideration of the City’s internal control over financia l reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreemen ts and other matters. The purpose of that report is solely to describe the scope of our testing of internal control ove r financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance.

Santa Ana, California
January 19, 2022

166

4 167

5 MANAGEMENT’S DISCUSSION AND ANALYSIS
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JUNE 30, 2021

7 Within this section of the City of Hercules’ annual financial report, the City’s management provides narrative discussion and analysis of the financial activities of the City for the fiscal year ended June 30, 2021. Readers are encouraged to consider the information presented here in conjunction with the accompanying financial statements and disclosures following this section. The discussion focuses on the City’s primary government and, unless otherwise noted, does not include separately reported component units.

FINANCIAL HIGHLIGHTS

 The assets and deferred outflows of the City exceeded liabilities and deferred inflows at the close of the most recent fiscal year by $158,267,355 (net position). Net position of $27,727,432 are restricted for specific purposes (restricted net position) , and $76,859,451 represents net investment in capital assets. Unrestricted net position was $53,680,472. The government’s total net position, as adjusted, decreased by $1,419,847 in comparison with the prior year.  The City’s net investment in capital assets decreased by $8,367,698 compared to the prior year.  The City’s governmental funds reported combined fund balances of $66,736,226, an increase of $2,387,811 in comparison with the prior year, as adjusted. The unassigned portion of those fund balances was $9,845,385.

OVERVIEW OF THE FINANCIAL STATEMENTS

This discussion and analysis are intended to serve as an introduction to the City’s basic financial statements. The City’s basic financial statements comprise three components 1) Government-wide financial statements; 2) Fund financial statements and 3) Notes to the basic financial statements. This report also contains other Supplementary Information in addition to the basic financial statements.

Government-wide Financial Statements are designed to provide readers with a broad overview of City finances, in a manner similar to a private-sector business.

 The statement of net position presents information on all City assets and deferred outflows and liabilities and deferred inflows, with the difference between them reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating.  The statement of activities presents information showing how net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows . Thus, revenues and expenses are reported in this statement for some items that will result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave).

Both government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a portion of their costs through user fees and charges (business-type activities). The governmental activities of the City include general government, public safety, streets and public works, parks and recreation, and community development. The business-type activities of the City consist of the Wastewater Fund. Fiduciary activities are not included in the government-wide statements since these assets are not available to fund City programs. 170
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8 The City’s financial reporting includes the funds of the City (primary government) and organizations for which the City is accountable (component units). Most of these legally separated organizations operate like City departments, serve as financing vehicles for City services (revenue bond issuers), or are governed by a board that is substantively identical to the City’s board. An example of this is the Hercules Public Finance Authority, which while legally separate is in substance an extension of the City operations.

Financial data for the Hercules Public Finance Authority are combined with the presentation of the primary government’s financial data and thus it is referred to as a “blended” component unit. A “discretely presented” component unit is one that is presented separately in the financial statements to emphasize its independence from the primary government. Hercules City has no discretely presented component units.

Fund Financial Statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific ac tivities or objectives. The City, like other state and local governments, uses fund accounting to ensure and demonstrate finance-related legal compliance. All the funds of the City can be divided into three categories: governmental funds, proprietary funds and fiduciary funds.

Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental funds financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a City’s near-term financing requirements.

Governmental funds use a current financial resources measur ement focus and modified accrual basis of accounting.

Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. Both the governmental funds balance sheet and the governmental funds statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities.

The City maintains individual governmental funds. Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues, expenditures and changes in fund balances for the General Fund, Hercules Debt Service Fund, and the other governmental funds combined into a single, aggregated column. Governmental Accounting Standards Board (GASB) Statement No. 34 defines major governmental funds as those with revenues, expenditures, assets and deferred outflows or liabilities and deferred inflows that make up at least 10% of the total fund category or type (governmental or business type) and at least 5% of the aggregate amount of all governmental and enterprise funds.
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9 Proprietary funds are maintained two ways. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses enterprise funds to account for the operations of the Wastewater Fund. Internal services funds are an accounting device used to accumulate and allocate costs internally among the City’s various functions.

The City uses three internal service funds to account for its vehicle replacement, technology services, and facilities maintenance functions. Because internal service funds predominantly benefit governmental rather than business-type functions, they have been included within governmental activities in the government-wide financial statements.

Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail.

Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the City’s own programs. The City is responsible for ensuring that the assets reported in these funds are used for their intended purposes. As of February 1, 2012, the activities of the Successor Agency to the former Hercules Redevelopment Agency are reported with the City’s Fiduciary Fund as a Private Purpose Trust Fund because they are under the control of an Oversight Board.

Notes to the Financial Statements provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements.

Required Supplementary Information provides the schedule of funding progress for the City Employees Retirement Plan and Other Postemployment Benefits other than pensions. Also presented are the budgetary comparison schedules for the City’s General Fund and Major Special Revenue Funds, and notes to required supplementary information.

GOVERNMENT-WIDE FINANCIAL ANALYSIS

Net position may serve over time as a useful indicator of a government’s financial position. In the case of the City, combined assets and deferred outflows exceeded liabilities and deferred inflows by $158,267,355 at the close of the most recent fiscal year. Of these combined net position 49% reflects the City’s investment in capital assets, net of related debt. Another 18% of the City’s net position is subject to external restrictions on how they may be used.

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10 Condensed Statement of Net Position

Governmental Business-type
Activities Activities Total
2021 2020 2021 2020 2021 2020
Assets
Current and other assets 81,949,344$ 79,466,710$ 39,917,628$ 42,210,751 $ 121,866,972 $ 121,677,461$ Capital assets 79,826,858 79,108,186 39,987,792 40,042,588 119,814,650 119,150,774 Total assets 161,776,202 158,574,896 79,905,420 82,253,339 241,681,622 240,828,235 Deferred Outflows of Resources
Related to OPEB 568,750 609,948 32,195 16,117 600,945 626,065 Related to pensions 2,710,833 3,772,781 180,108 211,447 2,890,941 3,984,228 Total Deferred Outflows of
Resources 3,279,583 4,382,729 212,303 227,564 3,491,886 4,610,293 Liabilities
Long-term Liabilities 41,822,221 37,288,258 32,942,838 34,254,465 74,765,059 71,542,723 Other Liabilities 6,069,079 6,735,576 2,673,706 5,613,158 8,742,785 12,348,734 Total Liabilities 47,891,300 44,023,834 35,616,544 39,867,623 83,507,844 83,891,457 Deferred Inflows of Resources
Related to OPEB 1,940,227 1,290,330 109,826 73,037 2,050,053 1,363,367 Related to pensions 1,341,909 461,753 6,347 34,750 1,348,256 496,503 Total Deferred Inflows of
Resources 3,282,136 1,752,083 116,173 107,787 3,398,309 1,859,870 Net Position:

Net Investment in Capital Assets 69,628,982 73,639,890 7,230,469 11,587,260 76,859,451 85,227,150

Restricted 20,047,707 20,047,707 7,679,725 7,674,002 27,727,432 27,721,709 Unrestricted 24,205,660 23,494,111 29,474,812 23,244,231 53,680,472 46,738,342 Total Net Position 113,882,349$ 117,181,708$ 44,385,006$ 42,505,493 $ 158,267,355 $ 159,687,201$

A significant portion of the City’s net position, $76,859,451, reflects the amount invested in capital assets (e.g. land and easements, structures and improvements, infrastructure, and equipment), less any related debt used to acquire those assets. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City’s investment in capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities.

The restricted portion of the City’s net position, $27,727,432 represents resources that are subject to external restrictions by grantors and other governments on how they may be used.

The unrestricted portion of the City’s net position is $53,680,472. It is to be noted that GASB 34 classifies long-term payroll liabilities to the unres tricted category. These reclassifications include liabilities for pensions, other postemploym ent benefits (OPEB) and compensated absences. These liabilities accumulate over decades as part of the City’s employment agreements and the timing for their translation into current year expense is not precisely subject to projection.

The City's net position, as adjusted, decreased by $1,419,847 during the current fiscal year. The decreased in net position is primarily attributed to Charges for Services due to COVID-19 mandatory closure.

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11 Changes in Net Position

Governmental Business-type
Activities Activities Total
2021 2020 2021 2020 2021 2020
Revenues
Program revenues
Fees, Fines and Charges for
Services 2,461,704$ 5,957,360$ 5,769,396 5,719,257$ 8,231,100$ 11,676,617$ Operating Grants/Contributions 4,566,850 1,945,666 - - 4,566,850 1,945,666 Capital Grants/Contributions - 655,467 - - - 655,467 General revenues
Property taxes 1,451,716 1,415,995 - - 1,451,716 1,415,995 Sales taxes 4,775,496 4,212,285 - - 4,775,496 4,212,285 Franchise Taxes 862,104 948,503 - - 862,104 948,503 Other taxes 4,293,889 4,402,327 - - 4,293,889 4,402,327 Motor Vehicles Taxes In-Lieu 2,239,058 2,128,054 - - 2,239,058 2,128,054 Interest and Investment Income 1,456,269 1,748,131 4,537 501,741 1,460,806 2,249,872 Special Item (3,624,150) - - - (3,624,150) Total revenues 22,107,086 19,789,638 5,773,933 6,220,998 27,881,019 26,010,636 Expenses
General Government 4,435,331 4,634,707 - - 4,435,331 4,634,707 Public
Safety 9,273,713 8,844,059 - - 9,273,713 8,844,059 Streets and Public Works 7,715,011 8,447,150 - - 7,715,011 8,447,150 Parks and Recreation 2,104,559 2,786,635 - - 2,104,559 2,786,635 Community Development 918,476 595,927 - - 918,476 595,927 Interest on Long-Term Debt 959,355 1,159,848 - - 959,355 1,159,848 Wastewater - - 3,894,420 4,593,120 3,894,420 4,593,120 Total expenses 25,406,445 26,468,326 3,894,420 4,593,120 29,300,865 31,061,446 Increase (Decrease) in Net Position (3,299,359) (6,678,688) 1,879,513 1,627,878 (1,419,846) (5,050,810) Net Position - Beginning, as Restated 117,181,708 123,860,396 42,505,493 40,877,615 159,687,201 164,738,011 Net Position - Ending 113,882,349$ 117,181,708$ 44,385,006 42,505,493$ 158,267,355$ 159,687,201$

FINANCIAL ANALYSIS OF THE CITY’S FUNDS

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

Governmental funds . The general government functions are contained in the General, Special Revenue, and Debt Service Funds. The focus of the City’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City’s financing requirements.

On June 30, 2021, the City’s governmental funds reported combined fund balances of $66,736,226. Of these combined fund balances, $9,845,385 constitutes unassigned fund balance , which is available to meet the City’s current and future needs.

The General Fund is the chief operating fund of the City. On June 30, 2021, unassigned fund balance was $10,008,178, while total fund balance was $45,958,422. As a measure of the General Fund’s liquidity, it may be useful to compare both unassigned and total fund balance to total fund expenditures.

Unassigned fund balance represents 71% of total General Fund expenditures, while the total fund balance represents 325% of total General Fund expenditures.

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12 Total governmental funds Fund Balance increased by $2,387,811 in the current year. The major governmental funds had changes in fund balance as follows:

The major funds, General Fund increased by $1,561,256, Hercules Debt Service Fund decreased by $66,058, and nonmajor (other) governmental funds increased by $892,613.

The following table presents the amount of revenues from various sources as well as increases or decreases from the prior year.

Revenues Classified by Source
Governmental Funds

Percent of Percent of Percent of
Amount Total Amount Total Amount Change
Taxes 14,098,060 $ 62.60% 10,727,692 $ 47.23% 3,370,368 $ 31% Licenses and Permits 952,294 4.23% 796,397 3.51% 155,897 20% Fines and Forfeitures 36,586 0.16% 62,582 0.28% (25,996) -42% Use of Money and Property 1,456,271 6.47% 1,702,755 7.50% (246,484) -14% Intergovernmental 4,589,299 20.38% 4,073,720 17.94% 515,579 13% Charges for Services 1,150,164 5.11% 5,282,444 23.26% (4,132,280) -78% Miscellaneous 239,610 1.06% 67,355 0.30% 172,255 256%
22,522,284$ 100.00% 22,712,945 $ 100.00% (190,661) $ 2021 2020 Increase (Decrease)

The decrease in revenues is due primarily to charges for services and interest income because of program revenues affected by COVID-19 closure and the effect of the economic fallout from the pandemic offset by year-over-year growth in overall general tax revenues. 175
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13 The following graph shows an illustrative picture of where the City funds come from.

Revenue by Source – Governmental Activities

The following table presents expenditures by function compared to prior year amounts.

Expenditures Classified by Function
Governmental Funds

Percent of Percent of Percent of
Amount Total Amount Total Amount Total
General Government 3,854,043$ 15.83% 4,070,428$ 17.08% (216,385)$ -5% Public Safety 7,774,932 31.93% 7,634,971 32.04% 139,961 2% Streets and Public Works 4,638,912 19.05% 4,080,345 17.12% 558,567 14% Parks and Recreation 1,434,988 5.89% 2,165,547 9.09% (730,559) -34% Community Development 792,456 3.25% 557,672 2.34% 234,784 42% Debt Service 1,693,231 6.95% 1,885,774 7.91% (192,543) -10% Capital Outlay 4,163,726 17.10% 3,434,295 14.41% 729,431 21% 24,352,288$ 100.00% 23,829,032 $ 100.00% 523,256$
2021 2020 Increase (Decrease)

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14 The following graph shows an illustrative picture of how City funds were spent.

Expenditures by Function – Governmental Activities

17.10%

6.95%

3.25%

5.89%

19.05%

31.93%

15.83%

14.41%

7.91%

2.34%

9.09%

17.12%

32.04%

17.08%

0.00% 10.00% 20.00% 30.00% 40.00%
Capital Outlay
Debt Service
Community Development
Parks and Recreation
Streets and Public Works
Public Safety
General Government
2020
2021

Proprietary funds reporting focuses on determining operating income, changes in net position (or cost recovery), financial position, and cash flows using the full accrual basis of accounting.

Enterprise funds report the business-type activities of the City. Enterprise funds are used to account for the operations of the Wastewater Fund.

Enterprise fund net position net investment in capital assets at fiscal year-end was $7,230,469.

Restricted for Debt Service was $7,679,725. Unrestricted net position at fiscal year-end was $29,474,812.

Internal service funds are an accounting device to accumulate and allocate costs internally among the City’s various functions. Internal service funds are used to account for its vehicle replacement, IT replacement, and facilities maintenance functions.

Total net position of the internal service funds at fiscal year-end were $2,605,371 and include $582,267 invested in capital assets. The net position of the internal service funds decreased by $243,648 over the prior fiscal year.

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15 CAPITAL ASSETS

The City’s investment in capital assets for its governmental and business type activities as of June 30, 2021, amounted to $119,814,650 (net of accumulated depreciation). This investment in capital assets includes land, structures and improvements, leas ehold improvements, equipment, and infrastructure (roads and bridges).

The following table shows the City’s total investment in capital assets for governmental and proprietary funds.

Capital Assets
Governmental Business-type
Activities Activities Total
2021 2020 2021 2020 2021 2020
Land 5,081,587$ 5,081,587$ 191,700$ 191,700$ 5,273,287$ 5,273,287$ Construction in progress 4,228,176 462,977 968,587 - 5,196,763 462,977 Land Improvements 11,720,361 11,807,105 - - 11,720,361 11,807,105 Buildings & Improvements 26,973,413 27,076,100 38,325,271 38,325,270 65,298,684 65,401,370 Equipment 5,080,999 6,881,849 250,345 250,345 5,331,344 7,132,194 Infrastructure 113,444,645 110,928,058 14,857,483 14,857,483 128,302,128 125,785,541 Total 166,529,181 162,237,676 54,593,386 53,624,798 221,122,567 215,862,474 Accumulated Depreciation (86,702,323) (83,129,490) (14,605,594) (13,582,210) (101,307,917) (96,711,700) Net Capital Assets 79,826,858$ 79,108,186$ 39,987,792$ 40,042,588$ 119,814,650$ 119,150,774$

Additional information regarding capital assets is presented in note 6.

DEBT ADMINISTRATION

At the end of the current fiscal year, the City had total outstanding long-term obligations of $55,381,570.

Of this amount, $14,261,843 comprised of bonds that are secured by the City’s lease rental payments and other dedicated sources of revenue.

The following table shows the composition of the City’s bonds and notes outstanding for governmental and proprietary funds.
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16 Long-Term Obligations

Governmental Business-Type
Activities Activities Total
2021 2020 2021 2020 2021 2020
Bonds Payable 14,261,843$ 14,290,000 $ 9,250,000 $ 9,535,000$ 23,511,843$ 23,825,000 $ Unamortized Discount/Refunding (294,035) (311,332) (138,162) (145,434) (432,197) (456,766) Lease Payable 4,503,004 478,284 - - 4,503,004 478,284 Loans Payable 5,265,521 5,350,000 24,356,298 25,457,694 29,621,819 30,807,694 Compensated Absences 608,384 584,351 47,180 46,251 655,564 630,602 Total 24,344,717 20,391,303 33,515,316 34,893,511 57,860,033 55,284,814 Less Current Portion (1,039,503) (1,175,169) (1,438,960) (1,433,674) (2,478,463) (2,608,843) Net Long-Term Obligations 23,305,214$ 19,216,134 $ 32,076,356 $ 33,459,837 $ 55,381,570 $ 52,675,971 $

Other obligations include compensated absences (accrued vacation and sick leave). More detailed information about the City’s long-term liabilities is presented in note 7.

HIGHLIGHTS

As we entered 2021 fiscal year, the City of Hercules was positioned for continued progress on our path to a fiscally sustainable future. While we knew t here were some possible bumps in the road, we now face many difficulties that have arisen not only from lingering issues from the past but now from more recent events of COVID-19. Unlike most other cities, Hercules did not close its City Hall, and we continued to provide services except for Parks & Recreation programs, which continue to be closed due to health restrictions. The COVID-19 Pandemic began to directly impact the City operations in mid- March 2020 when the initial County Health Order resulted in a stay-home order for all but essential services workers. The City’s response to the COVID-19 or coronavirus event, which started unfolding in the United States in the first quarter of the calendar year and continued into this fiscal year, has directly reduced programmatic revenues specifically for the Parks & Recreation. Those impacts, together with the lingering influences on the overall economy, and the delayed start on new commercial projects, are expected to reduce the City’s overall revenues in 20/21. While not yet formally a recession, our budgeting is based on what we would characterize as a recessionary outlook. The budget for FY 20/21, as adopted in June 2020, was a continuation of anticipated revenue trends and with funding, especially of a one-time nature, committed to operations and capital needs. It also addressed some of the lingering redevelopment dissolution-related obligations with a second payment made pursuant to a settlement agreement with the State of California related to a disputed repayment of a loan which the City made to the former Redevelopment Agency. The City’s prudent fiscal policies set the stage for us to navigate this turn of events in a way that will still meet our reserve goals.

The City continues to expand its tax base and quality of life through new development on critical sites.

The first phase of the Bayfront project, the 172 units building called the Exchange and ground floor retail, was expecting first occupancies in July 2020. The second phase of 235 units in the form of the Grand is under construction with completion set for 2021, and the City Council granted final approvals, in late 2019, for development on three blocks as the third phase with a total of 476 units and that phase is in plan check. The City and Bayfront developer also entered into a Cooperative Agreement regarding future steps to develop a parking entity to manage the shared parking in the Bayfront. Entitlements were approved for the future Sycamore Crossing project, including a retail center, hotel, and residential community in late 2019. Site preparation is underway, with the construction to start this year. A parcel map was approved for the Willow Avenue Auto Service Park & Self Storage project, which had previously been fully entitled, with the construction of that project set to start later in 2020. In April 2020, final entitlements for the nearly 600-unit Hilltown residential community were approved. Investment in infrastructure also remains a high priority.
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17 The Hercules Regional Intermodal Transportation Center, which will eventually see the bus, rail, and ferry service instituted at the Bayfront, was designated in October 2019, an official candidate station by the Board of the Capital Corridor Joint Powers Authority, which operates the Capital Corridor trains.

The City has also awarded the next phase design contract for the track, platform, and station improvements. It is actively seeking the funding needed to allow the subsequent phases to proceed.

Interim improvements needed to let bus service start at the Bayfront is now underway and will be completed soon; these improvements will also pr ovide a safer temporary connection for pedestrians between the East and West segments of the Bay Trail. These improvements were facilitated by approving a Memorandum of Understanding with an adjacent property owner to use an existing alley.

Other key efforts included completing the street repair project, which was the resurfacing of portions of Pheasant Avenue. The City also completed various projects such as the acceptance of the Refugio Path repaving project; a calming traffic project along Hercules Avenue; a design contract was awarded for the summer 2020 street repair project; the design on grant-funded pedestrian and bike enhancements for Sycamore/Palm/Willow; a contract was awarded for the resurfacing of the Refugio Park tennis courts, and a significant energy retrofit project with a company called Engie for a variety of City facilities. In two of the Citywide Landscape & Lighting Assessment Districts – Zones 1 and 7, property owners approved increased assessments in summer 2019 for new energy-efficient streetlights on metal poles replacing failing hollow-core wood poles and those lights have been installed.

In February, as part of the mid-year budget review, the FY 2020-21 budget was modified to assume no Parks & Rec programming, other than the current limited offerings, before the end of the fiscal year with revenues and expenses adjusted downwards. In addition to the debt service savings associated with the Library Bond refinance and the receipt of CARES Act funding, the other main change was the reinstatement of the previously deferred 2020 employee retention payments. We continue to be able to accomplish many things in Hercules to enhance the community and to offer programs and services desired by our residents due to the efforts of employees daily. This has been especially true as we have navigated the COVID-19 Pandemic, and our employees as Essential Services Workers can be considered heroes in my book. The above accomplishments were only possible due to the efforts of our small, but the talented and dedicated staff truly is Hercules’ Team Dynamic. Our dedicated and committed elected leaders also work hard to ensure the City is on a strong financial footing while at the same time looking at opportunities to enhance services and improve the community. They are good stewards of the public funds entrusted to them and ensure that our budgeting and financial operations are done in a manner consistent with the Council’s adopted Financial Policies & Principles.

REQUEST FOR INFORMATION

This financial report is designed to provide a general overview of the City’s finances for all those with an interest in the government’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Department of Finance at 111 Civic Drive, Hercules, California, 94547. 180

18 181

BASIC FINANCIAL STATEMENTS
19 182
20 183

GOVERNMENT-WIDE FINANCIAL STATEMENTS
21 184
22 185
Governmental Business-Type
Activities Activities Total
ASSETS
Cash and investments 25,269,319 $ 21,611,402 $ 46,880,721 $ Cash and investments with fiscal agent 1,995,351 7,679,725 9,675,076 Cash and investments held in trust 2,237,248 - 2,237,248 Accounts receivable 1,770,590 10,822 1,781,412 Prepaids 10,112 - 10,112 Loan receivable 1,502,773 - 1,502,773 Lease receivable 8,806,323 - 8,806,323 Due from Private Purpose Trust Fund (Note 5) 39,908,402 10,587,627 50,496,029 Net OPEB assets - PEHMCA 449,226 28,052 477,278 Capital Assets:

Nondepreciable 9,309,763 1,160,287 10,470,050 Depreciable, net 70,517,095 38,827,505 109,344,600 Total assets 161,776,202 79,905,420 241,681,622

DEFERRED OUTFLOWS OF RESOURCES
Pension-related deferred outflows of resources 2,710,833 180,108 2,890,941 OPEB-related deferred outflows of resources (PEHMCA) 275,261 15,581 290,842 OPEB-related deferred outflows of resources (SOMAR) 293,489 16,614 310,103 Total deferred outflows of resources 3,279,583 212,303 3,491,886

LIABILITIES
Accounts payable 783,259 674,700 1,457,959 Salaries and benefits payable 414,397 30,880 445,277 Accrued interest payable 533,387 529,166 1,062,553 Deposit payable 1,192,084 - 1,192,084 Claims and judgments payable 576,344 - 576,344 Due from fiduciary fund 322,055 - 322,055 Long-term debt:

Due within one year 1,009,554 1,438,960 2,448,514 Due in more than one year 23,335,163 32,076,356 55,411,519 Settlement payable 1,208,050 - 1,208,050 Net aggregate pension liabilities 16,985,954 779,817 17,765,771 Net OPEB liabilities - SOMAR 1,531,053 86,665 1,617,718 Total liabilities 47,891,300 35,616,544 83,507,844

DEFERRED INFLOWS OF RESOURCES
Pension-related deferred inflows of resources 1,341,909 6,347 1,348,256 OPEB-related deferred inflows of resources (PEHMCA) 1,596,358 90,361 1,686,719 OPEB-related deferred inflows of resources (SOMAR) 343,869 19,465 363,334 Total deferred inflows of resources 3,282,136 116,173 3,398,309

NET POSITION
Net investment in capital assets 69,628,982 7,230,469 76,859,451 Restricted for:

Public safety 914,731 - 914,731 Streets and roads 2,472,888 - 2,472,888 Development 7,677,420 - 7,677,420 Debt Service 8,982,668 7,679,725 16,662,393 Total restricted 20,047,707 7,679,725 27,727,432 Unrestricted 24,205,660 29,474,812 53,680,472 Total net position 113,882,349$ 44,385,006 $ 158,267,355 $ Primary Government
City of Hercules
Statement of Net Position
June 30, 2021
See accompanying Notes to the Basic Financial Statements. 23 186
Operating Capital
Charges for Grants and Grants and
Functions/Programs Expenses Services Contributions Contributions Total Primary Government
Governmental Activities:

General government 4,435,331 $ 1,343,812 $ - $ - $ 1,343,812$ Public safety 9,273,713 92,674 447,564 - 540,238 Streets and public works 7,715,011 76,839 4,119,286 - 4,196,125 Parks and recreation 2,104,559 396,289 - - 396,289 Community development 918,476 552,090 - - 552,090 Interest and fiscal agent fees 959,355 - - - - Total governmental activities 25,406,445 2,461,704 4,566,850 - 7,028,554 Business-Type Activities:

Wastewater 3,894,420 5,769,396 - - 5,769,396 Total business-type activities 3,894,420 5,769,396 - - 5,769,396 Total primary government 29,300,865$ 8,231,100 $ 4,566,850 $ - $ 12,797,950$ Program Revenues
City of Hercules
Statement of Activities
For the Year Ended June 30, 2021
See accompanying Notes to the Basic Financial Statements. 24 187
Governmental Business-Type
Functions/Programs Activities Activities Total
Primary Government
Governmental Activities:

General government (3,091,519) $ - $ (3,091,519)$ Public safety (8,733,475) - (8,733,475) Streets and public works (3,518,886) - (3,518,886) Parks and recreation (1,708,270) - (1,708,270) Community development (366,386) - (366,386) Interest and fiscal agent fees (959,355) - (959,355) Total governmental activities (18,377,891) - (18,377,891) Business-Type Activities:

Wastewater - 1,874,976 1,874,976 Total business-type activities - 1,874,976 1,874,976 Total primary government (18,377,891) 1,874,976 (16,502,915) General Revenues:

Property taxes 1,451,716 - 1,451,716 Sales and use taxes 4,775,496 - 4,775,496 Franchise taxes 862,104 - 862,104 Utility users taxes 3,590,649 - 3,590,649 Other taxes 703,240 - 703,240 Unrestricted motor vehicle taxes in-lieu 2,239,058 - 2,239,058 Use of money and property 1,456,269 4,537 1,460,806 Total general revenues 15,078,532 4,537 15,083,069 Changes in net position (3,299,359) 1,879,513 (1,419,846) Net Position:

Beginning of year, as restated (Note 17) 117,181,708 42,505,493 159,687,201 End of year 113,882,349$ 44,385,006$ 158,267,355$ Changes in Net Position
Net (Expense) Revenue and
City of Hercules
Statement of Activities (Continued)
For the Year Ended June 30, 2021
See accompanying Notes to the Basic Financial Statements. 25 188
26 189

FUND FINANCIAL STATEMENTS
27 190
28 191
Other Governmental Funds - These funds are special revenue funds that have not been determined to be major funds, as defined by GASB Statement No. 34.

GOVERNMENTAL FUND FINANCIAL STATEMENTS
General Fund - This fund is used to account for all revenues and expenditures necessary to carry out basic governmental activities of the City that are not accounted for through other funds. For the City, the General Fund includes such activities as police, planning, engineering, public works, operations and maintenance, and legal and administrative services.

Hercules Debt Service Fund - This fund is used to account for the accumulation of resources for, and the payment of, principal and interest on various Lease Revenue Bonds issued to cover the refinancing of the original City Hall debt issue and to generate additional resources to assist in the construction of a new library building and other general government projects. 29 192
Other
General Hercules Debt Governmental
Fund Service Fund Funds Total
ASSETS
Cash and investments 15,114,211 $ 218,009 $ 7,098,197 $ 22,430,417 $ Cash and investments with fiscal agent - 1,995,351 - 1,995,351 Cash and investments held in trust 2,237,248 - - 2,237,248 Accounts receivable 1,369,906 - 400,684 1,770,590 Prepaids 10,112 - - 10,112 Due from other funds 190,014 - 157 190,171 Loans receivable 1,502,773 - - 1,502,773 Lease receivable - 8,806,323 - 8,806,323 Due from Private Purpose Trust Fund 27,787,637 6,703,250 5,417,515 39,908,402 Total assets 48,211,901$ 17,722,933 $ 12,916,553 $ 78,851,387 $

LIABILITIES
Accounts payable 305,124 $ - $ 309,065$ 614,189 $ Accrued wages 325,340 - 63,558 388,898 Deposit payable 1,046,514 - 145,570 1,192,084 Claims and judgments payable 576,344 - - 576,344 Due to other funds 157 - 190,014 190,171 Amounts due to Private Purpose Trust Fund - - 322,055 322,055 Total liabilities 2,253,479 - 1,030,262 3,283,741

DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - 8,806,323 25,097 8,831,420 Total deferred inflows of resources - 8,806,323 25,097 8,831,420

FUND BALANCES
Nonspendable
30,034,997 - - 30,034,997 Restricted - 8,916,610 10,632,799 19,549,409 Committed - - 1,391,188 1,391,188 Assigned 5,915,247 - - 5,915,247 Unassigned (deficit) 10,008,178 - (162,793) 9,845,385 Total fund balances 45,958,422 8,916,610 11,861,194 66,736,226 Total liabilities, deferred inflows
of resources and fund balances 48,211,901$ 17,722,933$ 12,916,553$ 78,851,387$ City of Hercules
Balance Sheet
Governmental Funds
June 30, 2021
Major Funds
See accompanying Notes to the Basic Financial Statements. 30 193
Total fund balances of governmental funds 66,736,226$
Amounts reported for governmental activities in the Statement of Net Position are different because:

Amount reported in Government-Wide Statement of Net Position 79,826,858 Less: Amount reported in Internal Service Funds (582,267) Amount reported in Government-Wide Statement of Net Position:
(533,387)
8,831,420
Compensated absences, net of Internal Service Fund of $39,932 (568,452) Loans, leases, and bonds (23,736,333)
Settlements payable (1,208,050)
Pensions-related deferred outflows of resources, net of Internal Service Fund of $94,408 2,616,425 Net pension liability, net of Internal Service Fund of $549,627 (16,436,327) Pensions-related deferred inflows of resources, net of Internal Service Fund of $4,239 (1,337,670) OPEB-related deferred outflows of resources (PEHMCA), net of Internal Service Fund of $15,581 259,680 OPEB-related deferred outflows of resources (SOMAR), net of Internal Service Fund of $16,614 276,875 Net OPEB assets - PEHMCA, net of Internal Service Fund of $42,457 406,769 Net OPEB liability - SOMAR, net of Internal Service Fund of $86,665 (1,444,388) OPEB-related deferred inflows of resources (PEHMCA), net of Internal Service Fund of $90,361 (1,505,997) OPEB-related deferred outflows of resources (SOMAR), net of Internal Service Fund of $19,465 (324,404) 2,605,371
Net position of governmental activities 113,882,349$
Unavailable revenues represent amounts that are not available to fund current expenditures and, therefore, are not reported in the governmental funds
Interest payable on long-term debt does not require current financial resources, Therefore, interest payable is not reported as a liability in the Governmental Funds Balance Sheet.

Internal service funds are used by the City to charge the cost of its vehicle replacement, IT services and facilities maintenance activities to individual funds. The assets and liabilities of the internal service funds are included in governmental activities in the statement of net position City of Hercules
Reconciliation of the Governmental Funds Balance Sheet to the Government-Wide Statement of Net Position
June 30, 2021
Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the governmental funds.

Pensions and OPEB related deferred outflows and inflows of resources in the governmental activities were not financial resources (uses) and therefore were not reported in the Governmental Funds Balance Sheet.

Long-term liabilities are not due and payable in the current period and therefore, are not reported in the governmental funds:

Net pension liability and related deferred outflows and inflows of resources are not due and payable in the current period; therefore, are not reported as governmental funds' liabilities. They are reported in the Statement of Net Position.

Net OPEB liability and related deferred outflows and inflows of resources are not due and payable in the current period; therefore, are not reported as governmental funds' liabilities. They are reported in the Statement of Net Position.

