Agenda Packet — Hercules City Council, January 27, 2026 (part 1 of 2)

Tuesday, January 27, 2026
6:00 PM
City of Hercules
111 Civic Drive
Hercules, CA 94547
City Council
Mayor Chris Kelley
Vice Mayor Alex Walker-Griffin
Council Member Dilli Bhattarai
Council Member Tiffany Grimsley
Council Member Dion Bailey
Dante Hall, City Manager
Christie Crowl, City Attorney
Eibleis Melendez, City Clerk
Meeting Agenda
CLOSED SESSION 6:00 P.M.; REGULAR MEETING - 7:00 P.M
In-Person in Council Chambers or Via Zoom:

Zoom ID: 847 2952 1203 Zoom Passcode: 347626
Zoom Phone Number: 1-669-900-6833
1 January 27, 2026City Council Meeting Agenda
See last pages of agenda for information regarding meeting procedures To view webcast of meetings, live or on demand, go to the City's website at www.ci.hercules.ca.us I. SPECIAL CLOSED SESSION – CALL TO ORDER - ROLL CALL - 6:00 P.M.

1. CONSIDER AND TAKE ACTION ON ANY REQUEST FROM A COUNCIL MEMBER TO

PARTICIPATE IN A MEETING REMOTELY DUE TO JUST CAUSE OR EMERGENCY CIRCUMSTANCES PURSUANT TO AB 2449
II. PUBLIC COMMUNICATION - CLOSED SESSION ITEMS
III. CONVENE INTO CLOSED SESSION
The Hercules City Council will meet in Closed Session regarding the following:

1. 26-021 Pursuant to Government Code section 54957: Public Employment (City Manager)
IV. REGULAR MEETING – CONVENE TO OPEN SESSION - ROLL CALL - 7:00 P.M.

V. REPORT ON ACTION TAKEN IN CLOSED SESSION
VI. PLEDGE OF ALLEGIANCE
VII. MOMENT OF SILENCE
VIII. INTRODUCTIONS/PRESENTATIONS/COMMISSION REPORTS

1. 26-007
State of the Contra Costa Community College District
PresentationAttachments:

IX. AGENDA ADDITIONS/DELETIONS
X. PUBLIC COMMUNICATIONS
This time is reserved for members of the public to address issues not included in the agenda. In accordance with the Brown Act, Council will refer to staff any matters brought before them at this time, and those matters may be placed on a future agenda.

Individuals wishing to address the City Council are asked to complete a form indicating the name and address of the speaker and the general topic to be addressed. Speakers must make their comments from the podium and will be allowed 3 minutes to discuss their concerns. All public comments are recorded and become part of the public record. A limit of 30 minutes will be devoted to taking public comment at this point in the agenda. If any speakers remain at the conclusion of the initial 30 minute period, time will be reserved at the conclusion of the meeting to take the remaining comments.

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2 January 27, 2026City Council Meeting Agenda
XI. PUBLIC HEARINGS
XII. CONSENT CALENDAR

1. 26-005 Meeting Minutes for the Regular Meeting of January 13, 2026 Meeting Minutes for the Regular Meeting of January 13, 2026Attachments:

2. 26-006 Quarterly Review of the Future Agenda Items
RECOMMENDATION:

Staff recommends that the City Council receive the staff report on the quarterly review of future City Council agenda items.

Staff Report - Quarterly Review of Future Agenda Items
Attach 1 - Future Agenda Items List
Attachments:

3. 26-020 Waive Second Reading and Adopt an Ordinance Amending Hercules Municipal Code Title 5, Chapter 4.16 Sewer Service Charges to Establish a Residential Waiver Program and Appeals Process RECOMMENDATION:

Waive Second Reading and Adopt an Ordinance Amending Hercules Municipal Code Title 5, Chapter 4.16 Sewer Service Charges and Establishing a Residential Waiver Program and Appeals Process Staff Report - Amending Hercules Municipal Code - Sewer Service Charges Attach 1 - Ordinance
1A - Exhibit A to Ordinance
Attachments:

XIII. DISCUSSION AND/OR ACTION ITEMS

1. 26-003 Acceptance of the Annual Comprehensive Financial Report and other regulatory financial reports for the Fiscal Year Ended June 30, 2025
RECOMMENDATION:

Receive the Fiscal Year (FY) 24-25 Annual Comprehensive Financial Report (ACFR) and Accept the Audited Financial Statements.

Staff Report - FY 24-25 Annual Audit & ACFR
Attach 1 - FY 24-25 ACFR
Attach 2 - FY 24-25 Hercules Wastewater Fund Report
Attach 3 - FY 24-25 - AUP Report on Measure B
Attach 4 - FY 24-25 AUP Report on Measure N
Attach 5 - FY 24-25 AUP Report on GANN
Attach 6 - FY 24-25 AU-C260 Conclusion Letter
Presentation
Attachments:

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3 January 27, 2026City Council Meeting Agenda

2. 26-004 Execute a Professional Services Agreement with BKF Engineers, Inc. to provide Construction Management, Inspection and Quality Assurance Testing Services for the Refugio and Foxboro Park Improvements Project
RECOMMENDATION:

Adopt a Resolution authorizing the City Manager to execute a Professional Services Agreement with BKF Engineers, Inc. (BKF) to provide Construction Management, Inspection and Quality Assurance Testing Services for the Refugio and Foxboro Park Improvements Project for a Total Cost of $193,070.

Staff Report
Attach 1 - Resolution
Attach 2 - BKF Engineers Agreement
Attachments:

3. 26-001 “Shop Hercules” Yiftee Gift Card program
RECOMMENDATION:

Receive a report on the “Shop Hercules” Yiftee Gift Card program, ask any questions, take public comment, and provide any comments or direction to staff on continuation of the Yiftee Gift Card program.

Staff Report
Presentation
Attachments:

4. 26-002 Tiered Business Attraction Grant program
RECOMMENDATION:

Receive a presentation on the proposed tiered Business Attraction Grant program, take public comment, and provide any comments or direction to staff.

Staff Report
Attach 1 - Retail Void Analysis
Attach 2 - Draft Program Guidelines
Attachments:

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4 January 27, 2026City Council Meeting Agenda

5. 26-018 Addition of a Sewer and Stormwater Supervisor Job Description to the City’s Classification Plan
RECOMMENDATION:

Adopt a resolution approving the addition of a Sewer and Stormwater Supervisor job description to the City’s Classification Plan and approving an amended Fiscal Year 2025-2026 Master Salary Schedule pursuant to California Public Employees Retirement System (“CalPERS”) effective July 6, 2025 (last updated on January 8, 2026).

Staff Report - Sewer and Stormwater Supervisor Job Description Attach 1 - Resolution
Attach 2 - Sewer and Stormwater Supervisor Job Description Attach 3 - FY 25-26 Salary Schedule
Attachments:

6. 26-016 Discussion of potential ordinance regulating tobacco sales RECOMMENDATION:

Receive report. Provide direction to staff regarding preparation of an ordinance, if desired.

Staff Report - Ordinance Regulating TobaccoAttachments:

7. 26-011 Overview of H.R. 1 (“One Big Beautiful Bill Act”) and Potential Impacts on Local Governments
RECOMMENDATION:

Receive and file report.

Staff Report - Overview of H.R. 1Attachments:

XIV. PUBLIC COMMUNICATIONS
This time is reserved for members of the public who were unavailable to attend the Public Communications period during Section X of the meeting, or were unable to speak due to lack of time. The public speaker requirements specified in Section X of this Agenda apply to this Section.

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5 January 27, 2026City Council Meeting Agenda
XV. CITY COUNCIL/CITY MANAGER/CITY ATTORNEY ANNOUNCEMENTS,

COMMITTEE, SUB-COMMITTEE AND INTERGOVERNMENTAL COMMITTEE REPORTS

AND FUTURE AGENDA ITEMS
This is the time for brief announcements on issues of interest to the community. In accordance with the provisions of the Brown Act, matters which do not appear on this agenda but require City Council discussion may be either (a) referred to staff or other resources for factual information or (b) placed on a future meeting agenda.

1. Regional Committee
a. Contra Costa Mayors Conference
b. Hercules/ Pinole - WasteWater Management
c. League of Cities
d. Water Emerg. Transportation Authority
e. WCCIWMA
f. WCCTAC
g. West Co. Mayors & Supervisors Assoc. Meeting
h. WestCat
I. MCE
j. CCTA
k. East Bay Wildfire Coalition of Governments

2. City Council Committees and Subcommittees
a. Econ. Dev. Subcommittee
b. Traffic and Public Safety Committee
c. East Bay Economic Development Alliance
d. Education Subcommittee

3. Commission Liaisons
a. Community & Library Services Commission
b. Finance Commission
c. Planning Commisison
XVI. ADJOURNMENT
The next Regular Meeting of the City Council will be held on Tuesday, February 10, 2026 at 7:00p.m. in the Council Chambers.

Agendas are posted in accordance with Government Code Section 54954.2(a) or Section 54956.

Members of the public can view electronic agendas and staff reports by accessing the City website at www.ci.hercules.ca.us and can receive e-mail notification of agenda and staff report postings by signing up to receive an e-notice from the City’s homepage. Agendas and staff reports may also be obtained by contacting the City Clerk at (510) 799-8200 (Posted: January 22, 2026)

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6 January 27, 2026City Council Meeting Agenda

INSTRUCTIONS ON HOW TO PARTICIPATE AND WATCH THE HERCULES CITY COUNCIL AND PLANNING

COMMISSION HYBRID MEETINGS
Attend in Person: Hercules City Council Chambers – 111 Civic Drive, Hercules, CA 94547 Attend via Zoom Teleconference: Details provided below and zoom webinar login, passcode and phone numbers provided on the agenda cover.

How to Submit Public Comments
In Person: Attend meeting at the Hercules City Council Chambers, fill out a public speaker card located on the side table and submit it to the City Clerk.

Via Zoom: Members of the public may submit a remote public comment via Zoom video conferencing. Download the Zoom mobile app from the Apple Appstore or Google Play. If you are using a desktop computer, you can test your connection to Zoom by clicking here or go to: https://www.zoom.us/join. Zoom also allows you to join by phone at +1-669-900-6833 or +1-929-205-6099 or +1-253-215-8782.

Written Comments Submitted Electronically: All comments received before 3:00 p.m. the day of the meeting will be provided to the City Council prior to the meeting and posted to the City’s agenda website and located by clicking on the “meeting details” tab. Written comments received after 3:00 p.m. will be provided to City Council and posted to the agenda website the following day. Written comments will not be read aloud during the meeting. Email comments to [email protected]. Please indicate which item on the agenda you are commenting on in the subject line of your email.

Written comments submitted in person or via mail: Additional ways to provide your public comment is to either drop off your comment in person to the front desk receptionist located in the City Hall lobby or to mail your comment to City of Hercules, ATTN: City Clerk – Public Comment (Meeting Date), 111 Civic Drive, Hercules, CA 94547 in time to reach the City Clerk no later than 3:00 p.m. on the day of the meeting or you can submit your comment by telephone by calling (510) 799-8208 no later than 3:00 p.m. on the meeting date.

If you need assistance with public comment, please contact: Eibleis Melendez, City Clerk at [email protected] or by calling (510) 799-8200.

All public comments will become part of the official meeting record. As email containing public meeting comments are part of the official record, note that personal contact information may be published if it is included with your email. The City cannot guarantee that its network and/or the website will not be uninterrupted. To ensure that the City Council receives your written comments, you are strongly encouraged to submit your comments in writing in advance of the meeting by 3:00 p.m. on the day of the Council or Commission meeting.

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7 January 27, 2026City Council Meeting Agenda

OTHER WAYS TO WATCH THE MEETING
Live on Channel 28: City Council meetings will replay the following Thursday at 7:00 p.m. and Saturday at 1:00 p.m.

Planning Commission meetings will replay the following Wednesday at 7:00 p.m. and Saturday at 9:00 a.m.

Video Streamed Live on the City’s Website:

To view City Council and Planning Commission meeting videos online go to: Hercules Meeting Videos.

Instructions to view Live or On-Demand Videos from the City’s website:

1. Go to: Hercules Meeting Videos or https://hercules.legistar.com/calendar.aspx.

2. Locate the desired meeting and date.

3. Click the associated “Video” link (Video status is as follows):

Video = Video is available for on demand viewing.

In Progress = Video is available for viewing during live recording.

