Hercules City Council
February 14, 2023

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2021-2022

FISCAL YEAR

CITY OF HERCULES, CALIFORNIA
FOR THE YEAR ENDED JUNE 30, 2022

CITY OF HERCULES, CALIFORNI
A

ANNUAL COMPREHENSIVE

FINANCIAL REPORT

WITH REPORTS ON AUDIT

BY INDEPENDENT

CERTIFIED PUBLIC ACCOUNTANTS

FOR THE YEAR ENDED
JUNE 30, 2022
Prepared by:

The Finance Department

City of Hercules
Annual Comprehensive Financial Report
For the Year Ended June 30, 2022
Table of Contents
Page
I

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

FINANCIAL SECTION
Independent Auditors’ Report on the Financial St
atements ................................................................................... 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:

Govern
mental Fund Financial Statements:

Balance Sheet ........................................................................................................................................... 30 Reconciliation of the Governmental Funds Balance Sheet
to the Government-Wide Statement of Net Position ......................................................................... 33 Statement of Revenues, Expenditures, and
Changes in Fund Balances ................................................................................................................. 34 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Government-Wide Statement of Activities ...................................................................................................................... 36 Proprietary Fund Financial Statements:

Statement of Net Position
..................................................................................................... .................... 38 Statement of Revenues, Expenses, and Changes in Net Position ............................................................ 39 Statement of Cash Flows .......................................................................................................................... 40 Fiduciary Fund Financial Statements:

Statement of Fiduciary Net Position
........................................................................................................ 44 Statement of Changes in Fiduciary Net Position ................................................................................ ..... 45 Notes to the Basic Financial Statements ............................................................................................................ 51 Required Supplementary Information (Unaudited)
Budgetary Principles .......................................................................................................................................... 109 Budgetary Comparison Schedule:

General Fund
.................................................................................................................. .............................. 111 American Rescue Plan Act Special Revenue Fund ...................................................................................... 112 Landscape & Lighting Assessment District (LLAD) No. 83-2 Special Revenue Fund ............................... 113 City of Hercules
Annual Comprehensive Financial Report
For the Year Ended June 30, 2022
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 and Related Ratios:

CalPERS Miscellaneous Plans ..................................................................................................................... 114 CalPERS Safety Plans .................................................................................................................................. 114 Schedule of the City's Contributions to the Pension Plan:

CalPERS Miscellaneous Plan ....................................................................................................................... 116 CalPERS Safety Plan .................................................................................................................................... 116 Schedule of Changes in Net OPEB Liability and Related Ratios:

PEHMCA Plan
.................................................................................................................. .......................... 118 Schedule of Changes in Net OPEB Liability and Related Ratios:

SOMAR Plan
.................................................................................................................... ............................ 119 Schedule of the City’s Contributions to the OPEB Plan:

PEHMCA Plan
................................................................................................................... .......................... 120 Schedule of the City’s Contributions to the OPEB Plan:

SOMAR OP
EB Plan ..................................................................................................................................... 121 Supplementary Information:

Nonmajor Governmental Funds:

Combining B
alance Sheet ....................................................................................................... ..................... 129 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances .................................... 134 Schedules of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual:

State Gas Tax Special Revenue Fund .................................................................................................... 139 Measure C Special Revenue Fund ......................................................................................................... 140 C.O.P.S. Program (AB 3299) Special Revenue Fund ............................................................................ 141 Victoria By the Bay LLAD No. 2002-1 Special Revenue Fund ............................................................ 142 Hercules Village LLAD No. 2002-2 Special Revenue Fund ................................................................. 143 Baywood LLAD No. 2004-1 Special Revenue Fund ............................................................................. 144 Bayside LLAD No. 2005-1 Special Revenue Fund ............................................................................... 145 Arterial Roadways Special Revenue Fund ............................................................................................. 146 Stormwater Special Revenue Fund ........................................................................................................ 147 Development Services Special Revenue Fund ....................................................................................... 148 AB939 JPA Special Revenue Fund................................................................................................. ....... 149 Asset Forfeiture Special Revenue Fund ................................................................................................. 150 Bart Park and Ride Special Revenue Fund ............................................................................................ 151 City Capital Projects Fund ..................................................................................................................... 152 Development Impact Fees Capital Projects Fund .................................................................................. 153 City of Hercules
Annual Comprehensive Financial Report
For the Year Ended June 30, 2022
Table of Contents (Continued)
Page
FINANCIAL SECTION (Continued)
Supplementary Information (Continued)

Internal Service Funds:

Combining S
tatement of Net Position .......................................................................................................... 157 Combining Statement of Revenue, Expenses, and Changes in Net Position ............................................... 158 Combining Statement of Cash Flows ........................................................................................................... 159 Fiduciary Funds - Custodial Funds:

Combining S
tatement of Fiduciary Net Position .......................................................................................... 163 Combining Statement of Changes in Fiduciary Net Position ....................................................................... 164 STATISTICAL SECTION (Unaudited)
Description of Statistical S
ection Contents ...............................................................................................................167 Financial Trends:

Net Position by Component – Last Ten Fiscal Years ......................................................................................... 168 Changes in Net Position – Expenses and Program Revenues – Last Ten Fiscal Years ...................................... 170 Fund Balances of Governmental Funds – Last Ten Fiscal Years ....................................................................... 174 Changes in Fund Balances of Governmental Funds – Last Ten Fiscal Years .................................................... 176 Revenue Capacity:

Assessed and Estimated Actual Value of Taxable Property – Last Ten Fiscal Years ........................................ 178 Assessed Value of Property by Use Code - Last Ten Fiscal Years ..................................................................... 180 Direct and Overlapping Property Tax Rates – Last Two Fiscal Years ............................................................... 182 Principal Property Taxpayers – Last Fiscal Year and Nine Fiscal Years Ago .................................................... 183 Property Tax Levies and Collections - Last Ten Fiscal Years ............................................................................ 184 Principal Sales Tax Producers – Last Ten Fiscal Years ...................................................................................... 185 Debt Capacity:

Ratio of Outstanding Debt by Type – Last Ten Fiscal Years ............................................................................. 186 Computation of Direct and Overlapping Debt .................................................................................................... 189 Legal Debt Margin Information- Last Ten Fiscal Years ..................................................................................... 190 Wastewater Fund Debt Coverage- Last Ten Fiscal Years .................................................................................. 192 Demographic and Economic Information:

Demographic and Economic Statistics ................................................................................................................ 193 Operating Information:

Principal Employers- Current Fiscal Year and One Year Ago ........................................................................... 194 Full-Time Equivalent City Government Employees by Function – Last Ten Fiscal Years ................................ 195 Operating Indicators by Function/Program – Last Ten Fiscal Years .................................................................. 196 Capital Asset Statistics by Function/Program - Last Ten Fiscal Years ............................................................... 200

i
ii

ECONOMIC CONDITION AND OUTLOOK
The City was on-track and expected to exceed budgeted revenues through the third quarter of the fiscal year. With the continued COVID-19
pandemic shutting down significant
portions of the national and local economy
in mid-March, we did see minimal impacts
Sales Tax Growth Trend 2017-2022
in the fiscal year.

For Hercules, that primarily manifested in
a reduction of Parks & Recreation program
revenues as all programming was canceled
and slowly reopening of programs.

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.

Sales Tax Growth by Major Business
Group Comparision 2014-2021
2017
_ BUILDING &'"··---=BU=SIN=E=SS-=-& ____ FO=O=--D =& D=R=UG=-S __ G=E=NE=RA"'--L -�RE�_T_AU�AN T� &

CONSTRUCTION INDUSTRY
■ Hercules Contra Costa

CONSUMER GOODS HOTELS
California
2018
City of Hercules
(In Millions)
2019 2020 2021 2022
Hercules' s total sales tax revenues
grew 91 % over the period between
2017 to 2022, especially in the
Building & Construction segment as
the sales tax revenue of the economic
sector doubled in 2022 when
compared to 2017. The growth is
attributed to the Bayfront mix-use
project in The Village area along
with several new retail projects.

Other than the Building &
Construction segment, sales tax
revenues for both Business &
Industry as well as Food & Drugs segments have also experienced significant growth at 100% and 97% respectively.

The population in the city of Hercules has been growing steadily, industrial/commercial/ residential developments having influenced and created an increased demand for all business segments except General Consumer Goods. The Building & Construction, Business & Industry, Food & Drugs and Restaurants & Hotels segments all reflected higher-than-state-level growth during the comparison period between 2014-2021.

The City received the first payment equal to one-half of the City of Hercules' allocation for $3,142,889 in mid-July 2021. The second half will be distributed in the fall of 2022. Effective April 1, 2022, the Secretary of the Treasury adopted a final interim rule. This rule implements the Coronavirus State Fiscal Recovery Fund and the Coronavirus Local Fiscal Recovery Fund established under the American Rescue Plan Act (ARP A). The final rule offers a standard allowance for revenue loss of $10 million. The City selected the standard allowance as permissible iii
iv

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Specifically, we would like to express special thanks to our Finance staff Deysi Ortega, Senior Accountant; Nahid Vafadari, Accounts Payable Technician; and Steve Fox, 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 goal of attaining long-term fiscal stability.

Respectfully submitted,
City Manager
vi

DAN ROMERO
Council Member
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DION BAILEY
Vice Mayor

CHRIS KELLEY
Mayor

ALEXANDER

WALKER-GRIFFIN

TIFFANY GRIMSLEY
Council Member
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Council Member
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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
FY 2021-22 CITY OF HERCULES
ORGANIZATION CHART
CITIZENS OF

HERCULES

HERCULES CITY COUNCIL
CITY ATTORNEY

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CITY MANAGER

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BOARDS, COMMISSIONS
& COMMITTEES
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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
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Finance Director
*Staff – 4
Functions:
• Accounts
Payable
• Accounts
Receivable
• Payroll
• Budget
• Audits
• Investment
Mgmt.
• Cash Mgmt.
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ICity
Manager
*Staff –

2PT
Functions:
• Executive Mgmt.
• Real Estate
(Incl. RITC)
• Franchises
• RDA Successor
• Economic
Development
• Legislative
• Inter-
Governmental
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Public Works
Director
*Staff – 11
Functions:
• Engineering
• Streets
• Facility
Maintenance
• Solid Waste
• Wastewater
• Sewer
Maintenance
• Lighting/
Landscaping
• Clean Water
Program
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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
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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
21vLii
Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Hercules
California
For its Annual Comprehensive
Financial Report
For the Fiscal Year Ended
June 30, 2021
Executive Director/CEO
ix
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200 E. Sandpointe Avenue, Suite 600
Santa Ana, California 92707

INDEPENDENT AUDITORS’ REPORT

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

Report on the Audit of the Financial Statements

Opinions

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, 2022, 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.

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, 2022, 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.

Basis for Opinions

We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to fi nancial audits contained in Government Auditing Standards , issued by the Comptroller General of the United States. Our responsibilities under tho se standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements secti on of our report. We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Other Matters

Change in Accounting Principle

As described in Note 1W and Note 18 to the financial statements, the City adopted new accounting guidance, Governmental Accounting Standards Board (“GASB”) Statement No. 87, Leases. The implementation resulted in a restatement of governmental activities beginning net pos ition as of July 1, 2021 in the amount of $8,806,323 to $105,076,026. Our opinion is not modified with respect to this matter.

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

2 Responsibilities of Management for the Financial Statements

Management is responsible for the prep aration and fair presentation of the fi nancial statements in accordance with accounting principles generally accepted in the United Stat es of America, and for 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.

In preparing the financial statements, management is required to evaluate wh ether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ab ility to continue as a going concern for twelve months beyond the financial st atement date, including any currently known information that may raise substantial doubt shortly thereafter.

Auditors’ Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whet her the financial statements as a whole are free from material misstatement, whether due to fraud or error, a nd to issue an auditors’ report that includes our opinions.

Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with auditing standards ge nerally accepted in the United States of America and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the overri de of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

In performing an audit in accordance with auditing standards generally accepted in the United States of America and Government Auditing Standards, we:

• Exercise professional judgment and maintain professional skepticism throughout the audit.

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

• Obtain an understanding of internal c ontrol relevant to the audit 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 City’s internal control. Accordingly, no such opinion is expressed.

• Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.

• Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal cont rol-related matters that we identified during the audit.

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

3 Required Supplementary Information

Accounting principles generally accepted in the United Stat es of America require that Management’s Discussion and Analysis, the Budgetary Comparison Schedules – General F und and Major Special Revenue Funds, the Schedules of the City’s Proportionate Share of the Plan’s Net Pension Liability and Related Ratios, the Schedules of Contributions – Pensions, the Schedules of Changes in Net Other Postemployment Benefits Liability and Related Ratios, and the Schedules of Contributions – Other Postemployment Benefits as listed in the table of contents be presented to supplement the basic financial statements. Such informati on is the responsibility of mana gement and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied cer tain limited procedures to the required supplementary information in accordance with auditing standards gene rally accepted in the United States of America, which consisted of inquiries of management about 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 do not express an opinion or provide any assurance on the information because the limited pro cedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Supplementary 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 accompanying combining and individual nonmajor fund financial statements are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of mana gement and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing 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 additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual nonmajor fund fi nancial statements are fairly stated, in all material respects, in relation to the basic financial statements as a whole.

Other Information

Management is responsible for the othe r information included in the annual repor t. The other information comprises the Introductory Section and the Statistical Section are presented for purposes of additional analysis and are not a required part of the basic financial statements. Our opinions on the basic financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon.

In connection with our audit of the basi c financial statements, our responsibility is to read the other information and consider whether a material inconsistenc y exists between the other information and the basic financial statements, or the other information otherwise appears to be materially mi sstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report.

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

4 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards , we have also issued our repor t dated January 31, 2023, 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 agreements 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 31, 2023

5 MANAGEMENT’S DISCUSSION AND ANALYSIS
(UNAUDITED)

6 2022 HERCULES AUDIT
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2022

7 Within this section of the City of Hercules' annual financial report, the City's management provides a narrative discussion and analysis of the City's finan cial activities for the fiscal year that ended June 30, 2022. The discussion focuses on the City's primary government and, unless otherwise noted, does not include separately reported component units. Readers are encouraged to consider the information presented in conjunction with the accompanying financial statements and disclosures following this section.

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 $112,244,742 (net position). A net position of $9,237,967 are restricted for specific purposes (restricted net position), and $75,962,058 represents a net investment in capital assets. The unrestricted net position was $27,044,717. As restated, the government’s total net position decreased by $37,216,290 compared to the prior year. The decrease in net position is primarily due to t he adjustments of loan receivables from the Successor Agency (formerly known as Hercules Redevelopment Agency).  The City’s net investment in capital assets increased by $897,393 compared to the prior year.  The City’s governmental funds reported combined fund balances of $39,305,458, a decrease of $27,430,768 in comparison with the prior year. The unassigned portion of those fund balances was $22,192,542.

OVERVIEW OF THE FINANCIAL STATEMENTS

This discussion and analysis is 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 City’s financial position is improving or deteriorating.  The statement of activities presents information showing how the 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.

2022 HERCULES AUDIT
MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED)
JUNE 30, 2022

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

Governmental funds account for the same functions reported as governmental activities in the government-wide financial statements. However, unlike government-wide financial statements, governmental funds financial statements focus on near-term inflows and outflows of spendable resources and 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 measurement focus and modified accrual basis of accounting.

Because the focus of governmental funds is narrower than that of the government-wide financial statements, comparing the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements is useful. 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 fund's balance sheet and the governmental fund's statement of revenues, expenditures, and changes in fund balances for the General Fund, American Rescue Plan Act Special Revenue Fund, Landscape & Lighting Assessment District (LLAD) No. 83-2 Special Revenue 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 makeup 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.

Proprietary funds are maintained in two ways. The City uses enterprise fund to account for the operations of the Wastewater Fund. Enterprise funds report the same functions presented as business- type activities in government-wide financial statements. 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, IT equipment replacement, 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.
2022 HERCULES AUDIT
MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED)
JUNE 30, 2022

9 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 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 $112,244,742 at the close of the most recent fiscal year. Of these combined net positions, 68% reflects the City’s investment in capital assets, net of the related debt. Another 8% of the City’s net position is subject to external restrictions on how they may be used. 2022 HERCULES AUDIT
MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED)
JUNE 30, 2022

10 Condensed Statement of Net Position

Gove rnme nta l Busine ss-type
Activities Activities Total
2022 2021* 2022 2021 2022 2021
Asse ts
Current and other assets 53,858,058$ 81,949,344$ 28,521,323$ 39,917,628 $ 82,379,381 $ 121,866,972$ Capital assets 78,255,196 79,854,526 39,085,979 39,987,792 117,341,175 119,842,318 Total assets 132,113,254 161,803,870 67,607,302 79,905,420 199,720,556 241,709,290 Deferred Outflows of Resources
Related to OPEB 694,603 568,750 39,319 32,195 733,922 600,945 Related to pensions 3,737,048 2,710,833 162,085 180,108 3,899,133 2,890,941 Total Deferred Outflows of
Resources 4,431,651 3,279,583 201,404 212,303 4,633,055 3,491,886 Liabilities
Long-term Liabilities 33,226,479 41,849,889 30,687,887 32,942,838 63,914,366 74,792,727 Other Liabilities 5,323,692 6,069,079 2,250,301 2,673,706 7,573,993 8,742,785 Total Liabilities 38,550,171 47,918,968 32,938,188 35,616,544 71,488,359 83,535,512 Deferred Inflows of Resources
Related to OPEB 1,899,985 1,940,227 107,549 109,826 2,007,534 2,050,053 Related to pensions 8,867,405 1,341,909 492,568 6,347 9,359,973 1,348,256 Leases 9,253,003 8,806,323 - - 9,253,003 8,806,323 Total Deferred Inflows of
Resources 20,020,393 12,088,459 600,117 116,173 20,620,510 12,204,632 Net Position:

Net Investment in Capital Assets 60,257,709 69,62
8,982 15,704,349 7,230,469 75,962,058 76,859,451 Restricted 9,237,967 20,047,707 - 7,679,725 9,237,967 27,727,432 Unrestricted 8,478,665 15,399,337 18,566,052 29,474,812 27,044,717 44,874,149 Total Net Position 77,974,341$ 105,076,026$ 34,270,401 $ 44,385,006 $ 112,244,742 $ 149,461,032 $

*2021 balances were restated due to the implementation of GASB 87

A significant portion of the City’s net position, $75,962,058, 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, $9,237,967 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 $27,044,717. 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 $37,216,290 during the current fiscal year. The decrease in net position is primarily due to the adjustments of loan receivables from the Successor Agency (formerly known as Hercules Redevelopment Agency). 2022 HERCULES AUDIT
MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED)
JUNE 30, 2022

11 Changes in Net Position

Gove rnme nta l Busine ss-type
Activities Activities Total
2022 2021 2022 2021 2022 2021
Revenues
Program revenues
Fees, Fines and Charges for
Services 2,827,552$ 2,461,704$ 5,852,278 5,769,396 8,679,830$ 8,231,100$ Operating Grants/Contributions 16,826,293 4,566,850 16,826,293 4,566,850 Capital Grants/Contributions - -
General revenues
Property taxes 1,514,791 1,451,716 1,514,791 1,451,716 Sales taxes 6,263,066 4,775,496 6,263,066 4,775,496 Franchise Taxes 970,054 862,104 970,054 862,104 Other taxes 5,343,970 4,293,889 5,343,970 4,293,889 Motor Vehicles Taxes In-Lieu 2,341,444 2,239,058 2,341,444 2,239,058 Interest and Investment Income 773,519 1,456,269 (157,318) 4,537 616,201 1,460,806 Special Item (Note 17) (39,586,347) - (10,587,627) - (50,173,974) - Total revenues (2,725,658) 22,107,086 (4,892,667) 5,773,933 (7,618,325) 27,881,019 Expenses
General Government 4,768,150 4,435,331 4,768,150 4,435,331 Public Safety 6,581,205 9,273,713 6,581,205 9,273,713 Streets and Public Works 8,452,475 7,715,011 8,452,475 7,715,011 Parks and Recreation 2,312,529 2,104,559 2,312,529 2,104,559 Community Development 1,253,855 918,476 1,253,855 918,476 Interest on Long-Term Debt 1,007,813 959,355 1,007,813 959,355 Wastewater 5,221,938 3,894,420 5,221,938 3, 894,420 Total expenses 24,376,027 25,406,445 5,221,938 3,894,420 29,597,965 29,300,865 Increase (Decrease) in Net Position (27,101,685) (3,299,359) (10,114,605) 1,879,513 (37,216,290) (1,419,846) Net Position - Beginning, as Restated 105,076,026 117,181,708 44,385,006 42,505,493 149,461,032 159,687,201 Prior Period Adjustment - (8,806,323) - - - (8,806,323) Net Position - Ending 77,974,341$ 105,076,026 $ 34,270,401 44,385,006 112,244,742 $ 149,461,032 $

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, 2022, the City’s governmental funds reported combined fund balances of $39,305,458. Of these combined fund balances, $22,192,542 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, 2022, unassigned fund balance was $22,926,831, while total fund balance was $31,014,136. 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 142% of total General Fund expenditures, while the total fund balance represents 193% of total General Fund expenditures. 2022 HERCULES AUDIT
MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED)
JUNE 30, 2022

12 Total governmental funds Fund Balance decreased by $27,430,768 in the current year. The major governmental funds had changes in fund balance as follows:

The major funds, General Fund decreased by $14,944,286, Landscape & Lighting Assessment District (LLAD) No. 83-2 Fund decreased by $701,774 Hercules Debt Service Fund decreased by $6,764,098, and nonmajor (other) governmental funds decreased by $5,020,610.

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

Revenues Classified by Source
Governmental Funds
Percent of Percent of Percent of
Amount Total Amount Total Amount Change
Taxes 16,889,724 $ 46.06% 14,098,060 $ 62.60% 2,791,664 $ 20% Licenses and Permits 707,300 1.93% 952,294 4.23% (244,994) -26% Fines and Forfeitures 48,663 0.13% 36,586 0.16% 12,077 33% Use of Money and Property 783,885 2.14% 1,456,271 6.47% (672,386) -46% Intergovernmental 15,618,709 42.60% 4,589,299 20.38% 11,029,410 240% Charges for Services 2,319,388 6.33% 1,150,164 5.11% 1,169,224 102% Miscellaneous 297,797 0.81% 239,610 1.06% 58,187 24%
36,665,466$ 100.00% 22,522,284 $ 100.00% 14,143,182 $ 2022 2021 Increase (Decrease)

The increase of $14,143,182 in revenues is due primarily to the increase in sales tax revenues, the proceeds from the American Recovery Plan Act (ARPA), and local assistance received from the State of California enacted by Senate Bill 154 (Skinner) Budget Act of 2022. 2022 HERCULES AUDIT
MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED)
JUNE 30, 2022

13 The following graph shows an illustrative picture of where the City funds come from.

Revenue by Source – Governmental Funds

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 4,081,705$ 16.67% 3,854,043$ 15.83% 227,662$ 6% Public Safety 7,879,451 32.17% 7,774,932 31.93% 104,519 1% Streets and Public Works 4,514,842 18.43% 4,638,912 19.05% (124,070) -3% Parks and Recreation 1,910,716 7.80% 1,434,988 5.89% 475,728 33% Community Development 1,061,135 4.33% 792,456 3.25% 268,679 34% Debt Service 2,181,976 8.91% 1,693,231 6.95% 488,745 29% Capital Outlay 2,862,062 11.69% 4,163,726 17.10% (1,301,664) -31% 24,491,887$ 100.00% 24,352,288 $ 100.00% 139,599$
2022 2021 Increase (Decrease)

2022 HERCULES AUDIT
MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED)
JUNE 30, 2022

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

Expenditures by Function – Governmental Funds

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 investment in capital assets at fiscal year-end was $15,704,349. Unrestricted net position at fiscal year-end was $18,566,052.

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 $2,030,270 and include $533,035 invested in capital assets. The net position of the internal service funds decreased by $575,101 over the prior fiscal year.

2022 HERCULES AUDIT
MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED)
JUNE 30, 2022

15 GENERAL FUND BUDGETARY HIGHLIGHTS

The City adopts an annual appropriated budget for its General Fund. A budgetary comparison statement has been provided for the General Fund to demonstrate compliance with this budget and can be found on page 111 of this report.

General Fund revenues on a budgetary basis were $10.3 million more than projected for the fiscal year 2022. The increase in revenues was primarily due to the City receiving more tax revenue than budgeted. The income from sales was the most significant increase in tax revenue, consisting of $2.2 million more revenues received than projected as the City continued recovering from the pandemic, increased consumer spending from the federal stim ulus funds, and the rising cost of goods. Also, $8 million of local assistance was received from the State of California enacted by Senate Bill 154 (Skinner) Budget Act of 2022. Expenditures of $16.1 million were $189,407, slightly more than budgeted expenses, as adjusted at $15.9 million. The most considerable negative expenditure variances occurred in Public Safety, Parks and Recreation, and Community Development. These departments had negative variances because of the impact of the pandemic that increased services, the reopening of recreation programs, and the increase in development projects.

CAPITAL ASSETS

The City’s investment in capital assets for its governmental and business type activities as of June 30, 2022, amounted to $117,341,175 (net of accumulated depreciation). This investment in capital assets includes land, structures and improv ements, leasehold 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

Gove rnme nta l Busine ss-type
Activities Activities Total
2022 2021* 2022 2021 2021 2020
Land 5,081,587$ 5,081,587$ 191,700$ 191,700$ 5,273,287$ 5,273,287$ Construction in progress 1,004,447 4,228,176 981,195 968,587 1,985,642 5,196,763 Land Improvements 15,812,311 11,720,361 - - 15,812,311 11,720,361 Buildings & Improvements 26,323,217 26,973,413 38,325,271 38,325,271 64,648,488 65,298,684 Equipment 5,781,572 5,080,999 250,345 250,345 6,031,917 5,331,344 Infrastructure 113,444,645 113,444,645 14,945,317 14,857,483 128,389,962 128,302,128 Lease assets 27,668 27,668 - - 27,668 27,668 Total 167,475,447 166,556,849 54,693,828 54,593,386 222,169,275 221,150,235 Accumulated Depreciation (89,220,251) (86,702,323) (15,607,849) (14,605,594) (104,828,100) (101,307,917) Net Capital Assets 78,255,196 79,854,526 39,085,979 39,987,792 117,341,175 119,842,318

*2021 balances were restated due to implementation of GASB 87

Additional information regarding capital assets is presented in note 6.