See accompanying Notes to the Basic Financial Statements. 31 194
Other
General Hercules Deb t Governmental
Fund Service Fund Funds Total
REVENUES:

Taxes and assessments 11,063,092$ -$ 3,034,968$ 14,098,060$ Licenses and permits 776,572 - 175,722 952,294 Fines and forfeitures 36,586 - - 36,586 Use of money and property 476,520 942,241 37,510 1,456,271 Intergovernmental 2,647,128 - 1,942,171 4,589,299 Charges for services 1,295,954 - (145,790) 1,150,164 Other revenues 168,101 - 71,509 239,610 Total revenues 16,463,953 942,241 5,116,090 22,522,284 EXPENDITURES:

Current:

General government 3,854,043 - - 3,854,043 Public safety 7,549,028 - 225,904 7,774,932 Streets and public works 305,963 - 4,332,949 4,638,912 Parks and public works 1,434,988 - - 1,434,988 Community development 792,456 - - 792,456 Capital outlays - - 4,163,726 4,163,726 Debt services:

Principal 84,479 384,634 - 469,113 Interest and fiscal agent fee 115,521 935,702 172,895 1,224,118 Total expenditures 14,136,478 1,320,336 8,895,474 24,352,288

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 2,327,475 (378,095) (3,779,384) (1,830,004)

OTHER FINANCING SOURCES (USES)
Proceeds from loan - - 4,209,354 4,209,354 Proceeds from refunded bond - - 5,876,843 5,876,843 Payment to refunded bond escrow agent - - (5,705,000) (5,705,000) Transfers in 150,000 312,037 943,518 1,405,555 Transfers (out) (312,194) - (652,718) (964,912) Special items (604,025) - - (604,025) Total other financing sources (uses) (766,219) 312,037 4,671,997 4,217,815 NET CHANGE IN FUND BALANCES 1,561,256 (66,058) 892,613 2,387,811 FUND BALANCES:

Beginning of year, as restated (Note 17) 44,397,166 8,982,668 10,968,581 64,348,415 End of year 45,958,422$ 8,916,610$ 11,861,194$ 66,736,226$ City of Hercules
Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds
June 30, 2021
Major Funds
See accompanying Notes to the Basic Financial Statements. 32 195
Net change in fund balances - total governmental funds: 2,387,811$ Amounts reported for governmental activities in the Statement of Activities are different because:

Capital outlay expenditures, net of $214,241 reported in Internal Service Funds 4,163,726$ Depreciation expense, net of $256,400 reported in Internal Service Funds (3,402,895) 760,831 (415,198)
Proceeds from loan (4,209,354)
Proceeds from refunded bond (5,876,843)
Payment to refunded bond escrow agent 5,705,000
Principal repayment of loans, leases, and bonds 469,113 Interest expense 282,060
Amortization of long term debt (17,297)
Change in compensated absences, net of Internal Service Fund of $3,652 (20,381) Pension expense of CalPERS Plan, net of pension contribution made after measurement date in the amount of $637,942 (2,562,062) OPEB (PEHMCA) expense (39,106)
OPEB (SOMAR) expense (124,310)
Settlement with department of finance 604,025
(243,648)
Change in net position of governmental activities (3,299,359)$ Some expenses reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in the governmental funds:

City of Hercules
Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Government-Wide Statement of Activities For the Year Ended June 30, 2021
Governmental funds report capital outlays as expenditures. However, in the Statement of Activities, the cost of those assets is allocated over the estimated useful lives as depreciation expense. This is the amount by which capital expenditures exceeded depreciation in the current period:

Revenues that are measurable but not available and are reported as unavailable revenue under the modified accrual basis of accounting in the governmental funds.

Proceeds from long-term debt provided current financial resources to governmental funds, but issuing debt increased long-term liabilities in the Government-Wide Statement of Net Position. Repayment of bond principal was an expenditure in the governmental funds, but the repayment reduced long-term liabilities in the Government-Wide Statement of Net Position.

Internal service funds are used by management to charge the costs of certain activities, such as fleet repair and maintenance, central stores and printing services to individual funds. The net revenue (expense) of these internal service funds are reported as governmental activities.

See accompanying Notes to the Basic Financial Statements. 33 196
34 197

PROPRIETARY FUND FINANCIAL STATEMENTS
Internal Service Funds – These funds account for activities related to vehicle replacement, IT equipment replacement, and facilities maintenance.

Wastewater Fund – This fund accounts for wastewater treatment to the cities of Hercules and Pinole and for the maintenance of the City's sewer lines and related facilities. It is a self-supporting activity which provides services on a user charge basis to residences and businesses.
35 198
Business-Type
Activities
Enterprise Governmenta l
Fund Activities
Wastewater Internal
Fund Service Funds
ASSETS
Current assets:

Cash and investments 21,611,402$ 2,838,902$
Cash and investments with fiscal agent 7,679,725 -
Accounts receivable 10,822 -
Total current assets 29,301,949 2,838,902
Noncurrent assets:

Advances to Private Purpose Trust Fund 10,587,627 -
Net OPEB assets - PEHMCA 28,052 42,457
Capital assets:

Nondepreciable 1,160,287 -
Depreciable, net 38,827,505 582,267
Total noncurrent assets 50,603,471 624,724
Total assets 79,905,420 3,463,626

DEFERRED OUTFLOWS OF RESOURCES
Pensions-related deferred outflows of resources 180,108 94,408 OPEB-related deferred outflows of resources (PEHMCA) 15,581 15,581 OPEB-related deferred outflows of resources (SOMAR) 16,614 16,614 Total deferred outflows of resources 212,303 126,603

LIABILITIES
Current liabilities:

Accounts payable 674,700 169,070
Salaries and benefits payable 30,880 25,499
Accrued interest payable 529,166 -
Long-term debt - due within one year 1,438,960 9,983
Total current liabilities 2,673,706 204,552
Noncurrent liabilities:

Long-term debt - due in more than one year 32,076,356 - Net pension liabilities 779,817 549,627
Net OPEB liabilities - SOMAR 86,665 86,665
Total noncurrent liabilities 32,942,838 636,292
Total liabilities 35,616,544 840,844

DEFERRED INFLOWS OF RESOURCES
Pensions-related deferred outflows of resources 6,347 4,239 OPEB-related deferred outflows of resources (PEHMCA) 90,361 90,361 OPEB-related deferred outflows of resources (SOMAR) 19,465 19,465 Total deferred inflows of resources 116,173 114,065

NET POSITION
Net investment in capital assets 7,230,469 582,267 Restricted for debt services 7,679,725 -
Unrestricted 29,474,812 2,023,104
Total net position 44,385,006$ 2,605,371$
City of Hercules
Statement of Net Position
Proprietary Funds
June 30, 2021
See accompanying Notes to the Basic Financial Statements. 36 199
Business-Type
Activities
Enterprise Governmental
Fund Activities
Wastewater Internal
Fund Service Funds
OPERATING REVENUES:

Charges for services 5,769,396$ 1,896,276 $
Other operating revenues - 8,778 Total operating revenues 5,769,396 1,905,054
OPERATING EXPENSES:

Salaries and benefits 741,238 559,773
Services and supplies 927,704 891,886
Depreciation 1,023,383 256,400
Total operating expenses 2,692,325 1,708,059
Operating income 3,077,071 196,995

NONOPERATING REVENUES (EXPENSES)
Interest income 4,537 -
Interest (expenses) (1,202,095) -
Total nonoperating revenues (expenses) (1,197,558) - Income (loss) before transfers
TRANSFERS:

Transfers out - (440,643)
Total transfers - (440,643)
CHANGES IN NET POSITION 1,879,513 (243,648)
NET POSITION:

Beginning of year 42,505,493 2,849,019
End of year 44,385,006$ 2,605,371$
City of Hercules
Statement of Revenues, Expenses, and Changes in Net Position Proprietary Funds
For the Year Ended June 30, 2021
See accompanying Notes to the Basic Financial Statements. 37 200
Business-Type
Activities
Enterprise Governmental
Fund Activities
Wastewater Internal
Fund Service Funds
CASH FLOWS FROM OPERATING ACTIVITIES:

Cash receipts from customers 5,758,574$ - $
Cash receipts from internal services provided - 1,905,054 Cash paid to suppliers for goods and services (4,214,705) (885,256) Cash paid to employees for services (655,086) (486,419) Net cash provided by operating activities 888,783 533,379

CASH FLOWS FROM NON-CAPITAL
FINANCING ACTIVITIES:

Transfers out - (440,643)
Net cash (used in) non-capital
financing activities - (440,643)

CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES:

Payments related to the acquisition of capital assets (968,587) (214,241) Principal repayments related to capital purposes (1,386,397) - Interest repayments related to capital purposes (858,615) - Net cash (used in) capital and related
financing activities (3,213,599) (214,241)
CASH FLOWS FROM INVESTING ACTIVITIES:

Interest received 4,537 -
Net cash provided by investing activities 4,537 - NET CHANGES IN CASH AND CASH EQUIVALENTS (2,320,279) (121,505) CASH AND CASH EQUIVALENTS:

Beginning of year 31,611,406 2,960,407
End of year 29,291,127$ 2,838,902$

RECONCILIATION OF CASH AND CASH EQUIVALENTS
TO STATEMENT OF NET POSITION:

Cash and investments 21,611,402$ 2,838,902$
Cash and investments with fiscal agent 7,679,725 - Total cash and cash equivalents 29,291,127$ 2,838,902$ (Continued)
City of Hercules
Statement of Cash Flows
Proprietary Funds
For the Year Ended June 30, 2021
See accompanying Notes to the Basic Financial Statements. 38 201
Business-Type
Activities
Enterprise Governmental
Fund Activities
Wastewater Internal
Fund Service Funds

RECONCILIATION OF OPERATING INCOME (LOSS)

TO NET CASH PROVIDED BY
OPERATING ACTIVITIES:

Operating income 3,077,071$ 196,995 $
Adjustments to reconcile operating income (loss)
to net cash provided by (used in) operating activities:

Depreciation 1,023,383 256,400
(Increase) Decrease in Assets and Deferred Outflows
Pensions-related deferred outflows 13,495 9,014 OPEB-related deferred outflows 1,766 (1,968) Increase (Decrease) in Liabilities and Deferred Inflows Accounts receivable (10,822) -
Accounts payable (2,127,780) 6,630
Retentions payable (1,159,221) -
Salaries and benefits payable 6,056 5,670 Net pension liability 85,090 56,832
Net OPEB liability (29,570) (4,529)
Pensions-related deferred inflows (28,403) (7,080) OPEB-related deferred inflows 36,789 11,763 Compensated absences 929 3,652
Total adjustments (2,188,288) 336,384
Net cash provided by operating activities 888,783$ 533,379$ (Concluded)
Proprietary Funds
For the Year Ended June 30, 2021
City of Hercules
Statement of Cash Flows (Continued)
See accompanying Notes to the Basic Financial Statements. 39 202
40 203

FIDUCIARY FUND FINANCIAL STATEMENTS
Private Purpose Trust Fund - is a fiduciary fund type used by the City to report trust arrangements under which principal and income benefit other governments. This fund reports the assets, liabilities, and activities of the Hercules Redevelopment Successor Agency. The sole purpose of this fund is to retire debt of the former redevelopment agency.

Custodial Funds - are used to account for assets held by the government in a trustee capacity. Agency funds are used to account for assets held by the government as an agent for individuals, private organizations, other governments, and/or other funds. 41 204
Successor
Agency
Private Purpose Custodial
Trust Fund Funds
ASSETS
Cash and investments 10,325,875$ 382,000$
Cash and investments with fiscal agent 8,991,869 70,297 Accounts receivable 357,032 -
Loans receivable, net 8,551,079 -
Due from the City 322,055 -
Land held for resale 4,898,570 -
Capital Assets:

Nondepreciable 28,205,119 -
Depreciable, net 3,132,091 -
Total assets 64,783,690 452,297

DEFERRED OUTFLOWS OF RESOURCES
Deferred amount on refundings 135,880
Total deferred outflows of resources 135,880

LIABILITIES
Accounts payable 15,463,262 -
Unearned revenue 37,122 -
Amounts due to City of Hercules 50,496,029 -
Long-term debt:

Due within one year 3,640,000 -
Due in more than one year 92,050,289 -
Total liabilities 161,686,702 -

NET POSITION
Held in trust (deficit) (96,767,132) -
individuals, organization, and other government - 452,297 (96,767,132)$ 452,297$
City of Hercules
Statement of Fiduciary Net Position
Fiduciary Funds
June 30, 2021
See accompanying Notes to the Basic Financial Statements. 42 205
Successor
Agency
Private Purpose Custodial
Trust Fund Funds
ADDITIONS:

Taxes and assessments 12,019,210$ 229,064$
Investment income 48,323 (440)
Capital contributions 5,066 -
Losses (131,877) -
Proceeds from issuance of debt - 3,313,813 Other revenue 532,251 -
Total additions 12,472,973 3,542,437
DEDUCTIONS:

Community development 2,532,430 -
Administration - 115,564
Depreciation 310,158 -
Interest expenses 4,883,509 232,218
Principal payment to refunding escrow - 3,219,320 Total deductions 7,726,097 3,567,102
CHANGES IN FIDUCIARY NET POSITION 4,746,876 (24,665) FIDUCIARY NET POSITION:

Beginning of year, as restated (Note 17) (101,514,008) 476,962 End of year (96,767,132)$ 452,297 $
City of Hercules
Statement of Changes in Fiduciary Net Position
Fiduciary Funds
For the Year Ended June 30, 2021
See accompanying Notes to the Basic Financial Statements. 43 206
44 207

45 NOTES TO THE BASIC FINANCIAL STATEMENTS
208

46 209
City of Hercules
Index to the Notes to the Basic Financial Statements
For the Year Ended June 30, 2021

47 Page

Note 1 – Summary of Significant Accounting Policies ..................................................................................... 49

A. Financial Reporting Entity ............................................................................................................. 49 B. Basis of Accounting and Measurement Focus ............................................................................... 49 C. Cash and Investments ..................................................................................................................... 52 D. Fair Value Measurements .............................................................................................................. 53 E. Interfund Transactions ................................................................................................................... 53 F. Prepaid Items .................................................................................................................................. 53 G. Inventory ........................................................................................................................................ 53 H. Capital Assets ................................................................................................................................. 53 I. Long-Term Obligations .................................................................................................................. 54 J. Unearned and Unavailable Revenue .............................................................................................. 54 K. Compensated Absences .................................................................................................................. 55 L. Property Taxes Receivable ............................................................................................................. 55 M. Interfund Transactions ................................................................................................................... 55 N. Claims Payable ............................................................................................................................... 55 O. Pensions ......................................................................................................................................... 56 P. Other Postemployment Benefits (“OPEB”) ................................................................................... 56 Q. Deferred Outflows of Resources and Deferred Inflows of Resources ........................................... 57 R. Net Position .................................................................................................................................... 57 S. Use of Estimates ............................................................................................................................. 57 T. Fund Balances ................................................................................................................................ 57 U. Spending Policy ............................................................................................................................. 58 V. Implementation of New GASB Pronouncements .......................................................................... 58

Note 2 – Cash and Investments .......................................................................................................................... 59

A. Demand Deposits ........................................................................................................................... 60 B. Investments Authorized by the California Government Code and the City's Investment Policy ..................................................................................................... ..... 60 C. Investments Authorized by Debt Agreements ................................................................................ 61 D. Risk Disclosures ............................................................................................................................. 61 E. Investment in Local Agency Investment Fund (“LAIF”) ............................................................... 63 F. Investment in Money Market Mutual Funds .................................................................................. 63

Note 3 – Loans Receivable .................................................................................................................................. 63

A. Governmental Activities .................................................................................................... ............ 63 B. Fiduciary Fund Financial Statements ........................................................................................ ..... 64

Note 4 – Lease Receivable................................................................................................................................... 64

Note 5 – Interfund Transactions ........................................................................................................................ 65

A. Due From and To Other Funds ................................................................................................ ...... 65 B. Advances To and From Other Funds ........................................................................................... .. 65 C. Transfers In and Out ....................................................................................................... ................ 66

Note 6 – Capital Assets ....................................................................................................................................... 66

A. Governmental Activities .................................................................................................... ............ 66 B. Business-Type Activities ................................................................................................... ............. 67 C. Fiduciary Fund Financial Statements ........................................................................................ ..... 68 210
City of Hercules
Index to the Notes to the Basic Financial Statements (Continued) For the Year Ended June 30, 2021

48 Page

Note 7 – Long-Term Debt .................................................................................................................................... 69

A. Governmental Activities .................................................................................................... ............. 69 B. Business-Type Activities ................................................................................................... .............. 73 C. Fiduciary Fund Financial Statements ........................................................................................ ...... 74 D. Non-City Obligations ...................................................................................................................... 78

Note 8 – Retirement Plans ................................................................................................................................... 78

A. General Information A bout the Pension Plans ................................................................................ 79 B. Payable to the CalPERS Pension Plans ....................................................................................... .... 85

Note 9 – Deferred Compensation Plan ............................................................................................................... 85

A. 457 Plan ................................................................................................................... ........................ 85 B. 401A Plan .................................................................................................................. ...................... 85 C. PARS ....................................................................................................................... ........................ 86

Note 10 – Other Postemployment Benefits ........................................................................................................ 86

A. Retiree Healthcare Plan ( PEHMCA) .............................................................................................. 86 B. Retiree Cash Benefit Plan (SOMAR Plan) ..................................................................................... . 90

Note 11 – Risk Management................................................................................................................................ 94

Note 12 – Commitments and Contingencies ...................................................................................................... 95

A. Lawsuits ................................................................................................................... ....................... 95 B. Commit ments .................................................................................................................................. 95

Note 13 – Joint Powers Agreements ................................................................................................................... 96

A. West Contra Costa Transportation Advisory Committee (WCCTAC) ........................................... 96 B. West Contra Costa Integrated Waste Management Authority (WCCIWMA) ................................ 96 C. Pinole/Hercules Wastew ater Treatment Plant ................................................................................. 96

Note 14 – Stewardship, Compliance, and Accountability................................................................................. 97

A. Deficit Fund Balances/Net Position ......................................................................................... ....... 97

Note 15 – Fund Balance Classification ............................................................................................................... 98

Note 16 – Special Items – Settlement Payable to Department of Finance ....................................................... 99

Note 17 – Prior Period Adjustments ................................................................................................................... 99

211
City of Hercules
Notes to the Basic Financial Statements
For the Year Ended June 30, 2021

49 Note 1 – Summary of Significant Accounting Policies

The basic financial statements of the City of Hercules, California, (the “City”) have been prepared in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) as applied to governmental agencies. The Governmental Accounting Standards Board (“GASB”) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The following is a summary of the City’s significant policies:

A. Financial Reporting Entity

The City of Hercules (City) was incorporated under the General Laws of the state of California and enjoys all the rights and privileges pertaining to such “General Law” cities. The City uses the City Council/Manager form of government.

In evaluating how to define the City for financial reporting purposes, management has considered all potential component units. The primary criteria for including a poten tial component unit within the reporting entity are the governing body’s financial accountability and a financial benefit or burden relationship and whether it is misleading to exclude. A primary government is financially accountable and shares a financial benefit or burden relationship, if it appoints a voting majority of an organization’s governing body and it is able to impose its will on the organization, or if there is a potential for the organization to provide specific financial benefits to, or impose specific financial burdens on the primary government. A primary government may also be financially accountable if an organization is fiscally dependent on the primary government regardless of whether the organization has a separately elected governing board, a governing board appointed by a higher level of government, or a jointly appointed board, and there is a potential for the organization to provide specific financial benefits to, or impose specific financial burdens on the primary government.

Blended Component Units:

Management determined that the following entities should be reported as blended component units based on the criteria above. Although the following is legally separate from the City, it has been “blended” as though it is part of the City because the component unit’s governing body is substantially the same as the City’s and there is a financial benefit or burden relationship between the City and the component unit; management of the City has operational responsibilities for the component unit; and/or the component unit provides services entirely, or almost entirely, to the City or otherwise exclusively, or almost exclusively, benefits the City, even though it does not provide services directly to it.

The Hercules Public Financing Authority – The Hercules Public Financing Authority (Authority) was established July 24, 2001, by and between the City and the Authority, pursuant to the state of California Government Code. The purpose of the Authority is to finance the acquisition, construction, and improvement of public capital improvements, working capital requirements, or insurance programs.

Separate detailed financial statements are available from the City’s Finance Department.

B. Basis of Accounting and Measurement Focus

The accounts of the City are organized on the basis of funds, each of which is considered a separate accounting entity. The operations of each fund are accounted for by providing a separate set of self-balancing accounts that comprise its assets, deferred outflows of resources, liabilities, deferred inflows of resources, fund balance or net position, revenues and expenditures or expenses, as appropriate. City resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled.
212
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2021

50 Note 1 – Summary of Significant Accounting Policies (Continued)

B. Basis of Accounting and Measurement Focus (Continued)

The Statement of Net Position reports separate sections for Deferred Outflows of Resources, and Deferred Inflows of Resources, when applicable.

Deferred Outflows of Resources represent outflows of resources (consumption of net position) that apply to future periods and that, therefore, will not be recognized as an expense until that time.

Deferred Inflows of Resources represent inflows of resources (acquisition of net position) that apply to future periods and that, therefore, are not recognized as revenue until that time.

Government-Wide Financial Statements

The government-wide financial statements are presented on an “economic resources” measurement focus and the accrual basis of accounting. Accordingly, all of the City’s assets, deferred outflows of resources, liabilities, and deferred inflows of resources, including capital assets, as well as infrastructure assets, and long-term liabilities, are included in the accompanying statement of net position. The statement of activities presents changes in net position.

Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred. Fiduciary activities of the City are not included in these statements.

Certain types of transactions are reported as program revenues for the City in three categories:

 Charges for services
 Operating grants and contributions
 Capital grants and contributions

Certain eliminations have been made in regards to interfund activities, payables and receivables. All internal balances in the statement of net position have been eliminated. In the statement of activities, internal service fund transactions have been included in the governmental activities. The following interfund activities have been eliminated:

 Due from and to other funds, which are short-term loans within the primary government  Advances to and from other funds, which are long-term loans within the primary government  Transfers in and out, which are flows of assets between funds without the requirement for repayment

Governmental Fund Financial Statements

All governmental funds are accounted for on a spending or “current financial resources” measurement focus and the modified accrual basis of accounting. Accordingly, only current assets, current liabilities, and deferred inflows of resources are included on the balance sheet. The statement of revenues, expenditures and changes in fund balances presents increases (revenue and other financing sources) and decreases (expenditures and other financing uses) in fund balances. Under the modified accrual basis of accounting, revenues are recognized in the accounting period in which they become both measurable and available to finance expenditures of the current period. 213
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2021

51 Note 1 – Summary of Significant Accounting Policies (Continued)

B. Basis of Accounting and Measurement Focus (Continued)

Governmental Fund Financial Statements (Continued)

Revenues are recorded when received in cash, except those revenues subject to accrual (generally 60 days after year-end) which are recognized when due. The primary revenue sources that have been treated as susceptible to accrual by the City are property taxes, intergovernmental revenues and other taxes. Business license fees are recorded as received, except at year-end when they are accrued pursuant to the modified accrual basis of accounting. The City recognizes business license revenue collected within 60 days as revenue at June 30.

Expenditures are recorded in the accounting period in which the related fund liability is incurred.

Reconciliations of the fund financial statements to the government-wide financial statements are provided to explain the differences.

The City reports the following major Governmental Funds:

General Fund accounts for all revenues and expenditures necessary to carry out basic governmental activities of the City that are not accounted for through other funds, For the City, the General Fund includes such activities as police, planning, engineering, public works, operations and maintenance, and legal and administrative services.

Hercules Debt Service Fund accounts for the accumulation of resources for, and the payment of, principal and interest on the Lease Revenue Bonds, Series 2003A issued to cover capital costs for the Hercules Municipal Utility and principal and interest on the Lease Revenue Bonds, Series 2003B issued to cover the financing of the original City Hall debt issue and to generate additional resources to assist in the construction of a new library building, Series 2009 issued for the purpose of financing the acquisiti on of certain commercial condominium property (Bio-Rad).

Proprietary Fund Financial Statements

Proprietary Fund Financial Statements include a Statemen t of Net Position, a Statement of Revenues, Expenses and Changes in Net Position, and a Statement of Cash Flows for each major Proprietary Fund.

A separate column representing internal service funds is also presented in these statements. However, internal service balances and activities have been combined w ith the governmental activities in the Government-Wide Financial Statements. The City’s internal service funds include four individual funds that provide services directly to other City funds. These services include risk management, health and welfare, and equipment replacement.

Proprietary funds are accounted for using the "economic resources" measurement focus and the accrual basis of accounting. Accordingly, all assets, deferred outflows of resources, liabilities (whether current or noncurrent), and deferred inflows of resources are included on the Statement of Net Position. The Statement of Revenues, Expenses and Changes in Fund Net Position presents increases (revenues) and decreases (expenses) in total Net Position.

Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred. In these funds, receivables have been recorded as revenue and provisions have been made for uncollectible amounts.

Operating revenues in the proprietary funds are those revenues that are generated from the primary operations of the fund. All other revenues are reported as non-operating revenues. Operating expenses are those expenses that are essential to the primary operations of the fund. All other expenses are reported as non-operating expenses. 214
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2021

52 Note 1 – Summary of Significant Accounting Policies (Continued)

B. Basis of Accounting and Measurement Focus (Continued)

Proprietary Fund Financial Statements (Continued)

The City reports the following major Proprietary Funds:

Wastewater Fund accounts for wastewater treatment to the cities of Hercules and Pinole and for the maintenance of the City’s sewer lines and related facilities. It is a self-supporting activity which provides services on a user charge basis to residences and businesses.

Internal service funds are presented in the proprietary fund financial statements. Internal service funds account for activities related to vehicle replacement, IT equipment replacement, and facilities maintenance. However, internal service balances and activities have been combined with the governmental activities in the government- wide financial statements.

Fiduciary Fund Financial Statements

Fiduciary fund financial statements include a Statement of Net Position and a Statement of Changes in Fiduciary Net Position. The City’s fiduciary funds represent agency funds and private purpose trust funds. Both custodial funds and the private purpose trust funds are accounted for on the full accrual basis of accounting.

The City reports the following fiduciary funds:

Private-purpose Trust Fund – This fund is used to account for the balances and transactions of the Successor Agency to the former Hercules Redevelopment Agency.

Custodial Funds – These funds account for resources held by the City in custodial capacity for special assessment collected for Reassessment District 05-01 debt service payments, affordable housing set-aside funds, and for waste management service. The City is responsible for ensuring that the assets reported in these funds are used for their intended purposes.

C. Cash and Investments

The City’s cash and cash equivalents are comprised of cash on hand, demand deposits, and short-term investments with original maturity of three months or less from the date of acquisition. All cash and investments of proprietary funds are held in the City’s investment pool. These cash pools have the general characteristics of a demand deposit account, therefore, all cash and investments in the proprietary funds are considered cash and cash equivalents for statement of cash flows purposes.

Investments are stated at fair value (quoted market price or best available estimate thereof). 215
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2021

53 Note 1 – Summary of Significant Accounting Policies (Continued)

D. Fair Value Measurement

U.S. GAAP defines fair value, establishes a framework for measuring fair value and establishes disclosures about fair value measurement. Investments, unless otherwise specified, recorded at fair value in the financial statements, are categorized based upon the level of judgment associated with the inputs used to measure their fair value.

The three levels of the fair value measurement hierarchy are described below:

 Level 1 – Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement date.
 Level 2 – Inputs, other than quoted prices included in Level 1, that are observable for the assets or liabilities through corroboration with market data at the measurement date.  Level 3 – Unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the assets or liabilities at the measurement date.

E. Interfund Transactions

Activities between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as “due from/to other funds” (i.e., current portion of interfund loans).

F. Prepaid Items

Prepaid items are payments made to vendors for services that will benefit periods beyond the fiscal year ended using purchase method.

G. Inventory

Inventory consists of materials and supplies held for future consumption and are priced at average cost using the first-in, first-out method.

H. Capital Assets

In the government-wide financial statements, capital assets, which include land, buildings, improvements, equipment, furniture, and infrastructure assets (e.g., roads, sidewalks, and similar items), are recorded at historical cost or estimated historical if purchased or constructed. Donated capital assets are valued at their estimated acquisition value on the date donated. City policy has set the capitalization threshold for reporting capital assets with an initial, individual cost of more than $2,500 for general capital asserts and $5,000 for infrastructure capital assets, and an estimated useful life of one year or more.

216
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2021

54 Note 1 – Summary of Significant Accounting Policies (Continued)

H. Capital Assets (Continued)

The City defines infrastructure as the basic physical assets that allow the City to function. The assets include:

 Street system
 Site amenities such as parking and landscaped areas used by the City in conduct of its business.

Each major infrastructure system can be divided into subsystems. For example, the street system can be subdivided into pavement, curb and gutters, sidewalks, medians, streetlights, traffic control devices (signals), and land. These subsystems were not delineated in the basic financial statements. The appropriate operating department maintains information regarding the subsystems.

The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized
.

Capital assets used in operations are depreciated over their estimated useful lives using the straight-line method.

The estimated useful lives used for depreciation purposes are as follows:

Building and improvements 15-50 Years
Land improvements 20 Years
M achinery and equipment 5-20 Years
Infrastructure 15-50 Years

I. Long-Term Obligations

In the government-wide financial statements, long-term debt and other long-term obligations are reported as liabilities in the Statement of Net Position. Bond premiums and discounts are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount.

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

J. Unearned and Unavailable Revenue

In the government-wide financial statements, unearned revenue is recognized for transactions for which revenue has not yet been earned. Typical transactions recorded as unearned revenues in the government-wide financial statements are cell phone site license lease payments received in advance, prepaid charges for services and facility rentals paid in advance.
217
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2021

55 Note 1 – Summary of Significant Accounting Policies (Continued)

J. Unearned and Unavailable Revenue (Continued)

In the governmental fund financial statements, unearned and unavailable revenue is recorded when transactions have not yet met the revenue recognition criteria based on the modified accrual basis of accounting. The City records unearned revenue for transactions for which revenues have not been earned, and unavailable revenue when funds are not available to meet current financial obligations. Typical transactions for which unearned or unavailable revenue is recorded are lease payments, quarterly encroachment fees and advance registration for recreation classes which were not yet earned.

K. Compensated Absences

City employees have vested interest in varying levels of vacation, sick leave and compensatory time based on their length of employment. It is the policy of the City to pay all accumulated vacation pay and all or a portion of sick pay when an employee retires or terminates. The long-term amount is included as a liability in the governmental activities of the government-wide financial statements. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignations and retirements. The General Fund is typically used to liquidate compensated absences. In proprietary funds, compensated absences are expensed to the various funds in the period they are earned, and such fund’s share of the unpaid liability is recorded as a long-term liability of the fund.

L. Property Taxes Receivable

Property tax revenue is recognized in the fiscal year for which the taxes have been levied providing they become available. Available means due, or past due and receivable within the current period and collected within the current period or expected to be collected soon enough thereafter (not to exceed 60 days) to be used to pay liabilities in the current period.

Under California law, property taxes are assessed and collected by the counties at up to 1% of assessed value, plus other increases approved by the voters. The property taxes go into a pool, and are then allocated to the cities based on complex formulas. The County of Contra Costa levies, bills and collects property taxes and special assessments for the City and remits the full assessment regardless of the amounts received under a Teeter plan arrangement.

Secured Unsecured
Lien Date January 1 preceding fiscal year January 1 preceding fiscal year Due Date November 1 & February 1 August 31
Delinquent Date December 10 & April 10 September 1

M. Interfund Transactions

Activities between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as “due from/to other funds” (i.e., current portion of interfund loans).

N. Claims Payable

The City records a liability to reflect an actuarial estimate of ultimate uninsured losses for both general liability claims (including property damage claims) and workers’ compensation claims. The estimated liability for workers’ compensation claims and general liability claims includes “incurred but not reported” (“IBNR”) claims. There is no fixed payment schedule to pay these liabilities.
218
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2021

56 Note 1 – Summary of Significant Accounting Policies (Continued)

O. Pensions

For purposes of measuring the aggregate net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the plans and additions to/deductions from the plans’ fiduciary net position have been determined on the same basis as they are reported by the plans (Note 8). For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with benefit terms. Investments are reported at fair value.

The following timeframes are used for pension reporting:

CalPERS
Valuation Date June 30, 2019
Measurement Date June 30, 2020
Measurement Period July 1, 2019 - June 30, 2020

Gains and losses related to changes in total pension liability and fiduciary net position are recognized in pension expense systematically over time. The first amortized amounts are recognized in pension expense for the year the gain or loss occurs. The remaining amounts are categorized as deferred outflows and deferred inflows of resources related to pensions and are to be recognized in future pension expense. The amortization period differs depending on the source of the gain or loss. The difference between projected and actual earnings is amortized straight-line over 5 years. All other amounts are amortized straight-line over the average expected remaining service lives of all members that are provided with benefits (active, inactive, and retired) as of the beginning of the measurement period.

The General Fund is typically used to pay pension benefits. In proprietary funds, pension benefits are expensed to the various funds in the period they are earned, and such fund’s share of the unpaid liability is recorded as a long- term liability of the fund.

P. Other Postemployment Benefits (“OPEB”)

For purposes of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of the plans and additions to/deductions from OPEB Plan's fiduciary net position have been determined on the same basis as they are reported by the plan (Note 10). For this purpose, the OPEB plan recognizes benefit payments when due and payable in accordance with the benefit terms. Investments are reported at fair value.