Not Available = Video is either unavailable or has not been recorded.

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8 January 27, 2026City Council Meeting Agenda

THE HERCULES CITY COUNCIL ADHERES TO THE FOLLOWING POLICIES,

PROCEDURES AND REGULATIONS REGARDING CITY COUNCIL MEETINGS

1. SPECIAL ACCOMMODATIONS: In compliance with the Americans with Disabilities Act, if you require special accommodations to participate at a City Council meeting, please contact the City Clerk at 510-799-8208 at least 48 hours prior to the meeting.

2. AGENDA ITEMS: Persons wishing to add an item to an agenda must submit the final written documentation 12 calendar days prior to the meeting. The City retains the discretion whether to add items to the agenda. Persons wishing to address the City Council otherwise may make comments during the Public Communication period of the meeting.

3. AGENDA POSTING: Agendas of regular City Council meetings are posted at least 72 hours prior to the meeting at City Hall, the Hercules Swim Center, Ohlone Child Care Center, and on the City’s website (www.ci.hercules.ca.us),

4. PUBLIC COMMUNICATION: Persons who wish to address the City Council should complete the speaker form prior to the Council's consideration of the item on the agenda.

Anyone who wishes to address the Council on a topic that is not on the agenda and is relevant to the Council should complete the speaker form prior to the start of the meeting. Speakers will be called upon during the Public Communication portion of the meeting. In accordance with the Brown Act, the City Council may not take action on items not listed on the agenda. The Council may refer to staff any matters brought before them at this time and those matters may be placed on a future agenda.

In the interests of conducting an orderly and efficient meeting, speakers will be limited to three (3) minutes.

Anyone may also submit written comments at any time before or during the meeting.

5. CONSENT CALENDAR: All matters listed under Consent Calendar are considered to be routine and will be enacted by one motion. There will be no separate discussion of these items unless requested by a member of the Council or a member of the public prior to the time the City Council votes on the motion to adopt.

6. LEGAL CHALLENGES: If you challenge a decision of the City Council in court, you may be limited to raising only those issues you or someone else raised at the meeting or in written correspondence delivered at, or prior to, the meeting. Actions challenging City Council decisions shall be subject to the time limitations contained in Code of Civil Procedure Section 1094.6.

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9 INTRODUCTIONS/PRESENTATIONS/

COMMISSION REPORTS

AGENDA ITEMS

1. 26-007
10 State of the
Contra Costa
Community College
District
Chancellor Mojdeh Mehdizadeh
Dr. Kimberly Rogers, President, Contra Costa College
January 27, 2026
11 A few facts about us…
2 Created in December 1948, the first countywide
junior college district in the state
(county population: 249,000)
Celebrated our 75-year anniversary in 2024
(county population: 1.16 million)
Currently serve nearly 50,000 students annually
Currently employ nearly 3,400 people
12 California’s Community
College System
3 • 2.1 million students
• 116 colleges
• Largest system of higher
education in the U.S.

Data obtained from the California Community College’s Chancellor’s Office Website (cccco.edu) 13 John E. Márquez
Ward 1
Rebecca Barrett
Ward 3
Andy Li
Ward 4
Fernando Sandoval
Ward 5
Sophie Khouri
Student Trustee
Diana Honig
Ward 2
14 Who We Serve: 4CD Demographics
5 9%
<1%
18%
38%
10%
4%
1%
21%
8%
<1%
20%
28%
6%
1% <1%
38%
0%
5%
10%
15%
20%
25%
30%
35%
40%
4CD Students Contra Costa County
15 Who We Serve: CCC Demographics
13%
0%
13%
5%
50%
1%
7%
2% 1%
8%
0%
10%
20%
30%
40%
50%
60%
6 16
What We Offer
• More than 220 associate
deg
rees and 330 certificates
• 81 transfer pathways w ith
guaranteed admission into
CSUs
• Career training and industry-
r
ecognized credentials
• Flexible schedules with day,
e
vening, and weekend classes
• Online, in-p erson, and hybrid
classes and programs
7 17
Our Commitment:

Affordability and Access
FREE Tuition Programs
22,740 students received FREE tuition in 2024-2025
Classes with Reduced or No-Cost Textbooks
Wellness Centers to Meet Basic Needs
• Food Pantries
• Online Mental and Health Services
• Technology Loan Programs
Three Foundations: $3.2M since 2020
• Scholarships
• Emergency funds
• Program support
8 18
Students access 4CD colleges from multiple entry points with a range of goals High
Schools
Adult
Schools
Community
4CD
Colleges
4-Year
Colleges
Workforce
Workforce Boards
Community Partners
Adult Learners
Job Seekers and
Life-Long Learners
Transfer & Return
for Needed Credits
Skills Building &
Career Advancement
Early College
Credit Students
4CD Colleges as the Educational Hub
9 19
10,000
23,000
2,500
10,000
Brentwood Center
3,000
HS Graduates Who Attend 4CD
10 20
Partnership Highlight: Transfer Institutions
11 51% of CSU graduates and 29% of UC graduates
started at a community college
21 Strong Fiscal Health: Financial Highlights
• $267.5 million annual budget
• Board required reserve of at least
two months of operating expenses
- 2025-2 6 unrestricted reserves of
$52.3 million or 19.5% of
expenditure budget
- Continued clean audit findings for
Di
strict operations and bond
measures
12 22
4CD Economic Impact
13 23
Funding Per Full-Time Equivalent Student
22-23 23-24 24-25
K-12 $18,665 $19,573 $20,269
CCC $12,605 $12,631 $13,244
CSU $20,385 $22,151 $22,645
UC $34,485 $35,589 $36,662
14 24
Bond Issuance &
Financial Stewardship
15 • 2014 Measure E is
approximately 90% spent
• Final $110 million
authorization was sold in 2022
• Strong Bond Rating of AA+ (S&P)
and Aa1 (Moody's)
• The District refinanced prior
bond sales ($402M) as a
measure of fiscal stewardship,
successfully saving taxpayers
$44 million
25 Aging Facilities,
Continued Need
16 • Infrastructure and buildings are
50+ years old
• Facilities need repairs or
replacement
• Technology is insufficient to
meet evolving needs
• Flexible spaces and state-of-the-
art equipment are required to
help students prepare for
in-demand careers
26 Potential Future Bond
17 • Reviewing facilities plans for each
college
• Prioritizing projects
• Seeking community input
• Governing Board considering general
obligation bond for June 2026
27 Q & A
18 28

CONSENT CALENDAR

AGENDA ITEMS

1. 26-005

2. 26-006

3. 26-020
29 111 Civic Drive
Hercules, CA 94547City of Hercules
Meeting Minutes
City Council
Mayor Chris Kelley
Vice Mayor Alex Walker-Griffin
Council Member Dilli Bhattarai
Council Member Tiffany Grimsley
Council Member Dion Bailey
Dante Hall, City Manager
Christie Crowl, City Attorney
Eibleis Melendez, City Clerk
7:00 PMTuesday, January 13, 2026
REGULAR MEETING - 7:00 P.M
In-Person in Council Chambers or Via Zoom:

Zoom ID: 817 3998 1935 Zoom Passcode: 025752
Zoom Phone Number: 1-669-900-6833
I. SPECIAL CLOSED SESSION – NONE
NONE
II. PUBLIC COMMUNICATION - NONE
NONE
III. CONVENE INTO CLOSED SESSION - NO CLOSED SESSION
NONE
IV. REGULAR MEETING – CONVENE TO OPEN SESSION - ROLL CALL - 7:00 P.M.

Council Member Dilli Bhattarai, Mayor D. Bailey, Vice Mayor C. Kelley, Council Member A. Walker-Griffin, and Council Member T. Grimsley

Present: 5 -
V. A. REPORT ON ACTION TAKEN IN CLOSED SESSION - NO CLOSED SESSION B. CONSIDER AND TAKE ACTION ON ANY REQUEST FROM A COUNCIL MEMBER

TO PARTICIPATE IN A MEETING REMOTELY DUE TO JUST CAUSE OR EMERGENCY CIRCUMSTANCES PURSUANT TO AB 2449
NONE
VI. PLEDGE OF ALLEGIANCE
Pledge of Allegiance was lead by Council Member Grimsley.

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30 January 13, 2026City Council Meeting Minutes
VII. MOMENT OF SILENCE
Mayor Kelley requested a Moment of Silence for retired Hanna Ranch Kindergarten teacher, Kathy Tegg, who recently past away.

VIII. INTRODUCTIONS/PRESENTATIONS/COMMISSION REPORTS

1. 25-333 Proclamation - Police Officer of the Year
ProclamationAttachments:

Mayor Kelley read the proclamation. Police Chief Joseph Vasquez made remarks and introduced Police Officer Elijah Scholl. Police Officer Scholl thanked City Council. Council made remarks. Photos were taken.

IX. AGENDA ADDITIONS/DELETIONS
NONE
X. PUBLIC COMMUNICATIONS
Public Comment was provided by W. Bryce Horton, Chris Shelin, Stephanie Robillard, Derlin Hsu, Marybeth Falzareno and Selina Williams.

This time is reserved for members of the public to address issues not included in the agenda. In accordance with the Brown Act, Council will refer to staff any matters brought before them at this time, and those matters may be placed on a future agenda.

XI. PUBLIC HEARINGS
NONE
XII. CONSENT CALENDAR
Before action was taken on this item, Council Member Bailey asked Finance Director Gato questions about Consent Item XII.2, Recognized Obligation Payment Schedule for the period of July1, 2026, through June 30, 2027(ROPS 26-27). Director Gato provided a response.

Action was taken on the two items on the Consent Calendar.

MOTION: A motion was made by Council Member bailey, seconded by Walker-Griffin to adopt the Consent Calendar. The motion carried by the following vote:

Aye: Council Member Dilli Bhattarai, Mayor D. Bailey, Vice Mayor C. Kelley, Council Member A. Walker-Griffin, and Council Member T. Grimsley 5 -

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31 January 13, 2026City Council Meeting Minutes

1. 25-339 Meeting Minutes for the Regular Meeting of December 9, 2025 Meeting Minutes for the Regular Meeting of December 9, 2025Attachments:

APPROVED

2. 25-335 Recognized Obligation Payment Schedule for the period of July 1, 2026, through June 30, 2027 (ROPS 26-27)
RECOMMENDATION:

Adopt a resolution approving the Recognized Obligation Payment Schedule for the period July 1, 2026, through June 30, 2027 (ROPS 26-27) Staff Report
Attach 1 - Resolution
Attach 2 - Hercules ROPS 26-27
Attachments:

RESOLUTION 26-001, APPROVED
XIII. DISCUSSION AND/OR ACTION ITEMS

1. 25-336 Ordinance to repeal and replace Hercules Municipal Code Title 9, Chapters 1-18, re-locating appeals provisions, adopting by reference Contra Costa County Ordinance No. 2025-19, No. 2025-15, and No. 2025-14, which adopts the 2025 California Code of Regulations, Title 24, with changes, additions, and deletions, adopting by reference the Uniform Code for Abatement of Dangerous Buildings 1997 edition with existing amendments, additions, and deletions, and adopting by reference the International Property Maintenance Code 2024 Edition with amendments, additions, and deletions.

RECOMMENDATION:

That the City Council:

1. Request planning staff present the staff report;

2. Receive comments from the public;

3. Request clarification from staff on any issues related to the Ordinance;

4. Adopt first reading of amended Ordinance.

Staff Report
Attach 1 - Construction Codes 2025 Ordinance
Attach 2 - Building Code Ord No. 2025-19
Attach 3 - Fire Code Ord No. 2025-14
Attach 4 - WUI Ord No. 2025-15
Attachments:

Community Development Director, Tim Rood, introduced the item and presented the Staff Report. Council asked questions and made remarks.

Director Rood provided a response. No public comment. Action was taken on this item.

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32 January 13, 2026City Council Meeting Minutes
MOTION: A motion was made by Council Member Walker-Griffin, seconded by Mayor Bailey, to adopt Ordinance 556. The motion carried by the following vote:

Aye: Council Member Dilli Bhattarai, Mayor D. Bailey, Vice Mayor C. Kelley, Council Member A. Walker-Griffin, and Council Member T. Grimsley 5 -

2. 25-337
Waive first reading and introduce an Ordinance Amending Hercules Municipal Code Title 5, Chapter 4.16 Sewer Service Charges to Establish a Residential Waiver Program and Appeals Process
RECOMMENDATION:

Waive first reading and introduce an Ordinance Amending Hercules Municipal Code Title 5, Chapter 4.16 Sewer Service Charges and Establishing a Residential Waiver Program and Appeals Process Staff Report
Attach 1 - Ordinance Sewer Code
Attach 2 - Exhibit A to Ordinance
Attachments:

Public Woks Director, Glenn Dombeck, introduced the item and presented the Staff Report. Council asked questions and provided comments.