2022 HERCULES AUDIT
MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED)
JUNE 30, 2022

16 DEBT ADMINISTRATION

At the end of the current fiscal year, the City had total outstanding long-term obligations of $56,207,927.

Of this amount, $14,041,843 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.

Long-Term Obligations

Governmental Business-Type
Activities Activities Total
2022 2021* 2022 2021 2022 2021
Bonds Payable $14,041,843 $14,261,843 $8,450,000 $9,250,000 22,491,843 $ 23,511,843 $ Unamortized Discount/Refunding (276,738) (294,035) - (138,162) (276,738) (432,197) Lease Payable 4,232,382 4,530,672 - - 4,232,382 4,530,672 Loans Payable 5,189,588 5,265,521 23,259,518 24,356,298 28,449,106 29,621,819 Settlement Payable 604,025 1,208,050 - - 604,025 1,208,050 Compensated Absences 655,560 608,384 51,749 47,180 707,309 655,564 Total 24,446,660 25,580,435 31,761,267 33,515,316 56,207,927 59,095,751 Less Current Portion (2,018,080) (1,039,503) (1,509,236) (1,438,960) (3,527,316) (2,478,463) Net Long-Term Obligations 22,428,580$ 24,540,932$ 30,252,031 $ 32,076,356 $ 52,680,611 $ 56,617,288 $

*2021 balances were restated due to implementation of GASB 87

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.

ECONOMIC FACTORS AND NEXT YEAR’S BUDGET

The City's economy has rebounded from the pandemic's effects this past year. Unlike most other cities, Hercules did not close its City Hall, and we continued to provide services except for Parks & Recreation programs, which were closed due to health restrictions and, this year, started reopening programs.

In June 2022, The City Council approved a $37 million budget which 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 lingering redevelopment dissolution-related obligations with payment made pursuant to a settlement agreement with the State of California related to a disputed repayment of a loan 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 new Safeway, Peets, and Chase Bank all opened in April. The 235-unit Grant at the Bayfront opened in May; the Grand will also feature the first affordable units provided by the Bayfront development. The Willow Avenue Auto Service Park & Self Storage is completed with occupancy on the self-storage. The developer will be pay the City 10% of the rental income on the self-storage units as an in-lieu payment; future auto service units will also be tax generators.

2022 HERCULES AUDIT
MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED)
JUNE 30, 2022

17 Also, the future Sycamore Crossing project continues to work on its site preparation and utility relocation elements. The Project was approved by the Planning Commission and City Council in 2019.

Lewis Operating Companies are developing the 12-acre site at Sycamore & San Pablo. 2.6-acre site sold for hotel development – 100-room Hampton Inn. 27,000-sq.-ft. the retail center is planned for 3.22 acres on the corner—120 unit townhouse community.

The Franklin Canyon RV Resort, approved by the Ci ty Council in February 2022, the Project will replace the existing Franklin Canyon Golf with a destination RV resort, including spaces for 158 RVs, 22 bungalow tents, and a new 10,500 square-foot clubhouse/restaurant. The Project would also dedicate approximately 70 acres for open space uses (hiking, biking, and equestrian trails) and 5 acres for a future community garden. A 10% transient occupancy tax on all overnight visits will generate additional revenue for the City. Construction is estimated to take 18–24 months, with opening anticipated for the Summer of 2024.

Also, D.R. Horton has proposed developing the currently vacant 7-acre former horse ranch property at the end of Skelly with 40 single-family residences, including two below-market-rate units. The City is currently evaluating the project for potential environmental impacts and expects to be followed by public hearings at the Planning Commission and City Council. Pending these project approvals, D.R. Horton hopes to begin demolition and site grading in mid-2023, with home construction starting in 2024 and finishing in 2025.

The final design and permitting of the next phase of the Hercules Regional Intermodal Transportation Center is underway. This utility relocation element is shovel-ready and will proceed once funding is secured. There appear to be several new funding opportunities on the horizon. The interim improvements to allow for the initiation of bus service, which also provides better pedestrian connections between the two segments of the Bay Trail, have been completed. Further development of the track and platform design is also underway to set the stage for the project to move forward if funding were to be secured. A total of $46 million of funding has been secured and applied towards the project, including the completion of various improvements. At the same time, an additional estimated $67 million is needed to complete the infrastructure for a train to stop. The City has secured the services of GBS to develop a funding plan for the remaining improvements. Currently, 40 potential funding opportunities have been identified to be explored in greater depth.

Lastly, the broader economic recovery happened more quickly and robustly than many anticipated, providing a surge of revenues across several City funds, including the General Fund, that helped to change the City’s budgetary position in FY 2022 significantly and into FY 2023. As City operations continued their transition from the pandemic response into pandemic recovery and more normal business operations, the City experienced elevated levels of tax revenue. As a result of these adjustments and careful forecasting, monitoring, and management throughout all City funds, The City ended the fiscal year with a positive operating result.

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.

18 BASIC FINANCIAL STATEMENTS
19 20

GOVERNMENT-WIDE FINANCIAL STATEMENTS
21 22
Governmental Business-Type
Activities Activities Total
ASSETS
Cash and investments 28,169,903 $ 20,192,672 $ 48,362,575 $ Cash and investments with fiscal agent 2,002,393 8,327,888 10,330,281 Cash and investments held in trust 2,054,252 - 2,054,252 Accounts receivable 10,899,673 - 10,899,673 Prepaids 10,806 - 10,806 Loan receivable 1,444,181 - 1,444,181 Lease receivable 9,263,369 - 9,263,369 Net other postemployment benefits ("OPEB") assets - PEHMCA 13,481 763 14,244 Capital Assets:

Nondepreciable 6,086,034 1,172,895 7,258,929 Depreciable and amortizable, net 72,169,162 37,913,084 110,082,246 Total assets 132,113,254 67,607,302 199,720,556

DEFERRED OUTFLOWS OF RESOURCES
Pension-related deferred outflows of resources 3,737,048 162,085 3,899,133 OPEB-related deferred outflows of resources (PEHMCA) 433,598 24,543 458,141 OPEB-related deferred outflows of resources (SOMAR) 261,005 14,776 275,781 Total deferred outflows of resources 4,431,651 201,404 4,633,055

LIABILITIES
Accounts payable 906,173 345,476 1,251,649 Salaries and benefits payable 506,778 32,561 539,339 Accrued interest payable 540,175 363,028 903,203 Deposit payable 1,118,542 - 1,118,542 Claims payable 233,944 - 233,944 Long-term debt:

Due within one year 2,018,080 1,509,236 3,527,316 Due in more than one year 22,428,580 30,252,031 52,680,611 Net aggregate pension liabilities, due in more than one year 9,528,614 364,008 9,892,622 Net OPEB liabilities - SOMAR, due in more than one year 1,269,285 71,848 1,341,133 Total liabilities 38,550,171 32,938,188 71,488,359

DEFERRED INFLOWS OF RESOURCES
Pension-related deferred inflows of resources 8,867,405 492,568 9,359,973 OPEB-related deferred inflows of resources (PEHMCA) 1,276,273 72,243 1,348,516 OPEB-related deferred inflows of resources (SOMAR) 623,712 35,306 659,018 Leases 9,253,003 - 9,253,003 Total deferred inflows of resources 20,020,393 600,117 20,620,510

NET POSITION
Net investment in capital assets 60,257,709 15,704,349 75,962,058 Restricted for:

Public safety 87,406 - 87,406 Streets and roads 2,996,896 - 2,996,896 Development 1,946,901 - 1,946,901 Debt service 2,152,512 - 2,152,512 Pension 2,054,252 - 2,054,252 Total restricted 9,237,967 - 9,237,967 Unrestricted 8,478,665 18,566,052 27,044,717 Total net position 77,974,341$ 34,270,401$ 112,244,742 $ Primary Government
City of Hercules
Statement of Net Position
June 30, 2022
See accompanying Notes to the Basic Financial Statements. 23 Operating Capital
Charges for Grants and Grants and
Functions/Programs Expenses Services Contributions Contributions Total Primary Government
Governmental Activities:

General government 4,768,150 $ 1,030,250 $ - $ - $ 1,030,250$ Public safety 6,581,205 185,541 3,354,057 - 3,539,598 Streets and public works 8,560,194 261,490 5,565,989 - 5,827,479 Parks and recreation 2,312,529 1,034,873 - - 1,034,873 Community development 1,253,855 315,398 8,013,966 - 8,329,364 Interest and fiscal agent fees 1,007,813 - - - - Total governmental activities 24,483,746 2,827,552 16,934,012 - 19,761,564 Business-Type Activities:

Wastewater 5,221,938 5,852,278 - - 5,852,278 Total business-type activities 5,221,938 5,852,278 - - 5,852,278 Total primary government 29,705,684$ 8,679,830 $ 16,934,012 $ - $ 25,613,842$ Program Revenues
City of Hercules
Statement of Activities
For the Year Ended June 30, 2022
See accompanying Notes to the Basic Financial Statements. 24 Governmental Business-Type
Functions/Programs Activities Activities Total
Primary Government
Governmental Activities:

General government (3,737,900) $ - $ (3,737,900)$ Public safety (3,041,607) - (3,041,607) Streets and public works (2,732,715) - (2,732,715) Parks and recreation (1,277,656) - (1,277,656) Community development 7,075,509 - 7,075,509 Interest and fiscal agent fees (1,007,813) - (1,007,813) Total governmental activities (4,722,182) - (4,722,182) Business-Type Activities:

Wastewater - 630,340 630,340 Total business-type activities - 630,340 630,340 Total primary government (4,722,182) 630,340 (4,091,842) General Revenues:

Property taxes 1,514,791 - 1,514,791 Sales and use taxes 6,263,066 - 6,263,066 Franchise taxes 970,054 - 970,054 Utility users taxes 3,828,410 - 3,828,410 Other taxes 1,515,560 - 1,515,560 Unrestricted motor vehicle taxes in-lieu 2,341,444 - 2,341,444 Use of money and property 773,519 (157,318) 616,201 Total general revenues 17,206,844 (157,318) 17,049,526 Changes in net position before special item 12,484,662 473,022 12,957,684 Special Item (Note 17) (39,586,347) (10,587,627) (50,173,974) Changes in net position (27,101,685) (10,114,605) (37,216,290) Net Position:

Beginning of year, as restated (Note 18) 105,076,026 44,385,006 149,461,032
End of year 77,974,341$ 34,270,401$ 112,244,742$ Changes in Net Position
Net (Expense) Revenue and
City of Hercules
Statement of Activities (Continued)
For the Year Ended June 30, 2022
See accompanying Notes to the Basic Financial Statements. 25 26

FUND FINANCIAL STATEMENTS
27 28
Other Governmental Funds - These funds are special revenue funds or capital project 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.

American Rescu e Plan Ac t Special Revenue Fund - This fund is used to account for revenues and activities for American Rescue Plan Act funding which was provided to fund additional relief for individuals and businesses affected by the coronavirus pandemic.

Landscape & Lighting Assessment District (LLAD) No. 83-2 Special Revenue Fund - This fund accounts for special assessments on property withindistrict boundaries for the restricted purpose of providing landscaping and lighting services within the specified districts.
29 Landscape &
American Rescue Lighting Assessment
General Plan Act Special District Hercules Debt
Fund Revenue Fund (LLAD) No. 83-2 Service Fund
ASSETS
Cash and investments 18,309,201 $ - $ 485,296$ 150,119 $ Cash and investments with fiscal agent - - - 2,002,393 Cash and investments held in trust 2,054,252 - - - Accounts receivable 10,350,832 - - - Prepaids 10,806 - - - Due from other funds 1,195,217 - - - Loans receivable 1,444,181 - - - Lease receivable 661,166 - - 8,602,203 Total assets 34,025,655$ - 485,296$ 10,754,715 $

LIABILITIES
Accounts payable 573,411 $ - 65,387$ - $ Accrued wages 407,411 - 27,035 - Deposit payable 956,799 - - - Claims payable 233,944 - - - Due to other funds - - 628,171 - Total liabilities 2,171,565 - 720,593 -

DEFERRED INFLOWS OF RESOURCES
Unavailable revenue 189,154 - - - Leases 650,800 - - 8,602,203 Total deferred inflows of resources 839,954 - - 8,602,203

FUND BALANCES
Nonspendable 10,806 - - - Restricted 2,054,252 - - 2,152,512 Committed - - - - Assigned 6,022,247 - - - Unassigned (deficit) 22,926,831 - (235,297) - Total fund balances (deficit) 31,014,136 - (235,297) 2,152,512 Total liabilities, deferred inflows
of resources and fund balances 34,025,655$ -$ 485,296$ 10,754,715$ Major Funds
City of Hercules
Balance Sheet
Governmental Funds
June 30, 2022
See accompanying Notes to the Basic Financial Statements. 30 Other
Governmental
Funds Total
ASSETS
Cash and investments 6,981,049$ 25,925,665 $
Cash and investments with fiscal agent - 2,002,393 Cash and investments held in trust - 2,054,252 Accounts receivable 548,841 10,899,673
Prepaids - 10,806
Due from other funds - 1,195,217 Loans receivable - 1,444,181
Lease receivable - 9,263,369
Total assets 7,529,890$ 52,795,556 $

LIABILITIES
Accounts payable 223,603$ 862,401 $
Accrued wages 46,506 480,952
Deposit payable 161,743 1,118,542
Claims payable - 233,944
Due to other funds 567,046 1,195,217
Total liabilities 998,898 3,891,056

DEFERRED INFLOWS OF RESOURCES
Unavailable revenue 156,885 346,039
Leases - 9,253,003
Total deferred inflows of resources 156,885 9,599,042

FUND BALANCES
Nonspendable - 10,806
Restricted 4,874,318 9,081,082
Committed 1,998,781 1,998,781
Assigned - 6,022,247
Unassigned (deficit) (498,992) 22,192,542
Total fund balances (deficit) 6,374,107 39,305,458 Total liabilities, deferred inflows
of resources and fund balances 7,529,890$ 52,795,556$

City of Hercules
Balance Sheet (Continued)
Governmental Funds
June 30, 2022
See accompanying Notes to the Basic Financial Statements. 31 32
Total fund balances of governmental funds 39,305,458$
Amounts reported for governmental activities in the Statement of Net Position are different because:

Amount reported in Government-Wide Statement of Net Position 78,255,196 Less: Amount reported in Internal Service Funds (533,035) Amount reported in Government-Wide Statement of Net Position:
(540,175)
346,039
Compensated absences, net of Internal Service Fund of $50,208 (605,352) Loans, leases, and bonds (23,187,075)
Settlement payable (604,025)
Pension-related deferred outflows of resources, net of Internal Service Fund of $117,288 3,619,760 Net pension liability, net of Internal Service Fund of $248,738 (9,279,876) Pension-related deferred inflows of resources, net of Internal Service Fund of $356,432 (8,510,973) OPEB-related deferred outflows of resources (PEHMCA), net of Internal Service Fund of $24,543 409,055 OPEB-related deferred outflows of resources (SOMAR), net of Internal Service Fund of $14,776 246,229 Net OPEB assets - PEHMCA, net of Internal Service Fund of $763 12,718 Net OPEB liability - SOMAR, net of Internal Service Fund of $71,848 (1,197,437) OPEB-related deferred inflows of resources (PEHMCA), net of Internal Service Fund of $72,243 (1,204,030) OPEB-related deferred inflows of resources (SOMAR), net of Internal Service Fund of $35,306 (588,406) 2,030,270
Net position of governmental activities 77,974,341$
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, 2022
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. 33 Landscape &
American Rescue Lighting Assessment
General Plan Act Special District Hercules Deb t
Fund Revenue Fund (LLAD) No. 83-2 Service Fund
REVENUES:

Taxes and assessments 13,781,378 $ - $ 1,997,920$ - $ Licenses and permits 493,668 - - - Fines and forfeitures 48,663 - - - Use of money and property (108,296) - (22,036) 983,120 Intergovernmental 10,391,327 3,142,889 - - Charges for services 2,319,388 - - - Other revenues 116,093 - - - Total revenues 27,042,221 3,142,889 1,975,884 983,120 EXPENDITURES:

Current:

General government 4,081,705 - - - Public safety 7,851,486 - - - Streets and public works 375,842 - 1,810,594 - Parks and public works 1,910,716 - - - Community development 1,061,135 - - - Capital outlay 112,631 - 630,680 - Debt services:

Principal 690,966 - - 413,470 Interest and fiscal agent fee 24,551 - - 835,597 Total expenditures 16,109,032 - 2,441,274 1,249,067

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 10,933,189 3,142,889 (465,390) (265,947)

OTHER FINANCING SOURCES (USES)
Transfers in 3,539,704 - 29,316 205,099 Transfers (out) (1,629,542) (3,142,889) (265,700) - Total other financing sources (uses) 1,910,162 (3,142,889) (236,384) 205,099

NET CHANGES IN FUND BALANCES
BEFORE SPECIAL ITEMS 12,843,351 - (701,774) (60,848) SPECIAL ITEM:

Write off loans and due to due from
between the City and Successor Agency (Note 17) (27,787,637) - - (6,703,250) Total special item (27,787,637) - - (6,703,250) NET CHANGES IN FUND BALANCES (14,944,286) - (701,774) (6,764,098) FUND BALANCES (DEFICIT):

Beginning of year, 45,958,422 - 466,477 8,916,610 End of year 31,014,136$ -$ (235,297)$ 2,152,512$ Major Funds
City of Hercules
Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds
For the Year Ended June 30, 2022
See accompanying Notes to the Basic Financial Statements. 34 Other
Governmental
Funds Total
REVENUES:

Taxes and assessments 1,110,426$ 16,889,724$
Licenses and permits 213,632 707,300
Fines and forfeitures - 48,663 Use of money and property (68,903) 783,885 Intergovernmental 2,084,493 15,618,709
Charges for services - 2,319,388 Other revenues 163,704 279,797
Total revenues 3,503,352 36,647,466
EXPENDITURES:

Current:

General government - 4,081,705 Public safety 27,965 7,879,451
Streets and public works 2,328,406 4,514,842 Parks and public works - 1,910,716 Community development - 1,061,135 Capital outlay 2,118,751 2,862,062
Debt services:

Principal 93,812 1,198,248
Interest and fiscal agent fee 123,580 983,728 Total expenditures 4,692,514 24,491,887

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (1,189,162) 12,155,579

OTHER FINANCING SOURCES (USES)
Transfers in 1,949,738 5,723,857
Transfers (out) (685,726) (5,723,857)
Total other financing sources (uses) 1,264,012 -

NET CHANGES IN FUND BALANCES
BEFORE SPECIAL ITEMS 74,850 12,155,579
SPECIAL ITEM:

Write off loans and due to due from
between the City and Successor Agency (Note 17) (5,095,460) (39,586,347) Total special item (5,095,460) (39,586,347)
NET CHANGES IN FUND BALANCES (5,020,610)
(27,430,768)
FUND BALANCES (DEFICIT):

Beginning of year, 11,394,717 66,736,226
End of year 6,374,107$ 39,305,458$
City of Hercules
Statement of Revenues, Expenditures, and Changes in Fund Balances (Continued) Governmental Funds
For the Year Ended June 30, 2022
See accompanying Notes to the Basic Financial Statements. 35 Net change in fund balances - total governmental funds: (27,430,768)$ Amounts reported for governmental activities in the Statement of Activities are different because:

Capital outlay expenditures, net of $198,931 reported in Internal Service Funds 1,708,961 $ Depreciation and amortization expenses, net of $248,287 reported in Internal Service Funds (3,259,059) (1,550,098) 320,942
Principal repayment of loans, leases, and bonds 594,223 Change in accrued interet expense (6,788)
Amortization of bond discount (17,297)
Change in compensated absences, net of Internal Service Fund of $3,652 (36,900) Pension expense of CalPERS Plan, net of pension contribution made after measurement date in the amount of $1,991,027 986,483 OPEB (PEHMCA) expense 57,291
OPEB (SOMAR) credit (47,697)
Settlement with department of finance 604,025
(575,101)
Change in net position of governmental activities (27,101,685)$ 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, 2022
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 and amortization expenses. 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. 36 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.
37 Business-Type
Activities
Enterprise Governmenta l
Fund Activities
Wastewater Internal
Fund Service Funds
ASSETS
Current assets:

Cash and investments 20,192,672$ 2,244,238$
Cash and investments with fiscal agent 8,327,888 -
Total current assets 28,520,560 2,244,238
Noncurrent assets:

Net OPEB assets - PEHMCA 763 763
Capital assets:

Nondepreciable 1,172,895 -
Depreciable, net 37,913,084 533,035
Total noncurrent assets 39,086,742 533,798
Total assets 67,607,302 2,778,036

DEFERRED OUTFLOWS OF RESOURCES
Pensions-related deferred outflows of resources 162,085 117,288 OPEB-related deferred outflows of resources (PEHMCA) 24,543 24,543 OPEB-related deferred outflows of resources (SOMAR) 14,776 14,776 Total deferred outflows of resources 201,404 156,607

LIABILITIES
Current liabilities:

Accounts payable 345,476 43,772
Salaries and benefits payable 32,561 25,826
Accrued interest payable 363,028 -
Long-term debt - due within one year 1,509,236 37,656
Total current liabilities 2,250,301 107,254
Noncurrent liabilities:

Long-term debt - due in more than one year 30,252,031 12,552 Net pension liabilities 364,008 248,738
Net OPEB liabilities - SOMAR 71,848 71,848
Total noncurrent liabilities 30,687,887 333,138
Total liabilities 32,938,188 440,392

DEFERRED INFLOWS OF RESOURCES
Pensions-related deferred outflows of resources 492,568 356,432 OPEB-related deferred outflows of resources (PEHMCA) 72,243 72,243 OPEB-related deferred outflows of resources (SOMAR) 35,306 35,306 Total deferred inflows of resources 600,117 463,981

NET POSITION
Net investment in capital assets 15,704,349 533,035 Unrestricted 18,566,052 1,497,235
Total net position 34,270,401$ 2,030,270$
City of Hercules
Statement of Net Position
Proprietary Funds
June 30, 2022
See accompanying Notes to the Basic Financial Statements. 38 Business-Type
Activities
Enterprise Governmental
Fund Activities
Wastewater Internal
Fund Service Funds
OPERATING REVENUES:

Charges for services 5,852,278$ 1,553,353 $
Other operating revenues - 9,605 Total operating revenues 5,852,278 1,562,958
OPERATING EXPENSES:

Salaries and benefits 745,027 598,852
Services and supplies 2,748,281 1,290,920
Depreciation 1,002,257 248,287
Total operating expenses 4,495,565 2,138,059
Operating income 1,356,713 (575,101)

NONOPERATING REVENUES (EXPENSES)
Interest income (loss) (157,318) -
Interest (expenses) (726,373) -
Total nonoperating revenues (expenses) (883,691) - CHANGES IN NET POSITION BEFORE SPECIAL ITEMS 473,022 (575,101) SPECIAL ITEM:

Loss on write off the Successor Agency advances (Note 17) (10,587,627) - CHANGES IN NET POSITION (10,114,605) (575,101)
NET POSITION:

Beginning of year 44,385,006 2,605,371
End of year 34,270,401$ 2,030,270 $
City of Hercules
Statement of Revenues, Expenses, and Changes in Net Position Proprietary Funds
For the Year Ended June 30, 2022
See accompanying Notes to the Basic Financial Statements. 39 Business-Type
Activities
Enterprise Governmental
Fund Activities
Wastewater Internal
Fund Service Funds
CASH FLOWS FROM OPERATING ACTIVITIES:

Cash receipts from customers 5,863,100$ - $
Cash receipts from internal services provided - 1,562,834 Cash paid to suppliers for goods and services (3,077,505) (1,416,218) Cash paid to employees for services (647,271) (542,349) Net cash provided by (used in) operating activities 2,138,324 (395,733)

CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES:

Proceeds from issuance of debt 8,450,000 -
Payments related to the acquisition of capital assets (100,444) (198,931) Principal repayments related to capital purposes (10,346,780) - Interest repayments related to capital purposes (754,349) - Net cash (used in) capital and related
financing activities (2,751,573) (198,931)
CASH FLOWS FROM INVESTING ACTIVITIES:

Investment loss (157,318) -
Net cash provided by (used in) investing activities (157,318) - NET CHANGES IN CASH AND CASH EQUIVALENTS (770,567) (594,664) CASH AND CASH EQUIVALENTS:

Beginning of year 29,291,127 2,838,902
End of year 28,520,560$ 2,244,238$

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

Cash and investments 20,192,672$ 2,244,238$
Cash and investments with fiscal agent 8,327,888 - Total cash and cash equivalents 28,520,560$ 2,244,238$ (Continued)
City of Hercules
Statement of Cash Flows
Proprietary Funds
For the Year Ended June 30, 2022
See accompanying Notes to the Basic Financial Statements. 40 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 (loss) 1,356,713$ (575,101) $
Adjustments to reconcile operating income (loss)
to net cash provided by (used in) operating activities:

Depreciation 1,002,257 248,287
(Increase) Decrease in Assets and Deferred Outflows
Pensions-related deferred outflows 18,023 (22,880) OPEB-related deferred outflows (7,124) (7,124) Increase (Decrease) in Liabilities and Deferred Inflows Accounts receivable 10,822 -
Accounts payable (329,224) (125,422)
Retentions payable - -
Salaries and benefits payable 1,681 327
Net pension liability (415,809) (300,889)
Net OPEB liability 12,472 (14,817)
Pensions-related deferred inflows 486,221 352,193 OPEB-related deferred inflows (2,277) 39,417 Compensated absences 4,569 10,276
Total adjustments 781,611 179,368
Net cash provided by operating activities 2,138,324$ (395,733)$ (Concluded)
Proprietary Funds
For the Year Ended June 30, 2022
City of Hercules
Statement of Cash Flows (Continued)
See accompanying Notes to the Basic Financial Statements. 41 42

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. Custodial funds are used to account for assets held by the government as an agent for individuals, private organizations, other governments, and/or other funds. 43 Successor
Agency
Private Purpose Custodial
Trust Fund Funds
ASSETS
Cash and investments 8,538,337$ 399,774 $
Cash and investments with fiscal agent 33,499 85,512
Prepaid items 540,462 -
Loans receivable, net 8,386,065 -
Capital Assets:

Nondepreciable 14,090,684 -
Depreciable, net 8,354,772 -
Total assets 39,943,819 485,286

LIABILITIES
Unearned revenue 813,379 -
Long-term debt:

Due within one year 2,600,000 -
Due in more than one year 81,516,324 -
Total liabilities 84,929,703 -

DEFERRED INFLOWS OF RESOURCES
Deferred amount on refundings 907,947 -
Total deferred inflows of resources 907,947 -

NET POSITION (DEFICIT)
Held in trust (deficit) (45,893,831) -
Individuals, organization, and other government - 485,286 (45,893,831)$ 485,286$
City of Hercules
Statement of Fiduciary Net Position
Fiduciary Funds
June 30, 2022
See accompanying Notes to the Basic Financial Statements. 44 Successor
Agency
Private Purpose Custodial
Trust Fund Funds
ADDITIONS:

Taxes and assessments 10,503,145$ 232,493$
Investment income 261,580 (3,326)
Other revenue 7,188,990 -
Total additions 17,953,715 229,167
DEDUCTIONS:

Community development 3,622,552 -
Administration 4,774 8,010
Depreciation 6,507,422 -
Interest expenses 7,119,640 156,676
Principal payment to refunding escrow - 31,492 Total deductions 17,254,388 196,178
CHANGES IN FIDUCIARY NET POSITION BEFORE SPECIAL ITEM 699,327 32,989 SPECIAL ITEMS:

Write off loans and due to due from
between the City and Successor Agency (Note 17) 50,173,974 - Total special items 50,173,974 -
CHANGES IN FIDUCIARY NET POSITION 50,873,301 32,989 FIDUCIARY NET POSITION:

Beginning of year, (96,767,132) 452,297
End of year (45,893,831)$ 485,286 $
City of Hercules
Statement of Changes in Fiduciary Net Position
Fiduciary Funds
For the Year Ended June 30, 2022
See accompanying Notes to the Basic Financial Statements. 45 46

47 NOTES TO THE BASIC FINANCIAL STATEMENTS

48 City of Hercules
Index to the Notes to the Basic Financial Statements
For the Year Ended June 30, 2022

49 Page

Note 1 – Summary of Significant Accounting Policies ..................................................................................... 51

A. Financial Reporting Entity ............................................................................................................. 51 B. Basis of Accounting and Measurement Focus ............................................................................... 51 C. Cash and Investments ..................................................................................................................... 55 D. Cash and Investments with Fiscal Agents ...................................................................................... 55 E. Fair Value Measurements ....................................................................................................... ....... 55 F. Interfund Transactions ........................................................................................................ ........... 55 G. Prepaid Items .................................................................................................................................. 55 H. Inventory ........................................................................................................................................ 55 I. Capital Assets ................................................................................................................................. 56 J. Leases ............................................................................................................................................. 56 K. Long-Term Debt ............................................................................................................................ 58 L. Unearned and Unavailable Revenue .............................................................................................. 58 M. Compensated Absences .................................................................................................................. 58 N. Property Taxes Receivable ............................................................................................................. 58 O. Interfund Transactions ........................................................................................................ ........... 59 P. Claims Payable ............................................................................................................................... 59 Q. Pensions ...................................................................................................................... ................... 59 R. Other Postemployment Benefits (“OPEB”) ................................................................................... 60 S. Deferred Outflows of Resources and Deferred Inflows of Resources ........................................... 60 T. Net Position .................................................................................................................................... 60 U. Use of Estimates ............................................................................................................................. 61 V. Fund Balances ................................................................................................................................ 61 W. Spending Policy ............................................................................................................... .............. 61 X. Implementation of New GASB Pronouncements .......................................................................... 62

Note 2 – Cash and Investments .......................................................................................................................... 63

A. Demand Deposits ............................................................................................................ ............... 64 B. Investments Authorized by the California Government Code and the City's Investment Policy ..................................................................................................... ..... 64 C. Investments Authorized by Debt Agreements ................................................................................ 65 D. Risk Disclosures .......................................................................................................... ................... 65 E. Investment in Local Agency Investment Fund (“LAIF”) ............................................................... 67 F. Investment in Money Market Mutual Funds .................................................................................. 6 7

Note 3 – Loans Receivable .................................................................................................................................. 68

A. Governmental Activities .................................................................................................... ............ 68 B. Fiduciary Fund Financial Statements ........................................................................................ ..... 68

Note 4 – Lease Receivable...................................................................................................... ............................. 68

A. Bio-Rad Laboratories Lease Receivable ...................................................................................... .. 69 B. Other Leas e Receivable .................................................................................................................. 70

Note 5 – Interfund Transactions ........................................................................................................................ 70

A. Due From and To Other Funds ................................................................................................ ...... 70 B. Transfers In and Out ....................................................................................................... ................ 70

City of Hercules
Index to the Notes to the Basic Financial Statements (Continued) For the Year Ended June 30, 2022

50 Page

Note 6 – Capital Assets ....................................................................................................................................... 71

A. Governmental Activities .................................................................................................... ............ 71 B. Business-Type Activities ................................................................................................... ............. 72 C. Fiduciary Fund Financial Statements ........................................................................................ ..... 73

Note 7 – Long-Term Debt ................................................................................................................................... 74

A. Governmental Activities .................................................................................................... ............. 74 B. Business-Type Activities ................................................................................................... .............. 78 C. Fiduciary Fund Financial Statements ........................................................................................ ...... 79 D. Non-City Obligations ....................................................................................................... ............... 82

Note 8 – Retirement Plans ................................................................................................................................... 83

A. General Information A bout the Pension Plans ................................................................................ 84 B. Pension Liabilities, Pension Expenses, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pension ............................................................... 86 C. Other ...................................................................................................................... .......................... 91 D. Payable to the Ca lPERS Pension Plans ........................................................................................... 91 E. Liquidating Net Pension Liability .......................................................................................... ......... 91

Note 9 – Deferred Compensation Plan ............................................................................................................... 91

A. 457 Plan ................................................................................................................... ........................ 91 B. 401A Plan .................................................................................................................. ...................... 91 C. PARS ....................................................................................................................... ........................ 92

Note 10 – Other Postemployment Benefits ........................................................................................................ 92

A. Retiree Healthcare Plan ( PEHMCA) .............................................................................................. 93 B. Retiree Cash Benefit Plan (SOMAR Plan) ...................................................................................... 97

Note 11 – Risk Management .............................................................................................................................. 101

Note 12 – Commitments and Contingencies .................................................................................................... 102

A. Lawsuits ................................................................................................................... ..................... 102 B. Commitments ................................................................................................................ ................ 102

Note 13 – Joint Powers Agreements ................................................................................................................. 102

A. West Contra Costa Transportation Advisory Committee (WCCTAC) ......................................... 102 B. West Contra Costa Integrated Waste Management Authority (WCCIWMA) .............................. 102 C. Pinole/Hercules Wastewater Treatment Plant ............................................................................... 1 03

Note 14 – Stewardship, Compliance, and Accountability ............................................................................... 103

A. Deficit Fund Balances/Net Position ......................................................................................... ..... 103

Note 15 – Fund Balance Classification ............................................................................................................. 104

Note 16 – Net Investment in Capital Assets ..................................................................................................... 104

Note 17 – Special Item ........................................................................................................ ............................... 105

Note 18 – Restatement ......................................................................................................... .............................. 105 City of Hercules
Notes to the Basic Financial Statements
For the Year Ended June 30, 2022

51 Note 1 – Summary of Significant Accounting Policies

The basic financial statements of the City of Hercules, Calif ornia, (the “City”) have been prepared in accordance 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, California (“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 re porting 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 gove rnment. 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 a ppointed by a higher level of government, or a jointly appointed board, and there is a potential for the organizati on to provide specific financ ial benefits to, or impose specific financial burdens on the primary government.

Blended Component Units:

Management determined that the following entities shoul d 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 govern ing 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 componen t 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 impr ovements, 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 fu nds, each of which is cons idered a separate accounting entity. The operations of each fund are accounted for by pr oviding a separate set of self-balancing accounts that comprise its assets, deferred outflows of resources, liabiliti es, 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.

City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

52 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 a consumption of net assets that applies to future periods.

Deferred Inflows of Resources represent an acquisition of net assets that applies to future periods.

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 recogni zed 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 ac tivities. The following inte rfund 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 statem ent of revenues, expenditu res 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.

City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

53 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 reve nue 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 y ear-end when they are accrued pursuan t to the modified accrual basis of accounting. The City recognizes 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 fi nancial 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 main tenance, and legal and administrative services.

American Rescue Plan Act Special Revenue Fund accounts for revenues and activities for American Rescue Plan Act funding which was provided to fund additiona l relief for individuals and businesses affected by the coronavirus pandemic.

Landscape & Lighting Assessment District (LLAD) No. 83-2 Special Revenue 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.

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 acquisition of certain commercial condominium property (Bio-Rad).

Proprietary Fund Financial Statements

Proprietary Fund Financial Statements include a Statement 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 with the governmental activities in the Government-Wide Financial Statements. The City’s internal service funds include three individual funds that provide services directly to other City funds. These services include vehicle replacement, technology services, and facilities maintenance.

City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

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

B. Basis of Accounting and Measurement Focus (Continued)

Proprietary Fund Financial Statements (Continued)

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 (re venues) and decreases (expenses) in total Net Position.

Under the accrual basis of accounting, revenues are rec ognized 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 re venues that are generated fro m the primary operations of the fund. All other revenues are reported as nonoperating revenues. Operating expenses are those expenses that are essential to the primary operations of the fund. All other expenses are reported as nonoperating expenses.

The City reports the following major Proprietary Fund:

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 govern mental 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 custodial 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 th e City in custodial capacity for special assessment collected for R eassessment District 05-01 debt service pa yments, 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.

City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

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

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 proprie tary 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).

D. Cash and Investments with Fiscal Agents

Cash and investments are held by fiscal agents for the redemption of bonded debt and maintaining required reserves.

E. 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.

F. Interfund Transactions

Activities between funds that are representative of lendi ng/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).

G. Prepaid Items

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

H. Inventory

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

City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

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

I. 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 constructe d. Donated capital assets are valued at their estimated acquisition value on the date donated. City policy has se t 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.

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

J. Leases

Lessee

The City has a policy to recognize a lease liability and a right-to-use asset (lease asset) in the financial statements with an initial, individual value of $5,000 or more with a lease term greater than one year. Variable payments based on future performance or usage of the underlying assets are not included in the measurement of the lease liability.

At the commencement of a leas e, the lease liability is measured at the present value of payments expected to be made during the lease term. Subsequently, the lease liability is reduced by the principal portion of lease payments made.

Lease assets are recorded at the amount of the initial measurement of the lease liabilities and modified by any lease payments made to the lessor at or before the commencement of the lease term, less any lease incentives received from the lessor at or before the commencement of the lease term along with any initial direct costs that are ancillary charges necessary to place the lease assets into service. Lease assets are amortized using the straight–line method over the shorter of the lease term or the useful life of the underlying asset, unless the lease contains a purchase option that the State has determined is reasonably certain of being exercised. In this case, the lease asset is amortized over the useful life of the underlying asset.

City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

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

J. Leases (Continued)

Key estimates and judgments related to leases include how the City de termines (1) the discount rate it uses to discount the expected lease payments to present value, (2) lease term, and (3) lease payments.

 The City uses the interest rate ch arged by the lessor as the discount rate. When the interest rate charged by the lessor is not provided, the C ity generally uses its estimated in cremental borrowing rate as the discount rate for leases.
 The lease term includes the noncancelable period of the lease, plus any option periods that are reasonably certain to be exercised
 Lease payments included in the measurement of the lease liability are composed of fixed payments and purchase option price that the City is reasonably certa in to exercise. The City monitors changes in circumstances that would require a remeasurement of a lease and will remeasure any lease asset and liability if certain changes occur that are expected to significantly affect the amount of the lease liability.

Lease assets are reported as right-to-use along with ot her capital assets and lease liabilities are reported on the statement of net position.

Lessor

The City is a lessor for leases of buildings and land and recognizes leases receivable and deferred inflows of resources in the financial statements. Variable payments based on future performance or usage of the underlying asset are not included in the measurement of the lease receivable.

At the commencement of a lease, the lease receivable is measured at the present value of payments expected to be received during the lease term. Subsequently, the lease receivable is reduced by the principal portion of lease payments received. The deferred inflows of resources are initially measured as the initial amount of the lease receivable, adjusted for lease payments received at or before the lease commencemen t date. Subsequently, the deferred inflows of resources are recognized as revenue over the life of the lease term in a systematic and rational method.

Key estimates and judgments include how the City determines (1) the discount rate it uses to discount the expected lease receipts to present value, (2) lease term, and (3) lease receipts.

The City uses the average of the LAIF rate and the in cremental borrowing rate (IBR) provided by our financial institution at July 1, 2021 for existing leases or the current rate at the time a new lease is executed.

 The lease term includes the noncancelable period of the lease plus any option periods that are likely to be exercised.
 Lease receipts included in the measurement of the l ease receivable is composed of fixed payments from the lessee.

The City monitors changes in circum stances that would require a remeasureme nt of its lease and will remeasure the lease receivable and deferred inflows of resources if certain changes occur that ar e expected to significantly affect the amount of the lease receivable.

City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

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

K. Long-Term Debt

In the government-wide financial stat ements, long-term debt and other lo ng-term debts 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 straight-line 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 wit hheld from the actual debt proceeds received, are reported as debt service expenditures.

L. Unearned and Unavailable Revenue

In the government-wide financial stat ements, 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.

In the governmental fund financial statements, unearned an d 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.

M. 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-te rm amount is included as a li ability 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 re sult of employee resignations and retirements. The General Fund is typically used to liquidate compensated ab sences. 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.

N. Property Taxes Receivable

Property tax revenue is recognized in the fiscal year for wh ich 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.

City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

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

N. Property Taxes Receivable (Continued)

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

O. Interfund Transactions

Activities between funds that are representative of lendi ng/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).

P. Claims Payable

The City records a liability to reflect an actuarial estimate of ultimate uni nsured 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.

Q. 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, 2020
Measurement Date June 30, 2021
Measurement Period July 1, 2020 - June 30, 2021

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.

City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

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

R. 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 ne t 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, 2022
Measurement Date June 30, 2022
Measurement Period July 1, 2021 - June 30, 2022

Gains and losses related to changes in total OPEB li ability 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 O PEB expense. The amortization period differs depending on the source of gain or loss. The difference between proj ected and actual earnings is amortized on a straight-line basis over 5 years. All other amounts are amortized on a st raight-line basis over the av erage expected remaining service lives of all members that are provided with benefits (active, inactive, and retired) at the beginning of the measurement period.

S. Deferred Outflows of Resources and Deferred Inflows of Resources

Deferred Outflows of Resources represent a consumption of net assets that applies to future periods.

Deferred Inflows of Resources represent an acquisition of net assets that applies to future periods.

T. Net Position

In the government-wide financial statem ents and proprietary fund financial statements, net positi on is classified as follows:

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

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

Unrestricted – This component of net positi on 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.

City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

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

U. Use of Estimates

The preparation of financial statements in conformi ty 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.

V. Fund Balances

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

Nonspendable – Nonspendable fund balances include amounts th at 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 limita tions 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.

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 r esidual net resources in excess of the other classifications. The general fund is the only fund th at 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 sp ecific 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.

W. Spending Policy

Government-Wide Financial Statements and the Proprietary Fund Financial Statements

When expenses are incurred for purpo ses 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.

City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

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

W. Spending Policy (Continued)

Governmental Fund Financial Statements (Continued)

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

X. Implementation of New GASB Pronouncements

GASB Statement No. 87 – In June 2017, GASB issued Statement No. 87, Leases (GASB Statement No. 87), to better meet the information needs of financial statement users by improving accounting and financial reporting for leases by governments. This statement increases the usefulness of governments’ financial statements by requiring recognition of certain lease assets and liabilities for leases that previously were classified as operating leases and recognized as inflows of resources or outflows of resources based on the payment provisions of the contract. It also establishes a single model for lease accounting based on the foundational principle that leases are financings of the right to use an underlying asset. Implementation of this Statement had a significant eff ect on the City’s financial statements for the fiscal year ended June 30, 2022.

GASB Statement No. 89 – In June 201 8, GASB issued Statement No. 89, Accounting for Interest Cost Incurred before the End of a Construction Period . This Statement establishes accoun ting requirements for interest cost incurred before the end of a construction period. Such in terest cost includes all interest that previously was accounted for in accordance with the requirements of pa ragraphs 5–22 of Statement No. 62, Codification of Accounting and Financial Reporting Guidance Contai ned in Pre–November 30, 1989 FASB and AICPA Pronouncements, which are superseded by this Statement. This Statement requires that interest cost incurred before the end of a construction period be recognized as an expense in the period in which the cost is incurred for financial statements prepared using the economic resources measurement focus. As a result, interest cost incurred before the end of a construction period will not be included in the historical cost of a capital asset reported in a business–type activity or enterprise fund. Implementation of this Statement did not have a significant effect on the City’s financial statements for the fiscal year ended June 30, 2022.

GASB Statement No. 92 – In January 2020, GASB issued Statement No. 92, Omnibus 2020. The primary objectives of this Statement are to enhance comparability in accounting and financial reporting and to improve consistency of authoritative literature by addressing practice issues that have been identified during implementation and application of certain GASB Statements. Implementation of this Statement did not have a significant effect on the City’s financial statements for the fiscal year ended June 30, 2022.

GASB Statement No. 93 – In March 2020, GASB issued Statement No. 93, Replacement of Interbank Offered Rates. Some governments have entered into agreements in which variable payments made or received depend on an interbank offered rate (IBOR)—most notably, the London Interbank Offered Rate (LIBOR). As a result of global reference rate reform, LIBOR is expected to cease to ex ist in its current form at the end of 2021, prompting governments to amend or replace financial instruments fo r the purpose of replacing LIBOR with other reference rates, by either changing the reference rate or adding or changing fallback provisions related to the reference rate.

The objective of this Statement is to address those and other accounting and financial reporting implications that result from the replacement of an IBOR. Implementation of this Statement did not have a significant effect on the City’s financial statements for the fiscal year ended June 30, 2022.

City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

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

X. Implementation of New GASB Pronouncements (Continued)

GASB Statement No. 97 – In June 2020, GASB issued Statement No. 97, Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans – An Amendment of GASB Statements No. 14 and No . 84, and a Supersession of GASB Statement No. 32 . The primary objectives of this Statement are to (1) increase consistenc y and comparability related to the reporting of fiduciary component units in circumstances in which a potential component unit does not have a governing board and the primary government performs the duties that a governi ng board typically would perform; (2) mitigate costs associated with the reporting of certain defined cont ribution pension plans, de fined contribution other postemployment benefit (OPEB) plans, and employee benefit plans other than pension plans or OPEB plans (other employee benefit plans) as fiduciary component units in fiduciary fund financial stat ements; and (3) enhance the relevance, consistency, and comparab ility of the accounting and financial reporting for Internal Revenue Code (IRC) Section 457 deferred compensation plans (Section 457 plans) that meet the definition of a pension plan and for benefits provided through those plans. Implementati on of this Statement did not have a significant effect on the City’s financial statements for the fiscal year ended June 30, 2022.

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, 2022:

Governmental Business-type Fiduciary
Activities Activities Funds Total
Cash and investments 28,169,903 $ 20,192,672 $ 8,938,111$ 57,300,686$ Cash and investments with fiscal agent 2,002,393 8,327,888 119,011 10,449,292 Cash and investments held in trust 2,054,252 - - 2,054,252 Total 32,226,548$ 28,520,560$ 9,057,122$ 69,804,230$ Primary Government

The City’s cash and investments at June 30, 2022 in more detail:

Cash on hand 2,005$
Deposits with financial institutions 12,922,858
Deposits with trust 2,054,252
Investments 54,825,115
Total 69,804,230$

City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

64 Note 2 – Cash and Investments (Continued)

A. Demand Deposits

The carrying amounts of the City’s demand deposits were $12,922,858 at June 30, 2022. Bank balances at that date were $13,068,364 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 l east 110% of the City’s cash deposits. California law also allows institutions to secure City deposits by pledging first trus t 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 Corpora tion (“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 investme nt types that are authorized by th e 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 Million $50 Million 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 (Must 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
M edium-Term Notes 5 Years 30% 15%
Mone y Ma rke t Mutua l 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.

City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

65 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 Million $50 Million 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 (Must be Dollar Denominated) 6 Months 40% 30% Commercial Paper 6 Months 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 inv estments 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, th e 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 provi ded by the following table that shows the distribution of the City's investments by maturity:

City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

66 Note 2 – Cash and Investments (Continued)

D. Risk Disclosures (Continued)

Disclosures Relating to Interest Rate Risk

Maturity
12 Months
Investment Type Total or Less
Investments:

Local Agency Investment Fund 44,369,592$ 44,369,592 $ Investments with fiscal agents:

Money Market Mutual Funds 10,455,523 10,455,523 Total 54,825,115$ 54,825,115 $

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 a nd minimizing interest rate risk, the City’s investment policy limits are as follows:

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

Disclosures Relating to Credit Risk

Generally, credit risk is the risk that an issuer of an i nvestment 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 44,369,592$ N/A - $ 44,369,592$ Investments with fiscal agents:

Money Market Mutual Funds 10,455,523 N/A 10,455,523 - Total 54,825,115$ 10,455,523 $ 44,369,592 $ 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.

City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

67 Note 2 – Cash and Investments (Continued)

D. Risk Disclosures (Continued)

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 in vestments 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 trust ee, 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.

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, 2022 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 a nd/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, 2022, the City had $44,369,592 invested in LAIF, which had invested 1.88% of the pool investment funds in structured notes and asset-backed securities.

F. Investment in Money Market Mutual Funds

At June 30, 2022, 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 seek s 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, 2022 the City had $10,455,523 invested in Money Market Mutual Funds.

City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

68 Note 3 – Loans Receivable

A. Governmental Activities

At June 30, 2022, loans receivable consisted of the following:

Bio-Rad Loan 1,444,181$
Total 1,444,181$

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 commenci ng May 15, 2010, through September 14, 2038. The balance outstanding as of June 30, 2022 was $1,444,181.

B. Fiduciary Fund Financial Statements

At June 30, 2022, loans receivable consisted of the following:

Business Development Loans 1,276,029$
Bridge Housing Corporation 2,212,979
Home Emergency Loan 8,293
First Time Homebuyers 860,793
Homeowner Retention/Loss Mitigation 2,718,985
Revitalization and Beautification 168,439
Other Assistance Programs 1,140,547
Total 8,386,065$

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

At June 30, 2022, lease receivable consisted of the following:

Bio-Rad Laboratories, Inc. 8,602,203$
Other lease receivable 661,166
Total 9,263,369 $

City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

69 Note 4 – Lease Receivable (Continued)

A. Bio-Rad Laboratories Lease Receivable

On August 14, 2008, the City and Bio-Rad Laboratories, Inc. entered in to a lease agreement, which Bio-Rad agreed to lease from the City, the premises, consisting of the land located in the City of Hercules, County of Contra Costa, state of California, commonly known as the Vent ure Commerce Center located at 203-295 Linus Pauling Drive, including five (5) buildings consisting of approxima tely 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 fift eenth (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 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 au tomatically 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. elect s to exercise the Purchase Op tion 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%. M onthly 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. For the year ended June 30, 2022, the C ity recognized $204,120 in lease revenue and $704,354 in interest revenue.

The future required payments for these leases, including interest, are as follows:

Year Ending June 30, Principal Interest Total
2023 227,732 $ 686,994 $ 914,726 $
2024 253,325 667,653 920,978
2025 281,064 646,166 927,230
2026 311,131 622,351 933,482
2027 343,720 596,014 939,734
2028-2032 2,367,538 2,473,412 4,840,950
2033-2037 3,703,597 1,264,003 4,967,600
2038-2039 1,114,096 57,118 1,171,214
8,602,203$ 7,013,711 $ 15,615,914 $
Governmental Activities

City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

70 Note 4 – Lease Receivable (Continued)

B. Other Lease Receivable

Lease receivables consist of agreements with others for the right–to–use of the underlying assets for land and building owned by the City at various locations. The remaining terms of the agreements range from 1 to 10 years.