The following timeframes are used for OPEB reporting:

OPEB
Valuation Date June 30, 2021
Measurement Date June 30, 2021
Measurement Period July 1, 2020 - June 30, 2021

Gains and losses related to changes in total OPEB liabil ity and fiduciary net position are recognized in OPEB expense systematically over time. The first amortized amounts are recognized in OPEB expense for the year the gain or loss occurs. The remaining amounts are categorized as deferred outflows and deferred inflows of resources related to OPEB and are to be recognized in future OPEB expense. The amortization period differs depending on the source of gain or loss. The difference between projected and actual earnings is amortized on a straight-line basis over 5 years. All other amounts are amortized on a straight-line basis over the average expected remaining service lives of all members that are provided with benefits (active, inactive, and retired) at the beginning of the measurement period.
219
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2021

57 Note 1 – Summary of Significant Accounting Policies (Continued)

Q. Deferred Outflows of Resources and Deferred Inflows of Resources

The Statement of Net Position reports separate sections for deferred outflows of resources, and deferred inflows of resources, when applicable.

Deferred Outflows of Resources represent outflows of resources (consumption of net position) that apply to future periods; therefore, will not be recognized as an expense until that time.

Deferred Inflows of Resources represent inflows of resources (acquisition of net position) that apply to future periods; therefore, are not recognized as a revenue until that time.

R. Net Position

In the government-wide financial statements and proprietary fund financial statements, net position is classified as follows:

Investment in Capital Assets – This component of net position consists of capital assets, net of accumulated depreciation, related debt, and deferred inflows of resources.

Restricted – This component of net position consists of restricted assets reduced by liabilities and deferred inflows of resources related to those assets.

Unrestricted – This component of net position is the amount of the assets, deferred outflows of resources, liabilities, and deferred inflows of resources that are not included in the determination of net investment in capital assets or the restricted component of net position.

S. Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

T. Fund Balances

In the governmental fund financial statements, fund balances are classified as follows:

Nonspendable – Nonspendable fund balances include amounts that cannot be spent because they are not in a spendable form, such as loans receivable or inventory, or because resources legally or contractually must remain intact.

Restricted – Restricted fund balances are the portion of fund balance that have externally enforceable limitations on their usage through legislation or limitations imposed by creditors, grantor, laws and regulations of other governments or enabling legislation.

Committed – Committed fund balances are self-imposed limitations by the highest level of decision-making authority, namely the City Council, prior to the end of the reporting period. City Council adoption of a resolution is required to commit resources or to rescind the commitment.

220
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2021

58 Note 1 – Summary of Significant Accounting Policies (Continued)

T. Fund Balances (Continued)

Assigned – Assigned fund balances are limitations imposed by management based on the intended use of the funds. Modifications or rescissions of the constraints can be removed by the same type of action that limited the use of the funds. Assignment of resources can be done by the highest level of decision making or by a committee or official designated for that purpose. The City Council has authorized the City Manager for that purpose.

Unassigned – Unassigned fund balances represent the residual net resources in excess of the other classifications. The general fund is the only fund that reports a positive unassigned fund balance amount. In other governmental funds, it is not appropriate to report a positive unassigned fund balance amount. However, in governmental funds other than general fund, if expenditures incurred for specific purposes exceed the amounts that are restricted, committed, or assigned to those purposes, it may be necessary to report a negative unassigned fund balance in that fund.

U. Spending Policy

Government-Wide Financial Statements and the Proprietary Fund Financial Statements

When expenses are incurred for purposes for which both restricted and unrestricted components of net position are available, the City’s policy is to apply the restrict ed component of net position first, then the unrestricted component of net position as needed.

Governmental Fund Financial Statements

When expenditures are incurred for purposes for which both restricted and unrestricted fund balances are available, the City’s policy is to apply restricted fund balances first, then unrestricted fund balances as needed.

When expenditures are incurred for purposes where only unrestricted fund balances are available, the City uses the unrestricted resources in the following order, except for instances wherein an ordinance specifies the fund balance:

 Committed
 Assigned
 Unassigned

V. Implementation of New GASB Pronouncements

GASB Statement No. 84, Fiduciary Activities. This statement establishes standards relating accounting and financial reporting for identifying and financial reporting of fiduciary activities. Those provisions are effective for reporting periods beginning after December 15, 2019, as amended by GASB Statement No. 95. Application of this statement was effective starting in fiscal year ending June 30, 2021. See Note 17 for details.

GASB Statement No. 90, Majority Equity Interests. This statement defines a majority equity interest and specifies that a majority equity interest in a legally separate organization should be reported as an investment if a government’s holding of the equity interest meets the definition of an investment. Those provisions are effective for reporting periods beginning after December 15, 2019. Application of this statement did not have a material effect on the City’s financial statements for the fiscal year ending June 30, 2021. 221
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2021

59 Note 1 – Summary of Significant Accounting Policies (Continued)

V. Implementation of New GASB Pronouncements (Continued)

GASB Statement No. 93, Replacement of Interbank Offered Rates . This statement addresses those and other accounting and financial reporting implications that result from the replacement of London Interbank Offered Rate (IBOR). The removal of LIBOR as an appropriate benchmark interest rate is effective for reporting periods ending after December 31, 2021. All other requirements of this Statement are effective for reporting periods beginning after June 15, 2020. Application of this statement did not have a material effect on the City’s financial statements for the fiscal year ending June 30, 2021.

GASB Statement No. 98, The Annual Comprehensive Financial Report. This Statement establishes the term annual comprehensive financial report and its acronym ACFR. That new term and acronym replace instances of comprehensive annual financial report and its acronym in generally accepted accounting principles for state and local governments. Those provision are effective for fiscal years ending after December 15, 2021. The City has elected early implementation of this statement. Application of this statement did not have a material effect on the City’s financial statements for the fiscal year ending June 30, 2021.

Note 2 – Cash and Investments

The City maintains a cash and investment pool, which includes cash balances and authorized investments of all funds.

The City had the following cash and investments at June 30, 2021:

Governmental Business-type Fiduciary
Activities Activities Funds Total
Cash and investments 25,269,319 $ 21,611,402 $ 10,707,875 $ 57,588,596 $ Cash and investments with fiscal agents 4,232,599 7,679,725 9,062,166 20,974,490 Total 29,501,918$ 29,291,127 $ 19,770,041 $ 78,563,086 $ Primary Government

The City’s cash and investments at June 30, 2021 in more detail:

Cash on hand 2,255$
Deposits with financial institutions 16,153,983
Deposits with trust 2,237,248
Investments 60,169,600
Total 78,563,086$

222
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2021

60 Note 2 – Cash and Investments (Continued)

A. Demand Deposits

The carrying amounts of the City’s demand deposits were $16,153,983 at June 30, 2021. Bank balances at that date were $16,342,530, the total amount of which was insured or collateralized with accounts held by the pledging financial institutions in the City’s name as discussed below.

The California Government Code requires California banks and savings and loan associations to secure the City’s cash deposits by pledging securities as collateral. This Code states that collateral pledged in this manner shall have the effect of perfecting a security interest in such collateral superior to those of a general creditor. Thus, collateral for cash deposits is considered to be held in the City’s name.

The market value of pledged securities must equal at least 110% of the City’s cash deposits. California law also allows institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the City’s total cash deposits. The City may waive collateral requirements for cash deposits, which are fully insured up to $250,000 by the Federal Deposit Insurance Corporation (“FDIC”). The City, however, has not waived the collateralization requirements.

B. Investments Authorized by the California Government Code and the City's Investment Policy

The table below identifies the investment types that are authorized by the City's investment policy and the California Government Code. The table also identifies cer tain provisions of the California Government Code (or the City's investment policy, if more restrictive) that address interest rate risk, credit risk, and concentration of credit risk. This table does not address investments of debt proceeds held by bond trustee that are governed by the provisions of debt agreements of the City, rather than the general provisions of the California Government Code or the City's investment policy.

Ma x i m um Ma x i m um
M aximum Percentage Investment
Authorized Investment Type Maturity of Portfolio in One Issuer Local Agency Investment Fund (State Pool) N/A $50 M illion $50 M illion U.S. Treasury Obligations 5 Years None None
U.S. Government Agency Issues 5 Years None None
Insured Deposits with Banks and Savings and Loans N/A None None Bankers Acceptance (M ust be Dollar Denominated) 180 Days 40% 30% Commercial Paper 270 Days 15% 10%
Negotiable Time Certificates of Deposits 5 Years 30% $100,000 Nonnegotiable Time Certificates of Deposits 5 Years 30% $100,000 Federally Issued Time Deposits 5 Years None $100,000
Repurchase Agreements 30 Days None 10%
Reverse Repurchase Agreements 92 Days 20% None
Medium-Term Notes 5 Years 30% 15%
Money Market Mutual Funds N/A 20% 10%
Insured or Passbook Savings Accounts N/A None $100,000

*The table is based on state law requirements or investment policy requirements, whichever is more restrictive. 223
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2021

61 Note 2 – Cash and Investments (Continued)

C. Investments Authorized by Debt Agreements

Ma x i m um Ma x i m um
M aximum Percentage Investment
Authorized Investment Type Maturity of Portfolio in One Issuer Local Agency Investment Fund (State Pool) N/A $50 M illion $50 M illion U.S. Treasury Obligations 30 Years 20% None
U.S. Government Agency Issues 30 Years 20% None
Insured Deposits with Banks and Savings and Loans N/A None None Bankers Acceptance (M ust be Dollar Denominated) 6 M onths 40% 30% Commercial Paper 6 M onths 15% 10%
Negotiable Time Certificates of Deposits 5 Years 30% $100,000 Nonnegotiable Time Certificates of Deposits 5 Years 30% $100,000 Federally Issued Time Deposits 1 Years 20% None
Repurchase Agreements 30 Days None None
Reverse Repurchase Agreements 92 Days 20% None
Medium-Term Notes 5 Years 30% 15%
Mutual Funds N/A 20% None
Money Market Funds N/A None None
Insured or Passbook Savings Accounts N/A None $100,000
Guaranteed Investment Contract N/A None None

Investments of debt proceeds held by bond trustee are governed by provisions of the debt agreements, rather than the general provisions of the California Government Code or the City's investment policy. The table below identifies the investment types that are authorized for investments held by bond trustee. The table also identifies certain provisions of these debt agreements that address interest rate risk, and concentration of credit risk.

D. Risk Disclosures

Disclosures Relating to Interest Rate Risk

Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment.

Generally, the longer the maturity of an investment is, the greater the sensitivity of its fair value to changes in market interest rates. One of the ways that the City manages its exposure to interest rate risk is by purchasing a combination of shorter term and longer term investments and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time as necessary to provide the cash flow and liquidity needed for operations.

Information about the sensitivity of the fair values of the City's investments (including investments held by bond trustees) to market interest rate fluctuations is provided by the following table that shows the distribution of the City's investments by maturity:

Maturity
12 M onths
Investment Type Total or Less
Investments:

Local Agency Investment Fund 39,786,654$ 39,786,654 $ Investments with fiscal agents:

Mone y Ma rke t Mutua l Funds 20,382,946 20,382,946 Total 60,169,600$ 60,169,600 $

224
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2021

62 Note 2 – Cash and Investments (Continued)

D. Risk Disclosures (Continued)

Investments with Fair Values Highly Sensitive to Interest Rate Fluctuations

Interest rate risk is the market value fluctuation due to overall changes in the interest rates. It is mitigated by limiting the average maturity of the City’s portfolio, not to exceed three years.

As a means of maintaining liquidity and minimizing interest rate risk, the City’s investment policy limits are as follows:

Percentage
Maturity of Portfolio
Up to One Year 10% M inimum
One Year to Five Years 60% M aximum
M ore Than Five Years 30% M aximum

Disclosures Relating to Credit Risk

Generally, credit risk is the risk that an issuer of an in vestment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization.

Presented below is the minimum rating required by (where applicable) the California Government Code or the City's investment policy, or debt agreements, and the actual rating as of fiscal year end for each investment type.

Mi ni m um
Legal Not
Investment Type Total Rating AAA Rated
Investments:

Local Agency Investment Fund 39,786,654$ N/A - $ 39,786,654$ Investments with fiscal agents:

Money Market Mutual Funds 20,382,946 N/A 20,382,946 - Total 60,169,600$ 20,382,946 $ 39,786,654 $ S&P Rating as of Fiscal Year Ended

Concentration of Credit Risk

The investment policy of the City contains no limitations on the amount that can be invested in any one issuer beyond that stipulated by the California Government Code. The City has no investments in any one issuer (other than mutual funds and external investment pools) that represent 5% or more of total City investments.

Custodial Credit Risk

Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that in the event of the failure of the counterparty (e.g., broker dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The California Government Code and the City's investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits or investments, other than the provision for deposits as disclosed in Note 2A.

For investments identified herein as held by bond trustee, the bond trustee selects the investment under the terms of the applicable trust agreement, acquires the investment, and holds the investment on behalf of the reporting government.
225
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2021

63 Note 2 – Cash and Investments (Continued)

E. Investment in Local Agency Investment Fund (“LAIF”)

The City is a participant in LAIF, which is regulated by California Government Code Section 16429 under the oversight of the Treasurer of the State of California. The City’s investments with LAIF at June 30, 2021 included a portion of the pool funds invested in Structured No tes and Asset-Backed Securities, which included the following:

Structured Notes: debt securities (other than asset-backed securities) whose cash flow characteristics (coupon rate, redemption amount, or stated maturity) depend upon one or more indices and/or that have embedded forwards or options.

Asset-Backed Securities: generally, mortgage-backed securities that entitle their purchasers to receive a share of the cash flows from a pool of assets such as principal and interest repayments from a pool of mortgages (for example, collateralized mortgage obligations), or credit card receivables.

As of June 30, 2021, the City had $39,786,654 invested in LAIF, which had invested 1.10% of the pool investment funds in structured notes and asset-backed securities.

F. Investment in Money Market Mutual Funds

At June 30, 2021, investments in money market mutual funds are reported at fair value. The City values investments in money market mutual funds at NAV based on amortized cost. The funds investment objectives seek preservation of capital, daily liquidity and maximum current income. The portfolios consist of liquid, high-quality debt securities issued by the U.S. Government. The fund seeks to preserve the NAV at $1.00 per share but cannot guarantee to do so. The funds offer same day liquidity and as of June 30, 2021 the City had $20,382,946 invested in Money Market Mutual Funds.

Note 3 – Loans Receivable

A. Governmental Activities

At June 30, 2021, loans receivable consisted of the following:

Bio-Rad Loan 1,502,773$
Total 1,502,773$

Bio-Rad Loan

The City advanced Bio-Rad Laboratories, Inc. $2,000,000 to construct various tenant improvements in one or more of the buildings located at 203-295 Linus Pauling Drive. The terms of the loan call for monthly payments of $10,418, at an interest rate of 4.5% per annum, with repayments commencing May 15, 2010 through September 14, 2038. The balance outstanding as of June 30, 2021 was $1,502,773. 226
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2021

64 Note 3 – Loans Receivable (Continued)

B. Fiduciary Fund Financial Statements

At June 30, 2021, loans receivable consisted of the following:

Business Development Loans 1,285,518$
Bridge Housing Corporation 2,163,993
Home Emergency Loan 8,293
First Time Homebuyers 1,178,322
Homeowner Retention/Loss Mitigation 2,564,398
Revitalization and Beautification 214,198
Other Assistance Programs 1,136,357
Total 8,551,079$

Amounts shown above are net of an allowance for uncollectible accounts of $700,000 for Housing Program Loans.

The Successor Agency to the Redevelopment Agency of the City of Hercules, a private purpose trust fund continues to administer the above listed outstanding loans receivable as it winds down the activities of the former Redevelopment Agency.

Note 4 – Lease Receivable

On August 14, 2008, the City of Hercules and Bio-Rad Laboratories, Inc. entered in to a lease agreement, which Bio- Rad agreed to lease from the City of Hercules, the premises, consisting of the land located in the City of Hercules, County of Contra Costa, state of California, commonly known as the Venture Commerce Center located at 203-295 Linus Pauling Drive, including five (5) buildings consistin g of approximately 96,847 rentable square feet, together with the parking lot and associated improvements serving the buildings.

The term of this lease shall be for thirty (30) years, commencing on September 15, 2008 and ending on September 14, 2038, or terminated sooner pursuant to the terms of this lease. Bio-Rad Laboratories, Inc. has the option to terminate this lease anytime on or after the fifteenth (15th) anniversary date as to a portion or the entire premises by delivering to the City not later than three (3) months prior to said fifteenth (15th) anniversary date or any applicable later termination date, a notice of such election.

The City granted to Bio-Rad Laboratories, Inc. the option to purchase the premises, Bio-Rad Laboratories, Inc. may elect to exercise the Purchase Option by delivering to the City of Hercules written notice of such election within 30 days prior to either of the following dates: (i) the fifteenth (15th) anniversary date; (ii) the twentieth (20th) anniversary date; or (iii) the twenty-fifth (25th) anniversary date, If Bio-Rad Laboratories, Inc. has not elected to exercise the Purchase Option during the time period said above, then the Purchase Option shall automatically be deemed elected by Bio-Rad Laboratories, Inc. as of the expiration date unless Bio-Rad Laboratories, Inc., provides prior written notice to the City of Hercules within fifteen (15) days prior to the expiration date electing not to pursue the Purchase Option, If Bio-Rad Laboratories, Inc. elects to exercise the Purchase Option on the expiration date, the purchase price for the premises shall be one dollar ($1.00).

Total lease revenue of $26,723,100 will be received from the Bio-Rad Laboratories, Inc. during the term of lease. The interest rate on the lease payments is 8.0381%. Monthly lease payments vary from $55,300 to $83,699 will be received on the first day of each month without notice, offset, deduction, or demand, in advance, during the lease term.

227
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2021

65 Note 4 – Lease Receivable (Continued)

Future estimated minimum lease payments to be received are as follows:

Year Ending
June 30 Amount
2022 908,474 $
2023 914,726
2024 920,978
2025 927,230
2026 933,482
2026-2030 4,797,460
2031-2035 4,950,440
2036-2039 2,171,598
Subtotal 16,524,388
Less: Unearned income (7,718,065)
Lease receivable, net 8,806,323$

Note 5 – Interfund Transactions

A. Due From and To Other Funds

At June 30, 2021, the City’s Due to and from Other Funds are as follows:

Due From Other Funds (Receivable) Due To Other Funds (Payable) Amount General Fund Nonmajor Governmental Funds 190,014$
Nonmajor Governmental Funds General Fund 157
Successor Agency Private Purpose Trust Fund Grant Special Revenue Fund 322,055 Total 512,226$

The due to/from other funds are to provide cash flow fo r the funds with negative cash and for other short-term borrowings between funds.

B. Advances To and From Other Funds

At June 30, 2021, the City’s Advances to and from other funds are as follows:

Advances To Other Funds (Receivable) Advances From Other Funds (Payable) Amount General Fund Successor Agency Private Purpose Trust Fund 27,787,637$ Hercules Debt Service Fund Successor Agency Private Purpose Trust Fund 6,703,250 Nonmajor Governmental Funds Successor Agency Private Purpose Trust Fund 5,417,515 Wastewater Fund Successor Agency Private Purpose Trust Fund 10,587,627 Total 50,496,029$

Of the $48.2 million reported as assets in the General Fund, 57.7% of the balance represents amounts due from the Private Trust Fund, the Successor Agen cy to the City of Hercules Redevelopment Agency. The City is also reporting significant advances to the Agency in other funds. Amounts are not expected to be repaid within the next year.
228
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2021

66 Note 5 – Interfund Transactions (Continued)

C. Transfers In and Out

Transfer In Transfer Out Amount
General Fund Nonmajor Governmental Funds 150,000$
Debt Service Fund General Fund 312,037
Nonmajor Governmental Funds General Fund 157
Nonmajor Governmental Funds Nonmajor Governmental Funds 502,718 Nonmajor Governmental Funds Internal Service Fund 440,643 Total 1,405,555$

The transfer in and out are to fund City operations, debt service obligations, and maintenance of the arterial roadways.

Note 6 – Capital Assets

A. Governmental Activities

Summary of changes in governmental activities capital assets for the year ended June 30, 2021 was as follows:

Balance Reclassification/ Balance
June 30, 2020 Additions Retirements Transfers June 30, 2021 Nondepreciable assets:

Land 5,081,587$ -$ -$ -$ 5,081,587$ Construction in progress 462,977 4,026,454 - (261,255) 4,228,176 Total nondepreciable assets 5,544,564 4,026,454 - (261,255) 9,309,763 Depreci abl e assets:

Land improvements 11,807,105 - - (86,744) 11,720,361 Building and improvements 27,076,100 - - (102,687) 26,973,413 Machinery and equipment 6,881,849 214,241 (86,462) (1,928,629) 5,080,999 Infrastructure 110,928,058 137,272 - 2,379,315 113,444,645 Subtotal 156,693,112 351,513 (86,462) 261,255 157,219,418 Less: accumulated depreciation:

Land improvements (9,277,151) (423,598) - - (9,700,749) Building and improvements (11,250,397) (596,097) - - (11,846,494) Machinery and equipment (6,990,987) (264,027) 86,462 - (7,168,552) Infrastructure (55,610,955) (2,375,573) - - (57,986,528) Subtotal (83,129,490) (3,659,295) 86,462 - (86,702,323) Total depreciable assets, net 73,563,622 (3,307,782) - 261,255 70,517,095 Total capital assets, net 79,108,186$ 718,672$ -$ -$ 79,826,858$

229
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2021

67 Note 6 – Capital Assets (Continued)

A. Governmental Activities (Continued)

Depreciation expense was charged to functions/programs of governmental activities for the year ended June 30, 2021 as follows:

Depreciation Expenses Allocation
General government 311,664$
Public safety 37,201
Public works 2,680,503
Parks and recreation 373,527
Internal service funds 256,400
Total 3,659,295$

B. Business-Type Activities

Summary of changes in business-type activities capital assets for the year ended June 30, 2021 was as follows:

Balance Reclassification/ Balance
July 1, 2020 Additions Transfers June 30, 2021
Nondepreciable assets:

Land 191,700$ -$ -$ 191,700$ Construction in progress - 968,587 - 968,587 Total nondepreciable assets 191,700 968,587 - 1,160,287 Depreciable assets:

Building and improvements 38,325,271 - - 38,325,271 M achinery and equipment 250,345 - - 250,345 Infrastructure 14,857,483 - - 14,857,483 Subtotal 53,433,099 - - 53,433,099 Less: accumulated depreciation:

Building and improvements (10,718,869) (150,678) - (10,869,547) M achinery and equipment (197,354) (13,353) - (210,707) Infrastructure (2,665,988) (859,352) - (3,525,340) Subtotal (13,582,211) (1,023,383) - (14,605,594) Total de preciable asse ts, net 39,850,888 (1,023,383) - 38,827,505 Total capital assets, net 40,042,588$ (54,796)$ -$ 39,987,792$

Depreciation expense was charged to the Wastewater Fund within business-type activities as follows:

Depreciation Expenses Allocation
Wastewater 1,023,383$
Total 1,023,383$

230
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2021

68 Note 6 – Capital Assets (Continued)

C. Fiduciary Fund Financial Statements

Summary of changes in Fiduciary Fund capital assets for the year ended June 30, 2021 was as follows:

Balance Reclassification/ Balance
July 1, 2020 Additions Transfers June 30, 2021
Nondepreciable assets:

Land 229,685$ -$ -$ 229,685$ Construction in progress 27,975,434 - - 27,975,434 Total nondepreciable assets 28,205,119 - - 28,205,119 Depreciable assets:

Land improvements 11,379 - - 11,379 Building and improvements 4,965,778 - - 4,965,778 M achinery and equipment 116,445 - - 116,445 Infrastructure 4,232,722 - - 4,232,722 Subtotal 9,326,324 - - 9,326,324 Less: accumulated depreciation:

Land improvements (11,379) - - (11,379) Building and improvements (3,143,331) (99,437) - (3,242,768) M achinery and equipment (63,910) (5,810) - (69,720) Infrastructure (2,665,455) (204,911) - (2,870,366) Subtotal (5,884,075) (310,158) - (6,194,233) Total de preciable asse ts, net 3,442,249 (310,158) - 3,132,091 Total capital assets, net 31,647,368$ (310,158)$ -$ 31,337,210$

Depreciation expense was charged to the Successor Agency Private Purpose Trust Fund within the Fiduciary Fund Financial Statements as follows:

Depreciation Expenses Allocation
Successor Agency 310,158$
Total 310,158$

231
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2021

69 Note 7 – Long-Term Debt

A. Governmental Activities

Summary of changes in Governmental Activities long-term debt for the year ended June 30, 2021 was as follows:

Balance Balance Due within Due in More
July 1, 2020 Additions Deletions June 30, 2021 One Year Than One Year Publicly Offered:
2003B PFA Lease Revenue Bonds 5,705,000$ -$ (5,705,000)$ -$ -$ -$ 2009 PFA Taxable Lease Revenue Bonds 8,585,000 - (200,000) 8,385,000 220,000 8,165,000 Less: Discount on issuance (311,332) - 17,297 (294,035) - (294,035) 2020 PFA Lease Revenue Refunding Bonds - 5,876,843 - 5,876,843 - 5,876,843 H.E.L.P. Loan 1,600,000 - (84,479) 1,515,521 75,933 1,439,588 R.D.L.P. Loan 3,750,000 - - 3,750,000 - 3,750,000 Engie Energy Conservation - 4,209,354 - 4,209,354 93,812 4,115,542 S unTrust Lease 478,284 - (184,634) 293,650 193,470 100,180 Compensated Absences 584,351 315,418 (291,385) 608,384 426,339 182,045 Total 20,391,303$ 10,401,615$ (6,448,201)$ 24,344,717$ 1,009,554$ 23,335,163$

2003B PFA Lease Revenue Bonds

The Public Financing Authority issued lease revenue bonds, series 2003B, dated October 15, 2003, totaling $9,150,000. The purpose of the bonds was to refinance the 1994 Refunding Certificates of Participation and to finance a portion of the construction for a public library. The interest rate on the bonds ranges from 2.00% to

5.00%. The interest is payable semiannually on June 1 and December 1, commencing December 1, 2003. The bonds are subject to optional and mandatory early redemption provisions. The bonds are payable from and secured by revenues consisting primarily of the base rental payments of the facility lease. Principal is due annually beginning on December 1, 2005, in amounts ranging from $170,000 to $2,480,000. The outstanding balance was refunded with 2020 PFA Lease Revenue Refunding Bond during the year ended June 30, 2021.

2009 Public Financing Authority Taxable Lease Revenue Bonds (Bio-Rad Project)

The Authority issued taxable lease revenue bonds, series 2009, dated July 29, 2009, totaling $10,080,000. The purpose of the bonds was to finance the acquisition of certain commercial condominium properties, consisting of approximately 96,847 square feet located at 203-295 Linus Pauling Drive within the City from the City, funding a reserve fund for the Bonds and to paying the costs of issuance of the Bonds. The interest rates on the bonds range from 6.00% to 8.40%. The interest is payable semiannually on January 1 and July 1, commencing January 1, 2010.

The bonds are subject to optional special mandatory redemption, and mandatory sinking account redemption provisions. The bonds are payable from and secured by revenues consisting primarily of the base rental payments of the property lease, Principal is due annually be ginning on July 1, 2010, in amounts ranging from$165,000 to $845,000. The bonds mature on July 1, 2038. The balance at June 30, 2021 is $8,385,000.

The Bonds constitute limited obligations of the Authority payable solely from Revenues. The Authority has no taxing power. The obligation of the City to make City Advances does not constitute an obligation of the City which the City is obligated to levy or pledge any form of taxation or for which the City has levied or pledged any form of taxation.

232
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2021

70 Note 7 – Long-Term Debt (Continued)

A. Governmental Activities (Continued)

Future debt service requirements on the 2009 Public Financing Authority Taxable Lease Revenue bonds are as follows:

Year Ending
June 30, Principal Interest Total
2022 220,000$ 691,140$ 911,140$ 2023 235,000 672,371 907,371 2024 255,000 652,159 907,159 2025 275,000 630,296 905,296 2026 300,000 606,578 906,578 2027-2031 1,910,000 2,601,491 4,511,491 2032-2036 2,845,000 1,621,410 4,466,410 2037-2039 2,345,000 305,970 2,650,970 Total 8,385,000$ 7,781,415$ 16,166,415$

2020 Hercules Public Financing Authority 2020 Lease Revenue Refunding Bond

The Hercules Public Financing Authority issued Lease Revenue Refunding Bond series 2020, dated August 1, 2020, totaling $5,876,843. The purpose of the bonds was to finance and to refinance the acquisition and or construction of certain real property and public capi tal improvements of the City. The issuance of the 2020 Lease Revenue Refunding Bond (the “2020 Refunding Bond”) resulted in cash flow savings of $947,702 over the life of the Bond. The City has structured the refinancing to achieve nearly all of the cash flow savings in the first three fiscal years: $458,377 in FY 2021, $435,857 in FY 2022, and $53,463 in FY 2023.

Year Ending
June 30, Principal Interest Total
2022 - $ 129,878$ 129,878 $ 2023 386,663 125,606 512,269 2024 448,561 116,376 564,937 2025 457,061 106,369 563,430 2026 465,032 96,180 561,212 2027-2031 2,494,386 319,649 2,814,035 2032-2035 1,625,140 54,357 1,679,497 Total 5,876,843$ 948,416 $ 6,825,259 $

233
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2021

71 Note 7 – Long-Term Debt (Continued)

A. Governmental Activities (Continued)

H.E.L.P. Loan

In April 2005 the City entered into an agreement with the California Housing Finance Agency (Agency), a public instrumentality and political subdivision of the state of California to develop a 50-unit multifamily rental project that is a component to a mixed-used development, also consisting of 26,825 square feet of ground-floor commercial space. The Agency has authorized the making of a loan in the amount of $1,600,000 known as the Housing Enabled by Local Partnerships (H.E.L.P.) to the City for the purpose of assisting in operating a local housing program. Under the terms of this original agreement the City of Hercules agreed to reimburse the Agency $1,600,000, 10 years from April 11, 2005 at a 3% simple per annum interest. Interest is to be charged only on funds disbursed. In October 2013, the City and Agency amended the agreement to extend the due date of the loan and accumulated interest until April 2027 and to reduce the interest rate to 1.5% simple interest effective October 31, 2013. The balance at June 30, 2021 is $1,515,521.

The annual debt service requirements to maturity for the H.E.L.P. Loan as of June 30, 2021 are as follows:

Year Ending
June 30, Principal Interest Total
2022 75,933 $ 24,067 $ 100,000 $ 2023 76,067 23,933 100,000 2024 75,933 24,067 100,000 2025 76,133 23,867 100,000 2026 1,211,455 18,733 1,230,188 Total 1,515,521$ 114,667 $ 1,630,188 $

R.D.L.P. Loan

In February 2007, the City entered into a loan agreement with the California Housing Finance Agency (Agency) in the amount of $3,750,000 ($1,750,000 for predevelopment costs and $2,000,000 for construction costs). The funds will be used to assist with site acquisition, predevelopment, and construction costs for 23 affordable ownership units within a 52-unit condominium project, which is a component to the Sycamore Downtown Street project, a mixed-use, mixed-income development. Under the terms of the original agreement, the City agreed to repay the Agency $3,750,000, four years from February 2007 at 3% simple per annum interest. In October 2013, the City and Agency amended the agreement to extend the due date of the loan and accumulated interest until August 2026 and to reduce the interest rate to 1.5% simple interest effective October 31, 2013. The balance at June 30, 2021 is $3,750,000
.

The annual debt service requirements to maturity for the R.D.L.P. Loan as of June 30, 2021 are as follows:

Year Ending
June 30, Principal Interest Total
2022 - $ 100,000$ 100,000 $ 2022 - 100,000 100,000 2023 - 100,000 100,000 2024 - 100,000 100,000 2025 - 100,000 100,000 2026 3,750,000 113,572 3,863,572 Total 3,750,000$ 613,572 $ 4,363,572 $ 234
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2021

72 Note 7 – Long-Term Debt (Continued)

A. Governmental Activities (Continued)

Engie Construction Loan

On August 14, 2020, the City entered into an equipment lease purchase agreement for the implementation of the “Option A” Energy Services Contract. Interest rate is 2.71%, 30/360 basis, and payment commencing August 14, 2020 and ending on September 14, 2040.

The annual debt service requirements to maturity for the rental payment as of June 30, 2021 are as follows:

Year Ending
June 30, Principal Interest Total
2022 93,812 $ 123,580 $ 217,392 $
2023 114,900 111,531 226,431
2024 127,479 108,417 235,896
2025 130,064 104,963 235,027
2026 143,641 101,438 245,079
2027-2031 953,119 440,612 1,393,731
2032-2036 1,440,698 286,572 1,727,270
2037-2039 1,205,641 101,396 1,307,037
Total 4,209,354$ 1,378,509 $ 5,587,863 $

SunTrust Lease

On September 27, 2007, the City entered into master lease agreements with SunTrust Leasing Corporation in order to provide funds for the financing of the EMS Project performed by Siemens Building Technologies in the amount of $2,185,538. Payments are due semiannually on September 27 and March 27, at an interest rate of 4.73%. The Master Lease Agreement matures on September 27, 2022. The balance at June 30, 2021 is $293,650. The costs of these assets were $2,358,636 and the net book value at June 30, 2021 were $293,650.