Director Dombeck and City Manager Dante Hall, provided a response.

Bailey asked for a form to be available to the public on the website and at the front desk. No public comment. Action was taken on this item.

MOTION: A motion was made by Council Member Walker-Griffin, seconded by Council Member Bhattarai, to adopt Ordinance 557. The motion carried by the following vote:

Aye: Council Member Dilli Bhattarai, Mayor D. Bailey, Vice Mayor C. Kelley, Council Member A. Walker-Griffin, and Council Member T. Grimsley 5 -

3. 25-338
Award of a Construction Contract to Frontline General Engineering Construction, Inc. for the Refugio and Foxboro Park Improvement Project RECOMMENDATION:

Adopt a resolution authorizing the City Manager to execute a construction contract with Frontline General Engineering Construction, Inc. (Frontline) in the amount of $895,814.00 for the Refugio and Foxboro Park Improvement Project, including parking lot slurry seal alternate bid item, authorizing an additional expenditure of up to $89,581.40 for a 10 percent contingency on said construction contract, for a total not to exceed contract amount of $985,395.40.

Staff Report
Attach 1 - Resolution
Attach 2 - Project Location Map
Attachments:

Public Works Director, Glenn Dombeck, introduced and presented the Staff Report. Council asked questions and provided comments. Director Dombeck provided a response. No public comment. Action was taken on this item.

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33 January 13, 2026City Council Meeting Minutes
MOTION: A motion was made by Mayor Bailey, seconded by Council Member Grimsley, to adopt Resolution 26-002. The motion carried by the following vote:

Aye: Council Member Dilli Bhattarai, Mayor D. Bailey, Vice Mayor C. Kelley, Council Member A. Walker-Griffin, and Council Member T. Grimsley 5 -

4. 25-341
2026 Council Appointments on Regional Committees and Council Subcommittees
RECOMMENDATIONS:

Review and make Council Appointments to Regional Committees and Council Subcommittees.

Staff Report - Council Appointments to Regional Committees Attach 1 - 2025 City Council Regional Appointments
Attachments:

Mayor Kelley introduced and presented the item. Council Members made comments. No public comment. No action was taken on this item. Council agreed to their regional appointments. Please see attached for the 2026 Council Appointments on Regional Committees and Council Subcommittees.

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34 City Council Regional Appointments
Updated: 1/13/2026

CITY COUNCIL REPRESENTATION ON REGIONAL COMMITTEES

AND CITY SUB-COMMITTEES
APPROVED – January 13, 2026

COMMITTEES

APPOINTED

COUNCIL
MEMBER

ALTERNATE

MEETING SCHEDULE

AND/OR LOCATION

REGIONAL COMMITTEES
ABAG
101 Eighth Street
Oakland, CA 94607
510-464-7900
www.abag.ca.gov
Walker-Griffin Bhattarai Exec. Bd. Meets 3rd Thursday every other month 7:00 p.m. (Jan., Mar., May,
July, Sept. and Nov.) Attendance
Optional
Contra Costa Mayors Conference
http://www.ccmayors.org/
Mayor Vice Mayor First Thursday/mo. – 6:30 p.m.

Location Rotates
Hercules/Pinole - Wastewater
Management
Grimsley/Bhattarai Walker-Griffin 1st Thursday/mo. – 8:30 a.m.

Location alternates with City of Pinole
League of Cities-E. Bay Division Bhattarai Walker-Griffin 4th Thurs./mo. – Bd. Mtg. - 6:30 p.m.

Location Rotates
Capital Corridor JPA Board (Liaison) Walker-Griffin Kelley 3rd Wed/Feb., June, Sept. Nov. – 10:00 a.m., alternates SJ, Sacramento and Suisan
Water Emergency Transportation
Authority (WETA) Liaison
Walker-Griffin Grimsley 1st Thursday/mo. – 1:00 p.m., San Francisco Metro Center
West County Integrated Waste Mgmt.

JPA (WCCIWMA)
440 Civic Center - 27th Street
Richmond, CA 94804
www.recyclemore.com
Bhattarai Bailey 2nd Thursday/mo. - 7:00 p.m.

Form 806 required - $50 stipend
Form 700 required
WCCTAC
13831 San Pablo Avenue
San Pablo, CA 94806
510-215-3221
www.wcctac.org
Kelley Bailey Last Friday/mo. – 8:00 a.m.

El Cerrito City Hall
Form 700 Required
West Co. Mayors & Supervisors
Assoc.

Mayor Vice Mayor 4th Thursday/mo. – 8:30a.m.

The location rotates every 6 months
WestCat
601 Walter Avenue
Pinole, CA 94564
www.westcat.org
Bailey/Grimsley Kelley 2nd Thursday/mo. – 6:00 p.m.

Pinole Council Chambers, Pear St.

Form 700 required
MCE Clean Energy (Board Meetings)
Mt. Diablo Room – 2300 Clayton Road
Suite 1150 Concord, CA 94920
https://www.mcecleanenergy.org
Bailey Bhattarai 3rd Thursday/mo. – 6:30 p.m.

Office Locations -Concord and San Rafeal
Meetings can also be watched remotely
East Bay Wildfire Coalition of
Governments (EBWC)
http
s://eastbaywildfire.org/
Walker-Griffin Kelley Meeting materials and details for upcoming meetings will be listed as they become
available.
35 City Council Regional Appointments
Updated: 1/13/2026

CITY COMMITTEES

COMMITTEES

APPOINTED

COUNCIL
MEMBER

ALTERNATE

MEETING SCHEDULE

AND/OR LOCATION
Agenda Setting Mayor Vice Mayor Time and location arranged with current Mayor
Economic Development
Subcommittee
Bailey/Bhattarai Grimsley As needed and at least quarterly Education Subcommittee Grimsley/
Walker-Griffin
Bailey As needed and at least quarterly
Public Safety/Traffic Bailey/Grimsley Kelley As needed and at least quarterly CITY COMMISSIONS – COUNCIL LIAISONS
Planning Commission Bailey/Grimsley 1st and 3rd Mondays Community & Library Services
Commission
Bhattarai/Kelley 2nd Monday
Finance Commission Walker-Griffin/Kelley 3rd Wednesday (Every other Month)

COMMITTEES NOT ASSIGNED BY THE CITY COUNCIL
East Bay Economic Development
Alliance
Kelley Not a City Appointment
(Appointed by CC Mayors)
CCTA Kelley Not a City Appointment
(Appointed by CCTA)
36 January 13, 2026City Council Meeting Minutes
XIV. PUBLIC COMMUNICATIONS
Public comment was provided by Derlin Hsu and Charles Davidson.

This time is reserved for members of the public who were unavailable to attend the Public Communications period during Section X of the meeting, or were unable to speak due to lack of time. The public speaker requirements specified in Section X of this Agenda apply to this Section.

XV. CITY COUNCIL/CITY MANAGER/CITY ATTORNEY ANNOUNCEMENTS,

COMMITTEE, SUB-COMMITTEE AND INTERGOVERNMENTAL COMMITTEE REPORTS

2. City Council Committees and Subcommittees
a. Econ. Dev. Subcommittee
b. Traffic and Public Safety Committee
c. East Bay Economic Development Alliance
d. Education Subcommittee

3. Commission Liaisons
a. Community & Library Services Commission
b. Finance Commission
c. Planning Commisison
City Manager Hall advertised upcoming City events. No announcements from City Attorney Crowl.

1. Regional Committees
Vice Mayor Walker-Griffin attended the Mayor's Conference. Council

Page 6 ends

37 January 13, 2026City Council Meeting Minutes
Member Bailey reported out on the Marin Clean Energy(MCE) meeting.

Mayor Kelley reported out on the Mayors Conference, the West Contra Costa Transportation Commission meeting, and the Contra Costa Transportation Authority Board meeting.

2. City Council Committees and Subcommittees
Council Member Grimsley reported out on the Hercules/Pinole - Wastewater Management Subcommittee meeting

3. Commission Liaisons
No reports were provided
XVI. ADJOURNMENT
Future Agenda Item Requests- Council Member Bailey requested a discussion item recommending that we have two Student Commissioners on the Community and Library Services Commission. Council Member Walker-Griffin requested staff to provide an update at a future Council meeting on the status of our senior population and the meal program as we navigate cuts to funding. Council unanimously agreed to bring both items back at a future City Council meeting.

Mayor Kelley adjourned the meeting at 8:30pm. The meeting was closed in Kathy Tegg's honor.
_________________________________
Chris Kelley, Mayor
Attest:
_______________________________
Eibleis Melendez, City Clerk

Page 7 ends

38 CONSENT CALENDAR

AGENDA ITEMS

2. 26-006
39 STAFF REPORT TO THE CITY COUNCIL
DATE: Regular Meeting of January 27, 2026
TO: Mayor and Members of the City Council
VIA: Dante Hall, City Manager
SUBMITTED BY: Eibleis Melendez, City Clerk
SUBJECT: Quarterly Review of Future Agenda Items
RECOMMENDED ACTION:

Staff recommends that the City Council receive the staff report on the quarterly review of future City Council agenda items.

BACKGROUND:

The City Council has requested that the Future Agenda Items List be reviewed generally on a quarterly basis by the full Council. This list is kept on an updated basis as a tool to assist staff and the City Council in tracking items staff is planning on placing on future agendas, and includes future agenda items requested by City Council consensus or action.

The list is updated by the City Clerk following each City Council meeting and is reviewed each week in the City Manager’s Executive Team meeting. Please note that the list is a draft only and that items and dates are subject to change based on staff recommendation and meeting availability.

Council comments on these future agenda items is limited by the Brown Act to clarifying questions, brief announcements, or requests for additional information in connection with an item
40 FISCAL IMPACT:

There is no direct fiscal impact associated with this report.

ATTACHMENTS:

1. Future Agenda Items List
41 FUTURE AGENDA ITEM REQUESTS
Housebound Residence Assistance
Regular Meeting Date
2/10/2026
(Items dues 1/26)
Agenda Item/Agenda Title Agenda Action Recommendation/Action Description Notice by 1/29 Garbage Liens Public Hearing
Contract with TGA for Federal Lobbying Services Discussion/Action Investment Report: 2nd Quarter (Ending Dec. 31) Consent Notice twice: 1/22 and 1/29 Second Reading: Ordinance for Udated Building Codes Public Hearing Affordable Housing Policy Update Discussion/Action Adopt a resolution amending the City of Hercules Affordable Housing Policy to Clarify the maximum occupancy levels
Regular Meeting Date
2/24/2026
(Items due 2/9)
Agenda Item/Agenda Title Agenda Action Recommendation/Action Description Adopt a Resolution approving the FY 2025-26 Midyear Budget Update and Adjustments Discussion/Action
Capital Improvement Program Update Discussion Only
Professional Services Agreement with Kennedy & Associates, Inc. to provide Clean Water Program Support Discussion/Action Adopt a Resolution authorzing the CM to execute the Agreement with Kennedy& Associates, Inc. in a not-to-exceed amount of $54,305.35 to provide Clean Water Program Support
Resolution of Initiation for all LLADs and receive approval to proceed with Prop 218 proceedings Discussion/Action
Approve Francisco & Associates Contract Discussion/Action Professional Services Agreement with West Yost Associates, Inc. to provide design services for the Willow-Newbury Sewer
Improvements Project
Discussion/Action
Adopt a Resoltuion authorizing the CM to execute the Agreement wit hWest Yost Associates, inc. in a not-to-exceed amount of $____ to provide design servies for the Willow-Newbury Sewer
Improvements Project.