The incremental borrowing rates used ranged from 2.38%. For the year ended June 30, 2022, the City recognized $125,520 in lease revenue and $10,366 in interest revenue. The outstanding receivables are in the amounts of $661,166. The future required payments for these leases, including interest, are as follows:

Year Ending June 30, Principal Interest Total
2023 129,301 $ 14,339 $ 143,640 $
2024 123,026 11,253 134,279
2025 91,724 8,739 100,463
2026 95,026 6,520 101,546
2027 91,304 4,228 95,532
2028-2032 130,785 6,572 137,357
661,166$ 51,651 $ 712,817 $
Gove rnme ntal Acti vi ti e s

Note 5 – Interfund Transactions

A. Due From and To Other Funds

At June 30, 2022, the City’s Due to and from Other Funds are as follows:

Due From Other Funds (Receivable) Due To Other Funds (Payable) Amount Landscape & Lighting Assessment District
General Fund (LLAD) No. 83-2 Special Revenue Fund 628,171$ General Fund Nonmajor Governmental Funds 567,046
1,195,217$

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

B. Transfers In and Out

Transfer In Transfer Out Amount
General Fund Nonmajor Governmental Funds 396,815$
General Fund American Resecue Plan Act Special Revenue Fund 3,142,889 Landscape & Lighting Assessment District
(LLAD) No. 83-2 Special Revenue Fund General Fund 29,316 Debt Service Fund General Fund 205,099
Nonmajor Governmental Funds General Fund 1,395,127
Landscape & Lighting Assessment District
Nonmajor Governmental Funds (LLAD) No. 83-2 Special Revenue Fund 265,700 Nonmajor Governmental Funds Nonmajor Governmental Funds 288,911 Total 5,723,857$

The transfers in and out are to fund City operations, de bt service obligations, and maintenance of the arterial roadways.

City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

71 Note 6 – Capital Assets

A. Governmental Activities

Summary of changes in governmental activities capital assets for the year ended June 30, 2022 was as follows:

Balance
June 30, 2021 Reclassification/ Balance
(Restated) Additions Retirements Transfers June 30, 2022 Nondepreciable assets:

Land 5,081,587$ -$ -$ -$ 5,081,587$ Construction in progress 4,228,176 989,499 - (4,213,228) 1,004,447 Total nondepreciable assets 9,309,763 989,499 - (4,213,228) 6,086,034 Depreciable assets:

Land improvements 11,720,361 - - 4,091,950 15,812,311 Building and improvements 26,973,413 339,098 (989,294) - 26,323,217 M achinery and equipment 5,080,999 579,295 - 121,278 5,781,572 Infrastructure 113,444,645 - - - 113,444,645 Subtotal 157,219,418 918,393 (989,294) 4,213,228 161,361,745 Less: accumulated depreciation:

Land improvements (9,700,749) (288,810) - - (9,989,559) Building and improvements (11,846,494) (647,389) 989,418 - (11,504,465) M achinery and equipment (7,168,552) (271,319) - - (7,439,871) Infrastructure (57,986,528) (2,288,657) - - (60,275,185) Subtotal (86,702,323) (3,496,175) 989,418 - (89,209,080) Total de pre ci able asse ts, net 70,517,095 (2,577,782) 124 4,213,228 72,152,665 Total capital assets, net 79,826,858 (1,588,283) 124 - 78,238,699 Lesae assets, being amortized
Intang ible asset - rig ht to use 27,668 - - - 27,668 Accumulated amortization - (11,171) - - (11,171) Total lease assets, being amortized, net 27,668 (11,171) - - 16,497 Governmental activities capital assets, net 79,854,526$ (1,599,454)$ 124$ -$ 78,255,196$

Depreciation and amortization expenses were charged to functions/programs of governmental activities for the year ended June 30, 2022 as follows:

Depreciation and Amortization Expenses Allocation
General government 376,981$
Public safety 38,126
Public works 2,604,600
Parks and recreation 239,352
Internal service funds 248,287
Total 3,507,346$

City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

72 Note 6 – Capital Assets (Continued)

B. Business-Type Activities

Summary of changes in business-type activities capital assets for the year ended June 30, 2022 was as follows:

Balance Reclassification/ Balance
July 1, 2021 Additions Transfers June 30, 2022
Nondepreciable assets:

Land 191,700$ -$ -$ 191,700$ Construction in progress 968,587 12,608 - 981,195 Total nondepreciable assets 1,160,287 12,608 - 1,172,895 Depreciable assets:

Building and improvements 38,325,271 - - 38,325,271 Machinery and equipment 250,345 - - 250,345 Infrastructure 14,857,483 87,836 - 14,945,319 Subtotal 53,433,099 87,836 - 53,520,935 Less: accumulated depreciation:

Building and improvements (10,869,547) (137,484) - (11,007,031) Machinery and equipment (210,707) (4,687) - (215,394) Infrastructure (3,525,340) (860,086) - (4,385,426) Subtotal (14,605,594) (1,002,257) - (15,607,851) Total depreciable assets, net 38,827,505 (914,421) - 37,913,084 Total capital assets, net 39,987,792$ (901,813)$ -$ 39,085,979$

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

Depreciation Expenses Allocation
Wastewater 1,002,257$
Total 1,002,257$

City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

73 Note 6 – Capital Assets (Continued)

C. Fiduciary Fund Financial Statements

Summary of changes in Fiduciary Fund capital assets for the year ended June 30, 2022 was as follows:

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

Land 229,685$ -$ 7,301$ 236,986$ Construction in progress 27,975,434 - (2,384,332) (11,737,404) 13,853,698 Total nondepreciable assets 28,205,119 - (2,384,332) (11,730,103) 14,090,684 Depreciable assets:

Land improvements 11,379 - - 9,753,994 9,765,373 Building and improvements 4,965,778 - - 2,000 4,967,778 Machinery and equipment 116,445 - - - 116,445 Infrastructure 4,232,722 - - 1,974,109 6,206,831 Subtotal 9,326,324 - - 11,730,103 21,056,427 Less: accumulated depreciation:

Land improvements (11,379) (5,309,347) - - (5,320,726) Building and improvements (3,242,768) (100,366) - - (3,343,134) Machinery and equipment (69,720) (5,810) - - (75,530) Infrastructure (2,870,366) (1,091,899) - - (3,962,265) Subtotal (6,194,233) (6,507,422) - - (12,701,655) Total depreciable assets, net 3,132,091 (6,507,422) - 11,730,103 8,354,772 Total capital assets, net 31,337,210$ (6,507,422)$ (2,384,332)$ -$ 22,445,456$

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 6,507,422$
Total 6,507,422$

City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

74 Note 7 – Long-Term Debt

A. Governmental Activities

Summary of changes in Governmental Activities long-term debt for the year ended June 30, 2022 was as follows:

Balance
July 1, 20201 Balance Due within Due in More
(Restated) Additions Deletions June 30, 2022 One Year Than One Year Publicly Offered:
2009 PFA Taxable Lease Revenue Bonds 8,385,000$ - $ (220,000)$ 8,165,000 $ 235,000 $ 7,930,000 $ Less: Discount on issuance (294,035) - 17,297 (276,738) - (276,738) 2020 PFA Lease Revenue Refunding Bonds 5,876,843 - - 5,876,843 386,663 5,490,180 H.E.L.P. Loan 1,515,521 - (75,933) 1,439,588 76,067 1,363,521 R.D.L.P. Loan 3,750,000 - - 3,750,000 - 3,750,000 Engie Energy Conservation Loan 4,209,354 - (93,812) 4,115,542 114,900 4,000,642 S unTrust Loan 293,650 - (193,470) 100,180 100,180 - Lease payable 27,668 - (11,008) 16,660 9,576 7,084 S ettlement payable 1,208,050 - (604,025) 604,025 604,025 - Compensated Absences 608,384 439,897 (392,721) 655,560 491,669 163,891 Total 25,580,435 $ 439,897 $ (1,573,672) $ 24,446,660 $ 2,018,080 $ 22,428,580 $

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 beginni ng on July 1, 2010, in am ounts ranging from $165,000 to $845,000. The bonds mature on July 1, 2038. The principal outstanding balance and the unamortized issuance discount at June 30, 2022 are $8,165,000 and $276,738, respectively.

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 taxa tion or for which the City has levied or pledged any form of taxation.

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

Year Ending
June 30, Principal Interest Total
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 325,000 580,796 905,796 2028-2032 2,065,000 2,436,495 4,501,495 2033-2037 3,085,000 1,372,350 4,457,350 2038-2039 1,625,000 139,230 1,764,230 Total 8,165,000$ 7,090,275$ 15,255,275$

City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

75 Note 7 – Long-Term Debt (Continued)

A. Governmental Activities (Continued)

2020 Hercules Public Financing Authority Lease Revenue Refunding Bonds

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 cap ital 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, $435,857, and $53,463 during years ended 2021, 2022, and 2023, respectively.

Future debt service requirements on the 2020 Hercules Public Financi ng Authority Lease Revenue Refunding Bond are as follows:

Year Ending
June 30, Principal Interest Total
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 477,396 85,766 563,162 2028-2032 2,547,562 263,936 2,811,498 2033-2034 1,094,568 24,305 1,118,873 Total 5,876,843$ 818,539 $ 6,695,382 $

Housing Enabled by Local Partnerships (H.E.L.P.) Loan (“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, al so 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 th e 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, 2022 is $1,439,588.

The annual debt service requirements to maturity for the H.E.L.P. Loan as of June 30, 2022 are as follows:

Year Ending
June 30, Principal Interest Total
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 1,439,588$ 90,600 $ 1,530,188 $

City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

76 Note 7 – Long-Term Debt (Continued)

A. Governmental Activities (Continued)

Residential Development Loan Program Loan (“R.D.L.P Loan”)

In February 2007, the City entered into a loan agreem ent 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 agreem ent, 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, 2022 is $3,750,000
.

The annual debt service requirements to maturity for the R.D.L.P. Loan as of June 30, 2022 are as follows:

Year Ending
June 30, Principal Interest Total
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$ 413,572$ 4,163,572$

Engie Construction Loan

On August 14, 2020, the City entered into an equipment finance purchase agreement for the implementation of the “Option A” Energy Services Contract. Interest ra te is 2.71%, 30/360 basis, and payment commencing August 14, 2020 and ending on September 14, 2040. The balance at June 30, 2022 is $4,115,542.

The annual debt service requirements to maturity for the rental payment as of June 30, 2022 are as follows:

Year Ending
June 30, Principal Interest Total
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 158,064 97,545 255,609 2028-2032 1,039,606 414,783 1,454,389 2033-2037 1,408,443 247,529 1,655,972 2038-2041 993,345 68,723 1,062,068 Total 4,115,542$ 1,254,929 $ 5,370,471 $

SunTrust Loan

On September 27, 2007, the City entered into master loan 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, 2022 is $100,180. The costs of these assets were $2,358,636 and the net book value at June 30, 2022 were $603,566.

City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

77 Note 7 – Long-Term Debt (Continued)

A. Governmental Activities (Continued)

SunTrust Loan (Continued)

The annual debt service requirements to maturity for the SunTrust master lease agreement as of June 30, 2022 are as follows:

Year Ending
June 30, Principal Interest Total
2023 100,180 $ 2,369 $ 102,549 $

Lease Payable

The City has entered into leases for the machine uses. The terms of the agreements range from 13 months to 33 months. The calculated interest rate used was 2.38% based on the term of the agreements. Principal and interest payments to maturity at June 30, 2022 are as follows:

Year Ending
June 30, Principal Interest Total
2023 9,576$ 289$ 9,865$ 2024 7,084 71 7,155 Total 16,660$ 360$ 17,020$

Settlement Payable

On March 19, 2020, the City has entered a settlement agreement with Successor Agen cy 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 Legislature ("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 Hea lth 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, 2022, settlement payable reflected in the Statement of Net Position is $604,025.

Compensated Absences

There is no fixed payment schedule for earned but unpaid compensated absences.

City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

78 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, 2022 was as follows:

Balance Balance Due within Due in More
June 30, 2021 Additions Deletions June 30, 2022 One Year Than One Year 2010 PFA Wastew ater
Revenue Bonds 9,250,000$ -$ (9,250,000)$ -$ -$ -$ Less: Discount on issuance (138,162) - 138,162 - - - S tate Water R es ou rces C ons tru ction Loan
Construction Loan 24,356,298 - (1,096,780) 23,259,518 1,115,425 22,144,093 Wastew ater Revenue Bonds, S eries 2021A - 8,450,000 - 8,450,000 355,000 8,095,000 Compensated Absences 47,180 32,324 (27,755) 51,749 38,811 12,938 Total 33,515,316$ 8,482,324$ (10,236,373)$ 31,761,267 $ 1,509,236$ 30,252,031$

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 City issued Wastewater Revenue Bonds Series 2021 to fully refund the bonds.

State Water Resources Construction Loan

In June 2016, the City entered into an installment sal e 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 con tingent on the total drawdowns at project completion.

The loan matures on August 31, 2038. The City has dr awn down $25,458,720 of the loan principal including construction loan interest as of June 30, 2022. The balance at June 30, 2022 is $23,259,518.

The annual debt service requirements to maturity for as of June 30, 2022 are as follows:

Year Ending
June 30, Principal Interest Total
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 1,193,230 317,606 1,510,836 2028-2032 6,277,411 1,276,774 7,554,185 2033-2037 6,829,444 724,742 7,554,186 2038-2039 4,382,663 149,849 4,532,512 Total 23,259,518$ 3,935,550 $ 27,195,068 $

City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

79 Note 7 – Long-Term Debt (Continued)

B. Business-Type Activities (Continued)
Wastewater Revenue Bonds, Series

In July, 2021, the City issued the Direct Purchase Lease in the amount of $8,450,000 and the proceeds were used to early pay off the 2010 PFA Wastewater Revenue Bonds.

The bonds bear interest at 2.38%. Interest on the bonds is payable semi-annually on Fe bruary 1 and August 1 in each year, commencing February 1, 2022. Principal pa yments are due in annual installments ranging from $355,000 to $545,000, commencing August 1, 2022 through August 1, 2040.

In the event of default, the City shall declare the entire principal amount of the unpaid series 2021 installment payments and accrued inteest thereon to be due and payable immediately in wirting.

The annual debt service requirements to maturity for as of June 30, 2022 are as follows:

Year Ending
June 30, Principal Interest Total
2023 355,000 $ 196,886 $ 551,886 $ 2024 365,000 188,318 553,318 2025 375,000 179,512 554,512 2026 385,000 170,468 555,468 2027 395,000 161,186 556,186 2028-2032 2,100,000 659,855 2,759,855 2033-2037 2,365,000 394,545 2,759,545 2038-2041 2,110,000 101,864 2,211,864 Total 8,450,000$ 2,052,632 $ 10,502,632 $

C. Fiduciary Fund Financial Statements
A summary of changes in Fiduciary Fund long-term debt for the year ended June 30, 2022 was as follows:

Balance Balance Due within Due in More
June 30, 2021 Additions Deletions June 30, 2022 One Year Than One Year Publicly Offered:
2005 Tax Allocation Bonds 30,770,000$ -$ (30,770,000)$ -$ -$ -$ Plus: Bond Premium 1,015,457 - (1,015,457) - - - 2007A Housing Tax Allocation Bonds 8,925,000 - (8,925,000) - - - 2007B Housing Tax Allocation Bonds 7,080,000 - (7,080,000) - - - Plus: Bond Premium 37,762 - (37,762) - - - 2007 RDA Tax Allocation Bonds 47,515,000 - (47,515,000) - - - 2022A Tax Allocation - 29,510,000 - 29,510,000 - 29,510,000 Plu s: Bond Premiu m - 3,032,566 (18,758) 3,013,808 - 3,013,808 2022B Tax Allocation - Federerally Taxable - 51,180,000 - 51,180,000 2,600,000 48,580,000 Notes Payable 347,070 65,446 - 412,516 - 412,516 Total 95,690,289$ 83,788,012$ (95,361,977) $ 84,116,324$ 2,600,000$ 81,516,324 $

City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

80 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 principa l 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 Agency issued the Tax Allocation Refunding Bonds, Series 2022A and 2022B to currently refund the Bonds.

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 Augus t 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 fro m the project area and from the amounts on deposit in certain funds and accounts, including the reserve account and the revenue account. The Agency issued the Tax Allocation Refunding Bonds, Series 2022A and 2022B to currently refund the Bonds.

2007 RDA 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 proceeds 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 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 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 pa yable 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 Agency issued th e Tax Allocation Refunding Bonds, Series 2022A and 2022B to currently refund the Bonds.

City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

81 Note 7 – Long-Term Debt (Continued)

C. Fiduciary Fund Financial Statements (Continued)

2022 Tax Allocation Bonds Series A and B

On May 1, 2022, the Successor Agency to the Hercules Redevelopment Agency issued Tax Allocation Refunding Bonds, Series 2022A and 2022B to currently refund 200 5 Tax Allocation Bonds, 20 07A and B Housing Tax Allocation Bonds, and 2007 RDA Tax Allocation Bonds. The economic gain on the current refunding was $2,171,280 and the saving in debt service payment is $13,014,042.

The Series A bonds bear interest at 5% and the Seies B bonds bear interest rates range from 2.568% to 5.013%.

Principal on the bonds is payable a nnually on August 1 in each year, comme ncing August 1, 2022 ranging from $455,000 to $15,000,000. Interest on the bonds is payable semi-annually on February 1 and August 1 in each year, commencing August 1, 2022. The balances at June 30, 2022 for the Sereas A and B are $29,510,000 and $51,180,000.

In the event of default, the City shall declare the entire principal amount of the unpaid series 2022 A and B installment payments and accrued inteest thereon to be due and payable immediately in wirting.

The annual debt service requirements to maturity for as of June 30, 2022 are as follows:

2022 Series A

Year Ending
June 30, Principal Interest Total
2023 - $ 1,032,850$ 1,032,850 $ 2024 - 1,475,500 1,475,500 2025 - 1,475,500 1,475,500 2026 - 1,475,500 1,475,500 2027 - 1,475,500 1,475,500 2028-2032 - 7,377,500 7,377,500 2033-2037 11,925,000 6,619,125 18,544,125 2038-2042 14,285,000 2,680,125 16,965,125 2043 3,300,000 82,500 3,382,500 Total 29,510,000$ 23,694,100 $ 53,204,100 $

2022 Series B

Year Ending
June 30, Principal Interest Total
2023 2,600,000$ 1,525,263 $ 4,125,263 $ 2024 - 2,159,871 2,159,871 2025 455,000 2,152,254 2,607,254 2026 4,310,000 2,067,790 6,377,790 2027 4,465,000 1,904,991 6,369,991 2028-2032 25,280,000 6,436,084 31,716,084 2033-2035 14,070,000 867,456 14,937,456 Total 51,180,000$ 17,113,709 $ 68,293,709 $

City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

82 Note 7 – Long-Term Debt (Continued)

C. Fiduciary Fund Financial Statements (Continued)

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 th e 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, 2022, the Agency’s long- term notes payable for East Group, Bio Rad Laborator ies, and Eden Housing were $130,911, $216,160 and $65,445, respectively.

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, 2022
Refunding Reassessment District 2005-1 (John Muir Parkway) 3,006,859$ 2,617,966 $

City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

83 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, 2022 are as follows:

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

Pension contributions made after measurement date:

CalPERS Miscellaneous 872,447$ 88,805$ 961,252$ CalPERS Safety 1,127,304 - 1,127,304 Total pension contribution made after measurement date 1,999,751 88,805 2,088,556 Adjustment due to difference in proportions
CalPERS Miscellaneous 223,965 22,796 246,761 CalPERS Safety 98,440 - 98,440 Total adjustment due to difference in proportions 322,405 22,796 345,201 Difference between expected and actual experience
CalPERS Miscellaneous 459,455 46,766 506,221 CalPERS Safety 918,895 - 918,895 Total difference between expected and actual experience 1,378,350 46,766 1,425,116 Employer contributions in excess of proportionate share of contribution
CalPERS Miscellaneous 36,542 3,718 40,260 Total employer contributions in excess of proportionate share of contribution 36,542 3,718 40,260 Total deferred outflows of resources
CalPERS Miscellaneous 1,592,409 162,085 1,754,494 CalPERS Safety 2,144,639 - 2,144,639 Total deferred outflows of resources 3,737,048$ 162,085$ 3,899,133$ Net pension liabilities:

CalPERS Miscellaneous 4,150,214$ 364,008$ 4,514,222$ CalPERS Safety 5,378,400 - 5,378,400 Total net pension liabilities 9,528,614$ 364,008$ 9,892,622$ Deferred inflows of resources:

Adjustment due to difference in proportions
CalPERS Miscellaneous 75,841 8,812 84,653$ CalPERS Safety 254,366 - 254,366 Total adjustment due to difference in proportions 330,207 8,812 339,019 Difference between projected and actual investment earnings:

CalPERS Miscellaneous 3,530,444 410,223 3,940,667 Cal
PERS Safety 3,201,176 - 3,201,176 Total difference between projected and actual investment earnings: 6,731,620 410,223 7,141,843 Employer contributions in excess of proportionate share of contribution
CalPERS Miscellaneous 632,843 73,533 706,376 CalPERS Safety 1,172,735 - 1,172,735 Total employer contributions in excess of proportionate share of contribution 1,805,578 73,533 1,879,111 Total deferred inflows of resources
CalPERS Miscellaneous 4,239,128 492,568 4,731,696 CalPERS Safety 4,628,277 - 4,628,277 Total deferred inflows of resources 8,867,405$ 492,568$ 9,359,973$ Pension expenses (credits):

CalPERS Miscellaneous 1,418,399$ 211,951$ 1,630,350$ CalPERS Safety (413,419) - (413,419) Total net pension expenses 1,004,980$ 211,951$ 1,216,931$

City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

84 Note 8 – Retirement Plans (Continued)

A. General Information About the Pension Plans

Plan Description

The City contributes to CalPERS, a cost-sharing multiple-employer defined benefit pension plan, for its qualified permanent and probationary miscellaneous and safety employees. California Public Employees’ Retirement System (“CalPERS”) provides retirement and disability be nefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. CalPERS acts as a common investment and administrative agent for participating public entities within the State of Califo rnia. Benefit provisions and all other requirements are established by State statute and City ordinance. Copies of CalPERS’ annual financial report may be obtained from its website at https://www.calpers.ca.gov/ under Forms and Publications.

Employees Covered by Benefit Terms

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

Miscellaneous Safety Safety
Miscellaneous PEPRA Safety Tier 2 PEPRA
Active employees 31 13 7 1 15 Transferred employees 48 13 7 1 7 Separated employees 95 17 4 1 7 Retired employees and beneficiaries 88 1 37 - - Total 262 44 55 3 29

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 Deat h 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, 2022, are summarized below:

Miscellaneous Safety Safety
Miscellaneous PEPRA Safety Tier 2 PEPRA
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 10.340% 7.590% 23.710% 21.790% 13.100%

City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

85 Note 8 – Retirement Plans (Continued)

A. General Information About the Pension Plans (Continued)

Benefits Provided (Continued)

A participant is eligible for non-industrial disability retir ement if he or she becomes disabled and has at least 5 years of credited service. There is no special age requirement. The standard non-industrial disability retirement benefit is a monthly allowance equal to 1.8% of final compensation, multiplied by service. Industrial disability benefits are not offered to miscellaneous employees.

An employee's beneficiary may receive the basic death benefit if the employee dies while actively employed. The employee must be actively employed with the City to be e ligible for this benefit. An employee's survivor who is eligible for any other pre-retirement d eath benefit may choose to receive that death benefit instead of this basic death benefit. The basic death benefit is a lump sum in the amount of the employee's accumulated contributions, where interest is currently credited at 7.15% per year, plus a lump sum in the amount of one month's salary for each completed year of current service, up to a maximum of six months' salary. For purposes of this benefit, one month's salary is defined as the member's average monthl y full-time rate of compensation during the 12 months preceding death.

Upon the death of a retiree, a one-time lump sum paym ent of $500 will be made to the retiree's designated survivor(s), or to the retiree's estate.

Benefit terms provide for annual cost-of-living adjustments to each employee’s retirement allowance. Beginning the second calendar year after the year of retirement, retirement and survivor allowances will be annually adjusted on a compound basis by 2%.

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 cont ributions 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.

For the year ended June 30, 2022, the contributions rec ognized as part of pension expense for each Plan were as follows:

Miscellaneous Safety CalPERS Total
Contributions - employer 961,252$ 1,127,304$ 2,088,556$

City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

86 Note 8 – Retirement Plans (Continued)

B. Pension Liabilities, Pension Expenses, and Deferred Ou tflows of Resources and Deferred Inflows of Resources Related to Pension

Actuarial Methods and Assumptions Used to Determined Total Pension Liability

For the measurement period ended June 30, 2021 (the measurement date), the total pension liability was determined by rolling forward the June 30, 2020 total pension liability. The June 30, 2021 total pension liabilities were based on the following actuarial methods and assumptions:

Actuarial Methods and Assumptions Used to Determine Total Pension Liability Actuarial Cost Method Entry Ag e Normal in accordance with the requirements of GASB 68 Actuarial Assumptions:

Discount Rate
Inflation
Salary Increases
Morta l i ty Ra te Ta bl e
1 Post Retirement Benefit Increase

7.15%

2.50%
Varies by Entry Age and Service
Derived using CalPERS’ Membership 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 mortalit y improvement using 90% of Scale MP-2016 published by the Society of Actuaries. For more details on this table, please refer to the CalPERS Experience Study and Review of Actuarial Assumptions report from December 2017 that can be found on the CalPERS website.

Long-Term Expected Rate of Return

The long-term expected rate of return on pension plan investments was determined using a building -block method in which expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class.

In determining the long-term expected rate of return , CalPERS took into account bot h short-term and long-term market return expectations as well as the expected pension fund cash flows. Using historical returns of all of the funds’ asset classes, expected compound (geometric) return s 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 a bove and adjusted to account for assumed administrative expenses. The expected real rates of return by asset class are as follows:

City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

87 Note 8 – Retirement Plans (Continued)

B. Pension Liabilities, Pension Expenses, and Deferred Ou tflows of Resources and Deferred Inflows of Resources Related to Pension (Continued)

Long-Term Expected Rate of Return (Continued)

Asset Class
Assumed Asset
Alloction
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 ACFR, 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.

Discount Rate

The discount rate used to measure the total pension li ability was 7.15%. The projection of cash flows used to determine the discount rate assumed that contributions fro m plan members will be made at the current member contribution rates and that contributions from employers w ill be made at statutorily required rates, actuarially determined. Based on those assumptions, the Plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on plan investments was applied to all periods of projected benefit payments to determine the total pension liability.