The annual debt service requirements to maturity for the SunTrust master lease agreement as of June 30, 2021 are as follows:

Year Ending
June 30, Principal Interest Total
2022 193,470 $ 11,629 $ 205,099 $ 2023 100,180 2,369 102,549 Total 293,650 $ 13,998 $ 307,648 $

235
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2021

73 Note 7 – Long-Term Debt (Continued)

B. Business-Type Activities

Summary of changes in Business-Type Activities long-term debt for the year ended June 30, 2021 was as follows:

Balance Balance Due within Due in More
June 30, 2020 Additions Deletions June 30, 2021 One Year Than One Year 2010 PFA Wastew ater
Revenue Bonds 9,535,000$ -$ (285,000)$ 9,250,000$ 295,000$ 8,955,000$ Less: Discount on issuance (145,434) - 7,272 (138,162) - (138,162) State Water Resources Construction Loan
Construction Loan 25,457,695 - (1,101,397) 24,356,298 1,096,780 23,259,518 Compensated Absences 46,251 29,704 (28,775) 47,180 47,180 - Total 34,893,512$ 29,704$ (1,407,900)$ 33,515,316$ 1,438,960$ 32,076,356 $

2010 PFA Wastewater Revenue Bonds

The Public Financing Authority issued revenue bonds, series 2010, dated August 1, 2010, totaling $11,765,000.

The purpose of the bonds was to finance improvements to the City’s wastewater system, fund a reserve fund for the bonds, and pay the costs of issuances of the bonds. The interest rates on the bonds range from 2.00% to 5.130%.

Principal and interest payment are due annually beginning August 1, 2011, in amounts ranging from $230,000 to $700,000. The bonds mature on August 1, 2040. The balance at June 30, 2021 is $9,250,000.

The Bonds are limited obligations of the Authority and are not secured by a legal or equitable pledge of, or charge or lien upon, any property of the Authority or any of its income or receipts, except the Revenues. The full faith and credit of the Authority and the Agency and the City, which are parties to the agreement creating the Authority, are not pledged for the payment of the principal of, or interest on, the Bonds and no tax or other source of funds, other than the Revenues, is pledged to pay the principal and interest on the Bonds.

The annual debt service requirements to maturity for the 2010 PFA Wastewater Revenue Bonds as of June 30, 2021 are as follows:

Year Ending
June 30, Principal Interest Total
2022 295,000 $ 438,288 $ 733,288 $ 2023 305,000 426,288 731,288 2024 315,000 413,691 728,691 2025 330,000 400,181 730,181 2026 345,000 385,622 730,622 2027-2031 1,970,000 1,664,750 3,634,750 2032-2036 2,505,000 1,121,375 3,626,375 2037-2041 3,185,000 413,876 3,598,876 Total 9,250,000$ 5,264,070 $ 14,514,070 $

236
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2021

74 Note 7 – Long-Term Debt (Continued)

B. Business-Type Activities (Continued)

State Water Resources Construction Loan

In June 2016, the City entered into an installment sale agreement with the California State Water Resources Control Board in the amount of $26,500,000. The funds are for construction costs for the Pinole-Hercules Wastewater Pollution Control Plant Improvement Project. The interest rate on the loan is 1.7%. The first principal and interest payment are due August 31, 2019, and is contingent on the total drawdowns at project completion.

The loan matures on August 31, 2038. The City has drawn down $25,458,720 of the loan principal including construction loan interest as of June 30, 2021. The balance at June 30, 2021 is $24,356,298.

The annual debt service requirements to maturity for the Publicly Owned Treatment Works Construction Loan as of June 30, 2021 are as follows:

Year Ending
June 30, Principal Interest Total
2022 1,096,780$ 414,057$ 1,510,837$ 2023 1,115,425 395,412 1,510,837 2024 1,134,388 376,450 1,510,838 2025 1,153,672 357,165 1,510,837 2026 1,173,285 337,553 1,510,838 2027-2031 6,172,479 1,381,707 7,554,186 2032-2036 6,715,284 838,902 7,554,186 2037-2041 5,794,985 248,361 6,043,346 Total 24,356,298$ 4,349,605$ 28,705,903$

C. Fiduciary Fund Financial Statements

A summary of changes in Fiduciary Fund long-term debt for the year ended June 30, 2021 was as follows:

Balance Balance Due within Due in More
June 30, 2020 Additions Deletions June 30, 2021 One Year Than One Year P ublicly Offered:
2005 Tax Allocation Bonds 32,355,000$ -$ (1,585,000)$ 30,770,000 $ 1,655,000$ 29,115,000 $ Plus: Bond Premium 1,087,989 - (72,532) 1,015,457 - 1,015,457 2007A Housing Tax Allocation Bonds 9,370,000 - (445,000) 8,925,000 470,000 8,455,000 2007B Housing Tax Allocation Bonds 7,465,000 - (385,000) 7,080,000 405,000 6,675,000 Plus: Bond Premium 40,908 - (3,146) 37,762 - 37,762 2007 RDA Tax Allocation Bonds 48,605,000 - (1,090,000) 47,515,000 1,110,000 46,405,000 Notes Payable 347,070 - - 347,070 - 347,070 Total 99,270,967$ -$ (3,580,678)$ 95,690,289 $ 3,640,000$ 92,050,289 $

237
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2021

75 Note 7 – Long-Term Debt (Continued)

C. Fiduciary Fund Financial Statements (Continued)

2005 Tax Allocation Bonds

On August 5, 2005, the former Redevelopment Agency (Agency) issued Hercules Merged Project Area Tax Allocation Bonds. Series 2005, in the amount of $56, 260,000. The proceeds of the bonds were used to finance certain public capital improvements within the Agency’s Merged Project Area and refund the Agency Subordinate Tax Allocation Bonds, Series 2001. The Bonds mature annually each August 1 from 2006 to 2035, in amounts ranging from $740,000 to $2,960,000 and bear interest at rates ranging from 3.50% to 5.00%. Interest is payable semi-annually on February 1 and August 1. The Bonds maturing on or after August 1, 2016, are subject to optional redemption prior to maturity at the option of the Agency on or after August 1, 2015, as a whole or in part, on any interest payment date, at a price equal to the principal amount, plus accrued interest on the redemption date. The bonds are payable exclusively from pledged tax revenues to be derived from the project area and from the amounts on deposit in certain funds and accounts, including the reserve account and the revenue account. The balance at June 30, 2021 is $30,770,000.

The annual debt service requirements to maturity for the 2005 Tax Allocation Bonds as of June 30, 2021 are as follows:

Year Ending
June 30, Principal Interest Total
2022 1,655,000$ 1,484,431 $ 3,139,431 $ 2023 1,735,000 1,400,356 3,135,356 2024 1,825,000 1,312,069 3,137,069 2025 1,915,000 1,219,325 3,134,325 2026 2,010,000 1,121,988 3,131,988 2027-2031 11,650,000 3,971,900 15,621,900 2032-2036 9,980,000 941,881 10,921,881 Total 30,770,000$ 11,451,950 $ 42,221,950 $

In connection with the issuance of the 2005 Tax Allocation Bonds, the Agency recorded a deferred loss on refunding of debt which is reported as a deferred outflow . This deferred loss was in connection with interest payments made to the escrow agent for future payments of interest. The total amount of the deferred loss was $291,160 which will be amortized over the life of the bond. The amortization for the fiscal year 2020-2021 was $9,705, and the accumulated amortization at June 30, 2021 was $155,280.

238
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2021

76 Note 7 – Long-Term Debt (Continued)

C. Fiduciary Fund Financial Statements (Continued)

2007 Housing Tax Allocation Bonds Series A and B

On July 26, 2007, the former Redevelopment Agency issued Hercules Merged Project Area Housing Tax Allocation Bonds, 2007 Series A, in the amount of $13,130,000 and 2007 Series B, in the amount of $12,760,000.

The proceeds of the bonds were used to finance certain public capital improvements within the Agency’s Merged Project Area. The Bonds mature annually each August 1 from 2009 to 2033, in amounts ranging from $220,000 to $950,000 and bear interest at rates ranging from 3.50% to 6.125%. Interest is payable semi-annually on February 1 and August 1. The Bonds maturing on or after August 1, 2018, are subject to optional redemption prior to maturity at the option of the Agency on or after August 1, 2017, as a whole or in part, on any interest payment date, at a price equal to the principal amount plus accrued interest on the redemption date. The bonds are payable exclusively from pledged tax revenues to be derived from the project area and from the amounts on deposit in certain funds and accounts, including the reserve account and the revenue account. The balance at June 30, 2021 for 2007 Series A and Series B are $8,925,000 and $7,080,000, respectively.

The annual debt service requirements to maturity for the 2007A Housing Tax Allocation Bonds as of June 30, 2021 are as follows:

Year Ending
June 30, Principal Interest Total
2022 470,000 $ 531,344 $ 1,001,344 $ 2023 500,000 502,244 1,002,244 2024 530,000 471,013 1,001,013 2025 560,000 437,631 997,631 2026 595,000 402,259 997,259 2027-2031 3,565,000 1,400,328 4,965,328 2032-2036 2,705,000 254,953 2,959,953 Total 8,925,000$ 3,999,772 $ 12,924,772 $

The annual debt service requirements to maturity for the 2007B Housing Tax Allocation Bonds as of June 30, 2021 are as follows:

Year Ending
June 30, Principal Interest Total
2022 405,000 $ 337,213 $ 742,213 $ 2023 420,000 318,650 738,650 2024 - 309,200 309,200 2025 - 309,200 309,200 2026 - 309,200 309,200 2027-2031 4,210,000 1,077,275 5,287,275 2032-2036 2,045,000 255,625 2,300,625 Total 7,080,000$ 2,916,363 $ 9,996,363 $

239
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2021

77 Note 7 – Long-Term Debt (Continued)

C. Fiduciary Fund Financial Statements (Continued)

2007 Tax Allocation Bonds Series A

On December 20, 2007, the former Redevelopment Agency issued Hercules Merged Project Area Tax Allocation Bonds, 2007 Series A, in the amount of $60,555,000. The pr oceeds of the bonds will be used to finance certain public capital improvements within the Agency’s Merged Project Area. The Bonds mature annually each August 1 from 2009 to 2043, in amounts ranging from $260,000 to $3,315,000 and bear interest at rates ranging from

3.50% to 5.00%. Interest is payable semi-annually on Febr uary 1 and August 1. The Bonds maturing on or after August 1, 2018, are subject to optional redemption prior to maturity at the option of the Agency on or after February 1, 2018, as a whole or in part, on any interest payment date, at a price equal to the principal amount, plus accrued interest on the redemption date. The bonds are payable exclusively from pledged tax revenues to be derived from the project area and from the amounts on deposit in certain funds and accounts, including the reserve account and the revenue account. The balance at June 30, 2021 is $47,515,000.

The annual debt service requirements to maturity for the 2007 Tax Allocation Bonds Series A as of June 30, 2021 are as follows:

Year Ending
June 30, Principal Interest Total
2022 1,110,000$ 2,222,881 $ 3,332,881 $ 2023 1,140,000 2,170,793 3,310,793 2024 1,170,000 2,113,044 3,283,044 2025 1,200,000 2,053,794 3,253,794 2026 1,235,000 1,992,919 3,227,919 2027-2031 6,615,000 9,067,271 15,682,271 2032-2036 12,270,000 7,206,210 19,476,210 2037-2041 16,295,000 3,339,237 19,634,237 2042-2043 6,480,000 316,793 6,796,793 Total 47,515,000$ 30,482,942 $ 77,997,942 $

Notes Payable

In 1987, the Agency entered into Owner Participation Agreements with certain property owners (East Group and Bio Rad Laboratories) in the Redevelopment Area. Under the terms of these agreements, the Agency signed notes under which it promised to reimburse the owners by the year 2016 for the amount of incremental assessments levied on their properties, up to the cost of constructing public improvements. Payment on these notes is contingent on the property taxes and special assessments levied on these owners. As of June 30, 2021, the Agency’s long- term notes payable for East Group and Bio Rad Laboratories were $130,911 and $216,159, respectively. 240
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2021

78 Note 7 – Long-Term Debt (Continued)

D. Non-City Obligations

The District Bonds are not general obligations of the City nor any other political subdivision and the full faith and credit of the City is not pledged for repayment thereof since these debts do not constitute an obligation of the City and the City is not obligated to make payment beyond the available bond reserves, these bonds have not been reflected in the long-term debt in the accompanying financial statements.

Original Balance
Issuance June 30, 2021
Reassessment District 2005-1 (John Muir Parkway) 6,550,345 $ - $ Refunding Reassessment District 2005-1 (John Muir Parkway) 3,006,859 2,774,642

Note 8 – Retirement Plans

Summary of changes in deferred outflows of resources related to pension, net pension liabilities, and deferred inflows of resources related to pension for both governmental activities and business-type activities for the year ended June 30, 2021 are as follows:

Governmental Business-Type
Activities Activities Total
Deferred outflows of resources:

Pension contribution made after measurement date:

CalPERS M iscellaneous 194,040$ 30,105$ 224,145$ CalPERS Safety 443,902 - 443,902 Total pension contribution made after measurement date 637,942 30,105 668,047 Difference between projected and actual investment earnings:

CalPERS Miscellaneous 201,638 31,283 232,921 CalPERS Safety 215,712 - 215,712 Total difference between projected and actual investment earnings: 417,350 31,283 448,633 Adjustment due to difference in proportions
CalPERS Miscellaneous 415,435 64,450 479,885 CalPERS Safety 120,683 - 120,683 Total adjustment due to difference in proportions 536,118 64,450 600,568 Difference between expected and actual experience
CalPERS Miscellaneous 349,791 54,270 404,061 CalPERS Safety 769,632 - 769,632 Total difference between expected and actual experience 1,119,423 54,270 1,173,693 Total deferred outflows of resources
CalPERS Miscellaneous 1,160,904 180,108 1,341,012 CalPERS Safety 1,549,929 - 1,549,929 Total deferred outflows of resources 2,710,833$ 180,108$ 2,890,941$

241
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2021

79 Note 8 – Retirement Plans (Continued)

Governmental Business-Type
Activities Activities Total
Net pension liabilities:

CalPERS Miscellaneous 7,060,991 $ 779,817 $ 7,840,808 $ CalPERS Safety 9,924,963 - 9,924,963 Total net pension liabilities 16,985,954$ 779,817 $ 17,765,771 $ Deferred inflows of resources:

Change in assumptions
CalPERS M iscellaneous 54,822 $ 1,101 $ 55,923 $ CalPERS Safety 33,061 - 33,061 Total change in assumptions 87,883 1,101 88,984 Adjustment due to difference in proportions
CalPERS Miscellaneous 165,775 3,328 169,103$ CalPERS Safety 395,681 - 395,681 Total adjustment due to difference in proportions 561,456 3,328 564,784 Employer contributions in excess of proportionate share of contribution
CalPERS M iscellaneous 95,585 1,918 97,503 CalPERS Safety 596,985 - 596,985 Total employer contributions in excess of proportionate share of contribution 692,570 1,918 694,488 Total deferred inflows of resources
CalPERS Miscellaneous 316,182 6,347 322,529 CalPERS Safety 1,025,727 - 1,025,727 Total deferred inflows of resources 1,341,909$ 6,347$ 1,348,256$ Pension expenses:

CalPERS Miscellaneous 1,253,790$ 106,798$ 1,360,588$ CalPERS Safety 2,161,553 - 2,161,553 Total net pension ex penses 3,415,343$ 106,798$ 3,522,141$

A. General Information About the Pension Plans

Plan Descriptions – All qualified permanent and probationary employees are eligible to participate in the City’s separate Safety (police and fire) and Miscellaneous (all other) Employee Pension Plans, cost-sharing multiple employer defined benefit pension plans administered by the California Public Employees’ Retirement System (CalPERS). Benefit provisions under the Plans are established by state statute and City resolution. CalPERS issues publicly available reports that include a full description of the pension plans regarding benefit provisions, assumptions and membership information that can be found on the CalPERS website. 242
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2021

80 Note 8 – Retirement Plans (Continued)

A. General Information About the Pension Plans (Continued)

Employees Covered by Benefit Terms

At the June 30, 2020 measurement date the following employees were covered by the benefit terms:

Miscellaneous Safety Safety
Miscellaneous PEPRA Safety Tier 2 PEPRA
Active employees 30 16 11 1 11 Transferred employees 46 11 8 1 6 Separated employees 98 17 3 1 7 Retired employees and beneficiaries 89 - 33 - - Total 263 44 55 3 24

Benefits Provided – CalPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of full-time employment. Members with five years of total service are eligible to retire at age 50 with statutorily reduced benefits. All members are eligible for nonduty disability benefits after 10 years of service. The death benefit is one of the following: the Basic Death Benefit, the 1957 Survivor Benefit, or the Optional Settlement 2W Death Benefit. The cost-of-living adjustments for each plan are applied as specified by the Public Employees’ Retirement Law.

The Plans’ provisions and benefits in effect at June 30, 2021, are summarized below:

Miscellaneous Safety Safety
Miscellaneous Tier 2 Safety Tier 2 PE PRA
Benefit formula 2.0% @ 55 2.0% @ 62 3.0% @ 50 3.0% @ 55 2.7% @ 57 Benefit vesting schedule 5 years service 5 years service 5 years service 5 years service 5 years service Benefit payments monthly for life monthly for life monthly for life monthly for life monthly for life Retirement age 50-63 52 - 67 50 55 57
Monthly benefits, as a % of
eligible compensation 1.426 - 2.148% 1.0 - 2.5% 3.0% 3.0% 2.7% Required employee contribution rate 7.00% 6.75% 9.00% 9.00% 13.00% Required employer contribution rate 10.484% 7.732% 23.674% 21.746% 13.044%

Contributions – Section 20814(c) of the California Public Employees’ Retirement Law requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. Funding contributions for both Plans are determined annually on an actuarial basis as of June 30 by CalPERS. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The City is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. In addition, effective October 21, 2018, employees pay an additional 3% applied to the Employer CalPERS Contribution Rate.
243
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2021

81 Note 8 – Retirement Plans (Continued)

A. General Information About the Pension Plans (Continued)

For the year ended June 30, 2021, the contributions recognized as part of pension expense for each Plan were as follows:

Miscellaneous Safety CalPERS Total
Contributions - employer 224,145$ 443,902$ 668,047$

Proportionate Share of Net Pension Liability and Pension Expense

The following table shows the plan’s proportionate share of the risk pool collective net pension liability over the measurement period:

Plan Total Pension Plan Fiduciary Net Pension
L iability Net Position L iability/(Asset)
Miscellaneous
Balance at: 6/30/19 (Valuation date) 28,696,810$ 21,542,617 $ 7,154,193 $ Balance at: 6/30/20 (Measurement date) 29,729,683 21,888,875 7,840,808 Net changes during 2019-2020 1,032,873 $ 346,258 $ 686,615 $ Safety
Balance at: 6/30/19 (Valuation date) 33,743,015$ 23,895,251 $ 9,847,764 $ Balance at: 6/30/20 (Measurement date) 36,992,828 27,067,865 9,924,963 Net changes during 2018-2019 3,249,813 $ 3,172,614 $ 77,199 $

The City’s net pension liability/(asset) for each Plan is measured as the proportionate share of the net pension liability/(asset). The net pension liability/(asset) of each of the Plans is measured as of June 30, 2020, and the total pension liability/(asset) for each Plan used to calculate the net pension liability/(asset) was determined by an actuarial valuation as of June 30, 2019 rolled forward to June 30, 2020 using standard update procedures. The City’s proportion of the net pension liability/(asset) was based on a projection of the City’s long-term share of contributions to the pension plans relative to the projected contributions of all participating employers, actuarially determined. The City’s proportionate share of the net pension liability/(asset) for each Plan as of the June 30, 2019 measurement date (June 30, 2020 reporting date) and 2020 measurement date (June 30, 2021 reporting date) was as follows:

Miscellaneous Safety
Proportion - June 30, 2019 0.15751% 0.14724%
Proportion - June 30, 2020 0.18589% 0.14897%
Change - Increase/(Decrease) 0.02838% 0.00173%

244
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2021

82 Note 8 – Retirement Plans (Continued)

A. General Information About the Pension Plans (Continued)

For the year ended June 30, 2021, the City recognized pension expense of $1,360,588 and $2,161,553, for the Miscellaneous and Safety plans, respectively. At June 30, 2021, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Deferred Outflows Deferred Inflows
of Resources of Resources
Contribution made after the measurement date 224,145 $ - $ Difference between expected and actual
experience 404,061
Changes of assumptions - (55,923) Net difference between projected and actual
earnings on pension plan investments 232,921 - Employer contributions in excess/(under)
proportionate share of contributions (97,503)
Adjustments due to difference in proportions 479,885 (169,103) Total 1,341,012 $ (322,529) $
Miscellaneous Plan

Deferred Outflows Deferred Inflows
of Resources of Resources
Contribution made after the measurement date 443,902$ -$ Difference between expected and actual
experience 769,632 -
Changes of assumptions - (33,061) Net difference between projected and actual
earnings on pension plan investments 215,712 - Employer contributions in excess/(under)
proportionate share of contributions - (596,985) Adjustments due to difference in proportions 120,683 (395,681) Total 1,549,929$ (1,025,727)$
Safety Plan

Deferred Outflows Deferred Inflows
of Resources of Resources
Contribution made after the measurement date 668,047 $ - $ Difference between expected and actual
experience 1,173,693 -
Changes of assumptions - (88,984) Net difference between projected and actual
earnings on pension plan investments 448,633 - Employer contributions in excess/(under)
proportionate share of contributions - (694,488) Adjustments due to difference in proportions 600,568 (564,784) Total 2,890,941 $ (1,348,256) $
CalPERS Aggregate Total

245
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2021

83 Note 8 – Retirement Plans (Continued)

A. General Information About the Pension Plans (Continued)

For the Miscellaneous Plan and Safety Plan, $224,145 and $443,902, respectively, were reported as deferred outflows of resources related to pensions resulting from City’s contributions subsequent to the measurement date and will be recognized as a reduction of the net pension liability in the year ended June 30, 2021. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:

M easurement Period
Ended June 30 Miscellaneous Plan Safety Plan Total
2021 112,371$ (236,427)$ (124,056)$ 2022 396,532 74,398 470,930 2023 173,719 134,244 307,963 2024 111,716 108,085 219,801 2025 - - - Thereafter - - - Total 794,338$ 80,300$ 874,638$ Deferred Outflows/(Inflows) of Resources

Actuarial Assumptions

The total pension liabilities in the June 30, 2019 actuarial valuations were determined using the following actuarial assumptions:

Actuarial Cost M ethod Entry Age Normal in accordance with the requirements of GASB 68 Actuarial Assumptions:

Discount Rate
Inflation
Salary Increases
M ortality Rate Table
1 Post Retirement Benefit Increase

7.15%

2.50%
Varies by Entry Age and Service
Derived using CalPERS’ M embership Data for all Funds.

The lesser of contract COLA or 2.50% until Purchasing Power Protection Allowance floor on purchasing power applies, 2.50% thereafter.

1The mortality table used was developed based on CalPERS-specific data. The probabilities of mortality are based on the 2017 CalPERS Experience Study for the period from 1997 to 2015. Pre-retirement and Post-retirement mortality rates include 15 years of projected mortality improvement using 90% of Scale MP-2016 published by the Society of Actuaries. Further details of the Experience Study can be found on the CalPERS website. 246
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2021

84 Note 8 – Retirement Plans (Continued)

A. General Information About the Pension Plans (Continued)

Discount Rate

In determining the long-term expected rate of return, CalPERS took into account, both short-term and long-term market return expectations as well as the expected pension fund cash flows. Such cash flows were developed assuming that both members and employers will make their required contributions on time and as scheduled in all future years. Using historical returns of all the funds’ asset classes, expected compound (geometric) returns were calculated over the short-term (first 10 years) and the long-term (11+ years) using a building-block approach. Using the expected nominal returns for both short-term and long-term, the present value of benefits was calculated for each fund. The expected rate of return was set by calculating the rounded single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated using both short-term and long- term returns. The expected rate of return was then set equal to the single equivalent rate calculated above and adjusted to account for assumed administrative expenses.

The table below reflects long-term expected real rate of return by asset class. The rate of return was calculated using the capital market assumptions applied to determine the discount rate and asset allocation. These geometric rates of return are net of administrative expenses.

Asset Class
New Strategic
A llocation
Real Return Years
1 - 10
1 Real Return Years
11 +
2 Global equity 50.00% 4.80% 5.98%
Fixed income 28.00% 1.00% 2.62%
Inflation assets 0.00% 0.77% 1.81%
Private equity 8.00% 6.30% 7.23%
Real assets 13.00% 3.75% 4.93%
Liquidity 1.00% 0.00% -0.92%
2 An expected inflation of 2.00% used for this period.
3 An expected inflation of 2.92% used for this period.
1 In the System's CAFR, Fixed Income is included in Global Debt Securities; Liquidity is included in Short-term Investments; Inflation assets are included in both Global Equity Securities and Global Debt Securities.

The discount rate used to measure the total pension liability was 7.15% for the plan. To determine whether the municipal bond rate should be used in the calculation of a discount rate for each plan, CalPERS stress tested plans that would most likely result in a discount rate that would be different from the actuarially assumed discount rate.

Based on the testing, none of the tested plans run out of assets. Therefore, the current 7.15% discount rate is adequate and the use of the municipal bond rate calculation is not necessary. The long term expected discount rate of 7.15% is applied to all plans in the Public Employees Retirement Fund (PERF). The stress test results are presented in a detailed report called “GASB Crossover Testing Report” that can be obtained from the CalPERS website under the GASB 68 Section.

According to Paragraph 30 of Statement 68, the long-term discount rate should be determined without reduction for pension plan administrative expense. The 7.00% investment return assumption used in this accounting valuation is net of administrative expenses. Administrative expenses are assumed to be 15 basis points. An investment return excluding administrative expenses would have been 7.15%. Using this lower discount rate has resulted in a slightly higher Total Pension Liability and Net Pension Liability. The difference was deemed immaterial to the Public Agency Cost Sharing Multiple-Employer Defined Benefit Pension Plan. 247
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2021

85 Note 8 – Retirement Plans (Continued)

A. General Information About the Pension Plans (Continued)

Sensitivity of the Proportionate Share of the Net Pension Liability to Changes in the Discount Rate

The following presents the City’s proportionate share of the net position liability for the Plan, calculated using the discount rate for each Plan, as well as what the City’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage point lower or 1-percentage point higher than the current rate:

Discount Rate - 1% Current Discount Discount Rate + 1%
(6.15%) Rate (7.15%) (8.15%)
Miscellaneous 12,521,141$ 7,840,808 $ 3,973,605 $ Safety 14,938,674 $ 9,924,963 $ 5,810,759 $ Total 27,459,816 $ 17,765,771 $ 9,784,364 $ Plan's Net Pension L iability

Pension Plan Fiduciary Net Position

Detailed information about the pension plan’s fiduciary net position is available in the separately issued CalPERS financial reports.

B. Payable to the CalPERS Pension Plans

At June 30, 2021, the City had no outstanding amounts owed to the CalPERS pension plans for contributions for the year ended June 30, 2021.

Note 9 – Deferred Compensation Plan

A. 457 Plan

The City offers its employees a deferred compensation plan created in accordance with Internal Revenue Code Section 457. The Plan is available to full-time employees. The Internal Revenue Service regulations allow an employer to designate a 457(b) Deferred Compensation Plan as an alternative to social security. The plan permits employees to defer a portion of their salary until future years. The deferred compensation is not available to employees until termination, retirement, death, or unforeseeable emergency. All amounts of compensation deferred under the plan, all property and rights purchased with those amounts, and all income attributable to those amounts, property, or rights are (until paid or made available to the employee or other beneficiary) held in trust by a third-party administrator (ICMA) for the exclusive benefit of the plan participants and their beneficiaries as prescribed by Internal Revenue Code Section 457(g). Accordingly, these assets have been excluded from the City’s Annual Comprehensive Financial Report.

B. 401A Plan

The City contributes 4% of total gross salary to the plan for senior managers. 248
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2021

86 Note 9 – Deferred Compensation Plan (Continued)

C. PARS

Part-time employees who do not participate in the Public Employees Retirement System are covered through the City’s participation in Public Alternative Retirement System (PARS). Employees contribute 6.2% and the City contributes 1.3%.

Note 10 – Other Postemployment Benefits

A. Retiree Healthcare Plan (PEHMCA)

Plan Descriptions and Administration

The City Retiree Healthcare Plan (Plan) is a single-employer benefit healthcare plan administered by the City. The Plan provides healthcare benefits to eligible retirees and their dependents. The Plan does not issue a financial report.

The City has prefunded a portion of its OPEB benefits in a Public Agency Retirement Services (PARS) trust. The PARS Trust is a tax qualified irrevocable trusts, organized under Internal Revenue Code (IRC) Section 115, established to pre -fund OPEB as described in GASB Statement 75. PARS issues annual audited financial statements for each participating agency of the Trust. PARS is considered an agency agent multiple -employer plan, required to provide financial statements and required supplementary information (Schedule of Changes in Fiduciary Net Position by Plan) that are prepared in conformance with GASB statement 75.

These reports may be obtained by writing the plan at the following address: PARS 4350 Von Karman Ave., Suite 100, Newport Beach, CA 92660-2043.

Employees become eligible to retire and receive City-paid healthcare benefits upon attainment of age 50 and 5 years of service. The City contribution towards retiree health benefits is determined under the "Equal Contribution Method" under PEHMCA under which the City's nomina l contribution to PEMHCA is the same for active employees and retirees ($139/month for 2020 and $143/month for 2021).

Members of the Hercules Police Officers' Association and Executive Management retirees may receive supplement benefits under a sick-leave conversion plan called "Supplemental Optional Monies Allowance for Retirees" Plan. In order to be eligible, the employee must have served the City for at least ten consecutive years prior to retirement and be at least age 50 when they separate from service, or retire with a disability retirement and have at least 20 years of service with the City.

The SOMAR Plan benefit percentage is based on the lesser of actual years of service, or an equivalent based on sick-leave hours divided by 48, with a minimum percentage of 50% after 10 years and a maximum percentage of 100% after 20 years. The percentage is applied to a stated dollar amount prior to age 65 and the Kaiser Senior Advantage retiree only premium after age 65, offset by the PEMHCA Plan minimum, described above. The monthly dollar amounts under the SOMAR Plan are $355.08/per month for 2020 and $365.73/per month for 2021 (Police), $234.34 for 2020 and $241.37/per month for 2021 (Executive Management), and are contractually indexed each year by 3%.
249
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2021

87 Note 10 – Other Postemployment Benefits (Continued)

A. Retiree Healthcare Plan (PEHMCA) (Continued)

Contributions

The contributions are based on pay-go for premiums and contributions to the PARS OPEB trust. The pay-go amount is the actual amount of retiree premiums. Total contributions (pay-go and trust contributions) for the year ended June 30, 2021 were $22,016.

Employees Covered by Benefit Terms

At June 30, 2021, the following employees were covered by the benefit terms:

Active plan members 54
Retirees 17
Total 71

Actuarial Assumptions

The net OPEB liability of the Plan was determined usin g an actuarial valuation as of July 1, 2020 using the following actuarial assumptions:

Actuarial Assumptions:

Discount Rate 5.15%
Inflation 2.50%
Aggregate payroll increases 2.75%
Expected long-term investment rate of return n/a
M ortality, Termination, and Disability 2017 CalPERS M ortalit y
Healthcare Trend Rate 4%

The mortality assumptions are based on the 2017 CalPERS Mortality for Miscellaneous and Schools Employees table created by CalPERS. CalPERS periodically studies mortality for participating agencies and establishes mortality tables that are modified versions of commonly used tables. This table incorporates mortality projection as deemed appropriate based on CalPERS analysis.