Beechnut Park Project Amendment #2 Discussion/Action
Proclamation - Acknowledgement of Public Works Superintendent, Jeff Brown's, retirement and Years of Service Presentation No Action Regular Meeting Date
3/10/2026
(Items due 2/23)
Agenda Item/Agenda Title Agenda Action Recommendation/Action Description Annual Stomwater Parcel Assessment(Due to County By 3/31) Consent City Council's Authority regarding the Trash Location in Front of the Exchange Discussion Only
Regular Meeting Date 3/24
(Items due 3/9) Agenda Item/Agenda Title Agenda Action Recommendation/Action Description General Plan Annual Progress Report Consent Approve the report by minute order and direct staff to submit to the applicable agencies
Future Agenda Items List
(All Items Are Subject to Change)
42 Housing Element Annual Progress Report Consent Approve the report by minute order and direct staff to submit to the applicable agencies
Budget Workshop - 10- Year CIP and porject priorities, including recommendations Discussion Only
Housing Succesor Annual Report Consent
Organizational Structure and Succession Plan Discussion Discussion Only Review Stop Control Warrant Analysis Results and Approve New Stop Sign Instatllation at Five Locations in the City: Violet Road and Goldenrod Drive, Redwood Road and Chestnut Dirve, Tsushima Street and Central Street, Skelly and Pearce and Sycamore Avenue and S Front Street
Discussion/Action Adopt a resolution authorizing installation of new Stop Signs at Five Locations in the City
Agreement to Fund Refugio Creek Conservation Easement Discussion/Action Amended MPA JPA Discussion/Action
Regular Meeting Date 4/14
(Items due 3/30) Agenda Item/Agenda Title Agenda Action Recommendation/Action Description Adding A Second Student Commissioner seat to the Commmunity & Library Services Commission Discussion Only
City Monument Sign Discussion/Action
Regular Meeting Date 4/28
(Items due 4/13 ) Agenda Item/Agenda Title Agenda Action Recommendation/Action Description Resolution of Intention and Approve FY 2026-27 Preliminary Engineers Reports Discussion/Action
Award Landscape Maintenance Contract Discussion/Action
Budget Workshop - Preliminary draft of the FY 2026-27 Annual Operating Budget, including Sewer Enterprise and Internal Service Funds
Discussion Only
Regular Meeting Date 5/12
(Items due 4/27) Agenda Item/Agenda Title Agenda Action Recommendation/Action Description AB2561 Vacancy Reporting Discussion/Action
Calling November Election Discussion/Action
Investment Report: 3rd Quarter(Ending March 31) Consent Regular Meeting Date 5/26
(Items due 5/11) Agenda Item/Agenda Title Agenda Action Recommendation/Action Description First Public Hearing: Introduction of the FY 2026-27 Annual Budget and 10-Year Capital Improvement Plan(CIP) Public Hearing AB 481 Military Equipment Annual Review Discussion/Action 43 Award of a Constrcution Contract to ____, Inc. for the Refugio Lake Restoration Project Discussion/Action
Adopt a resolution auth. the CM to execute a construction contract with____, inc. in the amount of $___ for the Refugio Lake Restoration Project, authorizing an additional expenditure of up to $___ for a 10% contingency on said construction contract, for a total not to exceed contract amount of $____.

Refugio Lake Resotation Project Construction Management Services Discussion/Action
Adopt a resolution auth. the CM to execute a PSA with ___Inc., in the amount of $____ for Const. Mngmt. Serv. for the Ref. Lake Restoration Proj.

Regular Meeting Date 6/9
(Items due 5/26) Agenda Item/Agenda Title Agenda Action Recommendation/Action Description Second Public Hearing: Adoption of the FY 2026-27 Annual Budget and 10-Year Capital Improvemetn Plan(CIP) Public Hearing 44 CONSENT CALENDAR

AGENDA ITEMS

3. 26-020
45 STAFF REPORT TO THE CITY COUNCIL
DATE: Regular Meeting of January 27, 2026
TO: Mayor and Members of the City Council
VIA: Dante Hall, City Manager
SUBMITTED BY: Glenn Dombeck, Public Works Director
SUBJECT: Waive Second Reading and Adopt an Ordinance Amending Hercules Municipal Code Title 5, Chapter 4 .16 Sewer Service Charges to Establish a Residential Waiver Program and Appeals Process
RECOMMENDED ACTION:

Waive Second Reading and Adopt an Ordinance Amending Hercules Municipal Code Title 5, Chapter 4 .16 Sewer Service Charges and Establishing a Residential Waiver Program and Appeals Process
BACKGROUND:

Hercules Municipal Code (HMC) Title 5, Chapter 4.16 Sewer Service Charges establishes the basis for rates applied to residential, commercial, and industrial accounts. The language in subsections 4.16.a and 4.16.b is out of date and no longer applicable and is therefore recommended to be removed from the code.

The City has also managed a resi dential waiver program, where residents that can demonstrate that their water use is equal to or less than that of the average daily use of the Senior Living customer class are eligible for reclassification at the Senior Living Rate.

This waiver program has been in effect since the 2009 sewer rate increase, where Council directed the City Manager, through Resolution 09-070, to “…prepare an appeal process in relation to the rate increase.” The waiver program has since been managed informally based on criteria established by the Director of Public Works. As of Fiscal Year 2024-25, there were 6 residential accounts (4 townhomes and 2 condominiums) that were granted adjustments in their rate under this program.
46 It is proposed to formalize the waiver program by establishing the criteria within HMC Title 5, Chapter 4.16. It is also proposed to formalize the appeal process for disputes about sewer service charges, customer rate classification, or other matters.

ANALYSIS:

The Senior Living classification is applicable only to accounts residing within a property zoned as Senior Living. There are three such properties in the Ci ty; Sycamore Hills by the Bay, Samara Terrace and The Arbors. Senior citizens are only eligible for the Senior Living rate if they reside within one of these Senior Living properties.

The waiver program makes additional account holders eligible for the Senior Living rate if they are able to demonstrate that their water usage is comparable to that of the Senior Living users. The average daily use of the Senior Living customer class identified in the May 2025 Comprehensive Sewer Utility Rate Study is 74 gallons per day. Twelve months of East Bay Municipal Utility District bills are needed to document account holder water usage. The proposed waiver program rewards account holders that have very low water usage.

Waiver applicants must reapply annually to maintain waiver eligibility and must submit their application by May 1st. This deadline is necessary to ensure that there is adequate time to review the waiver request and ensure that the revised rate is reflected on the tax roll that is updated every August.

FISCAL IMPACT:

Prior to the 2025 rate increase, apartments were charged the “Senior Living” flat fee per dwelling unit regardless of water usage. Under the 2025 rate structure, apartments will pay the multi-family flat fee per dwelling unit regardless of water usage. Therefore, many accounts will see an increase in their historic rates and may seek relief under the waiver program.

Since the average water use for single -family (152 gpd/unit ) and multi -family (116 gpd/unit) residences is significantly greater than that of the Senior Living accounts (74 gpd/unit), there are not likely to be many residences that will be able to demonstrate eligibility for the waiver program.

The fiscal impact of the waiver program is $239.03 annually for eligible single -family accounts and $127.86 annually for eligible multi-family accounts. Enrollment comparable to the Fiscal Year 2024 -25 waiver program would represent a n annual loss of $767.16.

The maximum possible fiscal impact is not anticipated to be significantly greater than this value.
47 ATTACHMENTS:

Attachment 1 - Ordinance
48 ORDINANCE NO.

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF HERCULES

AUTHORIZING REPEAL AND REPLACEMENT OF HERCULES MUNICIPAL CODE TITLE 5, CHAPTER 4.16 – “SEWER SERVICE CHARGES ” TO ESTABLISH A

RESIDENTIAL WAIVER PROGRAM AND APPEALS PROCESS
WHEREAS, the City of Hercules (“City”) has managed an informal residential waiver program for sewer service charges where residents demonstrat ing that their water use is equal to or less than that of the average daily use of the Senior Living customer class are eligible for reclassification at the Senior Living Rate; and WHEREAS, on April 28, 2009 at its regularly scheduled City Council Meeting, the City Council adopted Resolution No. 09 -070 directing the City Manager to prepare an appeal process in relation to the rate increase.

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF HERCULES DOES HEREBY ORDAIN AS FOLLOWS:

SECTION 1. Adoption of this Ordinance is not a “project” under the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines section 15378 in that it is an administrative activity that will not result in any direct or indirect impacts to the environment nor authorize any construction. Further, adoption of this Ordinance is exempt from CEQA pursuant to CEQA Guidelines section 15061(b)(3 ) because it can be seen with certainty that the administrative waiver of fees will not result in any impacts to the environment.

SECTION 2. Title 5 (Sanitation and Health) , Chapter 4 (Sanitary Sewers) , Section 16 (Sewer Services Charges ) of the Hercules Municipal Code is hereby repealed and replaced in its entirety as set forth in Exhibit A.

SECTION 3. Severability. If any section, subsection, sentence, clause, or phrase of this Ordinance is for any reason held to be invalid, such decisions shall not aff ect the validity of the remaining portions of this Ordinance. The Council hereby declares that it would have adopted the Ordinance, and each section, subsection, sentence, c lause, or phrase thereof, irrespective of the fact that any one or more sections, s ubsections, sentences, clauses, or phrases be deleted.

SECTION 4. Publication and Effective Date. This Ordinance shall take effect thirty (30) days after passage, and shall, within fifteen (15) days after passage, be published or posted in accordance wit h Section 36933 of the Government Code of the State of California with the names of those City Council Members voting for and against it. 49 The foregoing Ordinance was introduced and first read at a regular meeting of the City Council of the City of Herc ules held on the 13th day of January, 2026, and passed and adopted at a regular meeting of the City Council on the 27th day of January, 2026 by the following vote of the Council:

AYES:

NOES:

ABSTAIN:

ABSENT:
____________________________
Chris Kelley, Mayor
ATTEST:
________________________________
Eibleis Melendez, City Clerk
50 EXHIBIT A

HERCULES MUNICIPAL CODE
TITLE 5, CHAPTER 4, SECTION 16

Sec. 5-4.16 Sewer Service Charges.

Any person who uses the sanitary sewer system or each premises connected or required to be connected by this Chapter to the sanitary sewer system shall pay to the City of Hercules a fee for the use of said sanitary sewer system. (a) Sewer Service Charges. Any modification to the fees charged for the use of said sanitary sewer system that are payable pursuant to the provisions of this section shall be established by ordinance or resolution of the City Council duly adopted in the manner prescribed by California law. (Ord. 431 § 1, 2007; Ord. 96-337 § 1, 1996: Ord. 328 § 1, 1995: Ord. 304 § 1, 1991: Ord. 293 § 1, 1990: Ord. 272 § 1, 1988: Ord. 264 § 1, 1987: Ord. 235 § 1, 1986: Ord. 207 § 1, 1985: Ord. 188 § 1, 1984) (b) An additional sewer service charge may be imposed upon users discharging sewage stronger than domestic sewage into the sanitary sewer system; such additional charge shall be determined based on actual costs incurred by the City to handle treat, and dispose of such sewage.
(c) Appeal Process. Disputes about sewer service charges, customer rate classification, or other matters shall be subject to the review and approval of the Director of Public Works. Any person subject to the sewer service charges may file an application to the Director of Public Works disputing their charges, customer rate classification, or other matters. The application must be filed by May 1st of the City’s fiscal year the disputed charge was imposed and must be accompanied by information or evidence supporting the application. The Director of Public Works shall issue a decision on the application within forty-five (45) days of receipt. If the Director fails to issue a decision within 45 days, the application is denied. The Director’s decision shall be final. d) Residential Waiver Applicants. Residential accounts that can demonstrate average daily water use, as demonstrated by 12 months of East Bay Municipal Utility District bills, below the average daily use of the Senior Living customer class are eligible to apply for a waiver for reclassification at the Senior Living Rate in the next fiscal year for which the tax roll has not been set. Waiver applicants must reapply annually to maintain waiver eligibility and must submit their application by May 1st. The current average daily water use of the Senior Living customer class is 74 gallons, but this threshold may be updated by resolution of the City Council.
51 DISCUSSION AND/OR ACTION ITEM

AGENDA ITEMS

1. 26-003

2. 26-004

3. 26-001

4. 26-002

5. 26-018

6. 26-016

7. 26-011
52 STAFF REPORT TO THE CITY COUNCIL

DATE: Regular Meeting of January 27, 2026

TO: Mayor and Members of the City Council

VIA: Dante Hall, City Manager

SUBMITTED BY: Edwin Gato, Director of Finance

SUBJECT: Acceptance of the Annual Comprehensive Financial Report and other regulatory financial reports for the Fiscal Year Ended June 30, 2025

RECOMMENDED ACTION:

Receive the Fiscal Year (FY) 24-25 Annual Comprehensive Financial Report (ACFR) and Accept the Audited Financial Statements.