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

The following presents the City’s proportionate share of the net pension liability of the Plan as of the measurement date, calculated using the discount rate of 7.15%, 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 (6.15%) or 1 percentage-point higher (8.15%) than the current rate:

Discount Rate - 1% Current Discount Discount Rate + 1 % (6.15%) Rate (7.15%) (8.15%)
Miscellaneous 8,669,259$ 4,514,222 $ 1,079,312 $ Safety 10,627,918 $ 5,378,400 $ 1,066,569 $ Plan's Net Pension L iability

Pension Plan Fiduciary Net Position

Detail information about the plan’s fiduciary net position is available in the separately issued CalPERS financial report and can be obtained from CalPERS’ website under Forms and Publications.

City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

88 Note 8 – Retirement Plans (Continued)

B. Pension Liabilities, Pension Expenses, and Deferred Ou tflows of Resources and Deferred Inflows of Resources Related to Pension (Continued)

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
Liability Net Position Liability/(Asset)
Miscellaneous
Balance at: 6/30/20 (Valuation date) 29,729,683$ 21,888,875 $ 7,840,808 $ Balance at: 6/30/21 (Measurement date) 31,470,190 26,955,968 4,514,222 Net changes during 2020-2021 1,740,507 $ 5,067,093 $ (3,326,586) $ Safety
Balance at: 6/30/20 (Valuation date) 36,992,828$ 27,067,865 $ 9,924,963 $ Balance at: 6/30/21 (Measurement date) 38,998,377 33,619,977 5,378,400 Net changes during 2020-2021 2,005,549 $ 6,552,112 $ (4,546,563) $

The following is the approach established by the plan actuary to allocate the net pension liability and pension expense to the individual employers within the risk pool.

(1) In determining a cost-sharing plan’s proportionate share, total amounts of liabilities and assets are first calculated for the risk pool as a whole on the valuation date (June 30, 2020). The risk pool’s fiduciary net position (“FNP”) subtracted from its total pension liability (“TPL”) determines the net pension liability (“NPL”) at the valuation date.

(2) Using standard actuarial roll forward methods, the risk pool TPL is then computed at the measurement date (June 30, 2021). Risk pool FNP at the measurement date is then subtracted from this number to compute the NPL for the risk pool at the measurement date. For purposes of FNP in this step and any later reference thereto, the risk pool’s FNP at the measurement date denotes the aggregate risk pool’s FNP at June 30, 2021 less the sum of all additional side fund (or unfunded liab ility) contributions made by all empl oyers during the measurement period (2020-21).

(3) The individual plan’s TPL, FNP and NPL are also calc ulated at the valuation date. TPL is allocated based on the rate plan’s share of the actuarial accrued liability. FNP is allocated based on the rate plan’s share of the market value assets.

(4) Two ratios are created by dividing the plan’s individual TPL and FNP as of the valuation date from (3) by the amounts in step (1), the risk pool’s total TPL and FNP, respectively.

(5) The plan’s TPL as of the Measurement Date is equal to the risk pool TPL generated in (2) multiplied by the TPL ratio generated in (4). The plan’s FNP as of the M easurement Date is equal to the FNP generated in (2) multiplied by the FNP ratio generated in (4) plus any additional side f und (or unfunded liability) contributions made by the employer on behalf of the plan during the measurement period.

(6) The plan’s NPL at the Measurement Date is the difference between the TPL and FNP calculated in (5).

City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

89 Note 8 – Retirement Plans (Continued)

B. Pension Liabilities, Pension Expenses, and Deferred Ou tflows of Resources and Deferred Inflows of Resources Related to Pension (Continued)

Proportionate Share of Net Pension Liability and Pension Expense (Continued)

Deferred outflows of resources, deferred inflows of r esources, and pension expense are allocated based on the City’s share of contribution during the measurement period.

The City’s proportionate share of the net pension liability was as follows:

Miscellaneous Safety
Proportion - June 30, 2020 0.07263% 0.91220%
Proportion - June 30, 2021 0.08347% 0.09945%
Change - Increase/(Decrease) 0.01083% -0.81275%

For the year ended June 30, 2022, the City recognized pension expense (credit) of $1,650,350 and $(413,419), for the Miscellaneous and Safety plans, respectively.

Deferred Outflows and Deferred Inflows of Resources Related to Pensions

At June 30, 2022, the City reported deferred outflows of resources and defe rred inflows of resources related to pensions from the following sources:

Deferred Outflows Deferred Inflows
of Resources of Resources
Contributions made after the measurement date 961,252 $ - $ Difference between expected and actual
experience 506,221
Net difference between projected and actual
earnings on pension plan investments - (3,940,667) Employer contributions in excess/(under)
proportionate share of contributions 40,260 (706,376) Adjustments due to difference in proportions 246,761 (84,653) Total 1,754,494 $ (4,731,696) $
Deferred Outflows Deferred Inflows
of Resources of Resources
Contributions made after the measurement date 1,127,304 $ - $ Difference between expected and actual
experience 918,895 -
Net difference between projected and actual
earnings on pension plan investments - (3,201,176) Employer contributions in excess/(under)
proportionate share of contributions - (1,172,735) Adjustments due to difference in proportions 98,440 (254,366) Total 2,144,639 $ (4,628,277) $
Miscellaneous Plan
Safety Plan

City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

90 Note 8 – Retirement Plans (Continued)

B. Pension Liabilities, Pension Expenses, and Deferred Ou tflows of Resources and Deferred Inflows of Resources Related to Pension (Continued)

Deferred Outflows and Deferred Inflows of Resources Related to Pensions (Continued)

Deferred Outflows Deferred Inflows
of Resources of Resources
Contribution made after the measurement date 2,088,556 $ - $ Difference between expected and actual
experience 1,425,116 -
Net difference between projected and actual
earnings on pension plan investments - (7,141,843) Employer contributions in excess/(under)
proportionate share of contributions 40,260 (1,879,111) Adjustments due to difference in proportions 345,201 (339,019) Total 3,899,133 $ (9,359,973) $
CalPERS Aggregate Total

The amortization period differs depending on the source of the gain or loss. The difference between projected and actual earnings is amortized over 5-years straight line. 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 expected average remaining service lifetime (“EARSL”) is calculated by dividing the total future service years by the total number of plan participants (active, inactive, and retired) in the risk pool. The EARSL for risk pool for the 2020-21 measurement period is 3.7 years, which was obtained by dividing the total service years of 561,622 (the sum of remaining service lifetimes of the active em ployees) by 150,648 (the tota l number of participants:
active, inactive, and retired).

$961,252 and $1,118,578 reported as deferred outflows of resources related to pensions for miscellaneous plan and safety plan, respectively, resulting from the City’s c ontributions made subsequent to the measurement date.

Both will be recognized as a reduction of the collective net pension liability in the year ending June 30, 2023.

Other amounts reported as deferred outflows of resources a nd deferred inflows of resources related to pensions will be recognized in pension expense as follows:

M easurement Period
Ending June 30 Miscellaneous Plan Safety Plan Total
2022 (782,237) $ (953,414) $ (1,735,651) $ 2023 (1,017,018) (896,767) (1,913,785) 224 (1,050,202) (879,840) (1,930,042) 2025 (1,088,997) (880,921) (1,969,918) 2026 - - - Thereafter - - - Total (3,938,454)$ (3,610,942)$ (7,549,396)$ Deferred Outflows/(Inflows) of Resources

City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

91 Note 8 – Retirement Plans (Continued)

C. Other

On July 12, 2021, CalPERS reported a preliminary 21.3% net return on investments for fiscal year 2020-21. Based on the thresholds specified in CalPERS Funding Risk Mitigation policy, the excess return of 14.3% prescribes a reduction in investment volatility that corresponds to a reduction in the discount rate used for funding purposes of

0.20%, from 7.00% to 6.80%. Since CalPERS was in the final stages of the four-year Asset Liability Management (ALM) cycle, the board elected to defer any changes to the asset allocation until the ALM process concluded, and the board could make its final decision on the asset allocation in November 2021.

On November 17, 2021, the board ad opted a new strategic asset allocation. The new asset allocation along with the new capital market assumptions, economic assumptions and administrative expense assumption support a discount rate of 6.90% (net of investment expense but without a reduction for administrative expense) for financial reporting purposes. This includes a reduction in the price inflation assumption from 2.50% to 2.30% as recommended in the November 2021 CalPERS Experience Study and Review of Actuarial Assumptions. This study also recommended modifications to retirement rates, termination rates, mortality rates and rates of salary increases that were adopted by the board. These new assu mptions will be reflected in the GASB 68 accounting valuation reports for the June 30, 2022, measurement date.

D. Payable to the CalPERS Pension Plans

At June 30, 2022, the City had no outstanding amounts owed to the CalPERS pension plans for contributions for the year ended June 30, 2022.

E. Liquidating Net Pension Liability

Pension liabilities are liquidated principally by all the funds.

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 employ ees. 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 sa lary until future years. The deferre d 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 pa id 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.

City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

92 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

Summary of changes in deferred outflows of resources related to other postemployment benefit (“OPEB”), net OPEB liabilities, and deferred inflows of resources related to OPEB for both governmental activities and business-type activities for the year ended June 30, 2022 are as follows:

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

Difference between expected and actual experience
PEHMCA 16,260 920 17,180 Total difference between expected and actual experience 16,260 920 17,180 Changes of assumptions
PEHMCA 168,400 9,532 177,932 SOMAR 261,005 14,776 275,781 Total employer contributions in excess of proportionate share of 168,400 9,532 177,932 Difference between projected and actual investment earnings:

PEHMCA 248,938 14,091 263,029 Total difference between projected and actual investment 248,938 14,091 263,029 Total deferred outflows of resources
PEHMCA 433,598 24,543 458,141 SOMAR 261,005 14,776 275,781 Total deferred outflows of resources 694,603$ 39,319$ 733,922$ Net OPE B liabilities (assets):

PEHMCA (13,481)$ (763)$ (14,244)$ SOMAR 1,269,285 71,848 1,341,133 Total net OPEB liabilities (assets) 1,255,804$ 71,085$ 1,326,889$ Deferred inflows of resources:

Difference between expected and actual experience
PEHMCA 1,072,885 60,730 1,133,615$ SOMAR 310,156 17,556 327,712 Total difference between expected and actual experience 1,383,041 78,286 1,461,327 Changes of assumptions
PEHMCA 203,388 11,513 214,901 SOMAR 313,556 17,750 331,306 Tota changes of assumptions 516,944 29,263 546,207 Total deferred inflows of resources
PEHMCA 1,276,273 72,243 1,348,516 SOMAR 623,712 35,306 659,018 Total deferred inflows of resources 1,899,985$ 107,549$ 2,007,534$

City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

93 Note 10 – Other Postemployment Benefits (Continued)

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 a nd 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, orga nized 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 Tr ust. PARS is considered an agency agent multiple -employer plan, required to provide financial statements and requi red 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 nominal contribution to PEMHCA is the same for active employees and retirees ($143/month for 2021 and $149/month for 2022).

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.

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, 2022 were $144,124 including the implied rate subsidy.

Employees Covered by Benefit Terms

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

Active employees 54
Retirees 17
Total 71

City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

94 Note 10 – Other Postemployment Benefits (Continued)

A. Retiree Healthcare Plan (PEHMCA) (Continued)

Actuarial Assumptions

The net OPEB liability of the Plan was determined using an actuarial valuation as of June 30, 2021 using the following actuarial assumptions:

Actuarial Assumptions:

Cost Method Entry ag e actuarial cost
method
Discount Rate 5.15%
Inflation 2.50%
Aggregate payroll increases 2.75%
Expected long-term investment rate of return 5.15%
Mortality, Termination, and Disability 2017 CalPERS Mortality Healthcare Trend Rate 4%

The mortality assumptions are based on the 2017 CalPERS Mortality for Miscellaneous and Schools Employees table created by CalPERS for the miscellaneous participan t type and the 2017 CalPERS Mortality for Safety Employees for the safety participant type . CalPERS peri odically 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 O PEB 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.

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-e stimate 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%

City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

95 Note 10 – Other Postemployment Benefits (Continued)

A. Retiree Healthcare Plan (PEHMCA) (Continued)

Changes in the Net OPEB Liability (Asset) (Continued)

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, 2022:

Total OPEB Plan Fiduciary Net OPEB
L iability Net Position L iability (Asset)
Balance at June 30, 2021 2,429,170 $ 2,906,448 $ (477,278) $ Changes Recognized for the M easurement Period:

Service Cost 135,089 - 135,089 Interest on the total OPEB liability 124,870 - 124,870 Contributions from the employer - 144,124 (144,124) Expected investment income - 149,251 (149,251) Investment (gains)/losses - (479,716) 479,716 Administrative expenses - (16,734) 16,734 Benefit payments (144,124) (144,124) - Net Changes during July 1, 2021 to June 30, 2022 115,835 (347,199) 463,034 Balance at June 30, 2022 (Measurement Date) 2,545,005 $ 2,559,249 $ (14,244) $

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%
(4.15%) Rate (5.15%) (6.15%)
295,249$ (14,244) $ (275,253) $ Ne t O PEB Li abi l i ty (Asse t)

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%
(396,084)$ (14,244) $ 419,258 $ Net OPEB Liability (Asset)

City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

96 Note 10 – Other Postemployment Benefits (Continued)

A. Retiree Healthcare Plan (PEHMCA) (Continued)

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

For the year ended June 30, 2022, the City recognized OPEB expense of $101,656 for the Plan. OPEB expense represents the change in the net OPEB liability during th e measurement period, adjusted for actual contributions and the deferred recognition of changes in investment gain/loss, and actuarial assumptions or method. At June 30, 2022, 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 17,180$ (1,133,615)$ Changes of assumptions 177,932 (214,901) Net difference between projected and actual earning on
OPEB plan investments 263,029 -
Total 458,141$ (1,348,516)$

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

Measurement
Period Deferred Outflows/
Ending June 30 (Inflows) of Resources
2023 (26,134) $
2024 (36,113)
2025 (99,008)
2026 (60,941)
2027 (156,881)
Thereafter (511,298)
Total (890,375) $

Liquidating PEHMAC OPEB Liability

OPEB liabilities are liquidated principally by the General Fund.

City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

97 Note 10 – Other Postemployment Benefits (Continued)

B. Retiree Cash Benefit Plan (SOMAR Plan)

Plan Description

The City SOMAR 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 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 stat ed 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 $366/per month for 2021 and $377/per month for 2022 (Police), $275 for 2021 and $283/per month for 2022 (Ex ecutive Management), and are contractually indexed each year by 3%.

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

City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

98 Note 10 – Other Postemployment Benefits (Continued)

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

Plan Description (Continued)

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 dr op 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.

Employees Covered by Benefit Terms

At the June 30, 2022 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, 2022, are summarized below:

E xecutiv es Police
Duration of benefits Lifetime Lifetime
Required service 50% at 10 years
grading to 100% at
20 years
50% at 10 years
grading to 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, 2022, the contributions r ecognized as part of OPEB expense for the SOMAR plan were as follows:

SOM AR Plan
Contributions - employer 43,718$

City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

99 Note 10 – Other Postemployment Benefits (Continued)

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

Actuarial Assumptions

The net OPEB liability of the SOMAR Plan was determined using an actuarial valuation as of July 1, 2021 using the following actuarial assumptions.

Actuarial Assumptions:

Cost method Entry age normal
Discount Rate 3.54%
Inflation 2.50%
Aggregate payroll increases 2.75%
Mortality, retirement, and turnover 2017 CalPERS tables Mortality Improvement Scale RP-2014 Employee and Healthy Annuitant Mortality Tables for males
and females.

The mortality assumptions are based on the 2017 CalPERS Mortality for Miscellaneous and Schools Employees table created by CalPERS. CalPERS periodically studi es 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.

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, 2022:

Total OPEB Plan Fiduciary Net OPEB
L iability Net Position L iability
Balance at June 30, 2021 1,617,718$ -$ 1,617,718$ Changes Recognized for the M easurement Period:

Service cost 95,420 - 95,420 Interest on the total pension liability 35,501 - 35,501 Changes of benefit terms - - - Difference between expected and actual experience - - - Changes of assumptions (363,788) - (363,788) Contributions from the employer as benefit payments - 43,718 (43,718) Net investment income - - - Administrative expenses - - - Benefit payments (43,718) (43,718) - Net changes during July 1, 2021 to June 30, 2022 (276,585) - (276,585) Balance at June 30, 2022 (measurement date) 1,341,133$ -$ 1,341,133$ S OMAR Plan

Discount Rate

The discount rate used to measure the total OPEB li ability for the SOMAR plan was 3.54%. based on the Bond Buyer 20 Bond Index.

City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

100
Note 10 – Other Postemployment Benefits (Continued)

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

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%
(2.54%) Rate (3.54%) (4.54%)
1,595,392$ 1,341,133 $ 1,158,833 $ SOMAR Plan's Total OPE B L iability

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

For the year ended June 30, 2022, the City recognized OPEB expense of $97,139 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 recogn ition of changes in investment gain/loss, and actuarial assumptions or method. At June 30, 2022, the City reported deferred outflows 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 -$ (327,712)$ Changes of assumptions 275,781 (331,306)
Total 275,781$ (659,018)$
S OMAR Plan

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

Measurement S OMAR Plan
Period Deferred Outflows/
Ending June 30 (Inflows) of Resources
2023 (33,782)$
2024 (33,782)$
2025 (33,782)$
2026 (33,782)$
2027 (33,782)$
Thereafter (214,327)
Total (383,237)$

Liquidating SOMAR OPEB Liability

OPEB liabilities are liquidated principally by the General Fund.

Payable to the OPEB Plan

At June 30, 2022, the City had no outstanding amounts owed to the SOMAR OPEB plan for contributions for the year ended June 30, 2022.

City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

101
Note 11 – Risk Management

General Liability Insurance

Coverage is maintained with the Muni cipal Pooling Authority (MPA) with coverage limits of $1,000,000 with self- insured retention of $10,000 and $1 ,000,001 to $29,000,000 covered by Calif ornia Affiliated Risk Management Authority (CARMA).

Workers’ Compensation

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

MPA $0 to $500,000
PRISM $500,000 to $50,000,000
Liberty Insurance Corporation Statuatory excess of $50,000,000

At June 30, 2022, the City’s estimated claims liabilities were as follows:

General liabilities 196,694$
Workers' Compensation 37,250
Total 233,944$

The City’s claims liability of $233,934 are considered to be current and reported under th e general fund. Changes in the claims liabilities for the fiscal years ended June 30, 2022, 2021 and 2020 are as follows:

Claims and
Beginning Changes in Claims Ending
Fiscal Year Balance Estimates Payments Balance
2019-2020 545,522 $ 1,194,289 $ (1,152,731) $ 587,080 $ 2020-2021 587,080 452,015 (462,751) 576,344 2021-2022 576,334 343,845 (686,235) 233,944

Miscellaneous Coverages

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

Coverage
Type 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 Cyber Liability 50,000 3,000,000
Pollution Liability 250,000 25,000,000
Crime Coverage 2,500 5,000,000
Boiler and M achinery 5,000 100% of primary $75,000,000; 100% of $25,000,000 excess of
$75,000,000
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 de veloped from overall loss costs and spr ead 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.

City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

102
Note 12 – Commitments and Contingencies

A. Lawsuits

The City is presently involved in certain matters of litiga tion 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 St atements. Additionally, City management believes that the City’s insurance programs are sufficient to cover any potential losses should an unfavorable outcome materialize.

B. Commitments

At June 30, 2022, the outstanding commitment is in the amount of $4,536,916. Details were as follows:

Governmental Funds:

General Fund 516,527$
American Rescue Plan Act Special Revenue Fund 65,000
Landscape & Lighting Assessment District (LLAD) No. 83-2 Special Revenue Fund 47,266 Other Governmental Funds 1,350,615
Proprietary Funds:

Wastewater Enterprise Fund 2,499,559
Internal Service Funds 57,949
Total 4,536,916$

Note 13 – Joint Powers Agreements

The City is a member of the joint powers agencies describ ed below. Each of these agen cies is governed by a board, which controls their operation, including selection of management and approval of oper ating 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 ar e 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 co llected from the ratepayers within WCCIWMA's jurisdiction. Audited financial statements can be obtained from the WCCIWMA, One Alvarado Square, San Pablo, California 94806.

City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

103
Note 13 – Joint Powers Agreements (Continued)

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 Pi nole 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.

Note 14 – Stewardship, Compliance, and Accountability

A. Deficit Fund Balances/Net Position

At June 30, 2022, the following funds had a deficit fund balance/net position:

Landscape & Lighting Assessment District (LLAD) NO. 83-2 (235,297)$ Nonmajor Special Revenue Funds:

Victoria by the bay LLAD No. 2002-01 (315,422) $
Stormwater (183,570) $
Fiduciary Funds:

Successor Agency Private Purpose Trust Fund (45,893,831) $

Landscape & Lighting Assessment District (LLAD) No. 83-2 Special Revenue Fund negative fund balance of $235,297 will be financed through future assessments.

Victoria by the bay LLAD No. 2002-01 Special Revenue Fund negative fund balance of $315,422 will be financed through future assessments.

The Stormwater Special Revenue Fund negative fund ba lance of $183,570 will be financed through future assessments.

Private Purpose Trust Fund negative net position of $45,8 93,831 will be financed through future Redevelopment Property Tax Trust Fund.

City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

104
Note 15 – Fund Balance Classification

The Governmental Fund’s fund balance classification at June 30, 2022 is follows:

Lan dscape &
American Rescue Lighting Assessment Hercules Nonmajor
General Plan Act Special District Debt Service Governmental Fu n d Revenue Fund (LL AD) No. 83-2 F und F unds T otal Nonspendable:

Prepaid items 10,806$ -$ -$ -$ -$ 10,806$ T otal Nonspendable 10,806 - - - - 10,806 Restricted for:

Pension section 115 trust 2,054,252 - - - - 2,054,252 Debt service - - - 2,152,512 - 2,152,512 Streets and roads - - - - 728,822 728,822 Development services - - - - 237,830 237,830 Development impact fees - - - - 1,709,071 1,709,071 Public safety - - - - 87,406 87,406 Integrated waste management - - - - 828,649 828,649 Transportation - - - - 275,881 275,881 Assessment district - - - - 955,515 955,515 Regional wat er qualit y - - - - 51,144 51,144 To t a l R e s t r i c t e d 2,054,252 - - 2,152,512 4,874,318 9,081,082 Committed to:

Capital projects - - - - 1,998,781 1,998,781 T otal Committed - - - - 1,998,781 1,998,781 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 953,800 - - - - 953,800 Reusable bags 13,930 - - - - 13,930 P ublic, educat ion and government (P EG) 70,000 - - - - 70,000 T otal Assigned 6,022,247 - - - - 6,022,247 Unassigned (deficit) 22,926,831 - (235,297) - (498,992) 22,192,542 T otal Unassigned 22,926,831 - (235,297) - (498,992) 22,192,542 T otal F und Balances 31,014,136$ -$ (235,297)$ 2,152,512$ 6,374,107$ 39,305,458$ Major F unds

Note 16 – Net Investment in Capital Assets

The net investment in capital assets for the governmental activities and business-type activities is calculated as follows:

Governmental Business-Type
Activities Activities
Total capital assets, net 78,255,196$ 39,085,979$ Unspent capital bond proceeds - 8,327,888 Capital related debt (17,997,487) (31,709,518)
Net investment in capital assets 60,257,709$ 15,704,349$

City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

105
Note 17 – Special Item

Department of Finance Negotiation

After the negotiation with the California Department of Finance, the City recognized the loan write off in the amount of $50,173,974 during the year ended June 30, 2022 and it was reported as a special item on the financial statements.

Note 18 – Restatement

Following restatement was made at the July 1, 2021:

Governmental
Activities
Net Position at July 1, 2021 113,882,349 $
GASB 87 implementation to reclass lease
related deferred inflows of resources from net position (8,806,323) Net Position at July 1, 2021, as restated 105,076,026 $

106

107

REQUIRED SUPPLEMENTARY INFORMATION
(UNAUDITED)

108

City of Hercules
Required Supplementary Information (Unaudited)
For the Year Ended June 30, 2022

109

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 budgete d 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 empl oyed as a management control device. Special Revenue Fund budgets are adopted on a basis consistent with accounting principl es generally accepted in th e United States (USGAAP) and are consistent with the basis used for financial reporti ng. Accordingly, actual revenues and expenditures can be compared with related budget amounts without any rec onciliation. The General Fund budget is adopted on the budgetary basis, which is not consistent with accounti ng 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 c ontrolling expenditures. 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 Regional Water Quality Special Revenue 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 proceed s 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 m odified by adjustments authorized during the year.

Budgeted expenditure amounts represent original appropriati ons adjusted for supplemental appropriations during the year, which were contingent upon new or additi onal revenue sources and re-a ppropriated amounts for prior year encumbrances. The City Manager must approve adjustments to departmental budgets; however, management may amend the budgeted amounts within de partmental 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.