Discount Rate

The discount rate used to measure the total Plan’s OPEB liability was 5.15%. The projection of cash flows used to determine the discount rate assumed that City contributions will be made at rates equal to the actuarially determined contribution rates. Based on those assumptions, the City plan's fiduciary net position was projected to be available to make all projected OPEB payments for current active and inactive employees. Therefore, the long- term expected rate of return on OPEB plan investments was applied to all periods of projected benefit payments to determine the total OPEB liability.
250
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2021

88 Note 10 – Other Postemployment Benefits (Continued)

A. Retiree Healthcare Plan (PEHMCA) (Continued)

Discount Rate (Continued)

The expected long-term rate of return on OPEB plan investments of 5.15%, gross of expenses, was determined by Highmark Capital Management using a building-block method in which best-estimate ranges of expected future real rates of return, net of inflation, are developed for each major asset class. These ranges are combined to produce the term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table:

Asset Class
New Strategic
Allocation
Long-Term Expected
Real Rate of Return
All Domestic Equities 30.00% 7.25%
All Fixed Income 65.00% 4.25%
Short-Term Gov't Fixed 5.00% 3.00%
100.00%

Changes in the Net OPEB Liability (Asset)

This table shows the changes in the total OPEB liability, the plan fiduciary net position, and the net OPEB liability (asset) of the PEHMCA Plan as of June 30, 2021:

Total OPEB Plan Fiduciary Net OPEB
L iab ility Net Position L iab ility (Asset)
Balance at June 30, 2020 2,492,220 $ 2,664,592 $ (172,372) $ Changes Recognized for the M easurement Period:

Service Cost 167,563 - 167,563 Interest on the total OPEB liability 139,104 359,682 (220,578) Difference between expected and actual experience (311,195) - (311,195) Changes of assumptions 65,097 - 65,097 Contributions from the employer - 22,016 (22,016) Net investment income - - - Administrative expenses - (16,223) 16,223 Benefit payments (123,619) (123,619) - Net Changes during July 1, 2020 to June 30, 2021 (63,050) 241,856 (304,906) Balance at June 30, 2021 (Measurement Date) 2,429,170$ 2,906,448$ (477,278)$

Sensitivity of the Net OPEB Liability (Asset) to Changes in the Discount Rate

The following presents the net OPEB liability (asset) of the Plan, as well as what the City’s net OPEB liability (asset) would be if it were calculated using a discount rate 1% lower or 1% higher than the current discount rate:

Discount Rate - 1% Current Discount Discount Rate + 1%
(3.4%) Rate (5.4%) (5.4%)
(187,026)$ (477,278)$ (722,165)$ Net OPE B L iability (Asset)

251
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2021

89 Note 10 – Other Postemployment Benefits (Continued)

A. Retiree Healthcare Plan (PEHMCA) (Continued)

Sensitivity of the Net OPEB Liability (Asset) to Changes in the Discount Rate (Continued)

The following presents the net OPEB liability (asset) of the Plan, as well as what the Plan’s net OPEB liability (asset) would be if it were calculated using healthcare cost trend rates that 1% lower or 1% higher than the current healthcare cost trend rate:

Healthcare Cost Healthcare Cost Healthcare Cost
Trend Rates Trend Rates Trend Rates
3% 4% 5%
(782,975)$ (477,278)$ (99,715)$ Net OPE B L iability (Asset)

OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Relate to OPEB

For the year ended June 30, 2021, the City recognized OPEB expense of $60,455 for the Plan. OPEB expense represents the change in the net OPEB liability during the measurement period, adjusted for actual contributions and the deferred recognition of changes in investment gain/loss, and actuarial assumptions or method. At June 30, 2021, the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources:

Deferred Outflows Deferred Inflows
of Resources of Resources
Difference between expected and actual experience 22,908$ (1,270,430)$ Changes of assumptions 246,634 (241,109) Net difference between projected and actual earning on
OPEB plan investments 21,300 (175,180) Total 290,842$ (1,686,719)$

Amounts reported as deferred outflows of resources and de ferred inflows of resources related to OPEB will be recognized in OPEB expense as follows:

Measurement
Period Deferred Outflows/
E nding June 30 (Inflows) of Resources
2022 (121,730) $
2023 (122,078)
2024 (132,057)
2025 (194,952)
2026 (156,881)
Thereafter (668,179)
Total (1,395,877)$

252
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2021

90 Note 10 – Other Postemployment Benefits (Continued)

B. Retiree Cash Benefit Plan (SOMAR Plan)

Plan Description

The City provide an optional monetary allowance with an annual three (3%) adjustment each year to Public Safety and Executive employees who retire as regulated by the Public Employee’s Retirement System. To be eligible for the optional monies, an employee must retire as follows:

1. Service Retirement: Employees who have served the City for at least ten (10) consecutive years immediately prior to retirement and are at least fifty (50) years old when they separate service from the City.

2. Disability Retirement: Employees who retire with a disability retirement are not required to be a certain age, but must have at least twenty (20) years of service with the City.

Employees must have the minimum amount of sick leave on the books, as outlined in the chart below. If an employee has below the amount of sick leave required for their years of service, then they will only be eligible for the percentage paid equivalent to the amount of sick leave they do have on the books.

Years of
Ser v ic e
Sic k L eav e
Balance
% of Optional
Money
Av ailable
10 480 50
11 528 55
12 576 60
13 624 65
14 672 70
15 720 75
16 768 80
17 846 85
18 864 90
19 912 95
20-24 960 100
25 No Minimum
amount required 100

Employees must retire within one hundred twenty (120) days. In addition, employees who separate service but do not retire as a PERS annuitant, shall not be eligible under for SOMAR benefits.

The City will pay a portion of the optional money to a retiree until the retiree reaches age sixty five (65), upon which they are required to enroll in Medicare. At that time, the optional money will drop to an amount equivalent to the Kaiser Supplemental to Medicare rate through PERS.

The SOMAR benefit is expected to last into perpetuity. Payment are made on a bi-annual basis. 253
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2021

91 Note 10 – Other Postemployment Benefits (Continued)

B. Retiree Cash Benefit Plan (SOMAR Plan) (Continued)

Employees Covered by Benefit Terms

At the June 30, 2021 measurement date the following employees were covered by the benefit terms:

E xecutiv es Police Total
Participating active employees 11 20 31 Inactive employees receiving benefits 2 11 13 Total 13 31 44

Benefits Provided

The SOMAR plan’s provisions and benefits in effect at June 30, 2021, are summarized below:

E xecutiv es Police
Duration of benefits Lifetime Lifetime
Required service 50% at 10 years
grading t o 100% at
20 years
50% at 10 years
grading t o 100% at
20 years
M inimum age Retirement Retirement
Amount $263 per month pre-
65; based on Kaiser
premium post-65
$350 per month pre-
65; based on Kaiser
premium post-65
Contributions

For the year ended June 30, 2021, the contributions recognized as part of OPEB expense for the SOMAR plan were as follows:

SOM AR Plan
Contributions - employer 43,536$

Actuarial Assumptions

The net OPEB liability of the SOMAR Plan was determined using an actuarial valuation as of July 1, 2020 using the following actuarial assumptions:

Actuarial Assumptions:

Cost method Entry age normal
Discount Rate 2.16%
Inflation 2.50%
Aggregate payroll increases 2.75%
Mortality, retirement, and turnover 2017 CalPERS tables M ortality Improvement Scale RP-2014 Employee and Healthy Annuitant M ortality Tables for males
and females.

Mortality rates were based on the RP-2014 Employee and Healthy Annuitant Mortality Tables for Males or Females, as appropriate, projected using a generational projection based on 100% of scale MP-2016 for years 2014 through 2029, 50% of MP-2016 for years 2030 through 2049, and 20% of MP-2016 for 2050 and thereafter. 254
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2021

92 Note 10 – Other Postemployment Benefits (Continued)

B. Retiree Cash Benefit Plan (SOMAR Plan) (Continued)

Changes in the Net OPEB Liability

This table shows the changes in the total OPEB liability, the plan fiduciary net position, and the net OPEB liability (asset) of the SOMAR plan as of June 30, 2021:

Total OPEB Plan Fiduciary Net OPEB
L iability Net Position L iability
Balance at June 30, 2019 1,864,795 $ - $ 1,864,795$ Changes Recognized for the M easurement Period:

Service cost 141,956 - 141,956 Interest on the total pension liability 42,108 - 42,108 Changes of benefit terms - - - Difference between expected and actual experience (398,956) - (398,956) Changes of assumptions 11,351 - 11,351 Contributions from the employer as benefit payments - 43,536 (43,536) Net investment income - - - Administrative expenses - - - Benefit payments (43,536) (43,536) - Net changes during July 1, 2019 to June 30, 2020 (247,077) - (247,077) Balance at June 30, 2020 (measurement date) 1,617,718 $ - $ 1,617,718$ S OMAR Plan

Discount Rate

The discount rate used to measure the total OPEB liabi lity for the SOMAR plan was 2.2%. This discount rate estimates investment earnings for assets earmarked to cover retiree cash benefit liabilities. Since the SOMAR plan is an unfunded plan, the discount rate is based on an index of 20-year General Obligation municipal bonds.

Sensitivity of the Net OPEB Liability to Changes in the Discount Rate

The following presents the net OPEB liability of the SOMAR Plan, as well as what the SOMAR Plan’s net OPEB liability (asset) would be if it were calculated using a discount rate 1% lower or 1% higher than the current discount rate:

Discount Rate - 1% Current Discount Discount Rate + 1%
(1.2%) Rate (2.2%) (3.2%)
1,942,727$ 1,617,718 $ 1,365,073 $ SOMAR Plan's Total OPE B L iability

255
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2021

93 Note 10 – Other Postemployment Benefits (Continued)

B. Retiree Cash Benefit Plan (SOMAR Plan) (Continued)

OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Relate to OPEB

For the year ended June 30, 2021, the City recognized OPEB expense of $182,764 for the SOMAR plan. OPEB expense represents the change in the net OPEB liability during the measurement period, adjusted for actual contributions and the deferred recognition of changes in investment gain/loss, and actuarial assumptions or method. At June 30, 2021, the City reported deferred out flows of resources and deferred inflows of resources related to OPEB from the following sources for the SOMAR plan:

Deferred Outflows Deferred Inflows
of Resources of Resources
Difference between expected and actual experience - $ (363,334)$ Changes of assumptions 310,103 -
Total 310,103 $ (363,334) $
SOM A R P lan

Amounts reported as deferred outflows of resources and de ferred inflows of resources related to OPEB will be recognized in OPEB expense as follows:

Measurement SOMA R Plan
Period Deferred Outflows/
Ending June 30 (Inflows) of Resources
2022 (1,300) $
2023 (1,300)
2024 (1,300)
2025 (1,300)
2026 (1,300)
Thereafter (46,731)
Total (53,231)$

Payable to the OPEB Plan

At June 30, 2021, the City had no outstanding amounts owed to the SOMAR OPEB plan for contributions for the year ended June 30, 2021.

256
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2021

94 Note 11 – Risk Management

General Liability Insurance

Coverage is maintained with the Municipal Pooling Authority (MPA) with coverage limits of $10,000,000 per occurrence. The City maintains a deductible of $5,000 per occurrence.

Workers’ Compensation

The City has coverage limits for the following without a deductible:

MPA $0 to $500,000
American Safety Insurance $500,000
CSAC-EIA $1,000,000 to $4,000,000
ACE American Insurance Company $5,000,000 to $45,000,000

At June 30, 2021, the City’s estimated claims liabilities were as follows:

General liabilities 474,548$
Workers' Compensation 101,796
Total 576,344$

The City’s claims liability of $576,344 consists of $10,736 due within one year and the remainder of $565,609 due in more than one year. Changes in the claims liabilities for the fiscal years ended June 30, 2021, 2020 and 2019 are as follows:

Claims and
Beginning Changes in Claims Ending
Fiscal Year Balance Estimates Payments Balance
2018-2019 232,391$ 1,037,099$ (723,968)$ 545,522$ 2019-2020 545,522 1,194,289 (1,152,731) 587,080 2020-2021 587,080 452,015 (462,751) 576,344

Miscellaneous Coverages

The MPA provides additional coverage for the following risks incurred by the City:

Coverage
Deductibles Limits
Auto - Physical Damage:

Police Vehicles 3,000$ 250,000$
All Other Vehicles 2,000 250,000
All Risk Fire & Property 25,000 1,000,000,000 Boiler and M achinery 5,000 100,000,000

The MPA is governed by a board consisting of representatives from member municipalities. The board controls the operations of the MPA, including selection of management and approval of operating budgets, independent of any influence by member municipalities beyond their representation on the board.

The City’s deposits with the MPA are in accordance with formulas established by the MPA. Actual surpluses or losses are shared according to a formula developed from overall loss costs and spread to member entities on a percentage basis after a retrospective rating. Audited financial statements can be obtained from the Municipal Pooling Authority, 1911 San Miguel Drive, #200, Walnut Creek, California 94596. 257
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2021

95 Note 12 – Commitments and Contingencies

A. Lawsuits

The City is presently involved in certain matters of litigation that have arisen in the normal course of conducting City business. City management believes, based upon consultation with the City Attorney, that these cases, in the aggregate, will not have a material adverse effect on the City’s Annual Financial Statements. Additionally, City management believes that the City’s insurance programs are sufficient to cover any potential losses should an unfavorable outcome materialize.

B. Commitments

American Municipal Bond Assurance Corporation (“AMBAC”) Litigation – On January 30, 2012, AMBAC filed an action in the Contra Costa County Superior Court ag ainst the City, the former Redevelopment Agency, and each individual member of the City Council, seeking to, among other things, compel the City to transfer $4,100,000 from the Pooled Cash Account, which AMBAC alleges constitute the December 2011 tax increment receipts, to the Trustee, and in the alternative to impose a constructive trust on such funds and prevent the City from using those funds for any other purpose. The City, Agency, and Council members have vigorously opposed this action. The City believes that, unless the $4,100,000 of December receipts are allowed to be accounted for to reimburse the temporary advance from the Pooled Cash Account made on August 1, 2011 to the Trustee, that advance will have been an unlawful diversion of legally restricted funds which itself would need to be reversed in order to avoid violation of various state statutory and constitutional restrictions on the use of those funds. On January 31, 2012, AMBAC filed an ex parte application seeking, among other thing, a temporary restraining order effectively freezing $4,100,000 of City funds and, in the alte rnative, a writ of attachment on certain real estate owned by the City. The court denied AMBAC’s request for immediate relief on all points but issued an order to show cause why a preliminary injunction freezing the funds should not issue against the City in several weeks.

The City and AMBAC briefed the issue for the court and at a hearing on February 21, 2012, the Court was to evaluate whether AMBAC had demonstrated sufficient urgency to warrant issuing a preliminary injunction against the City, which injunction would have compelled the City in some way to set aside $4,100,000.

On March 8, 2012, a stipulation and Writ of Atta chment was signed between AMBAC and the Hercules Redevelopment Agency and the City of Hercules. It was agreed that as consideration for AMBAC’s forbearance on seeking an immediate writ of mandate and preliminary injunction on March 20, 2012, AMBAC received a Writ of Attachment on the real property commonly known as “Parcel C” (Contra Costa County Assessor’s Parcel No. 404-020-076-0) (Property “A”) and the real property co mmonly known as “Victoria Crescent” (Contra Costa County Assessor’s Parcel No. 404-040-062-6)(Property “B”). These properties were to be sold in 2014 to satisfy what is owed to AMBAC.

On February 24, 2014, the City of Hercules sold the real property commonly known as “Victoria Crescent” (Contra Costa County Assessor’s Parcel No. 404-040-062-6) (Property “B”) and on August 26, 2014, the City of Hercules sold the real property commonly known as “Parcel C” (Contra Costa County Assessor’s Parcel No. 404-020-076- 0)(Property “A”), net proceeds from both properties were paid to AMBAC.

In August 2014, the City, and the City as Successor Ag ency to the Redevelopment Agency entered into a stipulation with AMBAC that resulted in a dismissal of the litigation against the City and Agency which confirmed that AMBAC would receive the unencumbered proceeds from the sale of Victoria Crescent and Parcel C, and there is no obligation to the City’s general fund. These proceeds were paid to AMBAC. 258
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2021

96 Note 12 – Commitments and Contingencies (Continued)

B. Commitments (Continued)

In addition, the remaining obligations to AMBAC were satisfied through the sale of the Sycamore Crossing site (Contra Costa County Assessor’s Parcel Nos. 404-020-057 and 058) to Sycamore Crossing Land Developer, LLC, on October 13, 2016. The final related obligation to AMBAC which requires the Successor Agency to replenish the debt service reserve fund held by the Bond Trustee will be satisfied from former redevelopment tax increment received by the City of Hercules as the Successor Agency for Non-Housing Assets.

The AMBAC Litigation has been settled and the debt service reserve has been funded during fiscal year end June 30, 2021.

Note 13 – Joint Powers Agreements

The City is a member of the joint powers agencies describe d below. Each of these agencies is governed by a board, which controls their operation, including selection of management and approval of operating budgets, independent of influence by member municipalities beyond their representation on the board.

A. West Contra Costa Transportation Advisory Committee (WCCTAC)

WCCTAC was established in 1990 to develop regional strategies and meet regional requirements established by Measure “C” and to cooperatively address West Contra Costa County transportation issues.

The City’s payments to WCCTAC are in accordance with a formula under which each member Agency pays a proportionate share of the expenditures based on the number of voting members representing each agency. Audited financial statements can be obtained from the WCCTAC, One Alvarado Square, San Pablo, California 94806, The City has one voting member on the WCCTAC and pays 10% of annual expenditures.

B. West Contra Costa Integrated Waste Management Authority (WCCIWMA)

WCCIWMA was established in 1991 to coordinate landfill use reduction in the West Contra Costa County Area as mandated by the state of California. The City is represented by one Director. Funding for WCCIWMA is provided for through a surcharge collected from the ratepayers within WCCIWMA's jurisdiction. Audited financial statements can be obtained from the WCCIWMA, One Alvarado Square, San Pablo, California 94806.

C. Pinole/Hercules Wastewater Treatment Plant

On January 23, 2001, the cities of Pinole and Hercules entered into a joint powers agreement for the operation and ownership of the Pinole/Hercules Wastewater Treatment Plant (Plant). The City retains responsibility for the operation and maintenance of its wastewater collection system. The City of Hercules has an undivided fifty percent (50%) ownership interest in the Plant. The City of Pinole has the right and responsibility to manage and operate the Plant. Also, the City of Pinole maintains the records and accounts for all the transactions.

259
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2021

97 Note 14 – Stewardship, Compliance, and Accountability

A. Deficit Fund Balances/Net Position

At June 30, 2021, the following funds had a deficit fund balance/net position:

Nonmajor Special Revenue Funds:

Victoria by the bay LLAD No. 2002-01 (60,540) $
Stormwater (102,253)
STM P Traffic Impact Fees Special Revenue Fund -
Fiduciary Funds:

Successor Agency Private Purpose Trust Fund (96,767,132)

Victoria by the bay LLAD No. 2002-01 Special Revenue Fund negative fund balance of $60,540 will be financed through future assessments.

The Stormwater Special Revenue Fund negative fund balance of $102,253 will be financed through future assessments.

Private Purpose Trust Fund negative net position of $96,767,131 will be financed through future Redevelopment Property Tax Trust Fund.

260
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2021

98 Note 15 – Fund Balance Classification

The Governmental Fund’s fund balance classification at June 30, 2021 is follows:

Hercules Nonmajor
General Debt Service Governmental
F und F und F unds T otal
Nonspendable:

Prepaid items 10,112$ -$ -$ 10,112$ Pension section 115 trust 2,237,248 - - 2,237,248 Advances 27,787,637 - - 27,787,637 T otal Nonspendable 30,034,997 - - 30,034,997 Restricted for:

Debt service - 8,916,610 - 8,916,610 S treets and roads - - 817,895 817,895 Development services - - 403,008 403,008 Development impact fees 7,090,298 7,090,298
Public safety - - 106,187 106,187 Integrated waste management - - 867,734 867,734 Transportation - - 240,737 240,737 Assessment district - - 1,055,371 1,055,371 Regional wat er qualit y - - 51,569 51,569 To t a l R e s t r i c t e d - 8,916,610 10,632,799 19,549,409 Committed to:

Capital projects - - 1,391,188 1,391,188 T otal Committed - - 1,391,188 1,391,188 Assigned:

Assigned by Cit y Manager:

Eart hquake insurance deduct ible 500,000 - - 500,000 Fiscal neutrality reserve 4,034,517 - - 4,034,517 Capital projects 450,000 - - 450,000 Planning & building 846,800 - - 846,800 Reusable bags 13,930 - - 13,930 P ublic, educat ion and government (P EG) 70,000 - - 70,000 T otal Assigned 5,915,247 - - 5,915,247 Unassigned (deficit) 10,008,178 - (162,793) 9,845,385 T otal F und Balances 45,958,422$ 8,916,610$ 11,861,194$ 66,736,226$ Major F unds

261
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2021

99 Note 16 – Special Items – Settlement Payable to Department of Finance

On March 19, 2020, the City has entered a settlement agreement with Successor Agency to the Redevelopment Agency for the City of Hercules, the California Department of Finance related to completely resolve any and all disputes between the Parties pertaining to California Department of Finance v. City of Hercules; Successor Agency to the Hercules Redevelopment Agency, Sacramento County Superior Court Case No. 34-2019-80003245 ("Finance Action") and Successor Agency to the Hercules Redevelopment Agency; City of Hercules v. Keely Bosler, in her official capacity as Director of the California Department of Finance; California Department of Finance; Betty T. Yee, in her official capacity as Controller of the State of California; Robert Campbell, in his official capacity as Auditor-Controller of the County of Contra Costa , Sacramento County Superior Court Case No. 34-2018-80003038 ("Hercules Action") (collectively, the "Actions").

The actions related to the wind down of the Redevelopment Agency for the City of Hercules ("RDA") pursuant to Assembly Bill 26 of the 2011-12 First Extraordinary Session of the California Legislature ("AB xi 26"), Assembly Bill 1484 of the 2011-12 Regular Session of the California Legi slature ("AB 1484"), and Senate Bill 107 of the 2015-16 Regular Session of the California Legislature ("SB 107''). (AB x I 26, AB 1484, SB 107 and all other laws codified in Parts 1.8 and 1.85 of Division 24 of the Health and Safety Code are collectively referred to as the "Dissolution Law".)

In this settlement, the City and Successor Agency is obligated to pay up to $3.6 million to Auditor-Controller. At June 30, 2021, settlement payable reflected in the Statement of Net Position is $1,208,050. The first outstanding settlement of $604,025 was paid during the fiscal year June 30, 2021 and additional two payments of $604,025 are due on May 1 for the next two years.

Note 17 – Prior Period Adjustments

Following prior period adjustments were made:

Governmental Fiduciary Funds Governmental
Activities Custodial Funds Funds
Net Position at July 1, 2020 117,158,805 $ - $ 64,325,512$ Required by GASB 84 - Fiduciary Activities (1) 22,903 476,962 22,903 Net Position at July 1, 2020, as restated 117,181,708 $ 476,962 $ 64,348,415 $ (1) Restatements to the beginning net positions to Reassessment District 05-01 and Taylor Woodrow Maintenance LMOD Custodial Funds were made due to the applicability of GASB Statement No. 84. Adjustments were also made to the Hercules Community Library, Hercules Golf Club, and West Contra Costa Integrated M anagement Authority in Governmental Funds and Governmental Activities due to this implementation. These assets and activities have merged into the City's General Fund.

Taylor Woodrow
Reassessment Maintenance
General Fund District 05-01 LMOD Total
Net Position at July 1, 2020 44,374,263 $ - $ - $ 44,374,263$ Required by GASB 84 - Fiduciary Activities 22,903 406,921 70,041 499,865 Net Position at July 1, 2020, as restated 44,397,166 $ 406,921 $ 70,041 $ 44,874,128$ Custodial Funds

262

100

263

101

REQUIRED SUPPLEMENTARY INFORMATION
(UNAUDITED)
264

102
265
City of Hercules
Required Supplementary Information (Unaudited)
For the Year Ended June 30, 2021

103

BUDGETARY PRINCIPLES

The City follows these procedures in establishing the budgetary data reflected in the financial statements:

1. In June, the City Manager submits to the City Council a proposed operating budget for the following fiscal year.

This budget includes proposed expenditures, by fund and department, and the revenues expected to finance them.

2. Public hearings are conducted to obtain taxpayer comments.

3. The budget is legally enacted through passage of a resolution before July 1.

4. The City Manager is authorized to transfer budgeted amounts between objects within the same department; however, any revisions, which alter total expenditures of any fund, must be approved by the City Council.

5. Formal budgetary integration is employed as a management control device. Special Revenue Fund budgets are adopted on a basis consistent with accounting principles generally accepted in the United States (USGAAP) and are consistent with the basis used for financial reporting. Accordingly, actual revenues and expenditures can be compared with related budget amounts without any reconciliation. The General Fund budget is adopted on the budgetary basis, which is not consistent with accounting principles generally accepted in the United States of America. Commitments for material and services, such as purchase orders and contracts, are recorded during the year as encumbrances to assist in controlling expendi tures. Appropriations, which are encumbered at year-end lapse, then are added to the following year’s budgeted appropriations. However, encumbrances at year-end are reported as reservations of fund balance. A budget is not adopted for the City’s Debt Service Fund.

6. Under Article XIII B of the California Constitution (the Gann Spending Limitation Initiative), the City is restricted as to the amount of annual appropriations from the pro ceeds of taxes, and if proceeds of taxes exceed allowed appropriations, the excess must either be refunded to the State Controller, returned to the taxpayers through revised tax rates or revised fees schedules, or an excess in one year may be offset against a deficit in the following year.

For the fiscal year ended June 30, 2021, based on the calculations by City Management, proceeds of taxes did not exceed the appropriations limit.

7. Budget revenue amounts represent the original budget modified by adjustments authorized during the year.

Budgeted expenditure amounts represent original appropriations adjusted for supplemental appropriations during the year, which were contingent upon new or additional revenue sources and re-appropriated amounts for prior year encumbrances. The City Manager must approve adjustments to departmental budgets; however, management may amend the budgeted amounts within departmental expenditure classifications, with approval of the Finance Director.

8. Certain appropriations carryover and are re-budgeted for the subsequent year.

9. Budget appropriations for the various governmental funds become effective July 1. The City Council may amend the budget during the fiscal year. The legal level of budgetary control has been established at the fund level.

266

104

267
Variance with
Original Final Actuals Final Budget
REVENUES:

Taxes and assessments 10,437,000$ 10,807,000$ 11,063,092$ 256,092$ Licenses and permits 400,169 400,169 776,572 376,403 Fines and forfeitures 36,000 36,000 36,586 586 Use of money and property 307,000 307,000 476,520 169,520 Intergovernmental 2,369,000 2,714,530 2,647,128 (67,402) Charges for services 2,240,638 1,105,038 1,295,954 190,916 Other revenues 360,672 385,672 168,101 (217,571) Total revenues 16,150,479 15,755,409 16,463,953 708,544 EXPENDITURES:

Current:

General government 4,457,463 4,370,763 3,854,043 516,720 Public safety 7,551,799 7,795,599 7,549,028 246,571 Streets and public works 251,933 301,723 305,963 (4,240) Parks and recreation 2,517,748 1,257,622 1,434,988 (177,366) Community development 661,812 719,935 792,456 (72,521) Capital outlay 9,300 9,300 - 9,300 Debt services:

Principal - - 84,479 (84,479) Interest and fiscal agent fee - - 115,521 (115,521) Total expenditures 15,450,055 14,454,942 14,136,478 318,464

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 700,424 1,300,467 2,327,475 1,027,008

OTHER FINANCING SOURCES (USES)
Transfers in 173,000 173,000 150,000 (23,000) Transfers (out) (769,938) (311,938) (312,194) (256) Special item (604,025) (604,025) (604,025) - Total financing sources (uses) (1,200,963) (742,963) (766,219) (23,256) NET CHANGES IN FUND BALANCES (500,539)$ 557,504$ 1,561,256 1,003,752$ FUND BALANCES:

Beginning of year, as restated (Note 17) 44,397,166
End of year 45,958,422$
City of Hercules
Required Supplementary Information (Unaudited)
Budgetary Comparison Schedule - General Fund
For the Year Ended June 30, 2021
Budgeted Amounts
105
268
Measurement Date: June 30, 20201 June 30, 20191 June 30, 20181 June 30, 20171 June 30, 20161 June 30, 20151 City's Proportion of the Net
Pension Liability 0.19% 0.17% 0.16% 0.17% 0.17% 0.18%
City's Proportionate Share of the
Net Pension Liability 7,840,808$ 7,154,193 $ 6,686,045 $ 6,891,269 $ 6,031,627 $ 4,815,777 $ City's Covered-Employee Payrol
l 3,376,629$ 3,411,264 $ 3,369,924 $ 3,154,200 $ 2,697,183 $ 2,655,670 $ City's Proportionate Share of the
Net Pension Liability as a
Percenta
ge of Covered-Employee 232.21% 209.72% 198.40% 218.48% 223.63% 181.34% Plan's Fiduciary Net Position as a
Percentage of the Plan's Total
Pension Liabilit
y 73.63% 75.07% 77.69% 75.39% 75.87% 78.32%
Measurement Date: June 30, 20201 June 30, 20191 June 30, 20181 June 30, 20171 June 30, 20161 June 30, 20151 City's Proportion of the Net
Pension Liability 0.15% 0.16% 0.14% 0.16% 0.16% 0.18%
City's Proportionate Share of the
Net Pension Liability 9,924,963$ 9,847,764 $ 9,268,866 $ 9,323,198 $ 8,509,821 $ 7,337,854 $ City's Covered-Employee Payrol
l 2,702,843$ 2,668,574 $ 2,436,633 $ 2,591,015 $ 2,220,165 $ 2,118,549 $ City's Proportionate Share of the
Net Pension Liability as a
Percenta
ge of Covered-Employee 367.20% 369.03% 380.40% 359.83% 383.30% 346.36% Plan's Fiduciary Net Position as a
Percentage of the Plan's Total
Pension Liabilit
y 73.17% 70.82% 73.39% 71.74% 72.69% 71.64%
1 Historical information is presented only for measurement periods for which GASB No. 68 is applicable.

Safety Plans
Miscellaneous Plans
California Public Employees' Retirement System (CalPERS) City of Hercules
Required Supplementary Information (Unaudited)
Schedule of the City's Proportionate Share of the Plan's Net Pension Liability For the Year Ended June 30, 2021
Last Ten Fiscal Years
106
269
Fiscal Year: 2020-211 2019-201 2018-191 2017-181 2016-171 2015-161 Actuarially Determined Contribution2 224,145$ 774,757 $ 770,639 $ 659,810 $ 558,315 $ 529,212 $ Actuarially Determined
Contribution2 (224,145) (774,757) (770,639) (659,810) (558,315) (529,212) .

Contribution Deficiency (Excess) -$ -$ -$ -$ -$ -$ District's Covered-Employee Payroll3
3,477,928$ 3,376,629 $ 3,411,264 $ 3,369,924 $ 3,154,200 $ 2,697,183 $ Contributions as a Percentage of
Covered-Employee Payroll 6.44% 22.94% 22.59% 19.58% 17.70% 19.62% Fiscal Year: 2020-211 2019-201 2018-191 2017-181 2016-171 2015-161 Actuarially Determined Contribution2 443,902$ 1,384,112 $ 1,080,225 $ 1,033,755 $ 1,203,357 $ 1,024,115 $ Actuarially Determined
Contribution2 (443,902) (1,384,112) (1,080,225) (1,033,755) (1,203,357) (1,024,115) Contribution Deficiency (Excess) -$ -$ -$ -$ -$ -$ District's Covered-Employee Payroll3
2,783,928$ 2,702,843 $ 2,668,574 $ 2,436,633 $ 2,591,015 $ 2,220,165 $ Contributions as a Percentage of
Covered-Employee Payroll 15.95% 51.21% 40.48% 42.43% 46.44% 46.13% Notes to the Schedule:

City of Hercules
Required Supplementary Information (Unaudited)
Schedule of the City's Contributions to the Pension Plan For the Year Ended June 30, 2021
Change in Benefit Terms: The figures above do not include any liability impact that may have resulted from plan changes which occurred after June 30, 2013 as they have minimal cost impact. This applies for voluntary benefit changes as well as any offers of the Two Years Additional Service Credit (a.k.a. Golden Handshakes).

Miscellaneous Plans
Safety Plans
Last Ten Fiscal Years
California Public Employees' Retirement System (CalPERS) 1 Historical information is presented only for measurement periods for which GASB No. 68 is applicable. 2 Employers are assumed to make contributions equal to the actuarially determined contributions (which is the actuarially determined contribution). However, some employers may choose to make additional contributions towards their side-fund or their unfunded liability. Employer contributions for such plan exceed the actuarial determined contributions. CalPERS has determined that employer obligations referred to as side-funds are not considered separately financed specific liabilities. 3 Covered-Employee Payroll represented above is based on pensionable earnings provided by the employer. However, GASB No. 68 defines covered-employee payroll as the total payroll of employees that are provided pensions through the pension plan. Accordingly, if pensionable earnings are different than total earnings for covered-employees, the employer should display in the disclosure footnotes the payroll based on total earnings for the covered group and recalculate the required payroll-related ratios.
107
270
Measurement period, year ending: 6/30/2021 1 6/30/2020 1 6/30/2019 1 6/30/2018 1 Total OPEB liability
Service cost 167,563$ 175,142 $ 127,197 $ 99,270 $ Interest 139,104 188,135 180,251 179,763 Differences between expected and actual experience (311,195) (1,203,506) 40,091 437,919 Changes of assumptions 65,097 (293,525) - - Benefit payments, including refunds of member contributions (123,619) (115,990) (166,793) (105,034) Net change in total OPEB liability (63,050) (1,249,744) 180,746 611,918 Total OPEB liability - beginning 2,492,220 3,741,964 3,561,218 2,949,300 Total OPEB liability - ending (a) 2,429,170$ 2,492,220 $ 3,741,964 $ 3,561,218 $ OPEB fiduciary net position
Contributions - employer 22,016$ 215,990$ 361,275$ 205,034$ Net investment income 359,682 123,227 155,134 123,771 Benefit payments, including refunds of member contributions (123,619) (115,990) (166,793) (105,034) Administrative expense (16,223) (13,381) - - Net change in plan fiduciary net position 241,856 209,846 349,616 223,771 Plan fiduciary net position - beginning 2,664,592 2,454,746 2,105,130 1,881,359 Plan fiduciary net position - ending (b) 2,906,448 2,664,592 2,454,746 2,105,130 Plan net OPEB liability - ending (a) - (b) (477,278)$ (172,372) $ 1,287,218 $ 1,456,088 $ Plan fiduciary net position as a percentage of the total OPEB liability 119.65% 106.92% 65.60% 59.11% Covered payroll 10,965,675$ 10,646,286 $ 10,336,200 $ 10,035,146 $ Plan net OPEB liability (asset) as a percentage of covered payroll -4.35% -1.62% 12.45% 14.51% 1 Historical information is presented only for periods for which GASB 75 is applicable. 2 Effective for the year ended June 30, 2020, PEHMCA Plan is valued separately.