EXECUTIVE SUMMARY:

The Annual Comprehensive Financial Report (ACFR) for the fiscal year ending June 30, 2025, is now complete and ready for City Council approval. Alongside the ACFR, additional audit compliance reports are also being submitted for acceptance.

This report presents the final audited ACFR for the year ending June 30, 202 5. The City received an unmodified (or "clean") audit opinion, confirming the fair presentation of its financial position as of that date. Overall, the City's finances demonstrate stability, reflecting sound management practices and prudent financial decisions.

BACKGROUND:

The Annual Comprehensive Financial Report (ACFR) presents a cl ear and organized overview of the City’s financial condition and activities, ensuring compliance with the accounting and financial reporting standards established by the Governmental Accounting Standards Board (GASB). This report offers valuable historical and comparative data for City staff, elected officials, and external stakeholders, including debt rating agencies, businesses, other public agencies, and City residents. The most recent ACFR, along with 53 reports from previous years, is available at the City’s libraries, the Finance Department, and the City’s Finance website at:
https://www.ci.hercules.ca.us/government/finance/comprehensive-annual-financial-reports.

The City of Hercules compiles audited financial statements for each fiscal year, as mandated by various financing covenants and regulations concerning restricted funding. To guarantee compliance with these requirements and bond indentures, the City engages an independent audit firm. The Pun Group, as the City’s external auditor, has successfully completed the independent audit and issued the audit report for the fiscal year ending June 30, 2025.

The quality of the City’s financial reporting and the ACFR is evaluated through two key measures: (1) the issuance of an unmodified audit report by independent auditors and (2) the receipt of the Certificate of Achievement for Excellence in Financial Reporting from the Government Finance Officers Association (GFOA). Attaining the latter is regarded as the highest form of recognition in governmental accounting and financial reporting.

Auditors adhere to the standards established by the American Institute of Certified Public Accountants (AICPA). These standards necessitate that auditors provide an opinion on specific aspects of the City’s financial statements, based on a comprehensive process of observations, inquiries, transaction testing, and analysis.

ANALYSIS:

We are pleased to present the City of Hercules Annual Comprehensive Financial Report (ACFR) for the fiscal year ending June 30, 2025. This report adheres to the governmental financial reporting model, which accurately represents the City as a singular government- wide entity while also offering traditional fund-based financial statements.

The City’s financial statements have been thoroughly audited by the independent auditing firm, The Pun Group. They have issued an unmodified audit opinion, often referred to as a "clean" opinion, confirming that the City's financial position as of June 30, 202 5, is fairly presented. The findings in the ACFR indicate that the City continues to uphold a sound and stable financial position.

In addition, the City of Hercules has been honored with the Certificate of Achievement for Excellence in Financial Reporting by the Government Finance Officers Association of the United States and Canada (GFOA) for its FY 2023-24 ACFR. This prestigious recognition reflects the City’s ongoing commitment to transparency and accountability in its financial practices and marks the fifth consecutive year that this esteemed award has been received.

To qualify for the Certificate of Achievement, governments must prepare an annual financial report that is not only clear and well-organized but also compliant with generally accepted accounting principles and applicable legal regulations. It is important to note that this certificate is valid for one year. The FY 2024-25 ACFR has been prepared in accordance with these rigorous standards and has been submitted to the GFOA for evaluation with the aim of receiving another certificate.
54 FILINGS WITH THE STATE CONTROLLER’S OFFICE AND ISSUANCE OF

SUPPLEMENTAL REPORTS
The City is responsible for preparing the City Financial Transactions Report, which is an important document submitted to the California State Controller’s Office. This report provides insight into the city's financial activities and ensures transparency in fiscal management.

In addition to this primary report, the City is re quired to produce several supplemental documents to comply with local and state regulations. These include the Wastewater Financial Report, which outlines the financial status of the city's wastewater operations; the Agreed Upon Procedures (AUP) for Measures B and N, which evaluate specific financial practices; and the GANN Appropriation Limit Calculation, which determines the maximum amount of tax revenue the city can appropriate. All these reports are attached for reference.

OTHER OUTSTANDING AUDITS
The City conducts a separate single audit in accordance with the Federal Single Audit Act and guidance from the U.S. Office of Management and Budget regarding audits of state and local governments. This report must be submitted to the federal clearinghouse no later than March 31 each year. The single audit for fiscal year 2024-25 is currently in progress and will be submitted by the deadline.

FISCAL IMPACT:

The audited results for the fiscal year 2024-25 will serve as a foundational reference in the development of the fiscal year 2026-27 budget. Staff will subsequently return to the Council for the FY 2025-26 mid-year budget update.

The chart below illustrates that the City’s General Fund wrapped up the year with a modest operating surplus of $137,367. This positive outcome reflects the careful and effective management of the City’s finances, showcasing a commitment to fiscal responsibility and prudent budgeting practices.

On June 28, 202 2, the City Council conducted a thorough review and subsequently approved amendments to the financial principles and policies during the budget adoption process, as recorded in Resolution No. 22 -056. This resolution specifies a strategic Revenues $21,780,080
Less: Expenditures (20,668,580)
Less: Transfers (Debt Service Obligation and
Others)
(408,968)
Net Operating Results, excluding one-time
investment on Capital Projects
702,532
Less: Outstanding Encumbrances (565,165)
Net Annual Operating Surplus (Deficit) $137,367
55 allocation of the General Fund surplus intended to bolster the city's financial stability and facilitate future growth. The surplus will be distributed as follows:

 25% will be designated for the Operating Reserve, ensuring the city maintains a robust financial safety net for unforeseen expenses and economic uncertainties.

 25% will fund the Section 115 trust for pensions, reinforcing the city's commitment to providing secure retirement benefits for its employees.

 50% will be invested in future capital improvement projects t o enhance public infrastructure and support community development initiatives.

These allocations reflect a prudent approach to fiscal management and a forward-looking strategy for effectively meeting the community's needs.

ATTACHMENTS:

1. FY 24-25 Annual Comprehensive Financial Report (ACFR)

2. FY 24-25 Hercules Wastewater Fund Financial Statements

3. FY 24-25 Agreed Upon Procedures (AUP) Report on Measure B

4. FY 24-25 Agreed Upon Procedures (AUP) Report on Measure N

5. FY 25-26 Agreed Upon Procedures (AUP) Report on GANN Appropriation Limit Calculation

6. FY 24-25 AU-C260_Required Communications/Conclusion Letter

7. Presentation

56 57
58 CITY OF HERCULES, CALIFORNIA

ANNUAL COMPREHENSIVE

FINANCIAL REPORT

WITH REPORTS ON AUDIT

BY INDEPENDENT

CERTIFIED PUBLIC ACCOUNTANTS

FOR THE YEAR ENDED
JUNE 30, 2025
Prepared by:

The Finance Department
59 60
City of Hercules
Annual Comprehensive Financial Report
For the Year Ended June 30, 2025

Table of Contents
Page

INTRODUCTORY 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 Statements ................................................................................... 1

Managements Discussion and Analysis (Re quired Supplementary Information) (Unaudited) .......................... 7 Basic Financial Statements:

Government-Wide Financial Statements:

Statement of Net Position ............................................................................................................................... 25 Statement of Activities ................................................................................................................................... 26 Fund Financial Statements:

Governmental Fund Financial Statements:

Balance Sheet ........................................................................................................................................... 33 Reconciliation of the Governmental Funds Balance Sheet
to the Government-Wide Statement of Net Position ......................................................................... 34 Statement of Revenues, Expenditures, and
Changes in Fund Balances ................................................................................................................. 35 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 ......................................................................................................................... 39 Statement of Revenues, Expenses, and Changes in Net Position ............................................................ 41 Statement of Cash Flows .......................................................................................................................... 42

Fiduciary Fund Financial Statements:

Statement of Fiduciary Net Position ........................................................................................................ 47 Statement of Changes in Fiduciary Net Position ..................................................................................... 48

Notes to the Basic Financial Statements ............................................................................................................ 53 Required Supplementary Information (Unaudited):

Budgetary Principles .......................................................................................................................................... 111 Budgetary Comparison Schedule:

General Fund ................................................................................................................................................ 112 Landscape & Lighting Assessment District (LLAD) No. 83-2 Special Revenue Fund ............................... 113 61 City of Hercules
Annual Comprehensive Financial Report
For the Year Ended June 30, 2025
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 the Citys Contributions to the OPEB Plan:

PEHMCA Plan ............................................................................................................................................. 120

Schedule of Changes in Net OPEB Liability and Related Ratios:

SOMAR Plan ................................................................................................................................................ 122 Schedule of the Citys Contributions to the OPEB Plan:

SOMAR Plan ................................................................................................................................................ 124 Supplementary Information:

Schedule of Revenues, Expenditures and Change in Fund Balance - Budget and Actual Hercules Debt Service Fund ......................................................................................................................... 129 Nonmajor Governmental Funds:

Combining Balance Sheet ............................................................................................................................ 135 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances .................................... 140 Schedules of Revenues, Expenditures, and Cha nges in Fund Balances Budget and Actual:

State Gas Tax Special Revenue Fund .................................................................................................... 145 Measure C Street Special Revenue Fund ............................................................................................... 146 C.O.P.S. Program (AB 3299) Special Revenue Fund ............................................................................ 147 Victoria By the Bay LLAD No. 2002-1 Special Revenue Fund ............................................................ 148 Hercules Village LLAD No. 2002-2 Special Revenue Fund ................................................................. 149 Baywood LLAD No. 2004-1 Special Revenue Fund ............................................................................. 150 Bayside LLAD No. 2005-1 Special Revenue Fund ............................................................................... 151 Arterial Roadways Special Revenue Fund ............................................................................................. 152 Stormwater Special Revenue Fund ........................................................................................................ 153 Development Services Special Revenue Fund ....................................................................................... 154 AB939 JPA Special Revenue Fund........................................................................................................ 155 Asset Forfeiture Special Revenue Fund ................................................................................................. 156 Bart Park and Ride Special Revenue Fund ............................................................................................ 157 Road Rehabilitation Maintenance Special Revenue Fund ..................................................................... 158 City Capital Projects Fund ..................................................................................................................... 159 Development Impact Fees Capital Projects Fund .................................................................................. 160 62 City of Hercules
Annual Comprehensive Financial Report
For the Year Ended June 30, 2025
Table of Contents (Continued)
Page
FINANCIAL SECTION (Continued)
Supplementary Information (Continued):

Internal Service Funds:

Combining Statement of Net Position .......................................................................................................... 163 Combining Statement of Revenues, Expenses, and Changes in Net Position .............................................. 164 Combining Statement of Cash Flows ........................................................................................................... 165 Fiduciary Funds - Custodial Funds:

Combining Statement of Fiduciary Net Position .......................................................................................... 169 Combining Statement of Changes in Fiduciary Net Position ....................................................................... 170 STATISTICAL SECTION (Unaudited)
Description of Statistical Section Contents ............................................................................................................... 173 Financial Trends:

Net Position by Component Last Ten Fiscal Years ............................................................................. ............ 174 Changes in Net Position Last Ten Fiscal Years ............................................................................... ................ 176 Fund Balances of Governmental F unds Last Ten Fiscal Years ................................................................... .... 180 Changes in Fund Balances of Government al Funds Last Ten Fiscal Years .................................................... 182 Revenue Capacity:

Assessed and Estimated Actual Value of Ta xable Property Last Ten Fiscal Years ........................................ 184 Assessed Value of Property by Use Code Last Ten Fiscal Years ................................................................ .... 186 Direct and Overlapping Property Tax Rates Last Six Fiscal Years ............................................................. .... 188 Principal Property Taxpayers Last Fiscal Year and Nine Years Ago .............................................................. 189 Property Tax Levies and Collecti ons Last Ten Fiscal Years ................................................................... ........ 190 Principal Sales Tax Producers Curre nt Year and Nine Years Ago .................................................................. 191 Debt Capacity:

Ratio of Outstanding Debt by Ty pe Last Ten Fiscal Years ..................................................................... ........ 192 Computation of Direct and Overlapping Debt .................................................................................................... 195 Legal Debt Margin Information Last Ten Fiscal Years ......................................................................... .......... 196 Wastewater Fund Debt Coverage Last Ten Fiscal Years ......................................................................... ........ 198 Demographic and Economic Information:

Demographic and Economic Statistics Last Ten Fiscal Years ................................................................... ...... 199 Operating Information:

Principal Employers Current Fi scal Year and Six Years Ago ......................................................................... 200 Full-Time Equivalent City Government Employ ees by Function Last Ten Fiscal Years ................................ 201 Operating Indicators by Function/Program Last Ten Fiscal Years .............................................................. .... 202 Capital Asset Statistics by Function/ Program Last Ten Fiscal Years .......................................................... .... 206

OTHER REPORT
Independent Auditors Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ..................................................................................... 209 63 64
To the Honorable Mayor, Members of the City Council, and Citizens of Hercules, California:

It is with great pleasure that we present the Annual Comprehensive Financial Report (ACFR) for the City of Hercules for the fiscal year ending June 30, 2025. The Finance Department has meticulously prepared this report in accordance with the financial reporting principles and standards set forth by the Governmental Accounting Standards Board (GASB). The City takes full responsibility for the accuracy of the financial data presented herein and the integrity of the disclosures made.