110
General Fund
Variance with
Original Final Actuals Final Budget
REVENUES:

Taxes and assessments 11,622,675 $ 11,622,675 $ 13,781,378 $ 2,158,703 $ Licenses and permits 413,000 413,000 493,668 80,668 Fines and forfeitures 37,000 37,000 48,663 11,663 Use of money and property 313,000 313,000 (108,296) (421,296) Intergovernmental 2,568,000 2,568,000 10,391,327 7,823,327 Charges for services 2,594,944 1,602,944 2,319,388 716,444 Other revenues 202,381 194,381 116,093 (78,288) Total revenues 17,751,000 16,751,000 27,042,221 10,291,221 EXPENDITURES:

Current:

General government 4,273,311 4,360,611 4,081,705 278,906 Public safety 7,491,895 7,494,895 7,851,486 (356,591) Streets and public works 283,599 498,435 375,842 122,593 Parks and recreation 2,780,735 1,786,736 1,910,716 (123,980) Community development 881,321 881,321 1,061,135 (179,814) Capital outlay 35,000 93,602 112,631 (19,029) Debt services:

Principal 604,025 604,025 690,966 (86,941) Interest and fiscal agent fee 200,000 200,000 24,551 175,449 Total expenditures 16,549,886 15,919,625 16,109,032 (189,407)

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 1,201,114 831,375 10,933,189 10,101,814

OTHER FINANCING SOURCES (USES)
Transfers in 150,000 3,068,338 3,539,704 471,366 Transfers (out) (2,349,614) (3,155,614) (1,629,542) 1,526,072 Total financing sources (uses) (2,199,614) (87,276) 1,910,162 1,997,438 SPECIAL ITEMS:

Loss on write off the Successor Agency advances - - (27,787,637) (27,787,637) Total special items - - (27,787,637) (27,787,637) NET CHANGES IN FUND BALANCES (998,500)$ 744,099$ (14,944,286) (15,688,385)$ FUND BALANCES:

Beginning of year, 45,958,422
End of year 31,014,136$
City of Hercules
Required Supplementary Information (Unaudited)
Budgetary Comparison Schedule
For the Year Ended June 30, 2022
Budgeted Amounts
111
American Rescue Plan Act Special Revenue Fund
Variance with
Original Final Actuals Final Budget
REVENUES:

Intergovernmental - - 3,142,889 3,142,889 Total revenues - - 3,142,889 3,142,889 EXPENDITURES:

Current:

Capital outlay - 65,000 - 65,000 Total expenditures - 65,000 - 65,000

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES - (65,000) 3,142,889 3,207,889

OTHER FINANCING (USES)
Transfers (out) - (2,918,338) (3,142,889) (224,551) Total financing (uses) - (2,918,338) (3,142,889) (224,551) NET CHANGES IN FUND BALANCES -$ (2,983,338)$ - 2,983,338$ FUND BALANCES:

Beginning of year, -
End of year -$
City of Hercules
Required Supplementary Information (Unaudited)
Budgetary Comparison Schedule (Continued)
For the Year Ended June 30, 2022
Budgeted Amounts
112
Landscape & Lighting Assessment District (LLAD) No. 83-2 Speical Revenue Fund Original Final Variance with
Budget Budget Actuals Final Budget
REVENUES:

Taxes and assessments 1,993,935$ 1,993,935$ 1,997,920$ 3,985$ Use of money and property - - (22,036) (22,036) Total revenues 1,993,935 1,993,935 1,975,884 (18,051) EXPENDITURES:

Current:

Streets and public works 1,522,105 1,547,093 1,810,594 (263,501) Capital outlays 50,000 773,299 630,680 142,619 Total expenditures 1,572,105 2,320,392 2,441,274 (120,882)

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 421,830 (326,457) (465,390) (138,933)

OTHER FINANCING SOURCES (USES)
Transfers in 29,046 29,046 29,316 270 Transfers (out) (265,700) (265,700) (265,700) - Total financing sources (uses) (236,654) (236,654) (236,384) 270 NET CHANGE IN FUND BALANCE 185,176$ (563,111)$ (701,774) (138,663)$ FUND BALANCE:

Beginning of year 466,477
End of year (235,297)$
City of Hercules
Required Supplementary Information (Unaudited)
Budgetary Comparison Schedule (Continued)
For the Year Ended June 30, 2022
113
Measurement Date: June 30, 20211 June 30, 2020 June 30, 2019 June 30, 2018 June 30, 2011 City's Proportion of the Net Pension Liability 0.83% 0.19% 0.17% 0.16% 0.17% City's Proportionate Share of the Net Pension Liability 4,514,222$ 7,840,808$ 7,154,193$ 6,686,045$ 6,891,269$ City's Covered Payroll 2,848,532$ 3,376,629$ 3,411,264$ 3,369,924$ 3,154,200$ City's Proportionate Share of the Net Pension Liability as a Percentage of Covered Payroll 158% 232% 210% 198% 218% Plan's Fiduciary Net Position as a Percentage of the Plan's Total Pension Liabilit
y 85.66% 73.63% 75.07% 77.69% 75.39%
Measurement Date: June 30, 20211 June 30, 2020 June 30, 2019 June 30, 2018 June 30, 2011 City's Proportion of the Net Pension Liability 0.99% 0.09% 0.16% 0.14% 0.16% City's Proportionate Share of the Net Pension Liability 5,378,400$ 9,924,963$ 9,847,764$ 9,268,866$ 9,323,198$ City's Covered Payroll 2,805,237$ 2,702,843$ 2,668,574$ 2,436,633$ 2,591,015$ City's Proportionate Share of the Net Pension Liability as a Percentage of Covered Payroll 191.73% 367.20% 369.03% 380.40% 359.83% Plan's Fiduciary Net Position as a Percentage of the Plan's Total Pension Liabilit
y 86.21% 73.17% 70.82% 73.39% 71.74%
1 Historical information is presented only for measurement periods for which GASB No. 68 is applicable.

City of Hercules
Required Supplementary Information (Unaudited)
Schedule of the City's Proportionate Share of the Plan's Net Pension Liability and Related Ratios For the Year Ended June 30, 2022
Miscellaneous Plans
Safety Plans
Last Ten Fiscal Years
California Public Employees' Retirement System (CalPERS) 114
Measurement Date: June 30, 2016 June 30, 2015
City's Proportion of the Net Pension Liability 0.17% 0.18% City's Proportionate Share of the Net Pension Liability 6,031,627$ 4,815,777$ City's Covered Payroll 2,697,183$ 2,655,670$
City's Proportionate Share of the Net Pension Liability as a Percentage of Covered Payroll 224% 181%
Plan's Fiduciary Net Position as a Percentage of the Plan's Total Pension Liabilit
y 75.87% 78.32%
Measurement Date: June 30, 2016 June 30, 2015
City's Proportion of the Net Pension Liability 0.16% 0.18% City's Proportionate Share of the Net Pension Liability 8,509,821$ 7,337,854$ City's Covered Payroll 2,220,165$ 2,118,549$
City's Proportionate Share of the Net Pension Liability as a Percentage of Covered Payroll 383.30% 346.36%
Plan's Fiduciary Net Position as a Percentage of the Plan's Total Pension Liabilit
y 72.69% 71.64%
City of Hercules
Required Supplementary Information (Unaudited)
Schedule of the City's Proportionate Share of the Plan's Net Pension Liability and Related Ratios (Continued) Safety Plans
Miscellaneous Plans
For the Year Ended June 30, 2022
Last Ten Fiscal Years
California Public Employees' Retirement System (CalPERS) 115
Fiscal Year: 2021-221 2020-21 2019-20 2018-19 2017-18
Actuarially Determined Contribution2 961,252$ 961,252 $ 774,757 $ 770,639 $ 659,810 $ Contribution in Relation to the Actuarially Determined
Contribution2 (961,252) (961,252) (774,757) (770,639) (659,810) Contribution Deficiency (Excess) -$ -$ -$ -$ -$ District's Covered Payroll3
3,573,571$ 3,477,928$ 3,376,629$ 3,411,264$ 3,369,924$ Contributions as a Percentage of Covered Payroll 26.90% 27.64% 22.94% 22.59% 19.58% Fiscal Year: 2021-221 2020-21 2019-20 2018-19 2017-18
Actuarially Determined Contribution2 1,127,304$ 1,127,304$ 1,384,112$ 1,080,225$ 1,033,755$ Contribution in Relation to the Actuarially Determined
Contribution
2 (1,127,304) (1,127,304) (1,384,112) (1,080,225) (1,033,755) Contribution Deficiency (Excess) -$ -$ -$ -$ -$ City Covered Payroll3
2,860,486$ 2,783,928$ 2,702,843$ 2,668,574$ 2,436,633$ Contributions as a Percentage of Covered Payroll 39.41% 40.49% 51.21% 40.48% 42.43% 1 Historical information is presented only for measurement periods for which GASB No. 68 is applicable.

Notes to the Schedule:
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 Includes one year’s payroll growth using 2.75% payroll growth assumption for fiscal years ended June 30, 2018-21\2; 3.00% payroll growth assumption for fiscal years ended June 30, 2014-17.

Benefit Changes: The figures above generally include any liability impact that may have resulted from voluntary benefit changes that occurred on or before the Measurement Date. However, offers of Two Years Additional Service Credit (a.k.a. Golden Handshakes) that occurred after the V valuation Date are not included in the figures above, unless the liability impact is deemed to be material by the plan actuary.

City of Hercules
Required Supplementary Information (Unaudited)
Schedule of the City's Contributions to the Pension Plan For the Year Ended June 30, 2022
California Public Employees' Retirement System (CalPERS) Last Ten Fiscal Years
Miscellaneous Plans
Safety Plans
116
Fiscal Year: 2016-17 2015-16
Actuarially Determined Contribution2 558,315$ 529,212 $ Contribution in Relation to the Actuarially Determined
Contribution2 (558,315) (529,212)
Contribution Deficiency (Excess) -$ -$ District's Covered Payroll3
3,154,200$ 2,697,183$
Contributions as a Percentage of Covered Payroll 17.70% 19.62% Fiscal Year: 2016-17 2015-16
Actuarially Determined Contribution2 1,203,357$ 1,024,115$ Contribution in Relation to the Actuarially Determined
Contribution
2 (1,203,357) (1,024,115)
Contribution Deficiency (Excess) -$ -$ City Covered Payroll3
2,591,015$ 2,220,165$
Contributions as a Percentage of Covered Payroll 46.44% 46.13% City of Hercules
Required Supplementary Information (Unaudited)
Schedule of the City's Contributions to the Pension Plan (Continued) For the Year Ended June 30, 2022
Last Ten Fiscal Years
California Public Employees' Retirement System (CalPERS) Miscellaneous Plans
Safety Plans
117
Measurement period, year ending: 6/30/2022 1 6/30/2021 6/30/20202 6/30/2019 6/30/2018 Total OPEB liability
Service cost 135,089$ 167,563 $ 175,142 $ 127,197 $ 99,270 $ Interest 124,870 139,104 188,135 180,251 179,763 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 (144,124) (123,619) (115,990) (166,793) (105,034) Net change in total OPEB liability 115,835 (63,050) (1,249,744) 180,746 611,918 Total OPEB liability - beginning 2,429,170 2,492,220 3,741,964 3,561,218 2,949,300 Total OPEB liability - ending (a) 2,545,005$ 2,429,170 $ 2,492,220 $ 3,741,964 $ 3,561,218 $ OPEB fiduciary net position
Contributions - employer 144,124$ 22,016 $ 215,990 $ 361,275 $ 205,034 $ Net investment income (loss) (330,465) 359,682 123,227 155,134 123,771 Benefit payments, including refunds of member contributions (144,124) (123,619) (115,990) (166,793) (105,034) Administrative expense (16,734) (16,223) (13,381) - - Net change in plan fiduciary net position (347,199) 241,856 209,846 349,616 223,771 Plan fiduciary net position - beginning 2,906,448 2,664,592 2,454,746 2,105,130 1,881,359 Plan fiduciary net position - ending (b) 2,559,249 2,906,448 2,664,592 2,454,746 2,105,130 Plan net OPEB liability (asset) - ending (a) - (b) (14,244)$ (477,278)$ (172,372)$ 1,287,218$ 1,456,088$ Plan fiduciary net position as a percentage of
the total OPEB liability (asset) 100.56% 119.65% 106.92% 65.60% 59.11% Covered payroll 11,239,883$ 10,939,059 $ 10,646,286 $ 10,336,200 $ 10,035,146 $ Plan net OPEB liability (asset) as a percentage of covered payr -0.13% -4.36% -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, 2022
118
Measurement period, year ending: 6/30/2022 1 6/30/2021 6/30/2020 2 Total OPEB liability
Service cost 95,420$ 141,956$ 98,801$ Interest 35,501 42,108 49,689 Differences between expected and actual experience - (398,956) - Changes of assumptions (363,788) 11,351 366,382 Benefit payments, including refunds of member contributions (43,718) (43,536) (40,738) Net change in total OPEB liability (276,585) (247,077) 474,134 Total OPEB liability - beginning 1,617,718 1,864,795 1,390,661 Total OPEB liability - ending (a) 1,341,133$ 1,617,718 $ 1,864,795 $ Fiduciary net position
Contributions - employer 43,718$ 43,536$ 40,738$ Net investment income - - - Benefit payments, including refunds of member contributions (43,718) (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) 1,341,133$ 1,617,718 $ 1,864,795 $ Plan fiduciary net position as a percentage of the total OPEB liability 0.00% 0.00% 0.00% Covered payroll -$ - $ - $ Plan net OPEB liability as a percentage of covered payroll 0.00% 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 Years1
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, 2022
119
Fiscal Year: 2021-221 2020-21 2019-20 2018-19 2017-18
Actuarially Determined Contribution2 144,124$ 22,016 $ 215,990 $ 361,275 $ 205,034 $ Contribution in Relation to the Actuarially Determined
Contribution2 (144,124) (22,016) (215,990) (361,275) (205,034) Contribution Deficiency (Excess) - $ - $ - $ - $ - $ City's Covered Payroll 11,239,883 $ 10,939,059 $ 10,646,286 $ 10,336,200 $ 10,035,146 $ Contributions as a Percentage of Covered Payroll 1.28% 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, 2022
Last Ten Fiscal Years1
120
Fiscal Year: 2021-22 2020-21 2019-202
Actuarially Determined Contribution 43,718$ 43,536$ 40,738$ Contribution in Relation to the Actuarially
Determined Contribution (43,718) (43,536) (40,738) Contribution Deficiency (Excess) -$ -$ -$ City's Covered-Employee Payroll -$ - $ - $ Contributions as a Percentage of Covered Payroll 0.00% 0.00% 0.00% 2 SOMAR Plan is now valued separately from PEHMCA Plan effective June 30, 2020. 1 Historical information is presented only for measurement periods for which GASB No. 75 is applicable.

City of Hercules
Last Ten Fiscal Years1
SOMAR Plan
For the Year Ended June 30, 2022
Schedule of the City's Contributions to the SOMAR OPEB Plan Required Supplementary Information (Unaudited)
121
122

SUPPLEMENTARY INFORMATION
123
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.

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. 124
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)
125
126

NONMAJOR GOVERNMENTAL FUNDS
127
128
Victoria by
C.O.P.S. the bay
State Gas Measure "C" Program LLAD
Tax Street (AB 3229) No. 2002-1
ASSETS
Cash and investments 614,676 $ 54,113 $ 18,011$ -$ Accounts receivable 97,099 - - - Total assets 711,775$ 54,113$ 18,011$ -$

LIABILITIES
Accounts payable 13,415$ -$ -$ 57,172$ Accrued wages 11,894 11,757 - 4,973 Deposit payable - - - - Due to other funds - - - 253,277 Total liabilities 25,309 11,757 - 315,422

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

FUND BALANCES
Restricted 686,466 42,356 18,011 - Committed - - - - Unassigned (deficit) - - - (315,422) Total fund balances (deficit) 686,466 42,356 18,011 (315,422) Total liabilities, deferred inflows
of resources and fund balances 711,775$ 54,113$ 18,011$ -$ (Continued)
Special Revenue Funds
City of Hercules
Combining Balance Sheet
Nonmajor Governmental Funds
June 30, 2022
129
Hercules
Village Baywood Bayside
LLAD LLAD LLAD Arterial
No. 2002-2 No. 2004-1 No. 2005-1 Roadways
ASSETS
Cash and investments 189,894 $ 212,474 $ 150,593$ 575,728$ Accounts receivable - - - - Total assets 189,894$ 212,474$ 150,593$ 575,728$

LIABILITIES
Accounts payable 7,895$ 7,060$ 1,955$ 486$ Accrued wages 2,232 3,105 2,211 930 Deposit payable - - - - Due to other funds - 147,300 - - Total liabilities 10,127 157,465 4,166 1,416

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

FUND BALANCES
Restricted 179,767 55,009 146,427 574,312 Committed - - - - Unassigned (deficit) - - - - Total fund balances (deficit) 179,767 55,009 146,427 574,312 Total liabilities, deferred inflows
of resources and fund balances 189,894$ 212,474$ 150,593$ 575,728$ (Continued)
Special Revenue Funds
City of Hercules
Combining Balance Sheet (Continued)
Nonmajor Governmental Funds
June 30, 2022
130
Regional
Development AB939 Water
Stormwater Services JPA Quality
ASSETS
Cash and investments 1,765 $ 237,830 $ 856,741$ 51,144$ Accounts receivable - - 43,904 - Total assets 1,765$ 237,830$ 900,645$ 51,144$

LIABILITIES
Accounts payable 10,139$ -$ 71,319$ -$ Accrued wages 8,727 - 677 - Deposit payable - - - - Due to other funds 166,469 - - - Total liabilities 185,335 - 71,996 -

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

FUND BALANCES
Restricted - 237,830 828,649 51,144 Committed - - - - Unassigned (deficit) (183,570) - - - Total fund balances (deficit) (183,570) 237,830 828,649 51,144 Total liabilities, deferred inflows
of resources and fund balances 1,765$ 237,830$ 900,645$ 51,144$ (Continued)
Special Revenue Funds
City of Hercules
Combining Balance Sheet (Continued)
Nonmajor Governmental Funds
June 30, 2022
131
Capital Projects Funds
Development
Asset Bart City Capital Impact
Forfeiture Park and Ride Projects Fund Fees
ASSETS
Cash and investments 231,138$ 276,260$ 1,798,246$ 1,712,436$ Accounts receivable - - 407,838 - Total assets 231,138$ 276,260$ 2,206,084$ 1,712,436$

LIABILITIES
Accounts payable -$ 379$ 50,418$ 3,365$ Accrued wages - - - - Deposit payable 161,743 - - - Due to other funds - - - - Total liabilities 161,743 379 50,418 3,365

DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - - 156,885 - Total deferred inflows of resources - - 156,885 -

FUND BALANCES
Restricted 69,395 275,881 - 1,709,071 Committed - - 1,998,781 - Unassigned (deficit) - - - - Total fund balances (deficit) 69,395 275,881 1,998,781 1,709,071 Total liabilities, deferred inflows
of resources and fund balances 231,138$ 276,260$ 2,206,084$ 1,712,436$ (Continued)
Special Revenue Funds
City of Hercules
Combining Balance Sheet (Continued)
Nonmajor Governmental Funds
June 30, 2022
132
Total
ASSETS
Cash and investments 6,981,049$
Accounts receivable 548,841
Total assets 7,529,890$

LIABILITIES
Accounts payable 223,603$
Accrued wages 46,506
Deposit payable 161,743
Due to other funds 567,046
Total liabilities 998,898

DEFERRED INFLOWS OF RESOURCES
Unavailable revenue 156,885
Total deferred inflows of resources 156,885

FUND BALANCES
Restricted 4,874,318
Committed 1,998,781
Unassigned (deficit) (498,992)
Total fund balances (deficit) 6,374,107
Total liabilities, deferred inflows
of resources and fund balances 7,529,890$
(Concluded)
City of Hercules
Combining Balance Sheet (Continued)
Nonmajor Governmental Funds
June 30, 2022
133
Victoria by
C.O.P.S. the ba y
State Gas Measure "C" Program LLA D
Tax Street (AB 3229) No. 2002-1
REVENUES:

Taxes and assessments -$ - $ -$ 461,039$ Licenses and permits - - - - Fines and forfeitures - - - - Use of money and property (5,739) (562) - - Intergovernmental 1,184,727 450,134 161,284 - Charges for services - - - - Other revenues - - - - Total revenues 1,178,988 449,572 161,284 461,039 EXPENDITURES:

Current:

Public safety - - - - Streets and public works 394,172 282,812 - 698,351 Capital outlay 861,913 132,167 - - Debt services:

Principal - - - - Interest and fiscal agent fee - - - - Total expenditures 1,256,085 414,979 - 698,351

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (77,097) 34,593 161,284 (237,312)

OTHER FINANCING SOURCES (USES)
Transfers in - - - 9,230 Transfers (out) (46,569) - (150,000) (26,800) Total financing sources (uses) (46,569) - (150,000) (17,570)

NET CHANGES IN FUND BALANCES
BEFORE SPECIAL ITEMS (123,666) 34,593 11,284 (254,882) SPECIAL ITEM:

Gain (Loss) on write off the Successor Agency advances (Note 17) - - - - Total special item - - - - NET CHANGES IN FUND BALANCES (123,666) 34,593 11,284 (254,882) FUND BALANCES (DEFICIT):

Beginning of year 810,132 7,763 6,727 (60,540) End of year 686,466$ 42,356 $ 18,011$ (315,422)$ (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, 2022
134
Hercules
Village Baywoo d Bayside
LLAD LLAD LLAD Arterial
No. 2002-2 No. 2004-1 No. 2005-1 Roadways
REVENUES:

Taxes and assessments 158,265$ 150,144 $ 143,268$ -$ Licenses and permits - - - - Fines and forfeitures - - - - Use of money and property (1,681) (1,960) (1,437) (5,581) Intergovernmental - - - - Charges for services - - - - Other revenues - - - 107,719 Total revenues 156,584 148,184 141,831 102,138 EXPENDITURES:

Current:

Public safety - - - - Streets and public works 184,736 171,831 125,000 - Capital outlay - 1,072 - - Debt services:

Principal - - - - Interest and fiscal agent fee - - - - Total expenditures 184,736 172,903 125,000 -

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (28,152) (24,719) 16,831 102,138

OTHER FINANCING SOURCES (USES)
Transfers in 3,874 2,515 1,634 319,600 Transfers (out) (7,100) (2,400) (17,600) - Total financing sources (uses) (3,226) 115 (15,966) 319,600

NET CHANGES IN FUND BALANCES
BEFORE SPECIAL ITEMS (31,378) (24,604) 865 421,738 SPECIAL ITEM:

Gain (Loss) on write off the Successor Agency advances (Note 17) - - - - Total special item - - - - NET CHANGES IN FUND BALANCES (31,378) (24,604) 865 421,738 FUND BALANCES (DEFICIT):

Beginning of year 211,145 79,613 145,562 152,574 End of year 179,767$ 55,009 $ 146,427$ 574,312$ (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, 2022
135
Regional
Development AB939 Wate r
Stormwater Services JPA Quality
REVENUES:

Taxes and assessments 144,495$ - $ -$ -$ Licenses and permits - - 213,632 - Fines and forfeitures - - - - Use of money and property - (1,978) (8,168) (425) Intergovernmental - - - - Charges for services - - - - Other revenues - - - - Total revenues 144,495 (1,978) 205,464 (425) EXPENDITURES:

Current:

Public safety - - - - Streets and public works 350,812 - 9,912 - Capital outlay - - 109,637 - Debt services:

Principal - - - - Interest and fiscal agent fee - - - - Total expenditures 350,812 - 119,549 -

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (206,317) (1,978) 85,915 (425)

OTHER FINANCING SOURCES (USES)
Transfers in 125,000 - - - Transfers (out) - - (125,000) - Total financing sources (uses) 125,000 - (125,000) -

NET CHANGES IN FUND BALANCES
BEFORE SPECIAL ITEMS (81,317) (1,978) (39,085) (425) SPECIAL ITEM:

Gain (Loss) on write off the Successor Agency advances (Note 17) - (163,200) - - Total special item - (163,200) - - NET CHANGES IN FUND BALANCES (81,317) (165,178) (39,085) (425) FUND BALANCES (DEFICIT):

Beginning of year (102,253) 403,008 867,734 51,569 End of year (183,570)$ 237,830 $ 828,649$ 51,144$ (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, 2022
136
Development
Asset Bart City Capital Impac t
Forfeiture Park and Ride Projects Fund Fees
REVENUES:

Taxes and assessments -$ - $ 53,215$ -$ Licenses and permits - - - - Fines and forfeitures - - - - Use of money and property (2,100) - (4,299) (34,973) Intergovernmental - - 288,348 - Charges for services - - - - Other revenues - 53,985 2,000 - Total revenues (2,100) 53,985 339,264 (34,973) EXPENDITURES:

Current:

Public safety 27,965 - - - Streets and public works - 18,841 - 91,939 Capital outlay - - 1,013,962 - Debt services:

Principal - - 93,812 - Interest and fiscal agent fee - - 123,580 - Total expenditures 27,965 18,841 1,231,354 91,939

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (30,065) 35,144 (892,090) (126,912)

OTHER FINANCING SOURCES (USES)
Transfers in - - 1,487,885 - Transfers (out) - - (310,257) - Total financing sources (uses) - - 1,177,628 -

NET CHANGES IN FUND BALANCES
BEFORE SPECIAL ITEMS (30,065) 35,144 285,538 (126,912) SPECIAL ITEM:

Gain (Loss) on write off the Successor Agency advances (Note 17) - - 322,055 (5,254,315) Total special item - - 322,055 (5,254,315) NET CHANGES IN FUND BALANCES (30,065) 35,144 607,593 (5,381,227) FUND BALANCES (DEFICIT):

Beginning of year 99,460 240,737 1,391,188 7,090,298 End of year 69,395$ 275,881$ 1,998,781$ 1,709,071$ (Continued)
City of Hercules
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances (Continued) Nonmajor Governmental Funds
For the Year Ended June 30, 2022
Special Revenue Funds Capital Projects Funds
137
Total
REVENUES:

Taxes and assessments 1,110,426$
Licenses and permits 213,632
Fines and forfeitures -
Use of money and property (68,903)
Intergovernmental 2,084,493
Charges for services -
Other revenues 163,704
Total revenues 3,503,352
EXPENDITURES:

Current:

Public safety 27,965
Streets and public works 2,328,406
Capital outlay 2,118,751
Debt services: -
Principal 93,812
Interest and fiscal agent fee 123,580
Total expenditures 4,692,514

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (1,189,162)

OTHER FINANCING SOURCES (USES)
Transfers in 1,949,738
Transfers (out) (685,726)
Total financing sources (uses) 1,264,012

NET CHANGES IN FUND BALANCES
BEFORE SPECIAL ITEMS 74,850
SPECIAL ITEM:

Gain (Loss) on write off the Successor Agency advances (Note 17) (5,095,460) Total special item (5,095,460)
NET CHANGES IN FUND BALANCES (5,020,610)
FUND BALANCES (DEFICIT):