Last Ten Fiscal Years
City of Hercules
Required Supplementary Information (Unaudited)
Schedule of Changes in Net OPEB Liability and Related Ratios - PEHMCA Plan For the Year Ended June 30, 2021
108
271
Measurement period, year ending: 6/30/2021 1 6/30/2020 1 2 Total OPEB liability
Service cost 141,956$ 98,801 $
Interest 42,108 49,689
Differences between expected and actual experience (398,956) - Changes of assumptions 11,351 366,382
Benefit payments, including refunds of member contributions (43,536) (40,738) Net change in total OPEB liability (247,077) 474,134 Total OPEB liability - beginning 1,864,795 1,390,661 Total OPEB liability - ending (a) 1,617,718$ 1,864,795 $ Fiduciary net position
Contributions - employer 43,536$ 40,738 $
Net investment income - -
Benefit payments, including refunds of member contributions (43,536) (40,738) Administrative expense - -
Net change in plan fiduciary net position - - Plan fiduciary net position - beginning - - Plan fiduciary net position - ending (b) - - Plan net OPEB liability - ending (a) - (b) 1,617,718$ 1,864,795 $ Plan fiduciary net position as a percentage of the total OPEB liability 0.00% 0.00% Covered payroll -$ - $
Plan net OPEB liability as a percentage of covered payroll 0.00% 0.00% 1 Historical information is presented only for periods for which GASB 75 is applicable. 2 SOMAR Plan is now valued separately from PEHMCA Plan effective June 30, 2020.

Last Ten Fiscal Years
City of Hercules
Required Supplementary Information (Unaudited)
Schedule of Changes in Net OPEB Liability and Related Ratios - SOMAR Plan For the Year Ended June 30, 2021
109
272
Fiscal Year: 2020-211 2019-201 2018-191 2017-181
Actuarially Determined Contribution2 22,016$ 215,990$ 361,275$ 205,034$ Contribution2 (22,016) (215,990) (361,275) (205,034) Contribution Deficiency (Excess) - $ - $ - $ - $ City's Covered-Employee Payroll3
10,965,675$ 10,646,286$ 10,336,200 $ 10,035,146 $ Contributions as a Percentage of Covered-Employee Payroll 0.20% 2.03% 3.50% 2.04% PEHMCA Plan
1 Historical information is presented only for measurement periods for which GASB No. 75 is applicable.

City of Hercules
Required Supplementary Information (Unaudited)
Schedule of the City's Contributions to the OPEB Plan
For the Year Ended June 30, 2021
Last Ten Fiscal Years1
110
273
Fiscal Year: 2020-212 2019-201
Actuarially Determined Contribution 43,536$ 40,738 $ Contribution in Relation to the Actuarially
Determined Contribution (43,536) (40,738)
Contribution Deficiency (Excess) -$ -$ City's Covered-Employee Payroll -$ - $ Contributions as a Percentage of Covered-Employee
Payroll 0.00% 0.00%
2 SOMAR Plan is now valued separately from PEHMCA Plan effective June 30, 2020.

City of Hercules
Last Ten Fiscal Years1
SOMAR Plan
1 Historical information is presented only for measurement periods for which GASB No. 75 is applicable.

For the Year Ended June 30, 2021
Schedule of the City's Contributions to the SOMAR OPEB Plan Required Supplementary Information (Unaudited)
111
274
112
275

SUPPLEMENTARY INFORMATION
113
276
STMP Traffic Impact Fees Fund - To account for the collection of Sub-regional Transportation Mitigation Program (STMP) fees and remits to West Contra Costa Transportation Advisory Committee (WCCTAC) in accordance with the Master Cooperative Agreement.

C.O.P.S. Program (AB 3229) Fund - This fund accounts for the California statewide sales and use tax allocated by the State for local public safety services.

AB939 JPA Fund - To account for waste haulers fee (also known as AB 939 fee) to comply with the recycling and diversion programs required by the State legislation (AB 939).

Regional Water Quality Fund - To account for the Regional Water Quality fees created by State legislature in 1967. The Board protects water quality by setting statewide policy, coordinating and supporting the Regional Water Board efforts, and reviewing petitions that contest Regional Board actions.

Asset Forfeiture - This fund accounts for police unclaimed funds. Revenue is collected from seized money and asset forfeiture.

Bart Park and Ride Fund - This fund accounts for the revenues and expenditures associated with the BART owned, but jointly operated, Hercules Transit Center, and which used to be part of the Facilities Maintenance Fund.

Landscape & Lighting Assessment District (LLAD) No. 83-2 - This fund accounts for special assessments on property within district boundaries for the restricted purpose of providing landscaping and lighting services within the specified districts.

Hercules Village LLAD No. 2002-2 - This fund accounts for special assessments on property within district boundaries for the restricted purpose of providing landscaping and lighting services within the specified districts.

Bayside LLAD No. 2005-1- This fund accounts for special assessments on property within district boundaries for the restricted purpose of providing landscaping and lighting services within the specified districts.

Arterial Roadways Fund - This fund accounts for special assessments on property within district boundaries for the restricted purpose of providing landscaping and lighting services within the specified districts.

Stormwater Fund - To account for activities associated with the operation and maintenance of stormwater facilities for drainage and disposal of stormwater, and operations related to the provision of services.

Development Services Fund - To account for the collection and expenditure of fees imposed as a condition of new development within the City, in compliance with California Government Code Section 66006 (AB 1600).

Baywood LLAD No. 2004-1 - This fund accounts for special assessments on property within district boundaries for the restricted purpose of providing landscaping and lighting services within the specified districts.

Victoria by the bay LLAD No. 2002-1 - This fund accounts for special assessments on property within district boundaries for the restricted purpose of providing landscaping and lighting services within the specified districts.

NONMAJOR GOVERNMENTAL FUNDS
Nonmajor Special Revenue Funds:

Special Revenue Funds are used to account for revenue sources that are restricted for specific purposes (other than those resources to be expended solely for the construction of major capital facilities).

State Gas Tax Fund - This fund accounts for Gas Tax revenue received from the State of California to cover costs of street maintenance and improvements.

Measure C Street Fund - This fund accounts for City's portion of sales tax dedicated to transportation programs. 114
277
City Capital Projects Fund - This fund accounts for the financial resources utilized in acquiring or constructing capital assets for the City.

Development Impact Fees Fund - This fund accounts for the fees collected from new developments, which will be used to construct public infrastructure.

Nonmajor Capital Projects Funds:

Capital Projects Funds are used to account for resources used for the acquisition and construction of capital facilities by the City, except those financed by Proprietary Funds.

NONMAJOR GOVERNMENTAL FUNDS (Continued)
115
278
116
279

NONMAJOR GOVERNMENTAL FUNDS
117
280
Landscape &
Lighting
C.O.P.S. Assessment
State Gas Measure "C" Program District (LLAD)
Tax Street (AB 3229) No. 83-2
ASSETS
Cash and investments 850,578 $ 25,527 $ 6,727 $ 558,119 $ Accounts receivable - - - - Due from other funds - - - - Due from Private Purpose Trust Fund - - - - Total assets 850,578$ 25,527 $ 6,727 $ 558,119 $

LIABILITIES
Accounts payable 29,640 $ 6,223 $ - $ 70,188$ Accrued wages 10,806 11,541 - 21,454 Deposit payable - - - - Due to other funds - - - - Amounts due to Private Purpose Trust Fund - - - - Total liabilities 40,446 17,764 - 91,642

DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - - - - Total deferred inflows of resources - - - -

FUND BALANCES
Restricted 810,132 7,763 6,727 466,477 Committed - - - - Unassigned (deficit) - - - - Total fund balances 810,132 7,763 6,727 466,477 Total liabilities, deferred inflows
of resources and fund balances 850,578$ 25,527$ 6,727$ 558,119$ (Continued)
Special Revenue Funds
City of Hercules
Combining Balance Sheet
Nonmajor Governmental Funds
June 30, 2021
118
281
Victoria by Hercules
the bay Village Baywood Bayside

LLAD LLAD LLAD LLAD
No. 2002-1 No. 2002-2 No. 2004-1 No. 2005-1
ASSETS
Cash and investments - $ 221,702$ 85,706 $ 168,532 $ Accounts receivable - - - - Due from other funds - - - - Due from Private Purpose Trust Fund - - - - Total assets -$ 221,702$ 85,706 $ 168,532 $

LIABILITIES
Accounts payable 32,917 $ 9,119 $ 3,830 $ 21,487 $ Accrued wages 4,259 1,438 2,263 1,483 Deposit payable - - - - Due to other funds 23,364 - - - Amounts due to Private Purpose Trust Fund - - - - Total liabilities 60,540 10,557 6,093 22,970

DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - - - - Total deferred inflows of resources - - - -

FUND BALANCES
Restricted - 211,145 79,613 145,562 Committed - - - - Unassigned (deficit) (60,540) - - - Total fund balances (60,540) 211,145 79,613 145,562 Total liabilities, deferred inflows
of resources and fund balances -$ 221,702$ 85,706$ 168,532$ (Continued)
Special Revenue Funds
City of Hercules
Combining Balance Sheet (Continued)
Nonmajor Governmental Funds
June 30, 2021
119
282
STMP
Traffic
Arterial Development Impact
Roadways Stormwater Services Fees
ASSETS
Cash and investments 185,434 $ 81,623 $ 239,808 $ 5,768 $ Accounts receivable - - - - Due from other funds - - - 157 Due from Private Purpose Trust Fund - - 163,200 - Total assets 185,434$ 81,623 $ 403,008 $ 5,925 $

LIABILITIES
Accounts payable 32,109 $ 8,398 $ - $ 5,744$ Accrued wages 751 9,009 - - Deposit payable - - - - Due to other funds - 166,469 - 181 Amounts due to Private Purpose Trust Fund - - - - Total liabilities 32,860 183,876 - 5,925

DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - - - - Total deferred inflows of resources - - - -

FUND BALANCES
Restricted 152,574 - 403,008 - Committed - - - - Unassigned (deficit) - (102,253) - - Total fund balances 152,574 (102,253) 403,008 - Total liabilities, deferred inflows
of resources and fund balances 185,434$ 81,623 $ 403,008$ 5,925$ (Continued)
Special Revenue Funds
City of Hercules
Combining Balance Sheet (Continued)
Nonmajor Governmental Funds
June 30, 2021
120
283
Regional
AB939 Water Asset Bart
JPA Quality Forfeiture Park and Ride
ASSETS
Cash and investments 895,911 $ 51,569 $ 245,030 $ 241,747 $ Accounts receivable 43,867 - - - Due from other funds - - - - Due from Private Purpose Trust Fund - - - - Total assets 939,778$ 51,569 $ 245,030 $ 241,747 $

LIABILITIES
Accounts payable 71,490 $ - $ - $ 1,010$ Accrued wages 554 - - - Deposit payable - - 145,570 - Due to other funds - - - - Amounts due to Private Purpose Trust Fund - - - - Total liabilities 72,044 - 145,570 1,010

DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - - - - Total deferred inflows of resources - - - -

FUND BALANCES
Restricted 867,734 51,569 99,460 240,737 Committed - - - - Unassigned (deficit) - - - - Total fund balances 867,734 51,569 99,460 240,737 Total liabilities, deferred inflows
of resources and fund balances 939,778$ 51,569 $ 245,030 $ 241,747$ (Continued)
Special Revenue Funds
City of Hercules
Combining Balance Sheet (Continued)
Nonmajor Governmental Funds
June 30, 2021
121
284
Development
City Capital Impact
Projects Fund Fees Total
ASSETS
Cash and investments 1,397,538 $ 1,836,878 $ 7,098,197 $ Accounts receivable 356,817 - 400,684 Due from other funds - - 157 Due from Private Purpose Trust Fund - 5,254,315 5,417,515 Total assets 1,754,355$ 7,091,193 $ 12,916,553 $

LIABILITIES
Accounts payable 16,015 $ 895 $ 309,065 $ Accrued wages - - 63,558 Deposit payable - - 145,570 Due to other funds - - 190,014 Amounts due to Private Purpose Trust Fund 322,055 - 322,055 Total liabilities 338,070 895 1,030,262

DEFERRED INFLOWS OF RESOURCES
Unavailable revenue 25,097 - 25,097 Total deferred inflows of resources 25,097 - 25,097

FUND BALANCES
Restricted - 7,090,298 10,632,799 Committed 1,391,188 - 1,391,188 Unassigned (deficit) - - (162,793) Total fund balances 1,391,188 7,090,298 11,861,194 Total liabilities, deferred inflows
of resources and fund balances 1,754,355$ 7,091,193 $ 12,916,553 $ (Concluded)
City of Hercules
Combining Balance Sheet (Continued)
Nonmajor Governmental Funds
June 30, 2021
Capital Projects Funds
122
285
Landscape &
Lighting
C.O.P.S. Assessmen t
State Gas Measure "C" Program District (LLAD)
Tax Street (AB 3229) No. 83-2
REVENUES:

Taxes and assessments -$ - $ - $ 1,852,313$ Licenses and permits - - - - Use of money and property 1,662 (2,125) - 10,054 Intergovernmental 1,023,113 - 156,727 - Charges for services - - - - Other revenues 43,566 - - - Total revenues 1,068,341 (2,125) 156,727 1,862,367 EXPENDITURES:

Current:

Public safety - - - - Streets and public works 344,804 321,623 - 1,502,531 Capital outlays 324,102 156,722 - 111,362 Debt services:

Interest and fiscal agent fee - - - - Total expenditures 668,906 478,345 - 1,613,893

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 399,435 (480,470) 156,727 248,474

OTHER FINANCING SOURCES (USES)
Proceeds from loan - - - - Proceeds from refunding bond - - - - Payment to refunded bond escrow agent - - - - Transfers in - - - 93,707 Transfers (out) (54,988) - (150,000) (275,338) Total financing sources (uses) (54,988) - (150,000) (181,631) NET CHANGES IN FUND BALANCES 344,447 (480,470) 6,727 66,843 FUND BALANCES:

Beginning of year 465,685 488,233 - 399,634 End of year 810,132$ 7,763 $ 6,727 $ 466,477 $ (Continued)
Special Revenue Funds
City of Hercules
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds
For the Year Ended June 30, 2021
123
286
Victoria by Hercules
the bay Village Baywoo d Bayside

LLAD LLAD LLAD LLAD
No. 2002-1 No. 2002-2 No. 2004-1 No. 2005-1
REVENUES:

Taxes and assessments 452,011$ 155,165 $ 137,968 $ 140,467 $ Licenses and permits - - - - Use of money and property (207) (138) 49 (476) Intergovernmental - - - - Charges for services - - - - Other revenues - - - - Total revenues 451,804 155,027 138,017 139,991 EXPENDITURES:

Current:

Public safety - - - - Streets and public works 569,427 170,366 116,903 138,721 Capital outlays - 5,840 850 - Debt services:

Interest and fiscal agent fee - - - - Total expenditures 569,427 176,206 117,753 138,721

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (117,623) (21,179) 20,264 1,270

OTHER FINANCING SOURCES (USES)
Proceeds from loan - - - - Proceeds from refunding bond - - - - Payment to refunded bond escrow agent - - - - Transfers in 7,991 3,224 2,750 1,442 Transfers (out) (23,792) (6,487) (2,289) (15,587) Total financing sources (uses) (15,801) (3,263) 461 (14,145) NET CHANGES IN FUND BALANCES (133,424) (24,442) 20,725 (12,875) FUND BALANCES:

Beginning of year 72,884 235,587 58,888 158,437 End of year (60,540)$ 211,145 $ 79,613 $ 145,562 $ (Continued)
Special Revenue Funds
City of Hercules
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances (Continued) Nonmajor Governmental Funds
For the Year Ended June 30, 2021
124
287
STMP
Traffic
Arterial Development Impact
Roadways Stormwate r Services Fees
REVENUES:

Taxes and assessments -$ 245,628$ - $ - $ Licenses and permits - - - - Use of money and property 2,520 (203) (16) 24 Intergovernmental - - - - Charges for services - - 1,500 5,744 Other revenues - - - - Total revenues 2,520 245,425 1,484 5,768 EXPENDITURES:

Current:

Public safety - - - - Streets and public works 286,301 373,638 (1,285) 5,744 Capital outlays - - - - Debt services:

Interest and fiscal agent fee - - - - Total expenditures 286,301 373,638 (1,285) 5,744

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (283,781) (128,213) 2,769 24

OTHER FINANCING SOURCES (USES)
Proceeds from loan - - - - Proceeds from refunding bond - - - - Payment to refunded bond escrow agent - - - - Transfers in 269,367 124,237 - 157 Transfers (out) - - - - Total financing sources (uses) 269,367 124,237 - 157 NET CHANGES IN FUND BALANCES (14,414) (3,976) 2,769 181 FUND BALANCES:

Beginning of year 166,988 (98,277) 400,239 (181) End of year 152,574$ (102,253) $ 403,008 $ - $ (Continued)
Special Revenue Funds
City of Hercules
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances (Continued) Nonmajor Governmental Funds
For the Year Ended June 30, 2021
125
288
Regional
AB939 Wate r Asset Bart
JPA Quality Forfeiture Park and Ride
REVENUES:

Taxes and assessments -$ - $ - $ - $ Licenses and permits 175,722 - - - Use of money and property 622 (5) 1,924 - Intergovernmental - - 234,514 - Charges for services - - - - Other revenues - - - 27,943 Total revenues 176,344 (5) 236,438 27,943 EXPENDITURES:

Current:

Public safety - - 225,904 - Streets and public works 1,122 - - 227,849 Capital outlays 9,056 - - - Debt services:

Interest and fiscal agent fee - - - - Total expenditures 10,178 - 225,904 227,849

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 166,166 (5) 10,534 (199,906)

OTHER FINANCING SOURCES (USES)
Proceeds from loan - - - - Proceeds from refunding bond - - - - Payment to refunded bond escrow agent - - - - Transfers in - - - 440,643 Transfers (out) (124,237) - - - Total financing sources (uses) (124,237) - - 440,643 NET CHANGES IN FUND BALANCES 41,929 (5) 10,534 240,737 FUND BALANCES:

Beginning of year 825,805 51,574 88,926 - End of year 867,734$ 51,569 $ 99,460 $ 240,737 $ (Continued)
Special Revenue Funds
City of Hercules
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances (Continued) Nonmajor Governmental Funds
For the Year Ended June 30, 2021
126
289
Development
City Capital Impac t
Projects Fund Fees Total
REVENUES:

Taxes and assessments 51,416$ - $ 3,034,968$ Licenses and permits - - 175,722 Use of money and property 4,112 19,713 37,510 Intergovernmental 527,817 - 1,942,171 Charges for services - (153,034) (145,790) Other revenues - - 71,509 Total revenues 583,345 (133,321) 5,116,090 EXPENDITURES:

Current:

Public safety - - 225,904 Streets and public works 273,217 1,988 4,332,949 Capital outlays 3,555,794 - 4,163,726 Debt services:

Interest and fiscal agent fee 172,895 - 172,895 Total expenditures 4,001,906 1,988 8,895,474

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (3,418,561) (135,309) (3,779,384)

OTHER FINANCING SOURCES (USES)
Proceeds from loan 4,209,354 - 4,209,354 Proceeds from refunding bond 5,876,843 - 5,876,843 Payment to refunded bond escrow agent (5,705,000) - (5,705,000) Transfers in - - 943,518 Transfers (out) - - (652,718) Total financing sources (uses) 4,381,197 - 4,671,997 NET CHANGES IN FUND BALANCES 962,636 (135,309) 892,613 FUND BALANCES:

Beginning of year 428,552 7,225,607 10,968,581 End of year 1,391,188$ 7,090,298 $ 11,861,194 $ (Concluded)
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances (Continued) City of Hercules
Capital Projects Funds
For the Year Ended June 30, 2021
Nonmajor Governmental Funds
127
290
Final Variance with
Budget Actuals Final Budget
REVENUES:

Use of money and property - $ 1,662$ 1,662 $ Intergovernmental 1,079,236 1,023,113 (56,123) Other revenues - 43,566 43,566 Total revenues 1,079,236 1,068,341 (10,895) EXPENDITURES:

Current:

Streets and public works 394,491 344,804 49,687 Capital outlays 566,865 324,102 242,763 Total expenditures 961,356 668,906 292,450

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 117,880 399,435 281,555

OTHER FINANCING (USES)
Transfers (out) (54,988) (54,988) - Total financing (uses) (54,988) (54,988) - NET CHANGE IN FUND BALANCE 62,892$ 344,447 281,555$ FUND BALANCE:

Beginning of year 465,685
End of year 810,132$
City of Hercules
Schedule of Revenues, Expenditures and Change in Fund Balance - Budget and Actual State Gas Tax Special Revenue Fund
For the Year Ended June 30, 2021
128
291
Final Variance with
Budget Actuals Final Budget
REVENUES:

Use of money and property - $ (2,125)$ (2,125) $ Intergovernmental 405,200 - (405,200) Total revenues 405,200 (2,125) (407,325) EXPENDITURES:

Current:

Streets and public works 284,532 321,623 (37,091) Capital outlays 137,471 156,722 (19,251) Total expenditures 422,003 478,345 (56,342) NET CHANGE IN FUND BALANCE (16,803)$ (480,470) (463,667) $ FUND BALANCE:

Beginning of year 488,233
End of year 7,763$
City of Hercules
Schedule of Revenues, Expenditures and Change in Fund Balance - Budget and Actual Measure C Special Revenue Fund
For the Year Ended June 30, 2021
129
292
Final Variance with
Budget Actuals Final Budget
REVENUES:

Intergovernmental 150,000$ 156,727 $ 6,727 $ Total revenues 150,000 156,727 6,727

OTHER FINANCING (USES)
Transfers (out) (150,000) (150,000) - Total financing (uses) (150,000) (150,000) - NET CHANGE IN FUND BALANCE -$ 6,727 6,727 $ FUND BALANCE:

Beginning of year -
End of year 6,727$
City of Hercules
Schedule of Revenues, Expenditures and Change in Fund Balance - Budget and Actual C.O.P.S. Program (AB 3299) Special Revenue Fund
For the Year Ended June 30, 2021
130
293
Final Variance with
Budget Actuals Final Budget
REVENUES:

Taxes and assessments 1,853,243 $ 1,852,313 $ (930) $ Use of money and property - 10,054 10,054 Total revenues 1,853,243 1,862,367 9,124 EXPENDITURES:

Current:

Streets and public works 1,344,064 1,502,531 (158,467) Capital outlays 606,159 111,362 494,797 Total expenditures 1,950,223 1,613,893 336,330

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (96,980) 248,474 345,454

OTHER FINANCING SOURCES (USES)
Transfers in - 93,707 93,707 Transfers (out) (275,338) (275,338) - Total financing sources (uses) (275,338) (181,631) 93,707 NET CHANGE IN FUND BALANCE (372,318)$ 66,843 439,161 $ FUND BALANCE:

Beginning of year 399,634
End of year 466,477$
City of Hercules
Schedule of Revenues, Expenditures and Change in Fund Balance - Budget and Actual Landscape and Lighting Assessment District (LLAD) No. 83-2 Special Revenue Fund For the Year Ended June 30, 2021
131
294
Final Variance with
Budget Actuals Final Budget
REVENUES:

Taxes and assessments 452,011 $ 452,011 $ - $ Use of money and property - (207) (207) Total revenues 452,011 451,804 (207) EXPENDITURES:

Current:

Streets and public works 414,181 569,427 (155,246) Total expenditures 414,181 569,427 (155,246)

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 37,830 (117,623) (155,453)

OTHER FINANCING SOURCES (USES)
Transfer in - 7,991 7,991 Transfers (out) (23,792) (23,792) - Total financing (uses) (23,792) (15,801) 7,991 NET CHANGE IN FUND BALANCE 14,038$ (133,424) (147,462)$ FUND BALANCE:

Beginning of year 72,884
End of year (60,540)$
City of Hercules
Schedule of Revenues, Expenditures and Change in Fund Balance - Budget and Actual Victoria By the Bay LLAD No. 2002-1 Special Revenue Fund For the Year Ended June 30, 2021
132
295
Final Variance with
Budget Actuals Final Budget
REVENUES:

Taxes and assessments 155,165 $ 155,165 $ - $ Use of money and property - (138) (138) Total revenues 155,165 155,027 (138) EXPENDITURES:

Current:

Streets and public works 167,253 170,366 (3,113) Capital outlays 7,500 5,840 1,660 Total expenditures 174,753 176,206 (1,453)

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (19,588) (21,179) (1,591)

OTHER FINANCING SOURCES (USES)
Transfers in - 3,224 3,224 Transfers (out) (6,487) (6,487) - Total financing sources (uses) (6,487) (3,263) 3,224 NET CHANGE IN FUND BALANCE (26,075)$ (24,442) 1,633 $ FUND BALANCE:

Beginning of year 235,587
End of year 211,145$
City of Hercules
Schedule of Revenues, Expenditures and Change in Fund Balance - Budget and Actual Hercules Village LLAD No. 2002-2 Special Revenue Fund
For the Year Ended June 30, 2021
133
296
Final Variance with
Budget Actuals Final Budget
REVENUES:

Taxes and assessments 137,968 $ 137,968 $ - $ Use of money and property - 49 49 Total revenues 137,968 138,017 49 EXPENDITURES:

Current:

Streets and public works 117,694 116,903 791 Capital outlays 20,000 850 19,150 Total expenditures 137,694 117,753 19,941

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 274 20,264 19,990

OTHER FINANCING SOURCES (USES)
Transfers in - 2,750 2,750 Transfers (out) (2,289) (2,289) - Total financing sources (uses) (2,289) 461 2,750 NET CHANGE IN FUND BALANCE (2,015)$ 20,725 22,740$ FUND BALANCE:

Beginning of year 58,888
End of year 79,613$
City of Hercules
Schedule of Revenues, Expenditures and Change in Fund Balance - Budget and Actual Baywood LLAD No. 2004-1 Special Revenue Fund
For the Year Ended June 30, 2021
134
297
Final Variance with
Budget Actuals Final Budget
REVENUES:

Taxes and assessments 135,858 $ 140,467 $ 4,609 $ Use of money and property - (476) (476) Total revenues 135,858 139,991 4,133 EXPENDITURES:

Current:

Streets and public works 97,882 138,721 (40,839) Total expenditures 97,882 138,721 (40,839)

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 37,976 1,270 (36,706)

OTHER FINANCING SOURCES (USES)
Transfers in - 1,442 1,442 Transfers (out) (15,587) (15,587) - Total financing sources (uses) (15,587) (14,145) 1,442 NET CHANGE IN FUND BALANCE 22,389$ (12,875) (35,264)$ FUND BALANCE:

Beginning of year 158,437
End of year 145,562$
City of Hercules
Schedule of Revenues, Expenditures and Change in Fund Balance - Budget and Actual Bayside LLAD No. 2005-1 Special Revenue Fund
For the Year Ended June 30, 2021
135
298
Final Variance with
Budget Actuals Final Budget
REVENUES:

Use of money and property - $ 2,520$ 2,520 $ Total revenues - 2,520 2,520 EXPENDITURES:

Current:

Streets and public works 252,033 286,301 (34,268) Total expenditures 252,033 286,301 (34,268)

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (252,033) (283,781) (31,748)

OTHER FINANCING SOURCES
Transfers in 269,367 269,367 -
Total financing sources 269,367 269,367 - NET CHANGE IN FUND BALANCE 17,334$ (14,414) (31,748)$ FUND BALANCE:

Beginning of year 166,988
End of year 152,574$
City of Hercules
Schedule of Revenues, Expenditures and Change in Fund Balance - Budget and Actual Arterial Roadways Special Revenue Fund
For the Year Ended June 30, 2021
136
299
Final Variance with
Budget Actuals Final Budget
REVENUES:

Taxes and assessments 243,585 $ 245,628 $ 2,043 $ Use of money and property - (203) (203) Total revenues 243,585 245,425 1,840 EXPENDITURES:

Current:

Streets and public works 418,387 373,638 44,749 Total expenditures 418,387 373,638 44,749

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (174,802) (128,213) 46,589

OTHER FINANCING SOURCES
Transfers in 124,237 124,237 -
Total financing sources 124,237 124,237 - NET CHANGE IN FUND BALANCE (50,565)$ (3,976) 46,589 $ FUND BALANCE:

Beginning of year (98,277)
End of year (102,253)$
City of Hercules
Schedule of Revenues, Expenditures and Change in Fund Balance - Budget and Actual Stormwater Special Revenue Fund
For the Year Ended June 30, 2021
137
300
Final Variance with
Budget Actuals Final Budget
REVENUES:

Use of money and property 23,700 $ (16) $ (23,716)$ Charges for services 894,000 1,500 (892,500) Total revenues 917,700 1,484 (916,216) EXPENDITURES:

Current:

Streets and public works 650 (1,285) 1,935 Total expenditures 650 (1,285) 1,935 NET CHANGE IN FUND BALANCE 917,050$ 2,769 (914,281)$ FUND BALANCE:

Beginning of year 400,239
End of year 403,008$
City of Hercules
Schedule of Revenues, Expenditures and Change in Fund Balance - Budget and Actual Development Services Special Revenue Fund
For the Year Ended June 30, 2021
138
301
Final Variance with
Budget Actuals Final Budget
REVENUES:

Use of money and property - $ 24 $ 24 $ Charges for services 2,129,304 5,744 (2,123,560) Total revenues 2,129,304 5,768 (2,123,536) EXPENDITURES:

Current:

Streets and public works 2,129,304 5,744 2,123,560 Total expenditures 2,129,304 5,744 2,123,560 NET CHANGE IN FUND BALANCE -$ 181 181 $ FUND BALANCE:

Beginning of year (181)
End of year -$
City of Hercules
Schedule of Revenues, Expenditures and Change in Fund Balance - Budget and Actual STMP Traffic Impact Fees Special Revenue Fund
For the Year Ended June 30, 2021
139
302
Final Variance with
Budget Actuals Final Budget
REVENUES:

Licenses and permits 175,000 $ 175,722 $ 722 $ Use of money and property - 622 622 Total revenues 175,000 176,344 1,344 EXPENDITURES:

Current:

Streets and public works 3,000 1,122 1,878 Capital outlays 8,034 9,056 (1,022) Total expenditures 11,034 10,178 856

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 163,966 166,166 2,200

OTHER FINANCING (USES)
Transfers (out) - (124,237) (124,237) Total financing (uses) - (124,237) (124,237) NET CHANGE IN FUND BALANCE 163,966$ 41,929 (122,037)$ FUND BALANCE:

Beginning of year 825,805
End of year 867,734$
City of Hercules
Schedule of Revenues, Expenditures and Change in Fund Balance - Budget and Actual AB939 JPA Special Revenue Fund
For the Year Ended June 30, 2021
140
303
Final Variance with
Budget Actuals Final Budget
REVENUES:

Use of money and property 757 $ (5) $ (762)$ Total revenues 757 (5) (762) NET CHANGE IN FUND BALANCE 757$ (5) (762)$ FUND BALANCE:

Beginning of year 51,574
End of year 51,569$
City of Hercules
Schedule of Revenues, Expenditures and Change in Fund Balance - Budget and Actual Regional Water Quality Special Revenue Fund
For the Year Ended June 30, 2021
141
304
Final Variance with
Budget Actuals Final Budget
REVENUES:

Use of money and property - $ 1,924$ 1,924 $ Intergovernmental 31,692 234,514 202,822 Total revenues 31,692 236,438 204,746 EXPENDITURES:

Current:

Public safety 45,000 225,904 (180,904) Total expenditures 45,000 225,904 (180,904) NET CHANGE IN FUND BALANCE (13,308)$ 10,534 23,842$ FUND BALANCE:

Beginning of year 88,926
End of year 99,460$
City of Hercules
Schedule of Revenues, Expenditures and Change in Fund Balance - Budget and Actual Asset Forfeiture Special Revenue Fund
For the Year Ended June 30, 2021
142
305
Final Variance with
Budget Actuals Final Budget
REVENUES:

Other revenue 50,000$ 27,943$ (22,057)$ Total revenues 50,000 27,943 (22,057) EXPENDITURES:

Current:

Streets and public works 229,000 227,849 1,151 Total expenditures 229,000 227,849 1,151

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (179,000) (199,906) (20,906)

OTHER FINANCING SOURCES
Transfers in - 440,643 440,643 Total financing sources - 440,643 440,643 NET CHANGE IN FUND BALANCE (179,000)$ 240,737 419,737 $ FUND BALANCE:

Beginning of year -
End of year 240,737$
City of Hercules
Schedule of Revenues, Expenditures and Change in Fund Balance - Budget and Actual Bart Park and Ride Special Revenue Fund
For the Year Ended June 30, 2021
143
306
Final Variance with
Budget Actuals Final Budget
REVENUES:

Taxes and assessments -$ 51,416$ 51,416 $ Use of money and property - 4,112 4,112 Intergovernmental 436,000 527,817 91,817 Total revenues 436,000 583,345 147,345 EXPENDITURES:

Current:

Streets and public works 2,399,629 273,217 2,126,412 Capital outlays 3,555,794 3,555,794 -
Debt services:

Interest and fiscal agent fee - 172,895 (172,895) Total expenditures 5,955,423 4,001,906 1,953,517

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (5,519,423) (3,418,561) 2,100,862

OTHER FINANCING SOURCES (USES)
Proceeds from loan - 4,209,354 4,209,354 Proceeds from refunding bond 4,209,354 5,876,843 1,667,489 Payment to refunded bond escrow agent - (5,705,000) (5,705,000) Total financing sources (uses) 4,209,354 4,381,197 (4,037,511) NET CHANGE IN FUND BALANCE (1,310,069)$ 962,636 (1,936,649)$ FUND BALANCE:

Beginning of year 428,552
End of year 1,391,188$
City of Hercules
Schedule of Revenues, Expenditures and Change in Fund Balance - Budget and Actual City Capital Projects Fund
For the Year Ended June 30, 2021
144
307
Final Variance with
Budget Actuals Final Budget
REVENUES:

Use of money and property 55,844 $ 19,713 $ (36,131) $ Charges for services 3,525,464 (153,034) (3,678,498) Total revenues 3,581,308 (133,321) (3,714,629) EXPENDITURES:

Current:

Streets and public works 523,134 1,988 521,146 Total expenditures 523,134 1,988 521,146 NET CHANGE IN FUND BALANCE 3,058,174$ (135,309) (3,193,483) $ FUND BALANCE:

Beginning of year 7,225,607
End of year 7,090,298$
City of Hercules
Schedule of Revenues, Expenditures and Change in Fund Balance - Budget and Actual Development Impact Fees Capital Projects Fund
For the Year Ended June 30, 2021
145
308
146
309

INTERNAL SERVICE FUNDS
147
310
148
311
Vehicle Technology Facilities
Replacement Services Maintenance Total
ASSETS
Current assets:

Cash and investments 642,668 $ 1,580,575 $ 615,659 $ 2,838,902 $ Total current assets 642,668 1,580,575 615,659 2,838,902 Noncurrent assets:

Net OPEB asset - PEHMCA - 28,305 14,152 42,457 Capital assets:

Depreciable, net 409,031 173,236 - 582,267 Total noncurrent assets 409,031 201,541 14,152 624,724 Total assets 1,051,699 1,782,116 629,811 3,463,626

DEFERRED OUTFLOWS OF RESOURCES
Pensions-related deferred outflows of resources - 64,291 30,117 94,408 OPEB-related deferred inflows of resources (PEHMCA) - 10,387 5,194 15,581 OPEB-related deferred outflows of resources (SOMAR) - 11,076 5,538 16,614 Total deferred outflows of resources - 85,754 40,849 126,603

LIABILITIES
Current liabilities:

Accounts payable - 149,339 19,731 169,070 Salaries and benefits payable - 17,664 7,835 25,499 Compensated absences, due in one year - 7,794 2,189 9,983 Total current liabilities - 174,797 29,755 204,552 Noncurrent liabilities:

Compensated absences - 23,381 6,568 29,949 Net pension liability - 370,530 179,097 549,627 Net OPEB liability - SOMAR - 57,777 28,888 86,665 Total noncurrent liabilities - 451,688 214,553 666,241 Total liabilities - 626,485 244,308 870,793

DEFERRED INFLOWS OF RESOURCES
Pensions-related deferred outflows of resources - 3,117 1,122 4,239 OPEB-related deferred outflows of resources (PEHMCA) - 60,241 30,120 90,361 OPEB-related deferred outflows of resources (SOMAR) - 12,977 6,488 19,465 Total deferred inflows of resources - 76,335 37,730 114,065

NET POSITION
Investment in capital assets 409,031 173,236 - 582,267 Unrestricted 642,668 991,814 388,622 2,023,104 Total net position 1,051,699$ 1,165,050$ 388,622$ 2,605,371$ City of Hercules
Combining Statement of Net Position
Internal Service Funds
June 30, 2021
149
312
Vehicle Technology Facilities
Replacement Services Maintenance Total
OPERATING REVENUES:

Charges for services 2,926 $ 1,010,200$ 883,150 $ 1,896,276 $ Other operating revenues 701 8,077 - 8,778 Total operating revenues 3,627 1,018,277 883,150 1,905,054 OPERATING EXPENSES:

Salaries and benefits - 378,517 181,256 559,773 Services and supplies 1,333 491,201 399,352 891,886 Depreciation 155,594 100,806 - 256,400 Total operating expenses 156,927 970,524 580,608 1,708,059 OPERATING INCOME (LOSS) (153,300) 47,753 302,542 196,995 TRANSFERS:

Transfers out - - (440,643) (440,643) Total transfers - - (440,643) (440,643) CHANGES IN NET POSITION (153,300) 47,753 (138,101) (243,648) NET POSITION:

Beginning of year 1,204,999 1,117,297 526,723 2,849,019 End of year 1,051,699$ 1,165,050$ 388,622$ 2,605,371$ City of Hercules
Combining Statement of Revenues, Expenses, and Changes in Net Position Internal Service Funds
For the Year Ended June 30, 2021
150
313
Vehicle Technology Facilities
Replacement Services Maintenance Total
CASH FLOWS FROM OPERATING ACTIVITIES:

Cash receipts from internal services provided 3,627 $ 1,018,277$ 883,150 $ 1,905,054 $ Cash paid to suppliers for goods and services (1,333) (475,796) (408,127) (885,256) Cash paid to employees for services - (330,507) (155,912) (486,419) Net cash provided by operating activities 2,294 211,974 319,111 533,379

CASH FLOWS FROM NON-CAPITAL
FINANCING ACTIVITIES:

Transfers (out) - - (440,643) (440,643) Net cash (used in) non-capital
financing activities - - (440,643) (440,643)

CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES:

Payments related to the acquisition of capital assets (205,041) (9,200) - (214,241) Net cash (used in) capital and related
financing activities (205,041) (9,200) - (214,241) NET CHANGES IN CASH AND CASH EQUIVALENTS (202,747) 202,774 (121,532) (121,505) CASH AND CASH EQUIVALENTS:

Beginning of year 845,415 1,377,801 737,191 2,960,407 End of year 642,668 $ 1,580,575 $ 615,659 $ 2,838,902 $

City of Hercules
Combining Statement of Cash Flows
Internal Service Funds
For the Year Ended June 30, 2021
151
314
Vehicle Technology Facilities
Replacement Services Maintenance Total

RECONCILIATION OF OPERATING INCOME (LOSS)

TO NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES:

Operating income (loss) (153,300) $ 47,753 $ 302,542 $ 196,995 $ Adjustments to reconcile operating income (loss)
to net cash provided by (used in) operating activities:

Depreciation 155,594 100,806 - 256,400 (Increase) Decrease in Assets and Deferred Outflows
Pensions-related deferred outflows - 5,799 3,215 9,014 OPEB-related deferred outflows - (1,312) (656) (1,968) Increase (Decrease) in Liabilities and Deferred Inflows Accounts Payable - 15,405 (8,775) 6,630 Salaries and benefits payable - 2,864 2,806 5,670 Net pension liability - 36,559 20,273 56,832 Net OPEB liability - (8,825) 4,296 (4,529) Pensions-related deferred inflows - (4,554) (2,526) (7,080) OPEB-related deferred inflows - 13,648 (1,885) 11,763 Compensated absences - 3,831 (179) 3,652 Total adjustments 155,594 164,221 16,569 336,384 Net cash provided by (used in) operating activities 2,294$ 211,974 $ 319,111 $ 533,379 $ Combining Statement of Cash Flows (Continued)
Internal Service Funds
For the Year Ended June 30, 2021
City of Hercules
152
315

FIDUCIARY-CUSTODIAL FUNDS
153
316
154
317
Taylor
Reassessment Woodrow
District Maintenance
05-01 LMOD Total
ASSETS
Cash and investments 311,965$ 70,035 $ 382,000 $ Cash and investments with fiscal agents 70,297 - 70,297 Total assets 382,262 70,035 452,297

NET POSITION
Restricted for individuals, organization, and other government 382,262 70,035 452,297 Total net position 382,262$ 70,035 $ 452,297 $ (Concluded)
City of Hercules
Combining Statement of Fiduciary Net Position
Fiduciary Funds - Custodial Funds
June 30, 2021
155
318
Taylor
Reassessment Woodrow
District Maintenance
05-01 LMOD Total
ADDITIONS:

Taxes and assessments 229,064 $ - $ 229,064$ Investment income/(loss) (434) (6) (440) Proceeds from issuance of debt 3,313,813 - 3,313,813 Total additions 3,542,443 (6) 3,542,437 DEDUCTIONS:

Administration 115,564 - 115,564 Interest and fiscal agent fee 232,218 - 232,218 Principal payment to refunding escrow 3,219,320 - 3,219,320 Total deductions 3,567,102 - 3,567,102 CHANGES IN FIDUCIARY NET POSITION (24,659) (6) (24,665) NET POSITION:

Beginning of year, as restated (Note 17) 406,921 70,041 476,962 End of year 382,262$ 70,035$ 452,297$ (Concluded)
City of Hercules
Combining Statement of Changes in Fiduciary Net Position Fiduciary Funds - Custodial Funds
For the Year Ended June 30, 2021
156
319

STATISTICAL SECTION
157
320
158
321
Debt Capacity (pages 178-184)
These schedules present information to help the reader assess the affordability of the City’s current levels of outstanding debt and the City’s ability to issue additional debt in the future.

Demographic and Economic Information (pages 185)
These schedules offer demographic and economic indicators to help the reader understand the environment with which the City’s financial activities take place.

Operating Information (pages 186-193)
These schedules contain service and infrastructure data to help the reader understand how the information in the City’s financial report relates to the services the government provides and the activities it performs.

City of Hercules
Description of Statistical Section Contents
This part of the City of Hercules' comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the City's overall financial health.

Financial Trends (pages 160-169)
These schedules contain trend information to help the reader understand how the City’s financial performance and well-being have changed over time.

Revenue Capacity (pages 170-177)
These schedules contain information to help the reader assess the City’s most significant local revenue sources, transient occupancy tax (“TOT”) and property taxes.
159
322
2012 2013 2014 2015 2016
Governmental activities
Invested in capital assets,
net of related debt 67,178,014$ 65,157,839$ 62,588,422$ 65,597,425$ 67,814,198$ Restricted 26,631,294 22,334,668 13,670,630 21,070,727 7,026,074 Unrestricted 14,262,530 20,635,123 36,350,966 16,564,422 34,482,114 Total governmental activities net position 108,071,838$ 108,127,630$ 112,610,018$ 103,232,574$ 109,322,386$ Business-type activities
Invested in capital assets,
net of related debt 11,246,807$ 10,746,142$ 9,897,549$ 9,942,508$ 11,637,225$ Restricted - - - - - Unrestricted 20,088,304 24,351,569 20,211,271 22,931,509 22,643,219 Total business-type activities net position 31,335,111$ 35,097,711$ 30,108,820$ 32,874,017$ 34,280,444$ Primary government
Invested in capital assets,
net of related debt 78,424,821$ 75,903,981$ 72,485,971$ 75,539,933$ 79,451,423$ Restricted 26,631,294 22,334,668 13,670,630 21,070,727 7,026,074 Unrestricted 34,350,834 44,986,692 56,562,237 39,495,931 57,125,333 Total primary government net position 139,406,949$ 143,225,341$ 142,718,838$ 136,106,591$ 143,602,830$ Source: City Finance Department
For the Fiscal Year Ended June 30,
City of Hercules
Net Position by Component
Last Ten Fiscal Years
(Accrual Basis of Accounting)
160
323
2017 2018 2019 2020 2021
Governmental activities
Invested in capital assets,
net of related debt 73,286,966$ 76,304,118$ 76,082,830$ 73,639,890$ 69,628,982$ Restricted 18,239,035 21,086,055 21,495,653 20,047,707 20,047,707 Unrestricted 27,146,535 24,579,483 26,259,010 23,471,208 24,205,660 Total governmental activities net position 118,672,536$ 121,969,656$ 123,837,493$ 117,158,805$ 113,882,349$ Business-type activities
Invested in capital assets,
net of related debt 9,503,346$ 10,572,862$ 9,384,765$ 11,587,259$ 7,230,469$ Restricted - - 7,582,403 7,674,002 7,679,725 Unrestricted 27,529,908 29,000,343 23,910,447 23,244,232 29,474,812 Total business-type activities net position 37,033,254$ 39,573,205$ 40,877,615$ 42,505,493$ 44,385,006$ Primary government
Invested in capital assets,
net of related debt 82,790,312$ 86,876,980$ 85,467,595$ 85,227,149$ 76,859,451$ Restricted 18,239,035 21,086,055 29,078,056 27,721,709 27,727,432 Unrestricted 54,676,443 53,579,826 50,169,457 46,715,440 53,680,472 Total primary government net position 155,705,790$ 161,542,861$ 164,715,108$ 159,664,298$ 158,267,355$ Source: City Finance Department
For the Fiscal Year Ended June 30,
City of Hercules
Net Position by Component (Continued)
Last Ten Fiscal Years
(Accrual Basis of Accounting)
161
324
2012 2013 2014 2015 2016
Expenses
Governmental Activities:

General Government 5,503,393$ 3,900,757$ 4,350,428$ 3,133,995$ 3,706,717$ Public Safety 4,692,607 4,560,766 4,905,837 5,094,319 5,299,440 Public Works 5,301,525 5,244,823 5,761,359 4,880,174 4,667,439 Parks and recreation 2,148,213 2,087,597 2,147,560 2,074,783 2,216,525 Community Development 2,247,460 1,275,685 3,295,068 742,529 400,754 Interest on Long-Term Debt 1,147,415 1,284,713 1,073,240 1,277,353 1,301,053 Total Governmental Activities 21,040,613 18,354,341 21,533,492 17,203,153 17,591,928 Business-Type Activities:

Sewer 3,236,147 3,336,974 3,494,287 2,834,835 3,854,974 Hercules Municipal Utility 3,329,348 3,369,406 2,491,837 Total Business-Type Activities Expenses 6,565,495 6,706,380 5,986,124 2,834,835 3,854,974 Total Primary Government Expenses 27,606,108$ 25,060,721$ 27,519,616$ 20,037,988$ 21,446,902$ Program Revenues
Governmental Activities:

General Government 184,647$ 236,231$ 282,512$ 361,223$ 128,430$ Public Safety 562,779 473,929 576,345 523,708 543,761
Public Works 3,509,646 3,273,051 4,570,184 6,150,061 12,784,856 Parks and recreation 1,487,192 1,544,429 1,623,655 1,604,294 1,538,554 Community Development 302,960 170,740 200,601 890,867 364,191 Total Government Activities Program Revenues 6,047,224 5,698,380 7,253,297 9,530,153 15,359,792 Business-Type Activities:

Sewer 4,970,329 5,282,963 5,619,601 6,028,122 5,595,044 Hercules Municipal Utility 2,693,486 2,756,288 2,070,923 Total Business-Type Activities Program Revenue 7,663,815 8,039,251 7,690,524 6,028,122 5,595,044 Total Primary Government Program Revenues 13,711,039$ 13,737,631$ 14,943,821$ 15,558,275$ 20,954,836$ Net (Expense)/Revenue
Governmental Activities (14,993,389) (12,655,961) (14,280,195) (7,673,000) (2,232,136) Business-Type Activities 1,098,320 1,332,871 1,704,400 3,193,287 1,740,070 Total Primary Government Net Expense (13,895,069)$ (11,323,090)$ (12,575,795)$ (4,479,713)$ (492,066)$ Source: City Finance Department
For the Fiscal Year Ended June 30,
City of Hercules
Changes in Net Position
Last Ten Fiscal Years
(Accrual Basis of Accounting)
162
325
2017 2018 2019 2020 2021
Expenses
Governmental Activities:

General Government 4,025,706$ 4,105,705$ 5,094,236$ 4,634,707$ 4,435,331$ Public Safety 5,365,068 7,034,658 7,055,390 8,844,059 9,273,713 Public Works 5,035,767 6,894,640 6,727,710 8,447,150 7,715,011 Parks and recreation 3,050,786 2,657,763 2,564,008 2,786,635 2,104,559 Community Development 640,428 491,562 630,341 595,927 918,476 Interest on Long-Term Debt 1,220,791 1,141,982 1,256,456 1,159,848 959,355 Total Governmental Activities 19,338,546 22,326,310 23,328,141 26,468,326 25,406,445 Business-Type Activities:

Sewer 3,092,380 3,750,261 5,343,759 4,593,120 3,894,420 Hercules Municipal Utility
Total Business-Type Activities Expenses 3,092,380 3,750,261 5,343,759 4,593,120 3,894,420 Total Primary Government Expenses 22,430,926$ 26,076,571$ 28,671,900$ 31,061,446$ 29,300,865$ Program Revenues
Governmental Activities:

General Government 113,875$ 3,866,023$ 1,816,337$ 719,485$ 1,343,812$ Public Safety 1,171,960 524,703 882,823 743,462 540,238 Public Works 12,014,579 5,218,076 4,433,560 5,546,868 4,196,125 Parks and recreation 1,715,375 1,696,769 1,731,066 1,030,758 396,289 Community Development 823,972 1,534,666 1,658,265 517,920 552,090 Total Government Activities Program Revenues 15,839,761 12,840,237 10,522,051 8,558,493 7,028,554 Business-Type Activities:

Sewer 5,797,766 6,145,215 6,003,202 5,719,257 5,769,396 Hercules Municipal Utility
Total Business-Type Activities Program Revenue 5,797,766 6,145,215 6,003,202 5,719,257 5,769,396 Total Primary Government Program Revenues 21,637,527$ 18,985,452$ 16,525,253$ 14,277,750$ 12,797,950$ Net (Expense)/Revenue
Governmental Activities (3,498,785) (9,486,073) (12,806,090) (17,909,833) (18,377,891) Business-Type Activities 2,705,386 2,394,954 659,443 1,126,137 1,874,976 Total Primary Government Net Expense (793,399)$ (7,091,119)$ (12,146,647)$ (16,783,696)$ (16,502,915)$ Source: City Finance Department
For the Fiscal Year Ended June 30,
City of Hercules
Changes in Net Position (Continued)
Last Ten Fiscal Years
(Accrual Basis of Accounting)
163
326
2012 2013 2014 2015 2016
General Revenues and Other Changes in Net Position
Governmental Activities:

Taxes:

Secured and unsecured property taxes 6,116,169$ 1,233,335$ 992,934$ 1,173,026$ 1,233,207$ Sales Taxes and use taxes 1,628,386 2,153,244 2,593,675 2,693,075 3,211,109 Franchise Tax 645,196 669,723 799,180 1,011,888 960,124 Other Taxes 2,209,580 2,284,442 3,265,624 3,511,023 3,628,145 Unrestricted Motor Vehicle Taxes In-Lieu 1,393,766 1,312,179 1,323,651 1,554,491 1,645,846 Use of Money and properties 2,083,873 993,098 1,002,389 1,055,791 1,133,587 Miscellaneous 1,109,636 758,854 1,397,677 476,033 1,029,258 Special items - 3,686,647 - - - Extraordinary item - RDA Dissolution 42,806,674 - - - - Transfers - - 7,387,453 (92,736) (10,452) Total Government Activities 57,993,280 13,091,522 18,762,583 11,382,591 12,830,824 Business-Type Activities:

Use of Money and properties 123,150 44,326 45,822 23,484 24,058 Miscellaneous 46,310 101,207 86,637 - - Special items - 2,874,410 561,703 - - Transfers - - (7,387,453) 92,736 10,452 Total Business-Type Activities 169,460 3,019,943 (6,693,291) 116,220 34,510 Total Primary Government 58,162,740$ 16,111,465$ 12,069,292$ 11,498,811$ 12,865,334$ Change in Net Position
Governmental Activities 42,999,891$ 435,561$ 4,482,388$ 3,709,591$ 10,598,688$ Business-Type Activities 1,267,780 4,352,814 (4,988,891) 3,309,507 1,774,580 Total Primary Government 44,267,671$ 4,788,375$ (506,503)$ 7,019,098$ 12,373,268$ Source: City Finance Department
For the Fiscal Year Ended June 30,
City of Hercules
Changes in Net Position (Continued)
Last Ten Fiscal Years
(Accrual Basis of Accounting)
164
327
2017 2018 2019 2020 2021
General Revenues and Other Changes in Net Position
Governmental Activities:

Taxes:

Secured and unsecured property taxes 1,286,788$ 1,376,354$ 1,378,493$ 1,415,995$ 1,451,716$ Sales Taxes and use taxes 3,324,807 3,206,095 3,988,702 4,212,285 4,775,496 Franchise Tax 878,574 862,946 852,751 948,503 862,104
Other Taxes 3,712,519 3,906,865 4,506,706 4,402,327 4,293,889 Unrestricted Motor Vehicle Taxes In-Lieu 1,799,014 1,911,327 1,990,306 2,128,054 2,239,058 Use of Money and properties 1,114,795 1,334,955 1,588,558 1,748,131 1,456,269 Miscellaneous 448,688 1,189,560 368,411 - - Special items - - - (3,624,150) - Extraordinary item - RDA Dissolution - - - - - Transfers - - - - - Total Government Activities 12,565,185 13,788,102 14,673,927 11,231,145 15,078,532 Business-Type Activities:

Use of Money and properties 47,424 200,280 482,095 501,741 4,537 Miscellaneous - - 162,872 - - Special items - - - - - Transfers - - - - - Total Business-Type Activities 47,424 200,280 644,967 501,741 4,537 Total Primary Government 12,612,609$ 13,988,382$ 15,318,894$ 11,732,886$ 15,083,069$ Change in Net Position
Governmental Activities 9,066,400$ 4,302,029$ 1,867,837$ (6,678,688)$ (3,299,359)$ Business-Type Activities 2,752,810 2,595,234 1,304,410 1,627,878 1,879,513 Total Primary Government 11,819,210$ 6,897,263$ 3,172,247$ (5,050,810)$ (1,419,846)$ Source: City Finance Department
For the Fiscal Year Ended June 30,
City of Hercules
Changes in Net Position (Continued)
Last Ten Fiscal Years
(Accrual Basis of Accounting)
165
328
2012 2013 2014 2015 2016
General Fund
Nonspendable 21,136,465$ 23,063,118$ 27,801,759$ 27,806,063$ 28,643,374$ Assigned 561,482 554,985 1,359,328 1,363,528 2,171,733
Unassigned (240,256) 2,700,418 5,389,258 7,969,320 8,291,363 Total General Fund 21,457,691$ 26,318,521$ 34,550,345$ 37,138,911$ 39,106,470$ All Other Governmental Funds
Nonspendable 8,434,036$ 12,131,778$ 12,131,778$ 11,013$ 6,714,263$ Restricted 13,079,793 19,147,732 8,253,115 21,070,727 12,443,589 Committed - - - - - Assigned - 71,386 - 35,395 1,314,160 Unassigned (173,527) (193,469) (857,203) (2,770,225) (7,036,753) Total all other governmental funds 21,340,302$ 31,157,427$ 19,527,690$ 18,346,910$ 13,435,259$ Source: Finance Department
For the Fiscal Year Ended June 30,
City of Hercules
Fund Balances of Governmental Funds
Last Ten Fiscal Years
(Modified Accrual Basis of Accounting)
166
329
2017 2018 2019 2020 2021
General Fund
Nonspendable 30,092,172$ 27,799,824$ 29,402,817$ 29,769,663$ 30,034,997$ Assigned 2,176,150 2,321,483 5,937,646 6,205,655 5,915,247 Unassigned 9,426,610 14,194,525 10,027,085 8,398,945 10,008,178 Total General Fund 41,694,932$ 44,315,832$ 45,367,548$ 44,374,263$ 45,958,422$ All Other Governmental Funds
Nonspendable 11,013$ 11,013$ 11,013$ -$ -$ Restricted 20,587,964 20,556,143 21,446,237 19,621,155 19,549,409 Committed - - - 428,552 1,391,188 Assigned - - - - - Unassigned (4,048,580) (1,473,498) (226,591) (98,458) (162,793) Total all other governmental funds 16,550,397$ 19,093,658$ 21,230,659$ 19,951,249$ 20,777,804$ Source: Finance Department
For the Fiscal Year Ended June 30,
City of Hercules
Fund Balances of Governmental Funds (Continued)
Last Ten Fiscal Years
(Modified Accrual Basis of Accounting)
167
330
2012 2013 2014 2015 2016
Revenues
Taxes and Assessments 10,599,331$ 6,340,744$ 7,651,413$ 8,389,012$ 9,032,585$ Licenses and permits 343,071 294,737 315,086 480,645 344,374 Fines and forfeitures 62,858 87,128 66,488 62,069 60,434 Use of money and property 2,077,929 1,012,177 1,003,729 1,082,244 1,183,964 Intergovernmental 2,926,750 2,413,531 3,374,022 6,194,872 5,677,447 Charges For Services 4,207,135 4,139,898 4,434,327 5,079,255 4,660,592 Other Revenues 991,537 758,854 1,015,728 476,033 1,029,258 Total Revenues 21,208,611 15,047,069 17,860,793 21,764,130 21,988,654 Expenditures
Current:

General government 4,061,861 3,482,323 3,934,402 2,635,701 2,952,966 Public Safety 4,727,262 4,578,363 4,869,782 5,158,435 5,589,583 Streets and Public Works 2,805,974 2,731,992 3,820,523 3,104,609 2,772,877 Parks And Recreation 2,082,076 1,833,902 1,878,925 1,827,391 1,961,669 Community Development 1,902,907 1,628,258 1,882,181 743,110 399,215 Lease expense 779,109 - - - - Capital outlay 670,331 853,299 1,161,622 4,994,173 8,504,827 Debt service:

Principal 3,906,223 457,025 583,104 604,474 626,149
Interest And Fiscal Agent Fees 4,416,241 1,233,175 1,213,038 1,189,346 1,164,163 Total Expenditures 25,351,984 16,798,337 19,343,577 20,257,239 23,971,449 Excess (deficiency) of revenues over
(under) expenditures (4,143,373) (1,751,268) (1,482,784) 1,506,891 (1,982,795) Other Financing Sources (Uses)
Proceeds from loan - - - - - Proceeds from refunding bond - - - - - Payment to refunded bond escrow agent - - - - - Transfers in 11,935,013 2,653,429 8,621,221 1,482,134 11,787,077 Transfers (out) (11,935,013) (1,899,798) (1,363,768) (1,574,870) (11,803,454) Sale of capital assets - - 381,949 - - Contributed Capital - - - - - Special Item - - - - - Total other financing sources (uses) 753,631 7,639,402 (92,736) (16,377) Special/Extraordinary Item (35,494,325) 3,686,647 - - - Net Change in fund balances (39,637,698)$ 2,689,010$ 6,156,618$ 1,414,155$ (1,999,172)$ Debt service as a percentage of
noncapital expenditures 34% 11% 10% 12% 12%
NOTE:
(a) Calculation of percentage only includes non-capitalized expenditures that is not being reflected on the capital outlay line.

Source: City Finance Department
For the Fiscal Year Ended June 30,
City of Hercules
Changes in Fund Balances of Governmental Funds
Last Ten Fiscal Years
(Modified Accrual Basis of Accounting)
168
331
2017 2018 2019 2020 2021
Revenues
Taxes and Assessments 9,202,688$ 9,352,260$ 10,726,652$ 10,727,692$ 14,098,060$ Licenses and permits 496,355 1,081,912 844,806 796,397 952,294 Fines and forfeitures 47,824 48,579 50,058 62,582 36,586 Use of money and property 1,192,976 1,443,270 1,728,361 1,702,755 1,456,271 Intergovernmental 14,911,152 7,650,796 4,455,255 4,073,720 4,589,299 Charges For Services 5,157,696 5,684,127 7,964,546 5,282,444 1,150,164 Other Revenues 448,688 1,204,989 92,602 67,355 239,610
Total Revenues 31,457,379 26,465,933 25,862,280 22,712,945 22,522,284 Expenditures
Current:

General government 3,153,498 3,492,082 4,542,651 4,070,428 3,854,043 Public Safety 6,022,005 6,295,019 6,776,245 7,634,971 7,774,932 Streets and Public Works 3,469,283 4,300,078 4,357,212 4,080,345 4,638,912 Parks And Recreation 1,883,159 2,101,369 2,128,110 2,165,547 1,434,988 Community Development 640,625 468,011 616,899 557,672 792,456 Lease expense - - - - - Capital outlay 9,079,227 2,757,245 2,261,555 3,434,295 4,163,726 Debt service:

Principal 653,144 580,473 613,153 646,201 469,113
Interest And Fiscal Agent Fees 1,136,588 1,307,495 1,285,738 1,239,573 1,224,118 Total Expenditures 26,037,529 21,301,772 22,581,563 23,829,032 24,352,288 Excess (deficiency) of revenues over
(under) expenditures 5,419,850 5,164,161 3,280,717 (1,116,087) (1,830,004) Other Financing Sources (Uses)
Proceeds from loan - - - - 4,209,354 Proceeds from refunding bond - - - - 5,876,843 Payment to refunded bond escrow agent - - - - (5,705,000) Transfers in 2,705,171 1,408,803 2,511,094 1,730,899 1,405,555 Transfers (out) (2,705,171) (1,408,803) (2,603,094) (1,730,899) (964,912) Sale of capital assets - - - - - Contributed Capital - - - 655,467 - Special Item - - - (1,812,075) (604,025) Total other financing sources (uses) (92,000) (1,156,608) 4,217,815 Special/Extraordinary Item - - - - - Net Change in fund balances 5,419,850$ 5,164,161$ 3,188,717$ (2,272,695)$ 2,387,811$ Debt service as a percentage of
noncapital expenditures 11% 10% 9% 9% 8%
NOTE:
(a) Calculation of percentage only includes non-capitalized expenditures that is not being reflected on the capital outlay line.

Source: City Finance Department
For the Fiscal Year Ended June 30,
City of Hercules
Changes in Fund Balances of Governmental Funds (Continued) Last Ten Fiscal Years
(Modified Accrual Basis of Accounting)
169
332
Fiscal Year Less: Taxable
Ended Residential Commercial Industrial Other Unsecured Tax-Exempt Assessed June 30, Property Property Property Property Property Property Value 2012 2,288,518,594$ 70,486,650$ 171,206,105$ 41,626,038$ 57,110,126$ 90,298,501$ 2,538,649,012$ 2013 2,145,156,967 68,182,982 166,377,521 41,803,608 54,863,064 89,677,874 2,386,706,268 2014 2,177,990,007 78,806,569 181,255,580 33,879,853 53,405,561 92,483,903 2,432,853,667 2015 2,567,234,136 71,672,395 175,156,171 28,510,114 56,578,518 75,454,264 2,823,697,070 2016 2,762,167,273 78,083,558 178,580,502 39,547,425 54,269,399 77,407,676 3,035,240,481 2017 2,984,511,909 79,706,704 192,358,822 58,775,769 58,945,949 94,538,055 3,279,761,098 2018 3,171,302,525 86,604,265 199,079,514 88,645,176 56,327,147 96,165,729 3,505,792,898 2019 3,322,501,416 85,620,650 196,779,448 91,306,290 56,782,463 97,967,035 3,655,023,232 2020 3,549,607,367 90,938,555 199,145,259 83,462,351 59,062,998 108,788,587 3,873,427,943 2021 3,785,286,659 88,476,522 204,766,171 82,829,255 58,291,816 111,756,157 4,107,894,266 Source: County Assessor data, MuniServices, LLC / Avenu Insights & Analytics * 2019-20 Other Property includes State Unitary tax $79,567. (1) Total tax rate is represented by TRA 4-001
(2) Estimated Actual Value is derived from a series of calculations comparing median assessed values from 1940 to current median sale prices. Based on these calculations a multiplier value was extrapolated and applied to current assessed values.

City of Hercules
Assessed and Estimated Actual Value of Taxable Property Last Ten Fiscal Years
170
333
Factor of
Fiscal Year Taxable
Ended Total Tax Estimated Actual Assessed
June 30, Rate (1) Taxable Value (2) Value (2)
2012 5.4221% 2,538,649,012$ 1.000000
2013 5.4221% 2,386,706,268 1.000000
2014 5.4221% 2,432,853,667 1.000000
2015 5.4221% 2,823,697,070 1.000000
2016 5.4221% 3,035,240,481 1.000000
2017 5.4221% 3,279,761,098 1.000000
2018 5.4221% 3,505,792,898 1.000000
2019 5.4221% 6,047,063,713 1.654453
2020 5.4221% 6,578,416,066 1.698345
2021 5.4221% 6,420,511,696 1.562969
Source: County Assessor data, MuniServices, LLC / Avenu Insights & Analytics * 2019-20 Other Property includes State Unitary tax $79,567. (1) Total tax rate is represented by TRA 4-001
(2) Estimated Actual Value is derived from a series of calculations comparing median assessed values from 1940 to current median sale prices. Based on these calculations a multiplier value was extrapolated and applied to current assessed values.