This report offers a thorough overview of the City's financial condition and the outcomes of its operations, as assessed through the various financial activities of its funds. The detailed disclosures included are intended to enhance the reader's understanding of the City's financial environment, emphasizing both its strengths and challenges.

The core financial statements have undergone a comprehensive audit conducted by The Pun Group, LLC, a respected and licensed public accounting firm qualified to perform audits for California's state and local governments. The primary objective of this independent audit was to provide reasonable assurance that the City's basic financial statements for the fiscal year ending June 30, 2025, are free from material misstatements. The findings of the independent auditors are presented as the initial component of the financial section of this report, establishing a foundation of trust and credibility.

In line with generally accepted accounting principles (GAAP), management is required to provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the Management's Discussion and Analysis (MD&A). This informative section follows the independent auditors' report and is intended to be considered alongside it for a more complete understanding of the City's financial landscape.

CITY PROFILE
The City of Hercules has a noteworthy history that has enabled its transition from a small company town to a thriving and dynamic community. In the late 19th century, the Industrial Revolution

CITY OF HERCULES
111 CIVIC DRIVE, HERCULES CA 94547
PHONE: (510) 799-8200
i
65 significantly transformed the business landscape across the United States, with the California Powder Works company playing a pivotal role in this transformation and establishing what is now known as Hercules.

The City of Hercules has a noteworthy history that has enabled its transition from a small company town to a thriving and dynamic community. In the late 19th century, the Industrial Revolution significantly transformed the business landscape across the United States, with the California Powder Works company playing a pivotal role in this transformation and establishing what is now known as Hercules.

On December 15, 1900, Hercules was officially organized and incorporated in accordance with the laws of the State of California. The City is located in western Contra Costa County, along the northeastern shore of San Pablo Bay. Its advantageous location along the I-80 corridor provides easy access to both San Francisco and Napa. The community is characterized by a diverse demographic, representing a variety of ethnic backgrounds and primarily exhibiting a suburban, family-oriented character. Additionally, there is an emerging New Urbanist, transit-oriented area along the bayfront.

Hercules operates under a "Council-Manager" form of government, in which the City Council appoints a City Manager as the Chief Executive Officer of the municipal corporation. The Council functions as the board of directors and is committed to conducting its business with transparency, actively encouraging public engagement in the governmental process. The City Council comprises five members elected at large, serving staggered, non-partisan four-year terms. Each December, the Council reorganizes and selects a Mayor and Vice Mayor, each serving for a term of one year.

With a workforce of 65 full-time staff members, Hercules serves an estimated population of 26,000 residents across a 19.99-square-mile area. The City offers a comprehensive range of municipal services, including public safety (police), street maintenance, public works, urban planning, building inspections, parks and recreation, and general administrative functions.

The City of Hercules is located along the I-80 corridor and within minutes of both San Francisco
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66 This report details the organizations and activities for which the elected City officials are financially responsible. The accompanying notes to the financial statements provide additional insights into the City's operations, representing it as a comprehensive financial reporting entity.On December 15, 1900, Hercules was officially organized and incorporated in accordance with the laws of the State of California. The City is located in western Contra Costa County, along the northeastern shore of San Pablo Bay. Its advantageous location along the I-80 corridor provides easy access to both San Francisco and Napa. The community is characterized by a diverse demographic, representing a variety of ethnic backgrounds and primarily exhibiting a suburban, family-oriented character. Additionally, there is an emerging New Urbanist, transit-oriented area along the bayfront.

This report details the organizations and activities for which the elected City officials are financially responsible. The accompanying notes to the financial statements provide additional insights into the City's operations, representing it as a comprehensive financial reporting entity.

ECONOMIC CONDITION AND OUTLOOK
The City has made substantial progress in alignment with its strategic priorities. It has successfully adopted a balanced budget and implemented programs to incentivize the establishment of preferred dining and drinking establishments by alleviating move-in costs. Furthermore, the City has advanced the vision for the Hercules Hub by securing $850,000 in federal funding through Congressman John Garamendis office, which is essential to advancing the project through the design phase. In addition, the City has taken on the role of Housing Successor to the former Hercules Redevelopment Agency. This significant action by the City Council effectively unlocks millions of dollars in assets previously held by the Redevelopment Agency, allowing for strategic investments in new affordable housing solutions.

MAJOR INITIATIVES
The City of Hercules' major initiatives for 2025 include the General Plan Update, a significant infrastructure and development project known as the Hercules Hub, and multiple projects under the Fiscal Year 2025-26 Capital Improvement Program (CIP). Furthermore, the ity
transitioned to a new electricity provider, Marin Clean Energy (MCE), in April 2025. i
67 Key Initiatives and Projects:

General Plan Update: This initiative marks the first update to the citys General Plan in 25 years, aiming to establish a comprehensive long-term roadmap for land use, housing, transportation, and economic development through the year 2050.

Capital Improvement Program (CIP): The CIP comprises 40 projects aimed at maintenance and development across various sectors, including:
o Streets:

Bay Trail wall repair
Rehabilitation of Falcon Way pavement
Implementation of traffic calming measures on John Muir Parkway o Buildings and Facilities:

Construction of police lobby areas
Upgrades to heating, ventilation, and air conditioning (HVAC) systems and electrical infrastructure at community centers
Dredging of Refugio Lake
o Parks:

Construction of a picnic area and shade structures at Refugio Park Resurfacing of the recreational court at Foxboro Park
Final design stages for improvements at Beechnut Park
Hercules Hub: The Hercules Hub project is a major development initiative aimed at establishing an interconnected transportation center, which will integrate bus, rail, and ferry services, alongside residential and retail components.

Electricity Provider: In April 2025, the city successfully transitioned to MCE as its electricity provider, which focuses on delivering lower energy costs and enhancing renewable energy options for residents and businesses alike.

The City of Hercules remains committed to advancing these initiatives, which are poised to enhance community infrastructure and services significantly.

BUDGETARY CONTROL
The City upholds strong budgetary controls through the annual budget approved by the City Council. These controls ensure compliance with the provisions established in the authorized budget. Each year, City departments collaborate closely with the City Manager and the Finance Department to develop their operating budget requests. The City Manager and Finance Director conduct a thorough review of these requests and subsequently provide informed recommendations to the City Council regarding the overall budget.

While budgetary control is primarily managed at the fund level, the City has implemented appropriation and transfer procedures to enhance internal controls, ensure accountability, and promote administrative responsiveness. All budget transfers require review and approval from the Finance Director or their designee. Additionally, transfers that affect salaries and benefits require review and approval by the City Manager or their designee. i
68 Budgetary control operates at several levels:
a) General Fund at the department level;
b) Other Funds at the fund level;
c) Capital Projects at the project level, the City Manager's signature is required for approval.

The City Manager holds the authority to approve budget transfers within designated line items of a General Fund department or its associated funds, as specified in the budget resolution.

Furthermore, the City employs encumbrance accounting as a strategic mechanism to ensure effective budget management. An encumbrance signifies a commitment to future expenditures allocated for specific purposes, thus minimizing the available budget for general spending.

At the conclusion of each fiscal year, encumbered appropriations, uncompleted capital appropriations, Participatory Budgeting allocations, and grant projects are carried forward into the subsequent year's budget. Conversely, unencumbered appropriations do not carry over and expire at the end of the fiscal year.

The City remains committed to sound financial management, a principle that is thoroughly reflected in the statements and schedules presented in the financial section of this report.

INTERNAL CONTROL
The City's management is responsible for establishing and maintaining robust internal controls to safeguard City assets from loss, theft, or misuse. In addition to protection, these controls ensure the collection of comprehensive accounting data necessary for the preparation of financial statements in accordance with Generally Accepted Accounting Principles (GAAP).

These internal controls are designed to provide reasonable assurancethough not absolutethat the stated objectives are achieved. The concept of reasonable assurance considers that the costs of implementing a control should not exceed the anticipated benefits. Careful estimation and sound management judgment are essential when evaluating these costs and benefits.

All assessments of internal controls are carried out within this established framework. City management expresses confidence that the current internal accounting controls adequately protect assets and provide reasonable assurance concerning the accurate recording of financial transactions.

CERTIFICATE OF ACHIEVEMENT
The Government Finance Officers Association of the United States and Canada (GFOA) has awarded the City a Certificate of Achievement for Excellence in Financial Reporting in recognition of its Annual Comprehensive Financial Report (ACFR) for the fiscal year ending June 30, 2024.

This accolade signifies the highest standards in governmental accounting and financial reporting.

To attain this esteemed recognition, the City must produce an ACFR that is clear and well- organized and that complies with all applicable program standards. The report must adhere to Generally Accepted Accounting Principles (GAAP) and relevant legal requirements. It is important to note that the Certificate of Achievement is conferred for one year. 69 i
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72 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, 2024
Executive Director/CEO
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74 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 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, 2025, and the related notes to the basic financial statements, which collectivel y comprise the Citys basic financial statements as listed in the table of contents.

In our opinion, the accompanying 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, 2025, and the respective changes in financial position, and, where applicable, cash flows thereof for 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 financial 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 section 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.

Emphasis of a Matter
Change in Accounting Principle
As discussed in Notes 1 and 17 to the financial statements, the City adopted new accounting guidance, GASB Statement No. 101, Compensated Absences during the year ended June 30, 2025. The adoption of this standard resulted in the restatement of the Citys net position as of J une 30, 2024. Our opinion is not modified with respect to this matter.
75 To the Honorable Mayor and the Members of the City Council of the City of Hercules
Hercules, California

Page 2 ends

2 Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States 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 whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Citys ab ility to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter.

Auditors Responsibilities for the Au dit of the Financial Statements Our objectives are to obtain reasonable assurance about whether 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 generally 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 override 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 control 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 Citys internal control. Accord ingly, 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 Citys 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 control-related matters that we identified during the audit.
76 To the Honorable Mayor and the Members of the City Council of the City of Hercules
Hercules, California

Page 3 ends

3 Required Supplementary Information
Accounting principles generally accepted in the United Stat es of America require that Managements Discussion and Analysis, the Budgetary Comparison Schedules General F und and Major Special Revenue Funds, the Schedules of the Citys Proportionate Share of the Plans 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 information is the responsibility of management 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 certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with managements responses to our inquiries, the basic fi nancial 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 procedures 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 Citys basic financial statem ents. 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 management 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 information 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 financial 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 other information included in the annual report. 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 basic financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the basic financial statements, or the other information otherwise appears to be materially misstated. 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.

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

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4 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards , we have also issued our report dated December 18, 2025, on our consideration of the Citys 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 over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the Citys 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 Citys internal contro l over financial reporting and compliance.

Santa Ana, California
December 18, 2025
78 5
MANAGEMENTS DISCUSSIO

MANAGEMENTS DISCUSSION AND ANALYSIS
(UNAUDITED)
79 6
80 CITY OF HERCULES
MANAGEMENTS DISCUSSION AND ANALYSIS (UNAUDITED)
June 30, 2025

7 In this section of the City of Hercules' annual financial report, the management team provides a comprehensive narrative discussion and analysis of the City's financial activities for the fiscal year that ended on June 30, 2025. The purpose of this analysis is to offer insights into the City's financial performance, highlighting key developments and trends. Unless otherwise indicated, the discussion focuses solely on the City's primary governmental activities, intentionally excluding separately reported component units such as affiliated organizations or special districts. Readers are strongly encouraged to review the detailed information presented alongside the accompanying financial statements and disclosures that follow this narrative, as these documents offer essential context and supporting details regarding the City's overall financial position and operations.