Beginning of year 11,394,717
End of year 6,374,107$
(Concluded)
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances (Continued) City of Hercules
For the Year Ended June 30, 2022
Nonmajor Governmental Funds
138
Original Final Variance with
Budget Budget Actuals Final Budget
REVENUES:

Use of money and property 1,052$ 1,052$ (5,739)$ (6,791)$ Intergovernmental 1,113,948 1,113,948 1,184,727 70,779 Total revenues 1,115,000 1,115,000 1,178,988 63,988 EXPENDITURES:

Current:

Streets and public works 439,252 439,252 394,172 45,080 Capital outlays 1,125,447 1,311,592 861,913 449,679 Total expenditures 1,564,699 1,750,844 1,256,085 494,759

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (449,699) (635,844) (77,097) 558,747

OTHER FINANCING (USES)
Transfers (out) (46,299) (46,299) (46,569) (270) Total financing (uses) (46,299) (46,299) (46,569) (270) NET CHANGE IN FUND BALANCE (495,998)$ (682,143)$ (123,666) 558,477$ FUND BALANCE:

Beginning of year 810,132
End of year 686,466$
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, 2022
139
Original Final Variance with
Budget Budget Actuals Final Budget
REVENUES:

Use of money and property 1,000$ 1,000$ (562)$ (1,562)$ Intergovernmental 405,000 405,000 450,134 45,134 Total revenues 406,000 406,000 449,572 43,572 EXPENDITURES:

Current:

Streets and public works 300,000 300,000 282,812 17,188 Capital outlays 219,000 221,858 132,167 89,691 Total expenditures 519,000 521,858 414,979 106,879 NET CHANGE IN FUND BALANCE (113,000)$ (115,858)$ 34,593 150,451$ FUND BALANCE:

Beginning of year 7,763
End of year 42,356$
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, 2022
140
Original Final Variance with
Budget Budget Actuals Final Budget
REVENUES:

Intergovernmental 150,000$ 150,000$ 161,284$ 11,284$ Total revenues 150,000 150,000 161,284 11,284

OTHER FINANCING (USES)
Transfers in - -
Transfers (out) (150,000) (150,000) (150,000) - Total financing (uses) (150,000) (150,000) (150,000) - NET CHANGE IN FUND BALANCE -$ -$ 11,284 11,284$ FUND BALANCE:

Beginning of year 6,727
End of year 18,011$
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, 2022
141
Original Final Variance with
Budget Budget Actuals Final Budget
REVENUES:

Taxes and assessments 461,039$ 461,039$ 461,039$ -$ Total revenues 461,039 461,039 461,039 - EXPENDITURES:

Current:

Streets and public works 511,493 512,567 698,351 (185,784) Total expenditures 511,493 512,567 698,351 (185,784)

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (50,454) (51,528) (237,312) (185,784)

OTHER FINANCING SOURCES (USES)
Transfer in 9,230 9,230 9,230 - Transfers (out) (26,800) (26,800) (26,800) - Total financing (uses) (17,570) (17,570) (17,570) - NET CHANGE IN FUND BALANCE (68,024)$ (69,098)$ (254,882) (185,784)$ FUND BALANCE:

Beginning of year (60,540)
End of year (315,422)$
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, 2022
142
Original Final Variance with
Budget Budget Actuals Final Budget
REVENUES:

Taxes and assessments 158,265$ 158,265$ 158,265$ -$ Use of money and property - - (1,681) (1,681) Total revenues 158,265 158,265 156,584 (1,681) EXPENDITURES:

Current:

Streets and public works 193,694 214,298 184,736 29,562 Total expenditures 193,694 214,298 184,736 29,562

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (35,429) (56,033) (28,152) 27,881

OTHER FINANCING SOURCES (USES)
Transfers in 3,874 3,874 3,874 - Transfers (out) (7,100) (7,100) (7,100) - Total financing sources (uses) (3,226) (3,226) (3,226) - NET CHANGE IN FUND BALANCE (38,655)$ (59,259)$ (31,378) 27,881$ FUND BALANCE:

Beginning of year 211,145
End of year 179,767$
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, 2022
143
Original Final Variance with
Budget Budget Actuals Final Budget
REVENUES:

Taxes and assessments 150,144$ 150,144$ 150,144$ -$ Use of money and property - - (1,960) (1,960) Total revenues 150,144 150,144 148,184 (1,960) EXPENDITURES:

Current:

Streets and public works 124,229 125,303 171,831 (46,528) Capital outlays 163,500 163,500 1,072 162,428 Total expenditures 287,729 288,803 172,903 115,900

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (137,585) (138,659) (24,719) 113,940

OTHER FINANCING SOURCES (USES)
Transfers in 2,515 2,515 2,515 - Transfers (out) (2,400) (2,400) (2,400) - Total financing sources (uses) 115 115 115 - NET CHANGE IN FUND BALANCE (137,470)$ (138,544)$ (24,604) 113,940$ FUND BALANCE:

Beginning of year 79,613
End of year 55,009$
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, 2022
144
Original Final Variance with
Budget Budget Actuals Final Budget
REVENUES:

Taxes and assessments 143,268$ 143,268$ 143,268$ -$ Use of money and property - - (1,437) (1,437) Total revenues 143,268 143,268 141,831 (1,437) EXPENDITURES:

Current:

Streets and public works 127,925 129,477 125,000 4,477 Total expenditures 127,925 129,477 125,000 4,477

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 15,343 13,791 16,831 3,040

OTHER FINANCING SOURCES (USES)
Transfers in 1,634 1,634 1,634 - Transfers (out) (17,600) (17,600) (17,600) - Total financing sources (uses) (15,966) (15,966) (15,966) - NET CHANGE IN FUND BALANCE (623)$ (2,175)$ 865 3,040$ FUND BALANCE:

Beginning of year 145,562
End of year 146,427$
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, 2022
145
Original Final Variance with
Budget Budget Actuals Final Budget
REVENUES:

Use of money and property -$ -$ (5,581)$ (5,581)$ Other revenue - - 107,719 107,719 Total revenues - - 102,138 102,138 EXPENDITURES:

Current:

Streets and public works 305,844 327,395 - 327,395 Total expenditures 305,844 327,395 - 327,395

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (305,844) (327,395) 102,138 429,533

OTHER FINANCING SOURCES
Transfers in 319,600 319,600 319,600 - Total financing sources 319,600 319,600 319,600 - NET CHANGE IN FUND BALANCE 13,756$ (7,795)$ 421,738 429,533$ FUND BALANCE:

Beginning of year 152,574
End of year 574,312$
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, 2022
146
Original Final Variance with
Budget Budget Actuals Final Budget
REVENUES:

Taxes and assessments 249,000$ 249,000$ 144,495$ (104,505)$ Use of money and property - - - - Total revenues 249,000 249,000 144,495 (104,505) EXPENDITURES:

Current:

Streets and public works 421,000 450,615 350,812 99,803 Total expenditures 421,000 450,615 350,812 99,803

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (172,000) (201,615) (206,317) (4,702)

OTHER FINANCING SOURCES
Transfers in 125,000 125,000 125,000 - Total financing sources 125,000 125,000 125,000 - NET CHANGE IN FUND BALANCE (47,000)$ (76,615)$ (81,317) (4,702)$ FUND BALANCE (DEFICIT):

Beginning of year (102,253)
End of year (183,570)$
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, 2022
147
Original Final Variance with
Budget Budget Actuals Final Budget
REVENUES:

Use of money and property 1,000$ 1,000$ (1,978)$ (2,978)$ Charges for services - - - - Total revenues 1,000 1,000 (1,978) (2,978) EXPENDITURES:

Current:

Streets and public works 1,000 1,000 - 1,000 Total expenditures 1,000 1,000 - 1,000

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES - - (1,978) (1,978)

NET CHANGES IN FUND BALANCE
BEFORE SPECIAL ITEMS - - (1,978) (1,978) SPECIAL ITEMS:

Loss on Successor Agency Advances to other funds write off - - (163,200) (163,200) Total special items - - (163,200) (163,200) NET CHANGES IN FUND BALANCE -$ -$ (165,178) (165,178)$ FUND BALANCE:

Beginning of year 403,008
End of year 237,830$
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, 2022
148
Original Final Variance with
Budget Budget Actuals Final Budget
REVENUES:

Licenses and permits 175,000$ 175,000$ 213,632$ 38,632$ Use of money and property 3,000 3,000 (8,168) (11,168) Total revenues 178,000 178,000 205,464 27,464 EXPENDITURES:

Current:

Streets and public works 127,138 127,138 9,912 117,226 Capital outlays 108,862 108,862 109,637 (775) Total expenditures 236,000 236,000 119,549 116,451

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (58,000) (58,000) 85,915 143,915

OTHER FINANCING (USES)
Transfers (out) - - (125,000) (125,000) Total financing (uses) - - (125,000) (125,000) NET CHANGE IN FUND BALANCE (58,000)$ (58,000)$ (39,085) 18,915$ FUND BALANCE:

Beginning of year 867,734
End of year 828,649$
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, 2022
149
Original Final Variance with
Budget Budget Actuals Final Budget
REVENUES:

Use of money and property -$ -$ (2,100)$ (2,100)$ Total revenues - - (2,100) (2,100) EXPENDITURES:

Current:

Public safety 45,000 45,000 27,965 17,035 Total expenditures 45,000 45,000 27,965 17,035 NET CHANGE IN FUND BALANCE (45,000)$ (45,000)$ (30,065) 14,935$ FUND BALANCE:

Beginning of year 99,460
End of year 69,395$
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, 2022
150
Original Final Variance with
Budget Budget Actuals Final Budget
REVENUES:

Other revenue 28,000$ 28,000$ 53,985$ 25,985$ Total revenues 28,000 28,000 53,985 25,985 EXPENDITURES:

Current:

Streets and public works 16,000 16,345 18,841 (2,496) Total expenditures 16,000 16,345 18,841 (2,496) NET CHANGE IN FUND BALANCE 12,000$ 11,655$ 35,144 23,489$ FUND BALANCE:

Beginning of year 240,737
End of year 275,881$
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, 2022
151
Original Final Variance with
Budget Budget Actuals Final Budget
REVENUES:

Taxes and assessments 44,000$ 44,000$ 53,215$ 9,215$ Use of money and property - - (4,299) (4,299) Intergovernmental 304,000 304,000 288,348 (15,652) Other revenues - - 2,000 2,000 Total revenues 348,000 348,000 339,264 (8,736) EXPENDITURES:

Capital outlays 542,000 2,864,733 1,013,962 1,850,771 Debt services:

Principal 94,000 94,000 93,812 188 Interest and fiscal agent fee 124,000 124,000 123,580 420 Total expenditures 760,000 3,082,733 1,231,354 1,851,379

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (412,000) (2,734,733) (892,090) 1,842,643

OTHER FINANCING SOURCES (USES)
Transfers in 412,000 412,000 1,487,885 1,075,885 Transfers (out) - - (310,257) (310,257) Total financing sources (uses) 412,000 412,000 1,177,628 765,628

NET CHANGES IN FUND BALANCES
BEFORE SPECIAL ITEMS - (2,322,733) 285,538 2,608,271 SPECIAL ITEMS:

Gain on Successor Agency Advances to other funds write off - - 322,055 322,055 Total special items - - 322,055 322,055 NET CHANGE IN FUND BALANCE -$ (2,322,733)$ 607,593 2,930,326$ FUND BALANCE:

Beginning of year 1,391,188
End of year 1,998,781$
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, 2022
152
Original Final Variance with
Budget Budget Actuals Final Budget
REVENUES:

Use of money and property 9,000$ 9,000$ (34,973)$ (43,973)$ Charges for services 522,000 522,000 - (522,000) Total revenues 531,000 531,000 (34,973) (565,973) EXPENDITURES:

Current:

Streets and public works 803,000 803,000 91,939 711,061 Capital outlays 50,000 50,000 - 50,000 Total expenditures 853,000 853,000 91,939 761,061

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (322,000) (322,000) (126,912) 195,088

NET CHANGES IN FUND BALANCES
BEFORE SPECIAL ITEMS (322,000) (322,000) (126,912) 195,088 SPECIAL ITEMS:

Loss on Successor Agency Advances to other funds write off - - (5,254,315) (5,254,315) Total special items - - (5,254,315) (5,254,315) NET CHANGE IN FUND BALANCE (322,000)$ (322,000)$ (5,381,227) (5,059,227)$ FUND BALANCE:

Beginning of year 7,090,298
End of year 1,709,071$
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, 2022
153
154

INTERNAL SERVICE FUNDS
155
156
Vehicle Technology Facilities
Replacement Services Maintenance Total
ASSETS
Current assets:

Cash and investments 645,987 $ 850,056 $ 748,195 $ 2,244,238 $ Total current assets 645,987 850,056 748,195 2,244,238 Noncurrent assets:

Net OPEB asset - PEHMCA - 509 254 763 Capital assets:

Depreciable, net 262,098 270,937 - 533,035 Total noncurrent assets 262,098 271,446 254 533,798 Total assets 908,085 1,121,502 748,449 2,778,036

DEFERRED OUTFLOWS OF RESOURCES
Pensions-related deferred outflows of resources - 79,301 37,987 117,288 OPEB-related deferred inflows of resources (PEHMCA) - 16,362 8,181 24,543 OPEB-related deferred outflows of resources (SOMAR) - 9,851 4,925 14,776 Total deferred outflows of resources - 105,514 51,093 156,607

LIABILITIES
Current liabilities:

Accounts payable - 35,939 7,833 43,772 Salaries and benefits payable - 17,994 7,832 25,826 Compensated absences, due in one year - 30,802 6,854 37,656 Total current liabilities - 84,735 22,519 107,254 Noncurrent liabilities:

Compensated absences - 10,267 2,285 12,552 Net pension liability - 173,133 75,605 248,738 Net OPEB liability - SOMAR - 47,899 23,949 71,848 Total noncurrent liabilities - 231,299 101,839 333,138 Total liabilities - 316,034 124,358 440,392

DEFERRED INFLOWS OF RESOURCES
Pensions-related deferred outflows of resources - 234,172 122,260 356,432 OPEB-related deferred outflows of resources (PEHMCA) - 48,162 24,081 72,243 OPEB-related deferred outflows of resources (SOMAR) - 23,538 11,768 35,306 Total deferred inflows of resources - 305,872 158,109 463,981

NET POSITION
Investment in capital assets 262,098 270,937 - 533,035 Unrestricted 645,987 334,173 517,075 1,497,235 Total net position 908,085$ 605,110$ 517,075$ 2,030,270$ City of Hercules
Combining Statement of Net Position
Internal Service Funds
June 30, 2022
157
Vehicle Technology Facilities
Replacement Services Maintenance Total
OPERATING REVENUES:

Charges for services - $ 736,313$ 817,040 $ 1,553,353 $ Other operating revenues 3,700 5,905 - 9,605 Total operating revenues 3,700 742,218 817,040 1,562,958 OPERATING EXPENSES:

Salaries and benefits - 423,324 175,528 598,852 Services and supplies 381 777,480 513,059 1,290,920 Depreciation 146,933 101,354 - 248,287 Total operating expenses 147,314 1,302,158 688,587 2,138,059 OPERATING INCOME (LOSS) (143,614) (559,940) 128,453 (575,101) CHANGES IN NET POSITION (143,614) (559,940) 128,453 (575,101) NET POSITION:

Beginning of year 1,051,699 1,165,050 388,622 2,605,371 End of year 908,085$ 605,110$ 517,075$ 2,030,270$ City of Hercules
Combining Statement of Revenues, Expenses, and Changes in Net Position Internal Service Funds
For the Year Ended June 30, 2022
158
Vehicle Technology Facilities
Replacement Services Maintenance Total
CASH FLOWS FROM OPERATING ACTIVITIES:

Cash receipts from internal services provided 3,700 $ 742,094 $ 817,040 $ 1,562,834 $ Cash paid to suppliers for goods and services (381) (890,880) (524,957) (1,416,218) Cash paid to employees for services - (382,802) (159,547) (542,349) Net cash provided by (used in) operating activities 3,319 (531,588) 132,536 (395,733)

CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES:

Payments related to the acquisition of capital assets - (198,931) - (198,931) Net cash (used in) capital and related
financing activities - (198,931) - (198,931) NET CHANGES IN CASH AND CASH EQUIVALENTS 3,319 (730,519) 132,536 (594,664) CASH AND CASH EQUIVALENTS:

Beginning of year 642,668 1,580,575 615,659 2,838,902 End of year 645,987$ 850,056$ 748,195$ 2,244,238$

RECONCILIATION OF OPERATING INCOME (LOSS)

TO NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES:

Operating income (loss) (143,614)$ (559,940)$ 128,453$ (575,101)$ Adjustments to reconcile operating income (loss)
to net cash provided by (used in) operating activities:

Depreciation 146,933 101,354 - 248,287 (Increase) Decrease in Assets and Deferred Outflows
Pensions-related deferred outflows - (15,010) (7,870) (22,880) OPEB-related deferred outflows - (4,750) (2,374) (7,124) Increase (Decrease) in Liabilities and Deferred Inflows Accounts Payable - (113,524) (11,898) (125,422) Salaries and benefits payable - 330 (3) 327 Net pension liability - (197,397) (103,492) (300,889) Net OPEB liability - (9,878) (4,939) (14,817) Pensions-related deferred inflows - 231,055 121,138 352,193
OPEB-related deferred inflows - 26,278 13,139 39,417 Compensated absences - 9,894 382 10,276 Total adjustments 146,933 28,352 4,083 179,368 Net cash provided by (used in) operating activities 3,319$ (531,588)$ 132,536$ (395,733)$ City of Hercules
Combining Statement of Cash Flows
Internal Service Funds
For the Year Ended June 30, 2022
159
160

FIDUCIARY-CUSTODIAL FUNDS
161
162
Taylor
Reassessment Woodrow
District Maintenance
05-01 LMOD Total
ASSETS
Cash and investments 330,317 $ 69,457 $ 399,774 $ Cash and investments with fiscal agents 85,512 - 85,512 Total assets 415,829 69,457 485,286

NET POSITION
Restricted for individuals, organization, and other government 415,829 69,457 485,286 Total net position 415,829$ 69,457 $ 485,286 $ (Concluded)
City of Hercules
Combining Statement of Fiduciary Net Position
Fiduciary Funds - Custodial Funds
June 30, 2022
163
Taylor
Reassessment Woodrow
District Maintenance
05-01 LMOD Total
ADDITIONS:

Taxes and assessments 232,493 $ - $ 232,493$ Investment income/(loss) (2,748) (578) (3,326) Total additions 229,745 (578) 229,167 DEDUCTIONS:

Administration 8,010 - 8,010 Interest and fiscal agent fee 156,676 - 156,676 Principal payment to refunding escrow 31,492 - 31,492 Total deductions 196,178 - 196,178 CHANGES IN FIDUCIARY NET POSITION 33,567 (578) 32,989 NET POSITION:

Beginning of year, 382,262 70,035 452,297 End of year 415,829$ 69,457 $ 485,286 $ (Concluded)
City of Hercules
Combining Statement of Changes in Fiduciary Net Position Fiduciary Funds - Custodial Funds
For the Year Ended June 30, 2022
164

STATISTICAL SECTION
165
166
Debt Capacity (pages 186-192)
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 193)
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 194-201)
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 168-177)
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 178-185)
These schedules contain information to help the reader assess the City’s most significant local revenue sources, transient occupancy tax (“TOT”) and property taxes.
167
2013 2014 2015 2016 2017
Governmental activities
Net investment in capital assets 65,157,839$ 62,588,422$ 65,597,425$ 67,814,198$ 73,286,966$ Restricted 22,334,668 13,670,630 21,070,727 7,026,074 18,239,035 Unrestricted 20,635,123 36,350,966 16,564,422 34,482,114 27,146,535 Total governmental activities net position 108,127,630$ 112,610,018$ 103,232,574$ 109,322,386$ 118,672,536$ Business-type activities
Net investment in capital assets 10,746,142$ 9,897,549$ 9,942,508$ 11,637,225$ 9,503,346$ Restricted - - - - - Unrestricted 24,351,569 20,211,271 22,931,509 22,643,219 27,529,908 Total business-type activities net position 35,097,711$ 30,108,820$ 32,874,017$ 34,280,444$ 37,033,254$ Primary government
Net investment in capital assets 75,903,981$ 72,485,971$ 75,539,933$ 79,451,423$ 82,790,312$ Restricted 22,334,668 13,670,630 21,070,727 7,026,074 18,239,035 Unrestricted 44,986,692 56,562,237 39,495,931 57,125,333 54,676,443 Total primary government net position 143,225,341$ 142,718,838$ 136,106,591$ 143,602,830$ 155,705,790$ 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)
168
2018 2019 2020 2021 2022
Governmental activities
Net investment in capital assets 76,304,118$ 76,082,830$ 73,639,890$ 69,628,982$ 60,257,709$ Restricted 21,086,055 21,495,653 20,047,707 20,047,707 9,237,967 Unrestricted 24,579,483 26,259,010 23,471,208 24,205,660 8,478,665 Total governmental activities net position 121,969,656$ 123,837,493$ 117,158,805$ 113,882,349$ 77,974,341$ Business-type activities
Net investment in capital assets 10,572,862$ 9,384,765$ 11,587,259$ 7,230,469$ 15,704,349$ Restricted - 7,582,403 7,674,002 7,679,725 - Unrestricted 29,000,343 23,910,447 23,244,232 29,474,812 18,566,052 Total business-type activities net position 39,573,205$ 40,877,615$ 42,505,493$ 44,385,006$ 34,270,401$ Primary government
Net investment in capital assets 86,876,980$ 85,467,595$ 85,227,149$ 76,859,451$ 75,962,058$ Restricted 21,086,055 29,078,056 27,721,709 27,727,432 9,237,967 Unrestricted 53,579,826 50,169,457 46,715,440 53,680,472 27,044,717 Total primary government net position 161,542,861$ 164,715,108$ 159,664,298$ 158,267,355$ 112,244,742$ 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)
169
2013 2014 2015 2016 2017
Expenses
Governmental Activities:

General Government 3,900,757$ 4,350,428$ 3,133,995$ 3,706,717$ 4,025,706$ Public Safety 4,560,766 4,905,837 5,094,319 5,299,440 5,365,068 Public Works 5,244,823 5,761,359 4,880,174 4,667,439 5,035,767 Parks and recreation 2,087,597 2,147,560 2,074,783 2,216,525 3,050,786 Community Development 1,275,685 3,295,068 742,529 400,754 640,428 Interest on Long-Term Debt 1,284,713 1,073,240 1,277,353 1,301,053 1,220,791 Total Governmental Activities 18,354,341 21,533,492 17,203,153 17,591,928 19,338,546 Business-Type Activities:

Sewer 3,336,974 3,494,287 2,834,835 3,854,974 3,092,380 Hercules Municipal Utility 3,369,406 2,491,837
Total Business-Type Activities Expenses 6,706,380 5,986,124 2,834,835 3,854,974 3,092,380 Total Primary Government Expenses 25,060,721$ 27,519,616$ 20,037,988$ 21,446,902$ 22,430,926$ Program Revenues
Governmental Activities:

General Government 236,231$ 282,512$ 361,223$ 128,430$ 113,875$ Public Safety 473,929 576,345 523,708 543,761 1,171,960 Public Works 3,273,051 4,570,184 6,150,061 12,784,856 12,014,579 Parks and recreation 1,544,429 1,623,655 1,604,294 1,538,554 1,715,375 Community Development 170,740 200,601 890,867 364,191 823,972 Total Government Activities Program Revenues 5,698,380 7,253,297 9,530,153 15,359,792 15,839,761 Business-Type Activities:

Sewer 5,282,963 5,619,601 6,028,122 5,595,044 5,797,766 Hercules Municipal Utility 2,756,288 2,070,923
Total Business-Type Activities Program Revenue 8,039,251 7,690,524 6,028,122 5,595,044 5,797,766 Total Primary Government Program Revenues 13,737,631$ 14,943,821$ 15,558,275$ 20,954,836$ 21,637,527$ Net (Expense)/Revenue
Governmental Activities (12,655,961) (14,280,195) (7,673,000) (2,232,136) (3,498,785) Business-Type Activities 1,332,871 1,704,400 3,193,287 1,740,070 2,705,386 Total Primary Government Net Expense (11,323,090)$ (12,575,795)$ (4,479,713)$ (492,066)$ (793,399)$ 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)
170
2018 2019 2020 2021 2022
Expenses
Governmental Activities:

General Government 4,105,705$ 5,094,236$ 4,634,707$ 4,435,331$ 4,768,150$ Public Safety 7,034,658 7,055,390 8,844,059 9,273,713 6,581,205 Public Works 6,894,640 6,727,710 8,447,150 7,715,011 8,560,194 Parks and recreation 2,657,763 2,564,008 2,786,635 2,104,559 2,312,529 Community Development 491,562 630,341 595,927 918,476 1,253,855 Interest on Long-Term Debt 1,141,982 1,256,456 1,159,848 959,355 1,007,813 Total Governmental Activities 22,326,310 23,328,141 26,468,326 25,406,445 24,483,746 Business-Type Activities:

Sewer 3,750,261 5,343,759 4,593,120 3,894,420 5,221,938 Hercules Municipal Utility
Total Business-Type Activities Expenses 3,750,261 5,343,759 4,593,120 3,894,420 5,221,938 Total Primary Government Expenses 26,076,571$ 28,671,900$ 31,061,446$ 29,300,865$ 29,705,684$ Program Revenues
Governmental Activities:

General Government 3,866,023$ 1,816,337$ 719,485$ 1,343,812$ 1,030,250$ Public Safety 524,703 882,823 743,462 540,238 3,539,598 Public Works 5,218,076 4,433,560 5,546,868 4,196,125 5,827,479 Parks and recreation 1,696,769 1,731,066 1,030,758 396,289 1,034,873 Community Development 1,534,666 1,658,265 517,920 552,090 8,329,364 Total Government Activities Program Revenues 12,840,237 10,522,051 8,558,493 7,028,554 19,761,564 Business-Type Activities:

Sewer 6,145,215 6,003,202 5,719,257 5,769,396 5,852,278 Hercules Municipal Utility
Total Business-Type Activities Program Revenue 6,145,215 6,003,202 5,719,257 5,769,396 5,852,278 Total Primary Government Program Revenues 18,985,452$ 16,525,253$ 14,277,750$ 12,797,950$ 25,613,842$ Net (Expense)/Revenue
Governmental Activities (9,486,073) (12,806,090) (17,909,833) (18,377,891) (4,722,182) Business-Type Activities 2,394,954 659,443 1,126,137 1,874,976 630,340 Total Primary Government Net Expense (7,091,119)$ (12,146,647)$ (16,783,696)$ (16,502,915)$ (4,091,842)$ 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)
171
2013 2014 2015 2016 2017
General Revenues and Other Changes in Net Position
Governmental Activities:

Taxes:

Secured and unsecured property taxes 1,233,335$ 992,934$ 1,173,026$ 1,233,207$ 1,286,788$ Sales Taxes and use taxes 2,153,244 2,593,675 2,693,075 3,211,109 3,324,807 Franchise Tax 669,723 799,180 1,011,888 960,124 878,574 Other Taxes 2,284,442 3,265,624 3,511,023 3,628,145 3,712,519 Unrestricted Motor Vehicle Taxes In-Lieu 1,312,179 1,323,651 1,554,491 1,645,846 1,799,014 Use of Money and properties 993,098 1,002,389 1,055,791 1,133,587 1,114,795 Miscellaneous 758,854 1,397,677 476,033 1,029,258 448,688 Special items 3,686,647 - - - - Extraordinary item - RDA Dissolution - - - - - Transfers - 7,387,453 (92,736) (10,452) - Total Government Activities 13,091,522 18,762,583 11,382,591 12,830,824 12,565,185 Business-Type Activities:

Use of Money and properties 44,326 45,822 23,484 24,058 47,424 Miscellaneous 101,207 86,637 - - - Special items 2,874,410 561,703 - - - Transfers - (7,387,453) 92,736 10,452 - Total Business-Type Activities 3,019,943 (6,693,291) 116,220 34,510 47,424 Total Primary Government 16,111,465$ 12,069,292$ 11,498,811$ 12,865,334$ 12,612,609$ Change in Net Position
Governmental Activities 435,561$ 4,482,388$ 3,709,591$ 10,598,688$ 12,565,185$ Business-Type Activities 4,352,814 (4,988,891) 3,309,507 1,774,580 47,424 Total Primary Government 4,788,375$ (506,503)$ 7,019,098$ 12,373,268$ 12,612,609$ 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)
172
2018 2019 2020 2021 2022
General Revenues and Other Changes in Net Position
Governmental Activities:

Taxes:

Secured and unsecured property taxes 1,376,354$ 1,378,493$ 1,415,995$ 1,451,716$ 1,514,791$ Sales Taxes and use taxes 3,206,095 3,988,702 4,212,285 4,775,496 6,263,066 Franchise Tax 862,946 852,751 948,503 862,104 970,054
Other Taxes 3,906,865 4,506,706 4,402,327 4,293,889 5,343,970 Unrestricted Motor Vehicle Taxes In-Lieu 1,911,327 1,990,306 2,128,054 2,239,058 2,341,444 Use of Money and properties 1,334,955 1,588,558 1,748,131 1,456,269 773,519 Miscellaneous 1,189,560 368,411 - - Special items - - (3,624,150) - (39,586,347) Extraordinary item - RDA Dissolution - - - - Transfers - - - - - Total Government Activities 13,788,102 14,673,927 11,231,145 15,078,532 (22,379,503) Business-Type Activities:

Use of Money and properties 200,280 482,095 501,741 4,537 (157,318) Miscellaneous - 162,872 - - - Special items - - - - (10,587,627) Transfers - - - - - Total Business-Type Activities 200,280 644,967 501,741 4,537 (10,744,945) Total Primary Government 13,988,382$ 15,318,894$ 11,732,886$ 15,083,069$ (33,124,448)$ Change in Net Position
Governmental Activities 4,302,029$ 1,867,837$ (6,678,688)$ (3,299,359)$ (27,101,685)$ Business-Type Activities 2,595,234 1,304,410 1,627,878 1,879,513 (10,114,605) Total Primary Government 6,897,263$ 3,172,247$ (5,050,810)$ (1,419,846)$ (37,216,290)$ 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)
173
2013 2014 2015 2016 2017
General Fund
Nonspendable 23,063,118$ 27,801,759$ 27,806,063$ 28,643,374$ 30,092,172$ Restricted - - - - - Assigned 554,985 1,359,328 1,363,528 2,171,733 2,176,150 Unassigned 2,700,418 5,389,258 7,969,320 8,291,363 9,426,610 Total General Fund 26,318,521$ 34,550,345$ 37,138,911$ 39,106,470$ 41,694,932$ All Other Governmental Funds
Nonspendable 12,131,778$ 12,131,778$ 11,013$ 6,714,263$ 11,013$ Restricted 19,147,732 8,253,115 21,070,727 12,443,589 20,587,964 Committed - - - - - Assigned 71,386 - 35,395 1,314,160 - Unassigned (193,469) (857,203) (2,770,225) (7,036,753) (4,048,580) Total all other governmental funds 31,157,427$ 19,527,690$ 18,346,910$ 13,435,259$ 16,550,397$ 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)
174
2018 2019 2020 2021 2022
General Fund
Nonspendable 27,799,824$ 29,402,817$ 29,769,663$ 30,034,997$ 10,806$ Restricted - - - - 2,054,252 Assigned 2,321,483 5,937,646 6,205,655 5,915,247 6,022,247 Unassigned 14,194,525 10,027,085 8,398,945 10,008,178 22,926,831 Total General Fund 44,315,832$ 45,367,548$ 44,374,263$ 45,958,422$ 31,014,136$ All Other Governmental Funds
Nonspendable 11,013$ 11,013$ -$ -$ -$ Restricted 20,556,143 21,446,237 19,621,155 19,549,409 7,026,830 Committed - - 428,552 1,391,188 1,998,781 Assigned - - - - - Unassigned (1,473,498) (226,591) (98,458) (162,793) (734,289) Total all other governmental funds 19,093,658$ 21,230,659$ 19,951,249$ 20,777,804$ 8,291,322$ 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)
175
2013 2014 2015 2016 2017
Revenues
Taxes and Assessments 6,340,744$ 7,651,413$ 8,389,012$ 9,032,585$ 9,202,688$ Licenses and permits 294,737 315,086 480,645 344,374 496,355 Fines and forfeitures 87,128 66,488 62,069 60,434 47,824 Use of money and property 1,012,177 1,003,729 1,082,244 1,183,964 1,192,976 Intergovernmental 2,413,531 3,374,022 6,194,872 5,677,447 14,911,152 Charges For Services 4,139,898 4,434,327 5,079,255 4,660,592 5,157,696 Other Revenues 758,854 1,015,728 476,033 1,029,258 448,688 Total Revenues 15,047,069 17,860,793 21,764,130 21,988,654 31,457,379 Expenditures
Current:

General government 3,482,323 3,934,402 2,635,701 2,952,966 3,153,498 Public Safety 4,578,363 4,869,782 5,158,435 5,589,583 6,022,005 Streets and Public Works 2,731,992 3,820,523 3,104,609 2,772,877 3,469,283 Parks And Recreation 1,833,902 1,878,925 1,827,391 1,961,669 1,883,159 Community Development 1,628,258 1,882,181 743,110 399,215 640,625 Lease expense - - - - - Capital outlay 853,299 1,161,622 4,994,173 8,504,827 9,079,227 Debt service:

Principal 457,025 583,104 604,474 626,149 653,144
Interest And Fiscal Agent Fees 1,233,175 1,213,038 1,189,346 1,164,163 1,136,588 Total Expenditures 16,798,337 19,343,577 20,257,239 23,971,449 26,037,529 Excess (deficiency) of revenues over
(under) expenditures (1,751,268) (1,482,784) 1,506,891 (1,982,795) 5,419,850 Other Financing Sources (Uses)
Proceeds from loan - - - - - Proceeds from refunding bond - - - - - Payment to refunded bond escrow agent - - - - - Transfers in 2,653,429 8,621,221 1,482,134 11,787,077 2,705,171 Transfers (out) (1,899,798) (1,363,768) (1,574,870) (11,803,454) (2,705,171) 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 3,686,647 - - - - Net Change in fund balances 2,689,010$ 6,156,618$ 1,414,155$ (1,999,172)$ 5,419,850$ Debt service as a percentage of
noncapital expenditures 11% 10% 12% 12% 11%
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)
176
2018 2019 2020 2021 2022
Revenues
Taxes and Assessments 9,352,260$ 10,726,652$ 10,727,692$ 14,098,060$ 16,889,724$ Licenses and permits 1,081,912 844,806 796,397 952,294 707,300 Fines and forfeitures 48,579 50,058 62,582 36,586 48,663 Use of money and property 1,443,270 1,728,361 1,702,755 1,456,271 783,885 Intergovernmental 7,650,796 4,455,255 4,073,720 4,589,299 15,618,709 Charges For Services 5,684,127 7,964,546 5,282,444 1,150,164 2,319,388 Other Revenues 1,204,989 92,602 67,355 239,610 279,797
Total Revenues 26,465,933 25,862,280 22,712,945 22,522,284 36,647,466 Expenditures
Current:

General government 3,492,082 4,542,651 4,070,428 3,854,043 4,081,705 Public Safety 6,295,019 6,776,245 7,634,971 7,774,932 7,879,451 Streets and Public Works 4,300,078 4,357,212 4,080,345 4,638,912 4,514,842 Parks And Recreation 2,101,369 2,128,110 2,165,547 1,434,988 1,910,716 Community Development 468,011 616,899 557,672 792,456 1,061,135 Lease expense - - - - Capital outlay 2,757,245 2,261,555 3,434,295 4,163,726 2,862,062 Debt service:

Principal 580,473 613,153 646,201 469,113 1,198,248
Interest And Fiscal Agent Fees 1,307,495 1,285,738 1,239,573 1,224,118 983,728 Total Expenditures 21,301,772 22,581,563 23,829,032 24,352,288 24,491,887 Excess (deficiency) of revenues over
(under) expenditures 5,164,161 3,280,717 (1,116,087) (1,830,004) 12,155,579 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 1,408,803 2,511,094 1,730,899 1,405,555 5,723,857 Transfers (out) (1,408,803) (2,603,094) (1,730,899) (964,912) (5,728,857) Sale of capital assets - - - - Contributed Capital - - 655,467 - Special Item - - (1,812,075) (604,025) (39,586,347) Total other financing sources (uses) (92,000) (1,156,608) 4,217,815 (39,591,347) Special/Extraordinary Item - - - - - Net Change in fund balances 5,164,161$ 3,188,717$ (2,272,695)$ 2,387,811$ (27,435,768)$ Debt service as a percentage of
noncapital expenditures 10% 9% 9% 8% 10%
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)
177
Fiscal Year Less: Taxable
Ended Residential Commercial Industrial Other Unsecured Tax-Exempt Assessed June 30, Property Property Property Property Property Property Value 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 2022 3,945,445,134 115,669,026 209,565,059 81,365,903 57,802,705 131,601,392 4,278,246,435 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
178
Factor of
Fiscal Year Taxable
Ended Total Tax Estimated Actual Assessed
June 30, Rate (1) Taxable Value (2) Value (2)
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
2022 5.4221% 7,751,990,119 1.811955
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
179
Category 2013 2014 2015 2016 2017
Residential 2,145,156,967$ 2,177,990,007$ 2,567,234,136$ 2,762,167,273$ 2,984,511,909$ Industrial 166,377,521 181,255,580 175,156,171 178,580,502 192,358,822 Commercial 68,182,982 78,806,569 71,672,395 78,083,558 79,706,704 Vacant 15,065,418 13,529,847 16,167,550 27,684,893 31,332,357 Institution 14,990,493 15,192,385 496,945 506,873 15,803,658 Recreation 9,282,254 2,735,888 9,411,388 9,461,565 9,716,963 Social 899,723 836,400 840,196 856,982 870,050
Miscellaneous 773,649 789,119 792,700 808,536 820,864
Rural 207,256 211,399 212,358 216,599 219,900
Unitary 7,815 7,815 11,977 11,977 11,977
Professional 577,000 577,000 577,000 - - Gross Secured Value 2,421,521,078 2,471,932,009 2,842,572,816 3,058,378,758 3,315,353,204 Unsecured 54,863,064 53,405,561 56,578,518 54,269,399 58,945,949 Exemptions 89,677,874 92,483,903 75,454,264 77,407,676 94,538,055 2,386,706,268$ 2,432,853,667$ 2,823,697,070$ 3,035,240,481$ 3,279,761,098$ 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
180
Category 2018 2019 2020 2021 2022
Residential 3,171,302,525$ 3,322,501,416$ 3,549,607,367$ 3,785,286,659$ 3,945,445,134$ Industrial 199,079,514 196,779,448 199,145,259 204,766,171 209,565,059 Commercial 86,604,265 85,620,650 90,938,555 88,476,522 115,669,026 Vacant 61,123,014 62,680,104 53,134,753 51,585,587 52,389,446 Institution 16,119,728 16,442,120 16,770,959 17,106,375 17,283,594 Recreation 9,502,881 10,179,175 11,038,616 11,570,506 9,100,314 Social 826,000 842,520 1,334,000 1,360,679 1,374,774
Miscellaneous 837,279 854,023 871,101 888,520 897,723
Rural 224,297 228,781 233,355 238,021 240,485
Unitary 11,977 79,567 79,567 79,567 79,567
Professional - - - - - Gross Secured Value 3,545,631,480 3,696,207,804 3,923,153,532 4,161,358,607 4,352,045,122 Unsecured 56,327,147 56,782,463 59,062,998 58,291,816 57,802,705 Exemptions 96,165,729 97,967,035 108,788,587 111,756,157 131,601,392 3,505,792,898$ 3,655,023,232$ 3,873,427,943$ 4,107,894,266$ 4,278,246,435$ 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
181
2020-21 2021-22
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 0.013900 0.006000
East Bay Reg Pk Bd 0.001400 0.002000
West CC Unified Bd 98 0.003200 0.002200
West Contra Costa Unified 0.198600 0.250500
WCCUSD 2012 Bond 0.041400 0.041200
Community College 0.016100 0.017600

0.274600 0.319500
Total Tax Rate 1.274600 1.319500
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
182
2021-22 2012-13
Percentage Percentage
($) of Total City of Total City
Taxable Assessed Assessed Assessed
Taxpayer Value Value Value Value
Bio-Rad Laboratories Inc 173,225,173$ 4.05% 148,620,495$ 6.23% Hercules Block Q&R Dev Partner 120,500,325 2.82%
WCV Aventine Hercules LLC 64,100,944 1.50%
Hercules Land Partners LP 26,412,372 0.62%
Trestle Hercules LLC 22,852,870 0.53%
HD Development of Maryland 19,376,969 0.45% 17,243,157 0.72% Hercules SPE MW LLC 12,576,927 0.29%
Vacaville Mobile Home Park LLC 10,770,132 0.25%
Tulloch Brian TRE 10,385,807 0.24% 8,554,048 0.36%
CS Creekside Hercules LLC 8,247,956 0.19% 3,600,000 0.15% Santa Clara VLY Housing Group 8,120,000 0.19% 5,310,000 0.22% Mary Terrace LLC 7,889,505 0.18%
Dathe Robert P & Carlotta R 7,809,671 0.18% 6,730,144 0.28% Hercules Sycamore Hills LLC 7,660,316 0.18% 6,601,434 0.28% LA Costalot LLC 7,639,040 0.18% 5,656,700 0.24%
Mechanics Bank of Richmond 7,532,612 0.18% 9,398,238 0.39% Hercules Real Est Ltd Ptnship 7,174,281 0.17% 5,139,600 0.22% Alcatraz475 LP 6,370,016 0.15%
1560 Sycamore LLC 6,312,565 0.15% 3,753,600 0.16%
North First Street Properties 6,250,937 0.15%
Madison MRH-1 Franklin LLC 5,950,721 0.14%
Arrow Investment Partners LLC 5,496,000 0.13% 3,958,350 0.17% Multiple O Holdings LLC 5,176,303 0.12%
Adalan Properties LLC 4,803,861 0.11% 4,139,829 0.17%
ORB Partnership 4,031,269 0.09% 3,474,054 0.15%
Rago Dev Corp - 10,691,000 0.45% Orinda Investors LP - 6,847,489 0.29% Three Trees Holdings I LLC - 6,600,000 0.28% Golden Gateway Assoc - 5,596,346 0.23% Robinson Theodore Deanna - 5,098,184 0.21% Red Barn Ventures I LLC - 4,545,429 0.19% Hercules Bayfront LLC - 3,758,212 0.16% Bank of New York Mellon TRE - 3,089,400 0.13% Brandenburg Eric TRE - 2,885,364 0.12% Convenience Retailers LLC - 2,543,242 0.11% Mega Investment Co - 2,369,500 0.10% Total Top 25 Taxpayers 566,666,572$ 13.25% 286,203,815$ 11.99% Total Taxable Value 4,278,246,435$ 100.00% 2,386,706,268$ 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
183
Percent
of Total
Current Percent Total Tax
Fiscal Total Tax of Levy Tax Collections
Year Tax Levy (a) Collections Collected Collections to Tax Levy 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%
2022 1,446,942 1,446,942 100% 1,446,942 100%
Source: City of Hercules Records
City of Hercules
Property Tax Levies and Collections
Last Ten Fiscal Years
184
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 Lucky Food Centers Food Markets KMS Convenience Marts Food Markets Mazatlan Taqueria And Grill Restaurants Mazatlan Taqueria & Grill Restaurants Mcdonald's Restaurants Restaurants Mcdonald's Restaurants Restaurants Mountain Mike's Pizza Restaurants Pro Media Ultrasound Electronic Equipment Rite Aid Drug Stores Drug Stores Radston's Office Equipment Round Table Pizza Restaurants Rite Aid Drug Stores Drug Stores Safeway Stores Food Markets Round Table Pizza Restaurants Shell Service Stations Service Stations Save Mart Supermarkets Food Markets Smeal Holding Auto Parts/Repair Shell Service Stations Service Stations Starbucks Coffee Food Markets 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. 2021-22 2012-13
City of Hercules
Principal Sales Tax Producers
Last Fiscal Year and Nine Years Ago
185
Tax Loans &
Fiscal Allocation Revenue Lease
Year Bonds Bonds Purchases Total
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) 13,976,808 9,796,193 23,773,001 2022 - (b) 13,765,105 9,421,970 23,187,075 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
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Total Governmental Activities Total Business-Type Activities 186
Loans & Percentage Debt
Fiscal Revenue Lease of Personal Per
Year Bonds Purchases Total Total Income (a) Capita (a)
2013 24,400,000 - 24,400,000 48,424,982 #DIV/0! #DIV/0! 2014 11,070,000 - 11,070,000 34,511,878 3.77% 1,401 2015 10,830,000 - 10,830,000 33,667,404 3.69% 1,356 2016 10,585,000 - 10,585,000 32,796,255 3.45% 1,311 2017 10,335,000 6,786,667 17,121,667 38,679,778 4.10% 1,529 2018 10,075,000 15,165,494 25,240,494 46,618,132 4.73% 1,805 2019 9,810,000 22,305,600 32,115,600 52,880,085 4.85% 2,037 2021 9,111,838 24,356,298 33,468,136 57,241,137 4.90% 2,242 2022 8,450,000 23,259,518 31,709,518 54,896,593 4.30% 2,123 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
187
188
2021-22 Assessed Valuation: $4,310,186,035 Total Debt City's Share of
OVERLAPPING TAX AND ASSESSMENT DEBT: 6/30/22 % Applicable (a) Debt 6/30/22 Bay Area Rapid Transit District 2,521,570,000 $ 0.484% 12,204,399 $ Contra Costa Community College District 568,780,000 1.848% 10,511,054 John Swett Unified School District 74,206,426 7.837% 5,815,558 West Contra Costa Unified School District 1,244,985,065 11.298% 140,658,413 West Contra Costa Healthcare Parcel Tax Obligations 44,580,000 11.205% 4,995,189 East Bay Regional Park District 184,590,000 0.774% 1,428,727 California Statewide Communities development Authority Assessment Districts 4,041,898 100.000% 4,041,898 City of Hercules 1915 Act Bonds 2,617,966 100.000% 2,617,966 TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT 182,273,204 $ DIRECT AND OVERLAPPING GENERAL FUND DEBT:

Contra Costa County General Fund Obligations 224,500,000 $ 1.842% 4,135,291 $ Contra Costa County Pension Obligation Bonds - - West Contra Costa Unified School District Certificates of Participation 6,005,000 11.298% 678,445 City of Hercules General Fund Obligations 23,791,100 100.000% 23,791,100 TOTALGROSS DIRECT AND OVERLAPPING GENERAL FUND DEBT 28,604,835 $ Less: Contra Costa County obligations supported from revenue funds 1,062,708 TOTAL NET DIRECT AND OVERLAPPING GENERAL FUND DEBT 27,542,127 $ OVERLAPPING TAX INCREMENT DEBT (Successor Agency): $80,690,000 100% 80,690,000$ TOTAL DIRECT DEBT 23,791,100
TOTAL GROSS OVERLAPPING DEBT 267,776,939$
TOTAL NET OVERLAPPING DEBT 266,714,231$
GROSS COMBINED TOTAL DEBT 281,818,782$ (b)
NET CONBINED TOTAL DEBT 280,756,074$
(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 …................................................... 4.24% Total Direct Debt ($14,041,843) …..................................................................... . 0.33% Gross Combined Total Debt ….............................................................................. 6.54% Net Combined Total Debt …................................................................................. . 6.51% Ratios to Redevelopment Successor Agency Incremental Valuation $1,725,870,022 Total Overlapping Tax Increment Debt …............................................................ . 4.68% 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, 2022
189
2013 2014 2015 2016 2017
Assessed Valuation 2,386,706,268$ 2,432,853,667$ 2,823,697,070$ 3,035,240,481$ 3,279,761,098$ Conversion Percentage 25% 25% 25% 25% 25%
Adjusted Assessed Valuation 596,676,567$ 608,213,417$ 705,924,268$ 758,810,120$ 819,940,275$ Debt Limit Percentage 15% 15% 15% 15% 15%
Debt Limit 89,501,485$ 91,232,013$ 105,888,640$ 113,821,518$ 122,991,041$ Total net debt applicable to limit:

General Obligation Bonds - - - - - Legal Debt Margin 89,501,485$ 91,232,013$ 105,888,640$ 113,821,518$ 122,991,041$ 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.

City of Hercules
Legal Debt Margin Information
Last Ten Fiscal Years
190
2018 2019 2020 2021 2022
Assessed Valuation 3,505,792,898$ 3,655,023,232$ 3,873,427,943$ 4,107,894,266$ 4,278,246,435$ Conversion Percentage 25% 25% 25% 25% 25%
Adjusted Assessed Valuation 876,448,225$ 913,755,808$ 968,356,986$ 1,026,973,567$ 1,069,561,609$ Debt Limit Percentage 15% 15% 15% 15% 15%
Debt Limit 131,467,234$ 137,063,371$ 145,253,548$ 154,046,035$ 160,434,241$ Total net debt applicable to limit:

General Obligation Bonds - - - - - Legal Debt Margin 131,467,234$ 137,063,371$ 145,253,548$ 154,046,035$ 160,434,241$ 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.

City of Hercules
Legal Debt Margin Information (Continued)
Last Ten Fiscal Years
191
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 2022 5,852,278 3,493,308 2,358,970 1,096,780 515,729 1,612,509 1.46 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…
192
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
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 2022 26,091 1,479,733,584 56,714 41.7 30,071 2.7% 2.5% 1,156,555 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
193
Percentage Percentage
Number of of Total City Number of of Total City
Business Name Employees Employment Employees Employment Bio-Rad Laboratories Inc 2,052 14.8% 2,406 17.3%
West Contra Costa Unified School District 230 1.65% 234 1.68% Home Depot 190 1.37% 79 0.57%
Safeway 162 1.17%
Contra Costa County Social Services 124 0.89% 104 0.75% Pacific Bio Labs Inc 95 0.68% 94 0.68%
Lucky Supermarkets 65 0.47% 100 0.72%
City of Hercules 56 0.40% 52 0.37%
Kinder's Meats & Deli BBQ & Catering 48 0.35% 40 0.29%
Benda Tool & Model Works Inc 43 0.31% 32 0.23%
A & B Die Casting 24 0.17%
Total Top 10 Employers 3,065 22.05% 3,165 22.77%
Total City Labor Force (1) 13,900 13,900
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.
2021-22 2020-21
City of Hercules
Principal Employers
Current Fiscal Year and One Year Ago
194
2013 2014 2015 2016 2017 2018 2019 2020 2021 22
Function
General Government 10.00 10.00 10.00 10.00 10.00 10.00 10.00 11.00 11.00 11.00 Public Safety 23.00 24.00 24.00 24. 00 24.00 26.00 26.00 28.00 29.00 28.00 Public Works (a) 14.00 13.00 11.00 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) 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 Housing Authority ©
Total 53.00 53.00 51.00 51.00 51 .00 53.00 53.00 56.00 57.00 56.00 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
60FTE's
General Government Public Safety Public Works (a)
Community Development Parks and Recreation (b) Housing Authority © 195
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
City of Hercules
For the Fiscal Year Ended June 30,
Operating Indicators by Function/Program
Last Ten Fiscal Years
196
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
City of Hercules
Operating Indicators by Function/Program (Continued)
Last Ten Fiscal Years
For the Fiscal Year Ended June 30,
197
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
198
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
199
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
200
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
201
202