City of Hercules
Assessed and Estimated Actual Value of Taxable Property (Continued) Last Ten Fiscal Years
171
334
Category 2012 2013 2014 2015 2016
Residential 2,288,518,594$ 2,145,156,967$ 2,177,990,007$ 2,567,234,136$ 2,762,167,273$ Industrial 171,206,105 166,377,521 181,255,580 175,156,171 178,580,502 Commercial 70,486,650 68,182,982 78,806,569 71,672,395 78,083,558 Vacant 15,279,054 15,065,418 13,529,847 16,167,550 27,684,893 Institution 14,696,564 14,990,493 15,192,385 496,945 506,873 Recreation 9,229,662 9,282,254 2,735,888 9,411,388 9,461,565 Social 882,082 899,723 836,400 840,196 856,982
Miscellaneous 758,482 773,649 789,119 792,700 808,536
Rural 203,194 207,256 211,399 212,358 216,599
Unitary - 7,815 7,815 11,977 11,977 Professional 577,000 577,000 577,000 577,000 - Gross Secured Value 2,571,837,387 2,421,521,078 2,471,932,009 2,842,572,816 3,058,378,758 Unsecured 57,110,126 54,863,064 53,405,561 56,578,518 54,269,399 Exemptions 90,298,501 89,677,874 92,483,903 75,454,264 77,407,676 2,538,649,012$ 2,386,706,268$ 2,432,853,667$ 2,823,697,070$ 3,035,240,481$ Source: County Assessor data, MuniServices, LLC / Avenu Insights & Analytics Use code categories are based on Contra Costa County Assessor's data For the Fiscal Year Ended June 30,
City of Hercules
Assessed Value of Property by Use Code
Last Ten Fiscal Years
172
335
Category 2017 2018 2019 2020 2021
Residential 2,984,511,909$ 3,171,302,525$ 3,322,501,416$ 3,549,607,367$ 3,785,286,659$ Industrial 192,358,822 199,079,514 196,779,448 199,145,259 204,766,171 Commercial 79,706,704 86,604,265 85,620,650 90,938,555 88,476,522 Vacant 31,332,357 61,123,014 62,680,104 53,134,753 51,585,587 Institution 15,803,658 16,119,728 16,442,120 16,770,959 17,106,375 Recreation 9,716,963 9,502,881 10,179,175 11,038,616 11,570,506 Social 870,050 826,000 842,520 1,334,000 1,360,679
Miscellaneous 820,864 837,279 854,023 871,101 888,520
Rural 219,900 224,297 228,781 233,355 238,021
Unitary 11,977 11,977 79,567 79,567 79,567
Professional - - - - - Gross Secured Value 3,315,353,204 3,545,631,480 3,696,207,804 3,923,153,532 4,161,358,607 Unsecured 58,945,949 56,327,147 56,782,463 59,062,998 58,291,816 Exemptions 94,538,055 96,165,729 97,967,035 108,788,587 111,756,157 3,279,761,098$ 3,505,792,898$ 3,655,023,232$ 3,873,427,943$ 4,107,894,266$ Source: County Assessor data, MuniServices, LLC / Avenu Insights & Analytics Use code categories are based on Contra Costa County Assessor's data For the Fiscal Year Ended June 30,
City of Hercules
Assessed Value of Property by Use Code (Continued)
Last Ten Fiscal Years
173
336
2019-20 2020-21
Basic City and County Levy
City of Hercules 0.054221 0.054221
County of Contra Costa 0.945779 0.945779

1.000000 1.000000
Override Assessments
Bart 0.012000 0.013900
East Bay Reg Pk Bd 0.009400 0.001400
West CC Unified Bd 98 0.004500 0.003200
West Contra Costa Unified 0.185400 0.198600
WCCUSD 2012 Bond 0.048000 0.041400
Community College 0.018800 0.016100

0.278100 0.274600
Total Tax Rate 1.278100 1.274600
Source: County Auditor/Controller data, MuniServices, LLC / Avenu Insights & Analytics Rates are not adjusted for ERAF
TRA 4-001 is represented for this report
*2012-13 is the city's first CAFR publication, therefore prior year data is unavailable.

Total 1% Breakout
Total Override Rate
City of Hercules
Direct and Overlapping Property Tax Rates
Last Two Fiscal Years
174
337
2020-21 2011-12
Percentage Percentage
($) of Total City of Total City
Taxable Assessed Assessed Assessed
Taxpayer Value Value Value Value
Bio-Rad Laboratories Inc 171,910,085 $ 4.18% 147,313,374 $ 5.80% Hercules Block N Dev Partners 70,100,125 1.71% -
WCV Aventine Hercules LLC 63,502,655 1.55% -
Hercules Land Partners LP 26,138,782 0.64% -
Reliant-East Bay LP 21,112,560 0.51% -
HD Development of Maryland 19,178,208 0.47% 16,626,806 0.65% Hercules SPE MW LLC 12,447,967 0.30% -
Vacaville Mobile Home Park LLC 10,659,700 0.26% -
Tulloch Brian TRE 10,279,314 0.25% 8,386,323 0.33%
CS Creekside Hercules LLC 8,163,384 0.20% -
Santa Clara VLY Housing Group 8,120,000 0.20% 5,310,000 0.21% Dathe Robert P & Carlotta R 7,729,593 0.19% 6,598,181 0.26% Hercules Sycamore Hills LLC 7,581,770 0.18% 6,471,995 0.25% LA Costalot LLC 7,560,712 0.18%
Hercules Real Est Ltd Ptnship 7,100,718 0.17% 5,139,600 0.20% Mechanics Bank of Richmond 6,483,737 0.16% 9,145,497 0.36% 1560 Sycamore LLC 6,247,838 0.15% 3,753,600 0.15%
North First Street Properties 6,186,842 0.15% 2,828,789 0.11% Creekside Shopping Center LLC 5,982,300 0.15% 3,600,000 0.14% Madison MRH-1 Franklin LLC 5,889,704 0.14% -
Taylor Morrison of CA LLC 5,605,396 0.14% -
Arrow Investment Partners LLC 5,382,000 0.13% 3,958,350 0.16% Multiple O Holdings LLC 5,123,227 0.12% -
Trestle Hercules LLC 5,051,060 0.12% -
Adalan Properties LLC 4,754,604 0.12% 4,058,657 0.16%
Rago Dev Corp - 14,715,064 0.58% Orinda Investors LP - 6,713,296 0.26% Three Trees Holdings I LLC - 6,600,000 0.26% Serb Andrew C Janet C - 5,656,700 0.22% Golden Gateway Assoc - 5,486,615 0.22% Robinson Theodore Deanna - 4,998,221 0.20% Red Barn Ventures I LLC - 4,456,304 0.18% Hercules Bayfront LLC - 3,700,131 0.15% Wells Fargo Bank NA - 3,536,500 0.14% ORB Partnership - 3,405,939 0.13% Comcast of California Colorado - 3,288,668 0.13% Emmerich Victor H Janet - 2,700,000 0.11% Total Top 25 Taxpayers 508,292,281 $ 12.37% 288,448,610 $ 11.36% Total Taxable Value 4,107,894,266 $ 100.00% 2,538,649,012 $ 100.00% Source: County Assessor data, MuniServices, LLC / Avenu Insights & Analytics Total Taxable Value includes State Unitary of $79,567.

City of Hercules
Principal Property Taxpayers
Last Fiscal Year and Nine Years Ago
175
338
Percent
of Total
Current Percent Total Tax
Fiscal Total Tax of Levy Tax Collections
Year Tax Levy (a) Collections Collected Collections to Tax Levy 2011 900,445 $ 900,445 $ 100% 900,445 $ 100% 2012 898,957 898,957 100% 898,957 100%
2013 1,238,594 1,238,594 100% 1,238,594 100%
2014 878,899 878,899 100% 878,899 100%
2015 1,044,373 1,044,373 100% 1,044,373 100%
2016 1,110,223 1,110,223 100% 1,110,223 100%
2017 1,168,687 1,168,687 100% 1,168,687 100%
2018 1,233,140 1,233,140 100% 1,233,140 100%
2019 1,296,155 1,296,155 100% 1,296,155 100%
2020 1,342,265 1,342,265 100% 1,342,265 100%
2021 1,378,587 1,378,587 100% 1,378,587 100%
Source: City of Hercules Records
City of Hercules
Property Tax Levies and Collections
Last Ten Fiscal Years
176
339
Taxpayer Business Type Taxpayer Business Type
Big Lots Department Stores 44 Sports Lounge Restaurants Bio Rad Laboratories Chemical Products A & B Die Casting Heavy Industry Burger King Restaurants Restaurants American Golf Club Restaurants Cabalen Filipino Cuisine Restaurants Big Lots Department Stores City Mechanical Incorporated Bldg.Matls-Whsle Bio Rad Laboratories Chemical Products City of Ember Miscellaneous Retail Burger King Restaurants Restaurants Domino's Pizza Restaurants Cigarettes City Miscellaneous Retail Dragon Terrace Restaurant Restaurants Extreme Pizza Restaurants Home Depot Bldg.Matls-Retail Home Depot Bldg.Matls-Retail Jack In The Box Restaurants Restaurants Jack In The Box Restaurants Restaurants Kinder's Food Markets Kinder's Meats Deli & BBQ Restaurants L & L Hawaiian Barbecue Restaurants Kms Convenience Marts Food Markets Lucky Food Centers Food Markets Mazatlan Taqueria & Grill Restaurants Mazatlan Taqueria And Grill Restaurants Mcdonald's Restaurants Restaurants Mcdonald's Restaurants Restaurants Pro Media Ultrasound Electronic Equipment Mountain Mike's Pizza Restaurants Radston's Office Equipment Rite Aid Drug Stores Drug Stores Rite Aid Drug Stores Drug Stores Riviera Brokerage Miscellaneous Retail Round Table Pizza Restaurants Round Table Pizza Restaurants Save Mart Supermarkets Food Markets Safeway Stores Food Markets Shell Service Stations Service Stations Shell Service Stations Service Stations Snap-On Tools Bldg.Matls-Retail Taco Bell Restaurants Starbucks Coffee Food Markets
The Powder Keg Pub Restaurants Taco Bell Restaurants
Union 76 Service Stations Service Stations The Powder Keg Restaurant Restaurants Willow Food & Liquor Food Markets Union 76 Service Stations Service Stations Source: MuniServices, LLC / Avenu Insights & Analytics Top Sales Tax Producers listed in alphabetical order. 2020-21 2011-12
City of Hercules
Principal Sales Tax Producers
Last Ten Fiscal Years
177
340
Tax Loans &
Fiscal Allocation Revenue Lease
Year Bonds Bonds Purchases Total
2012 -$ (b) 17,450,000$ 7,032,006 $ 24,482,006 $ 2013 - (b) 17,120,000 6,904,982 24,024,982 2014 - (b) 16,770,000 6,671,878 23,441,878 2015 - (b) 16,405,000 6,432,404 22,837,404 2016 - (b) 16,025,000 6,186,255 22,211,255 2017 - (b) 15,625,000 5,933,111 21,558,111 2018 - (b) 15,205,000 6,172,638 21,377,638 2019 - (b) 14,760,000 6,004,485 20,764,485 2020 - (b) 14,290,000 5,828,284 20,118,284 2021 - (b) 14,261,843 9,768,525 24,030,368 NOTE: Debt amounts exclude any premiums, discounts, or other amortization amounts.

Sources: City of Hercules
State of California, Department of Finance (population) U.S. Department of commerce, Bureau of the Census (income) (a) Demographic Statistics for personal income and population data. (b) Upon the dissolution of the Hercules Redevelopment Agency effective January 31, 2012, a Successor Agency assumed the liabilities of the former Hercules Redevelopment Agency, including the Tax Allocation Bonds.

Governmental Activities
City of Hercules
Ratio of Outstanding Debt by Type
Last Ten Fiscal Years
0 10,000,000
20,000,000
30,000,000
40,000,000
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Total Governmental Activities Total Business-Type Activities 178
341
Loans & Percentage Debt
Fiscal Revenue Lease of Personal Per
Year Bonds Purchases Total Total Income (a) Capita (a)
2012 24,735,000$ -$ 24,735,000$ 49,217,006$ 5.49% 2,012 2013 24,400,000 - 24,400,000 48,424,982 5.29% 1,965 2014 11,070,000 - 11,070,000 34,511,878 3.78% 1,390 2015 10,830,000 - 10,830,000 33,667,404 3.54% 1,346 2016 10,585,000 - 10,585,000 32,796,255 3.48% 1,296 2017 10,335,000 6,786,667 17,121,667 38,679,778 3.93% 1,497 2018 10,075,000 15,165,494 25,240,494 46,618,132 4.28% 1,795 2020 9,535,000 25,457,694 34,992,694 55,110,978 4.72% 2,159 2021 9,250,000 24,356,298 33,606,298 57,636,666 4.51% 2,228 NOTE: Debt amounts exclude any premiums, discounts, or other amortization amounts.

Sources: City of Hercules
State of California, Department of Finance (population) U.S. Department of commerce, Bureau of the Census (income) (a) Demographic Statistics for personal income and population data. (b) Upon the dissolution of the Hercules Redevelopment Agency effective January 31, 2012, a Successor Agency assumed the liabilities of the former Hercules Redevelopment Agency, including the Tax Allocation Bonds.

City of Hercules
Ratio of Outstanding Debt by Type (Continued)
Last Ten Fiscal Years
Business-Type Activities
179
342
180
343
2020-21 Assessed Valuation: $4,140,056,466 Total Debt City's Share of
OVERLAPPING TAX AND ASSESSMENT DEBT: 6/30/21 % Applicable (a) Debt 6/30/21 Bay Area Rapid Transit District 1,871,890,000 $ 0.483% 9,041,229 $ Contra Costa Community College District 596,325,000 1.836% 10,948,527 John Swett Unified School District 76,761,174 8.030% 6,163,922 West Contra Costa Unified School District 1,214,983,000 11.051% 134,267,771 West Contra Costa Healthcare Parcel Tax Obligations 51,237,000 10.971% 5,621,211 East Bay Regional Park District 133,170,000 0.773% 1,029,404 California Statewide Communities development Authority Assessment Districts 4,142,065 100.000% 4,142,065 City of Hercules 1915 Act Bonds 2,774,642 100.000% 2,774,642 TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT 173,988,771 $ DIRECT AND OVERLAPPING GENERAL FUND DEBT:

Contra Costa County General Fund Obligations 254,570,000 $ 1.830% 4,658,632 $ Contra Costa County Pension Obligation Bonds 44,925,000 1.830% 822,128 West Contra Costa Unified School District Certificates of Participation 7,105,000 11.051% 785,174 City of Hercules General Fund Obligations 14,261,843 100.000% 14,261,843 TOTALGROSS DIRECT AND OVERLAPPING GENERAL FUND DEBT 20,527,776 $ Less: Contra Costa County obligations supported from revenue funds 749,984 TOTAL NET DIRECT AND OVERLAPPING GENERAL FUND DEBT 19,777,792 $ OVERLAPPING TAX INCREMENT DEBT (Successor Agency): $95,455,000 100% 95,455,000$ TOTAL DIRECT DEBT 14,261,843
TOTAL GROSS OVERLAPPING DEBT 275,709,704$
TOTAL NET OVERLAPPING DEBT 275,959,720$
GROSS COMBINED TOTAL DEBT 289,971,547$ (b)
NET CONBINED TOTAL DEBT 289,221,563$
(b) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded capital lease obligations.

Ratios to 2019-20 Assessed Valuation:

Total Overlapping Tax and Assessment Debt …................................................... 4.20% Total Direct Debt ($14,290,000) …..................................................................... . 0.34% Gross Combined Total Debt ….............................................................................. 7.00% Net Combined Total Debt …................................................................................. . 6.99% Ratios to Redevelopment Successor Agency Incremental Valuation $1,621,659,162 Total Overlapping Tax Increment Debt …............................................................ . 5.89% Source: Avenue Insights & Analytics
California Municipal Statistics, Inc.
(a) The percentage of overlapping debt applicable to the city is estimated using taxable assessed property value. Applicable percentages were estimated by determining the portion of the overlapping district's assessed value that is within the boundaries of the city divided by the district's total taxable assessed value.

City of Hercules
Computation of Direct and Overlapping Debt
June 30, 2021
181
344
2012 2013 2014 2015 2016
Assessed Valuation 2,538,649,012$ 2,386,706,268$ 2,432,853,667$ 2,823,697,070$ 3,035,240,481$ Conversion Percentage 25% 25% 25% 25% 25%
Adjusted Assessed Valuation 634,662,253$ 596,676,567$ 608,213,417$ 705,924,268$ 758,810,120$ Debt Limit Percentage 15% 15% 15% 15% 15%
Debt Limit 95,199,338$ 89,501,485$ 91,232,013$ 105,888,640$ 113,821,518$ Total net debt applicable to limit:

General Obligation Bonds - - - - - Legal Debt Margin 95,199,338$ 89,501,485$ 91,232,013$ 105,888,640$ 113,821,518$ Total debt applicable to the limit
as a percentage of debt limit 1
Source: City Finance Department
County Tax Assessor's Office
1 Section 43605 of the California Government Code for General Obligation Bonds.

The Government Code of the State of California provides for a legal debt limit of 15% of gross assessed valuation. However, this provision was enacted when assessed valuation was based upon 25% of market value.

Effective with the 1981-82 fiscal year, each parcel is now assessed at 100% of market value (as of the most recent change in ownership for that parcel). The computations shown above reflect a conversion of assessed valuation data for each fiscal year from the current full valuation perspective to the 25% level that was in effect at the time that the legal debt margin was enacted by the State of California for local governments located within the state.

For the Fiscal Year Ended June 30,
City of Hercules
Legal Debt Margin Information
Last Ten Fiscal Years
182
345
2017 2018 2019 2020 2021
Assessed Valuation 3,279,761,098$ 3,505,792,898$ 3,655,023,232$ 3,873,427,943$ 4,107,894,266$ Conversion Percentage 25% 25% 25% 25% 25%
Adjusted Assessed Valuation 819,940,275$ 876,448,225$ 913,755,808$ 968,356,986$ 1,026,973,567$ Debt Limit Percentage 15% 15% 15% 15% 15%
Debt Limit 122,991,041$ 131,467,234$ 137,063,371$ 145,253,548$ 154,046,035$ Total net debt applicable to limit:

General Obligation Bonds - - - - - Legal Debt Margin 122,991,041$ 131,467,234$ 137,063,371$ 145,253,548$ 154,046,035$ Total debt applicable to the limit
as a percentage of debt limit 1
Source: City Finance Department
County Tax Assessor's Office
1 Section 43605 of the California Government Code for General Obligation Bonds.

For the Fiscal Year Ended June 30,
The Government Code of the State of California provides for a legal debt limit of 15% of gross assessed valuation. However, this provision was enacted when assessed valuation was based upon 25% of market value.

Effective with the 1981-82 fiscal year, each parcel is now assessed at 100% of market value (as of the most recent change in ownership for that parcel). The computations shown above reflect a conversion of assessed valuation data for each fiscal year from the current full valuation perspective to the 25% level that was in effect at the time that the legal debt margin was enacted by the State of California for local governments located within the state.

City of Hercules
Legal Debt Margin Information (Continued)
Last Ten Fiscal Years
183
346
Debt Service Requirements
Revenues Not Net Revenue
Fiscal Gross Available for Operating Available for
Year Revenue (a) Debt Service (b) Expenses (c) Debt Service Principal Interest Total Coverage 2012 5,067,181$ - $ 2,306,754$ 2,760,427 $ 230,000 $ 507,013$ 737,013 $ 3.75 2013 5,318,437 - 2,383,009 2,935,428 230,000 502,413 732,413 4.01 2014 5,656,760 - 2,606,826 3,049,934 235,000 497,763 732,763 4.16 2015 6,144,342 372,165 1,773,138 3,999,039 240,000 493,013 733,013 5.46 2016 5,629,550 - 2,733,393 2,896,157 245,000 487,856 732,856 3.95 2017 5,845,188 155,367 1,868,853 3,820,968 250,000 481,975 731,975 5.22 2018 6,345,495 510,645 2,380,221 3,454,629 260,000 474,950 734,950 4.70 2019 6,648,269 299,022 3,968,987 2,380,260 265,000 467,075 732,075 3.25 2020 6,220,998 - 3,367,478 2,853,520 275,000 458,631 733,631 3.89 2021 5,769,396 - 2,692,326 3,077,070 1,391,780 735,166 2,126,946 1.45 NOTE: (a) Includes all Sewer Service Charges operating revenues, non-operating interest revenue, other non-operating revenue (b) Sewer Connection Fees and Sewer Facilities Fees
(c) Includes all Sewer operating expenses, less depreciation and interest Source: City of Hercules Annual Financial Statements
City of Hercules
Wastewater Fund Debt Coverage
Last Ten Fiscal Years

0.00 1.00

2.00 3.00

4.00 5.00

6.00 7.00

8.00 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Cover…
184
347
Total Per Capita Public County City
Fiscal Personal Personal Median School Unemployment Unemployment County Year Population (1)
Income Income (2)
Age Enrollment (3) Rate (%) (4) Rate (%) (4)
Population
2012 24,457 897,253,959 $ 36,687 $ 37.0 29,883 10.3% 6.9% 1,073,520 2013 24,640 914,612,160 37,119 37.2 30,398 8.9% 6.0% 1,086,731 2014 24,826 913,423,018 36,793 37.3 30,720 7.5% 5.0% 1,099,843 2015 25,021 950,247,538 37,978 37.4 30,596 6.2% 4.1% 1,113,759 2016 25,299 942,311,853 37,247 37.6 30,973 5.0% 3.3% 1,128,574 2017 25,833 985,089,789 38,133 37.7 31,267 4.5% 4.0% 1,139,746 2018 25,964 1,089,501,368 41,962 37.8 31,649 3.8% 3.5% 1,147,879 2019 26,224 1,153,383,968 43,982 40.3 31,760 2.6% 2.3% 1,155,879 2020 25,530 1,167,844,320 45,744 40.2 32,143 13.6% 13.7% 1,153,561 2021 25,864 1,277,053,622 49,376 41.2 31,027 8.9% 8.8% 1,153,854 Source: MuniServices, LLC / Avenu Insights & Analytics
The California Department of Finance demographics estimates now incorporate 2010 Census counts as the benchmark. (1) Population Projections are provided by the California Department of Finance Projections. (2) Income Data is provided by the U.S. Census Bureau and is adjusted for inflation. (3) Student Enrollment reflects the total number of students enrolled in the West Contra Costa School District only. Any other school districts within the City are not accounted for in this statistic. (4) Unemployment Data is provided by the EDD's Bureau of Labor Statistics Department.

City of Hercules
Demographic and Economic Statistics
Last Ten Fiscal Years
185
348
Percentage Percentage
Number of of Total City Number of of Total City
Business Name Employees Employment Employees Employment Bio-Rad Laboratories Inc 2,194 16.0% 2,271 17.1%
West Contra Costa Unified School District 238 1.74% 238 1.79% Home Depot 192 1.40% 198 1.49%
Safeway 180 1.31%
Contra Costa County Social Services 107 0.78% 106 0.80% Pacific Bio Labs Inc 93 0.68% 94 0.71%
Lucky Supermarkets 90 0.66% 100 0.75%
City of Hercules 68 0.50% 60 0.45%
Benda Tool & Model Works Inc 44 0.32% 36 0.27%
Big Lots 23 0.17% 25 0.19%
Kinder's Meats & Deli BBQ & Catering 40 0.30%
Total Top 10 Employers 3,229 23.57% 3,168 23.82%
Total City Labor Force (1) 13,700 13,300
Source: MuniServices, LLC \ Avenu Insights & Analytics
Source: 2019-20 previously published ACFR.

Results based on direct correspondence with city's local businesses. (1) Total City Labor Force provided by EDD Labor Force Data. *2018-19 is the city's first CAFR Statistical publication, therefore, prior year data is unavailable.
2020-21 2019-20
City of Hercules
Principal Employers
Current Fiscal Year and One Year Ago
186
349
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Function
General Government 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 11.00 11.00 Public Safety 26.00 23.00 24.00 24. 00 24.00 24.00 26.00 26.00 28.00 29.00 Public Works (a) 18.00 14.00 13.00 11.00 11.0 0 11.00 11.00 11.00 11.00 11.00 Community Development 2.00 2.00 2.0 02 . 0 02 . 0 02 . 0 02 . 0 02 . 0 02 . 0 02 . 0 0 Parks and Recreation (b) 6.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 Housing Authority © 3.00
Total 65.00 53.00 53.00 51.00 51 .00 51.00 53.00 53.00 56.00 57.00 NOTE:
(a) Public Works includes Wastewater and Solid Waste
(b) Parks and Recreation includes Library, Recreation and Park (c) The Housing Authority became a separate legal entity during Fiscal Year 2011-12 Source: City of Hercules Operating Budget
For the Fiscal Year Ended June 30,
City of Hercules
Full-Time Equivalent City Government Employees by Function Last Ten Fiscal Years
0 10
20 30
40 50
60 70FTE's
General Government Public Safety Public Works (a)
Community Development Parks and Recreation (b) Housing Authority © 187
350
2012 2013 2014 2015 2016
General Information
Area in square miles 18.20 18.20 18.20 18.20 18.20 Number of registered voters - 21,862 - 17,280 2,671 Number of Hospitals - - - - - Education:

Student enrollment 3,042 3,007 2,928 2,799 2,823 Elementary schools 1,274 1,277 1,240 1,228 1,211 Junior high schools 767 724 673 636 632 High schools 1,001 1,006 1,015 935 980 Teachers (full & part time) 157 143 144 148 127 Function/Program
Police:

Police calls for Service 12,960 12,309 12,550 1,843 7,707 Law violations:

Part I and Part II crimes 761 822 811 96 571 Physical arrests (adult and juvenile) 351 410 450 45 245 Traffic violations 1,142 792 1,000 85 518 Sewer
Sewer service connections 8,235 8,235 8,235 8,235 8,265 Source: City of Hercules
For the Fiscal Year Ended June 30,
City of Hercules
Operating Indicators by Function/Program
Last Ten Fiscal Years
188
351
2017 2018 2019 2020 2021
General Information
Area in square miles 18.20 18.20 18.20 18.20 18.20 Number of registered voters 18,738 - 14,804 - 14,213 Number of Hospitals - - - - - Education:

Student enrollment 2,823 2,825 2,797 2,753 2,717 Elementary schools 1,243 1,296 1,327 1,305 1,296 Junior high schools 584 594 603 596 623 High schools 996 935 867 852 798 Teachers (full & part time) 134 127 125 124 121 Function/Program
Police:

Police calls for Service 13,142 16,245 16,918 29,935 16,192 Law violations:

Part I and Part II crimes 957 867 831 1,162 1,689 Physical arrests (adult and juvenile) 403 449 495 398 508 Traffic violations 793 1,074 1,383 975 607 Sewer
Sewer service connections 8,271 8,326 8,327 8,327 8,410 Source: City of Hercules
For the Fiscal Year Ended June 30,
City of Hercules
Operating Indicators by Function/Program (Continued)
Last Ten Fiscal Years
189
352
2012 2013 2014 2015 2016
Planning & Building:

Number of Building Permits issued 661 672 631 622 782
Recreation and Parks:

Youth & Teens:

Number of youth programs - - 10 11 12 Number of youth attendees - - 534 723 519 Aquatics:

Number of aquatics programs 4 4 4 4 4 Number of aquatics attendees 3,041 1,793 2,898 1,396 2,266 Recreation Classes:

Number of recreation programs 7 7 7 7 6 Number of recreation attendees 1,990 1,598 2,569 2,366 709 Preschool/GradeSchool Programs:

Number of preschool/gradeschool programs 12 10 11 12 9 Number of preschool/gradeschool attendees 3,241 2,880 3,151 3,358 2,900 Seniors:

Number of senior programs 14 14 14 14 14 Number of senior attendees 10,368 10,186 18,873 10,415 10,707 Number of meals served 8,258 8,347 8,702 8,791 8,787 Finance:

Number of Business Licenses issued 941 614 647 664 734 Source: City of Hercules
For the Fiscal Year Ended June 30,
City of Hercules
Operating Indicators by Function/Program (Continued)
Last Ten Fiscal Years
190
353
2017 2018 2019 2020 2021
Planning & Building:

Number of Building Permits issued 778 753 389 675 1,016 Recreation and Parks:

Youth & Teens:

Number of youth programs 12 10 38 8 - Number of youth attendees 250 637 550 112 - Aquatics:

Number of aquatics programs 4 4 4 2 4 Number of aquatics attendees 1,739 1,390 1,686 533 1,098 Recreation Classes:

Number of recreation programs 7 7 7 4 3 Number of recreation attendees 441 914 817 124 16 Preschool/GradeSchool Programs:

Number of preschool/gradeschool programs 11 11 11 8 - Number of preschool/gradeschool attendees 2,949 3,510 3,319 869 - Seniors:

Number of senior programs 14 14 14 14 - Number of senior attendees 11,445 10,573 12,577 2,778 - Number of meals served 9,811 8,880 7,259 3,399 8,212 Finance:

Number of Business Licenses issued 665 819 995 971 1,103 Source: City of Hercules
For the Fiscal Year Ended June 30,
City of Hercules
Operating Indicators by Function/Program (Continued)
Last Ten Fiscal Years
191
354
2012 2013 2014 2015 2016
Function/Program
Police:

Police stations 11111
Public works:

Miles of streets 58 58 58 58 58
Miles of bike lanes 77777
Street and parking lot fixtures 1,466 1,466 1,466 1,466 1,466 Traffic Signals 14 14 14 14 14
Wastewater
Miles of sanitary sewers 62 62 62 62 62
Recreation and Parks:

City parks 11 11 11 11 11
City parks acreage 98 98 98 98 98
Playgrounds 77777
City trails/Bike paths 11122
Community Swim Center 11111
Community centers 22222
Performing arts centers
Teen Center 11111
Swimming pools (a) 22222
Tennis courts (b) 88888
diamonds 22222
Soccer/football fields (c) 11111
Library:

City Libraries 11111
Source: City of Hercules
For the Fiscal Year Ended June 30,
City of Hercules
Capital Asset Statistics by Function/Program
Last Ten Fiscal Years
192
355
2017 2018 2019 2020 2021
Function/Program
Police:

Police stations 1111 1
Public works:

Miles of streets 58 58 58 58 58
Miles of bike lanes 7777 7
Street and parking lot fixtures 1,494 1,494 1,494 1,494 1,494 Traffic Signals 14 14 14 14 14
Wastewater
Miles of sanitary sewers 62 62 62 62 62
Recreation and Parks:

City parks 11 11 11 13 13
City parks acreage 98 98 98 99 99
Playgrounds 7778 8
City trails/Bike paths 2222 2
Community Swim Center 1111 4
Community centers 2224 1
Performing arts centers
Teen Center 1111 1
Swimming pools (a) 2222 3
Tennis courts (b) 8888 2
diamonds 2222 1
Soccer/football fields (c) 1111 1
Library:

City Libraries 1111 1
Source: City of Hercules
For the Fiscal Year Ended June 30,
City of Hercules
Capital Asset Statistics by Function/Program (Continued) Last Ten Fiscal Years
193
356
194
357

Hercules Public Financing Authority
(A Component Unit of the City of Hercules, California)

Hercules, California

Independent Auditors’ Report and
Basic Financial Statements

For the Year Ended June 30, 2021
358

359
Hercules Public Financing Authority
(A Component Unit of the City of Hercules, California)
Basic Financial Statements
For the Year Ended June 30, 2021

Table of Contents

Page

Independent Auditors’ Reports:

Report on the Financial Statements................................................................................................................. 1

Report on Internal Control Over Fi nancial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ............................................................................... 3

Basic Financial Statements:

Government-Wide Financial Statements:

Statement of Net Position ............................................................................................................................. 7 Statement of Activities ....................................................................................................... .......................... 8

Governmental Fund Financial Statements:

Balance Sheet.................................................................................................................. ............................ 11 Reconciliation of the Governmental Fund Balance Sheet
to the Government-Wide St atement of Net Position ............................................................................ 12 Statement of Revenues, Expenses, and Changes in Fund Balances ........................................................... 13 Reconciliation of the Governmental Fund Statement of Revenues, Expenses and Changes in Fund Balances to Government-Wide Statement of Net Position ............................... 14

Notes to the Basic Financial Statements ........................................................................................................... 19

360

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361

INDEPENDENT AUDITORS’ REPORT

To the Board of Directors
of the Hercules Public Financing Authority
Hercules, California

Report on the Financial Statements

We have audited the accompanying financial statements of the governmental activities and each major fund of the Hercules Public Financing Authority (the “Authority”), a component unit of the City of Hercules, California (the “City”), as of and for the year ended June 30, 2021, and the related notes to the basic financial statements, which collectively comprise the Authority’s basic financial statements as listed in the table of contents.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express opinions on these financial st atements based on our audit. We conducted our audit in accordance with auditing standards generally accepte d in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards , issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Authority’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the e ffectiveness of the Authority’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates ma de by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Opinions

In our opinion, the financial statements referred to above present fairly, in all mate rial respects, the financial position of the governmental activities and each major fund of the Authority as of June 30, 2021, and the changes in financial position, thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.
200 E. Sandpointe Ave., Suite 600, Santa Ana, California 92707 Tel: 949-777-8800 • Fax: 949-777-8850
www.pungroup.cpa
3939352 Pun & McGeady_L_final.pdf 2 1/14/14 3:48 PM 362
To the Board of Directors
of the Hercules Public Financing Authority
Hercules, California