FINANCIAL HIGHLIGHTS
As of June 30, 2025, the Citys financial position is strong, with total assets and deferred outflows exceeding liabilities and deferred inflows by $122,098,662. Of this amount, $16,627,247 is restricted for specific projects, while $81,614,432 is invested in capital assets. The unrestricted net position totals $23,856,983, providing the City with the flexibility to meet operational needs and commitments to residents and creditors. This demonstrates the Citys commitment to sound financial management. The restricted portion of the net position has increased by 24% compared to the previous year. This growth indicates that the revenues allocated to specific streets, roads, and development projects have surpassed the related expenses during this period. This favorable financial outcome is primarily due to the timing of expenditures associated with these projects.

Additionally, the increased contributions to the pension fund have further contributed to this rise.

The City's governmental funds have reported a total ending fund balance of $47,149,157. Within this total, $12,940,949 is explicitly allocated to address the City's immediate and forthcoming financial obligations. This available balance serves as a critical resource for supporting public services and initiatives that contribute to the community's well-being. Furthermore, the fund balance for governmental funds has increased by 5%, predominantly due to revenues designated for specific development projects, reflecting the timing of related expenditures, and an additional contribution to the pension fund.

The General Fund committed a total of $7,884,421 specifically to repay loans and support various capital projects essential for community development. Additionally, the fund assigned $7,139,026 reserved for insurance purposes and earmarked by the Council to address economic uncertainties and manage any potential short-term structural deficits that may arise in the future.

This careful financial planning ensures the community is prepared for current obligations and unforeseen challenges.

The total value of capital assets, after accounting for depreciation and amortization, has declined to $124,030,224, down from $126,424,507. This decrease is attributed to the depreciation and amortization of assets, which represents the systematic allocation of asset costs over their useful lives, leading to a reduction in their book value.

OVERVIEW OF THE FINANCIAL STATEMENTS

This discussion and analysis is intended to serve as an introduction to the Citys basic financial statements. The Citys 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. 81 CITY OF HERCULES
MANAGEMENTS DISCUSSION AND ANALYSIS (UNAUDITED) (CONTINUED) June 30, 2025

8 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 Citys 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 the 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.

The Citys financial report 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 Citys 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 governments 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 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 Citys near-term financing requirements. Governmental funds use 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 .
82 CITY OF HERCULES
MANAGEMENTS DISCUSSION AND ANALYSIS (UNAUDITED) (CONTINUED) June 30, 2025

9 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, 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 make up at least 10% of the total fund category or type (governmental or business type) and at least 5% of the aggregate amount of all governmental and enterprise funds.

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 Citys 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.

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 Citys 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 Citys 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 Citys General Fund and Major Special Revenue Funds, and notes to required supplementary information.

GOVERNMENT-WIDE FINANCIAL ANALYSIS

The net position serves as an important indicator of a government's financial stability over time. For the City, at the conclusion of the most recent fiscal year, the total value of assets and deferred outflows exceeded the total of liabilities and deferred inflows by a $122,098,662. This figure reflects the City's overall financial health. Breaking this down further, 67% of the combined net position is attributed to the Citys investment in capital assets, such as buildings, infrastructure, and equipment, after deducting the associated debt obligations. This indicates a strong commitment to maintaining and enhancing physical assets for public benefit. Furthermore, 14% of the City's net position is restricted externally, meaning it is earmarked for specific purposes and cannot be utilized freely. These restrictions underscore the importance of accountability in the Citys financial management. 83 CITY OF HERCULES
MANAGEMENTS DISCUSSION AND ANALYSIS (UNAUDITED) (CONTINUED) June 30, 2025

10 Condensed Statements of Net Position

The following is a condensed Statement of Net Position as of June 30, 2025 and June 30, 2024 which allows for analysis of the Citys net position as a whole.

Governmental Business-type
Activities Activities Total
2025 2024 2025 2024 2025 2024
Assets
Current and other assets 62,256,807$ 59,060,202$ 16,631,842$ 17,314,937$ 78,888,649$ 76,375,139$ Capital assets 73,833,304 76,635,566 50,196,920 49,788,941 124,030,224 126,424,507 Total assets 136,090,111 135,695,768 66,828,762 67,103,878 202,918,873 202,799,646 Deferred Outflows of Resources
Related to OPEB 1,038,699 932,643 53,726 48,240 1,092,425 980,883 Related to pensions 5,705,985 7,675,747 278,792 400,110 5,984,777 8,075,857 Total Deferred Outflows of
Resources 6,744,684 8,608,390 332,518 448,350 7,077,202 9,056,740 Liabilities
Long-term Liabilities 43,855,966 42,672,778 27,217,663 27,236,668 71,073,629 69,909,446 Other Liabilities 4,259,075 5,159,088 1,188,225 3,243,022 5,447,300 8,402,110 Total Liabilities 48,115,041 47,831,866 28,405,888 30,479,690 76,520,929 78,311,556 Deferred Inflows of Resources
Related to OPEB 2,166,260 2,008,555 112,048 103,891 2,278,308 2,112,446 Related to pensions 719,106 1,539,203 45,959 85,610 765,065 1,624,813 Leases 8,333,111 8,511,136 - - 8,333,111 8,511,136 Total Deferred Inflows of
Resources 11,218,477 12,058,894 158,007 189,501 11,376,484 12,248,395 Net Position:

Net Investment in Capital Assets 58,084,454 59,889,211 23,529,978 20,884,471 81,614,432 80,773,682 Restricted 16,609,847 13,368,313 17,400 - 16,627,247 13,368,313 Unrestricted 8,806,976 11,155,874 15,050,007 15,998,566 23,856,983 27,154,440 Total Net Position 83,501,277$ 84,413,398$ 38,597,385$ 36,883,037$ 122,098,662$ 121,296,435$ Note: A change in accounting estimate is treated prospectively, prior periods are not restated.

A significant component of the Citys net position, amounting to $81,614,432, represents the net value of its capital assets. These assets encompass land, easements, buildings, improvements, infrastructure, and various types of equipment. The net investment in Capital Assets is determined by subtracting any outstanding debt associated with the acquisition of these assets. The City uses these capital assets to deliver essential services to its residents, indicating they are not available for discretionary spending or future projects.

It's also crucial to understand that although the City reports its investment in capital assets after accounting for related debt, the funds necessary to repay this debt must be sourced from separate financial channels. This is because the capital assets themselves cannot be liquidated to cover these liabilities, emphasizing the importance of prudent financial management to ensure that obligations can be met.

The remainder of Citys net position is divided into two portions: restricted and unrestricted. The restricted portion amounts to $16,627,247, representing resources that have external restrictions imposed by grantors and other governments.
84 CITY OF HERCULES
MANAGEMENTS DISCUSSION AND ANALYSIS (UNAUDITED) (CONTINUED) June 30, 2025

11 Meanwhile, the unrestricted portion of the Citys net position is $23,856,983. Its important to note that GASB 34 includes long-term payroll liabilities in the unrestricted category. These reclassified liabilities encompass pensions, other post-employment benefits (OPEB), and compensated absences. They can accumulate over decades as part of the Citys employment agreements, and their timing for being recognized as current-year expenses is not straightforward or easily predictable.

Statement of Activities

The following is a condensed Statement of Activities for the fiscal years ended June 30, 2025 and June 30, 2024:

Governmental Business-type
Activities Activities Total
2025 2024 2025 2024 2025 2024
Revenues
Program revenues
Fees, Fines and Charges for Services 4,143,161$ 3,388,496$ 6,330,489$ 5,891,836$ 10,473,650$ 9,280,332$ Operating Grants/Contributions 6,237,477 6,413,314 6,237,477 6,413,314 Capital Grants/Contributions 364,310 1,909,108 364,310 1,909,108 General revenues
Property taxes 1,732,539 1,653,626 1,732,539 1,653,626 Sales taxes 5,669,937 5,753,278 5,669,937 5,753,278 Franchise taxes 918,508 972,391 918,508 972,391 Utility users taxes 4,212,443 4,011,166 4,212,443 4,011,166 Other taxes 1,742,620 952,561 1,742,620 952,561 Motor Vehicles Taxes In-Lieu 2,655,580 2,556,520 2,655,580 2,556,520 Interest and Investment Income 2,997,835 3,076,628 905,811 851,980 3,903,646 3,928,608 Total revenues 30,674,410 30,687,088 7,236,300 6,743,816 37,910,710 37,430,904 Expenses
General Government 6,232,379 5,378,751 6,232,379 5,378,751 Public Safety 10,636,628 10,027,823 10,636,628 10,027,823 Streets and Public Works 8,797,923 8,736,149 8,797,923 8,736,149 Parks and Recreation 3,254,269 2,955,545 3,254,269 2,955,545 Community Development 1,271,429 1,297,680 1,271,429 1,297,680 Interest on Long-Term Debt 873,180 1,022,790 873,180 1,022,790 Wastewater 5,487,763 5,262,133 5,487,763 5,262,133 Total expenses 31,065,808 29,418,738 5,487,763 5,262,133 36,553,571 34,680,871 Increase (Decrease) in Net Position (391,398) 1,268,350 1,748,537 1,481,683 1,357,139 2,750,033 before special item
Net Position - Beginning 84,413,398 83,145,048 36,883,037 35,401,354 121,296,435 118,546,402 Change in accounting principale (GASB 101)* (520,723) - (34,189) - (554,912) - Net Position - Ending 83,501,277$ 84,413,398$ 38,597,385$ 36,883,037$ 122,098,662$ 121,296,435$ *Note: A change in accounting estimate is treated prospectively, prior periods are not restated.

The net position has increased by 1% year over year, primarily due to higher tax revenues. This increase in tax revenues is mainly attributable to the Utility Users' Tax (UUT). In November 2022, voters approved continuing the UUT rate at 8% through Measure N. Consequently, although the percentage remains unchanged, rising costs for electricity, gas, telecommunications, and waste management services have naturally led to higher tax revenues.

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MANAGEMENTS DISCUSSION AND ANALYSIS (UNAUDITED) (CONTINUED) June 30, 2025

12 Governmental Activities Revenues

Governmental activities revenues are classified into two primary categories: Program Revenues and General Revenues. Program Revenues comprise charges for services, including traffic safety fines, licenses, permits, plan check fees, building inspections, and various construction-related fees. This category also includes contributions and grants, which encompass amounts provided by developers and financial assistance from state and federal government entities. Conversely, General Revenues consist of general taxes, such as property and sales taxes. In the most recent fiscal year, total revenues experienced an increase of $479,806 compared to the prior year.

Charges for services have increased by $754,665 million, or 22%, compared to the previous year, mainly due to enhanced activities within the Parks and Recreation programs.

Operating grants and contributions have declined by 3% relative to the prior year, primarily due to a reduction in the number of awards from external agencies.

Capital contributions and grants decreased by $1.5 million, or 81%, from the previous year, largely due to a significant slowdown in activities associated with grant-funded capital projects.

Property taxes have risen by 5% compared to the prior year, reflecting continued growth in residential assessed property values.

Sales taxes have decreased by 1% when compared to the previous year, indicative of a normalization in sales trends.

The utility users' tax has increased by 5% from the previous year, which aligns with the ongoing rise in utility costs.

Additionally, other taxes have risen by $790,059, or 83%, compared to the previous year. This increase is primarily due to the distribution of excess funds resulting from California's Redevelopment Agency (RDA) oversight process, where remaining funds after fulfilling "Recognized Obligation Payment Schedule" (ROPS) obligations are allocated to local taxing entities.

Governmental Activities Expenses

Governmental activities expenses, excluding transfers, have increased by $1.7 million, representing a 6% growth compared to the previous year. The most significant increases in expenditures are observed in the following areas: general government expenditures, which rose by 16%; public safety costs, which increased by 6%; and parks and recreation costs, which went up by 10%. A substantial portion of this increase in expenses is attributed to personnel costs, including escalating pension benefit expenses, as well as enhanced funding for parks and recreation programs resulting from the ongoing reopening of these initiatives following COVID-19 closures.

Business-Type Activities

As of June 30, 2025, the net position of business-type activities amounted to $38.5 million, representing an increase of $1.7 million from the prior fiscal year. Program revenues totaled $7.2 million, while program expenses totaled $5.5 million.
86 CITY OF HERCULES
MANAGEMENTS DISCUSSION AND ANALYSIS (UNAUDITED) (CONTINUED) June 30, 2025

13 Utility service charges comprise 87% of the overall revenue generated by the Citys enterprise funds, with the predominant portion of revenue stemming from sewer service fees. Notably, revenue from sewer collections increased by $438,653, or 7%, primarily due to a rate adjustment implemented to address rising costs for operations, maintenance, and critical infrastructure improvements required for the aging sewer system. This adjustment reflects a proactive strategy to ensure the sustainability and reliability of essential services.

FINANCIAL ANALYSIS OF THE CITYS 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 Citys governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the Citys financing requirements.

As of June 30, 2025, the City's governmental funds reported a combined fund balance of $47,149,157, indicating an increase of $2,341,603. This positive trend is mainly due to a strong local economy, which has enhanced local tax revenues.

Several factors have contributed to this growth, including increased revenues from the Utility User Tax (UUT) due to rising utility costs, improved investment income, and a commitment to conservative fiscal management. It is important to emphasize that the City is adopting a prudent budgeting approach in response to potential economic uncertainties that could lead to a recession. This strategy is designed to ensure financial stability and readiness for future challenges. Furthermore, $12,940,949 of the total fund balances is categorized as an unassigned fund balance, which is available to address the City's current and future financial requirements.

General Fund

The General Fund is the Citys primary operating fund. As of June 30, 2025, the unassigned fund balance is recorded at $13,802,029, resulting in a total fund balance of $32,731,580. A detailed analysis of the unassigned and total fund balances in relation to total fund expenditures provides valuable insights into the liquidity of the General Fund. The unassigned fund balance constitutes 67% of total General Fund expenditures, while the total fund balance represents 158%. It is important to note that the fund balance has decreased by $2,216,204, primarily due to one-time investments in capital projects designed to enhance the Citys streets, parks, and facilities.

Landscape and Lighting Assessment District (LLAD) No. 83-2

The fund balance for Landscape & Lighting Assessment District (LLAD) No. 83-2 has increased by $477,187. The increase in the fund balance is attributed to an assessment fee, which is based on a

2.37% rise in the Consumer Price Index (CPI). This amount will be allocated for the ongoing maintenance of landscaping and operational streetlights along public streets, as well as for fire breaks adjacent to open spaces.

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MANAGEMENTS DISCUSSION AND ANALYSIS (UNAUDITED) (CONTINUED) June 30, 2025

14 Hercules Debt Service Fund

The Hercules Debt Service Fund recorded an increase in its fund balance of $113,807. The resources entering the fund exceed the total resources, ensuring sufficient funds are allocated from various sources to meet upcoming debt service obligations.

Other Governmental Funds

Additionally, other governmental funds experienced a combined increase of $3,966,809 in their fund balances, which will be allocated to specific purposes based on constraints that classify them as restricted, committed, or assigned. Any residual negative balance in these funds would be reported as unassigned. The significant increase in fund balance is primarily attributable to Citys investment to capital projects, funding the deferred infrastructure upgrade and maintenance.

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

Total revenue from governmental funds decreased by $52,040, or 0.17%. This shift in revenue was due to a 17% increase in charges for services, licenses, permits, and miscellaneous revenues compared to the previous year. However, this positive development was counterbalanced by a 26% reduction in intergovernmental revenues, primarily due to decreased grant reimbursements as capital projects reached completion.

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

Percent of Percent of Percent of
Amount Total Amount Total Amount Change
Taxes and assessments 17,837,080$ 58.74% 16,617,812$ 54.63% 1,219,268$ 7.34% Licenses and Permits 738,897 2.43% 621,826 2.04% 117,071 18.83% Fines and Forfeitures 37,136 0.12% 34,409 0.11% 2,727 7.93% Use of Money and Property 3,065,119 10.09% 3,085,819 10.14% (20,700) -0.67% Intergovernmental 5,233,335 17.23% 7,085,810 23.29% (1,852,475) -26.14% Charges for Services 3,126,167 10.29% 2,750,986 9.04% 375,181 13.64% Miscellaneous 330,584 1.09% 223,696 0.74% 106,888 47.78% 30,368,318$ 100.00% 30,420,358$ 100.00% (52,040)$ -0.17% 2025 2024 Increase (Decrease)
88 CITY OF HERCULES
MANAGEMENTS DISCUSSION AND ANALYSIS (UNAUDITED) (CONTINUED) June 30, 2025

15 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 5,559,903$ 19.68% 4,768,426$ 17.08% 791,477$ 16.60% Public Safety 9,934,449 35.17% 9,184,101 32.91% 750,348 8.17% Streets and Public Works 5,253,403 18.60% 5,503,214 19.72% (249,811) -4.54% Parks and Recreation 3,095,102 10.96% 2,677,208 9.59% 417,894 15.61% Community Development 1,028,404 3.64% 1,285,428 4.61% (257,024) -20.00% Debt Service 1,896,102 6.71% 1,950,588 6.99% (54,486) -2.79% Capital Outlay 1,479,731 5.24% 2,541,812 9.11% (1,062,081) -41.78% 28,247,094$ 100.00% 27,910,777$ 100.00% 336,317$ 1.20% 2025 2024 Increase (Decrease)

During the fiscal year ending June 30, 2025, total governmental funds expenditures increased by $336,317, a 1.20% increase over the previous year. This growth can be attributed to several key factors.

First, salary adjustments played a significant role, reflecting a commitment to fair compensation practices.

Additionally, the ongoing reopening of Parks and Recreation programs revitalized community activities, leading to increased overall spending. Significantly, these rising costs are offset by user fees.

In contrast, expenditures for capital projects and community development declined, as most of the projects were completed during this fiscal year. It is also crucial to recognize that fluctuations in operational costs can affect budgeting in unpredictable ways. It is also important to acknowledge that variations in costs due to normal operational fluctuations can affect budgeting in unpredictable ways.

89 CITY OF HERCULES
MANAGEMENTS DISCUSSION AND ANALYSIS (UNAUDITED) (CONTINUED) June 30, 2025

16 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 flow using the full accrual basis of accounting.

Enterprise funds serve as a financial tool to report on the City's business-type activities, particularly focusing on the operations of the Wastewater Fund. On January 23, 2001, the cities of Hercules and Pinole entered into a collaborative agreement concerning the operation and ownership of the Pinole/Hercules Wastewater Treatment Plant. This joint agreement delineates that the City of Hercules holds a 50% undivided ownership stake in the Plant, while the City of Pinole is entrusted with the crucial responsibility of managing and operating the facility.

In addition to its ownership interest in the treatment plant, the City of Hercules is tasked with the operation and maintenance of its extensive wastewater collection system. This system is comprised of over 60 miles of underground piping, augmented by five strategically placed lift stations designed to facilitate the efficient transportation of wastewater. Meanwhile, the City of Pinole meticulously maintains the records and accounts for all financial transactions associated with the operations of the wastewater treatment plant, ensuring transparency and accuracy.

At the conclusion of the fiscal year, the enterprise fund reported a significant net investment in capital assets amounting to $23,529,978. Additionally, the fund reflected a robust unrestricted net position of $15,050,007, indicating a solid financial standing that supports ongoing operations and future investments.

Internal service funds act as a financial mechanism for the City, designed to gather and distribute costs among its various operational functions. These funds play a crucial role in managing expenses related to essential services, including the replacement of vehicles, upgrades to information technology, and ongoing maintenance of city facilities.

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17 At the end of the fiscal year, the total net position of the internal service funds amounted to $1,661,931.

This total includes $725,240 allocated for strategic capital investments in vital assets, such as vehicles and technological infrastructure. However, it is essential to note that the net position decreased by $212,546. This decline was primarily due to significant expenditures related to replacing aging vehicles, equipment, and the Citys facilities. This reflects the Citys commitment to operational efficiency and maintaining a high quality of service.

GENERAL FUND BUDGETARY HIGHLIGHTS

The City of Hercules has adopted a well-structured Fiscal Year (FY) 2024-25 General Fund Budget totaling $19.4 million, which strikes a careful balance between revenues and expenditures. This budget, approved in June 2024, is designed to ensure the continued delivery of vital core services, including police protection, park maintenance, and road upkeep, while also paving the way for future development.

Notable highlights include significant funding for a range of park projects, including the installation of inviting shade structures at Refugio Park and the comprehensive redesign of Beechnut Park. Additionally, essential repairs for public buildings will be prioritized to maintain their functionality and enhance community spaces. Ultimately, the budget seeks to improve residents' quality of life, even amid constrained resources.

Key Budget Highlights:

Balanced Budget: The FY 2024-25 budget successfully aligns revenues with expenditures, maintaining reserves to safeguard against economic uncertainties.

Total Budget: The overall budget for FY 2024-25 stands at approximately $19.4 million, reflecting a commitment to prudent financial management.

Strategic Goals: This budget aligns seamlessly with the Council's 2024-26 Strategic Goals, which focus on fostering an improved quality of life and creating opportunities within the Hercules community.

Core Services: A significant portion of the budget is directed toward sustaining essential services, ensuring residents benefit from effective police services, well-maintained parks, and reliable road networks.

Capital Improvement & Parks Focus:

o Refugio Park: Allocated funds will support the construction of a welcoming picnic area and shade structures, enhancing usability and enjoyment for all visitors. o Beechnut Park: The budget will facilitate progress on the final design for exciting improvements that aim to transform this space into a community hub. o Foxboro Park: Plans are in place to resurface the recreational courts, ensuring safe and attractive areas for sports and community activities.
o Public Buildings: The budget also includes critical repairs for City Hall, the Community Swim Center, and the Ohlone Community Center, ensuring these facilities continue to serve the needs of the community effectively.

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MANAGEMENTS DISCUSSION AND ANALYSIS (UNAUDITED) (CONTINUED) June 30, 2025

18 CAPITAL ASSETS

As of June 30, 2025, the City has made a substantial investment in capital assets for both its governmental and business-type activities, amounting to $124,030,224 after accounting for accumulated depreciation and amortization. This significant investment reflects the Citys commitment to maintaining and enhancing its infrastructure and facilities, which include a variety of essential components. The capital assets encompass valuable land holdings, various structures and improvements that support community functions, leasehold improvements that enhance operational facilities, a range of equipment necessary for effective service delivery, and critical infrastructure such as roads and bridges that facilitate transportation and connectivity throughout the City.

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

Capital Assets

Governmental Business-type
Activities Activities Total
2025 2024 2025 2024 2025 2024
Land 5,081,587$ 5,081,587$ 191,700$ 191,700$ 5,273,287$ 5,273,287$ Construction in progress 2,013,320 1,565,252 - 13,642,030 2,013,320 15,207,282 Land Improvements 16,001,080 16,001,080 - - 16,001,080 16,001,080 Buildings & Improvements 26,839,133 26,792,183 11,335,198 38,325,271 38,174,331 65,117,454 Equipment 8,027,665 7,892,230 250,345 250,345 8,278,010 8,142,575 Infrastructure 115,367,125 115,367,125 57,016,465 14,945,319 172,383,590 130,312,444 Intangible - Right to Use Assets 342,208 99,859 - - 342,208 99,859 Total 173,672,118 172,799,316 68,793,708 67,354,665 242,465,826 240,153,981 Accumulated Depreciation and Amortization (99,838,814) (96,163,750) (18,596,788) (17,565,724) (118,435,602) (113,729,474) Net Capital Assets 73,833,304$ 76,635,566$ 50,196,920$ 49,788,941$ 124,030,224$ 126,424,507$

Additional information regarding capital assets is presented in note 6.

DEBT ADMINISTRATION

As of the conclusion of the current fiscal year, the City has a total of $45,125,726 in outstanding long- term obligations. This amount encompasses $16,339,558 in bonds that are secured by the Citys lease rental payments and other dedicated revenue sources. These financial instruments reflect the Citys commitment to funding essential projects while managing its debt obligations through consistent revenue streams.

The following table shows the composition of the Citys bonds and notes outstanding for governmental and proprietary funds.

Long-Term Obligations

Governmental Business-Type
Activities Activities Total
2025 2024* 2025 2024* 2025 2024
Bonds Payable 11,984,558$ 12,716,619$ 4,355,000$ 7,730,000$ 16,339,558$ 20,446,619$ Unamortized Discount/Refunding (224,847) (242,144) - - (224,847) (242,144) Lease Payable 3,752,666 3,878,809 - - 3,752,666 3,878,809 Subscription Liability 182,449 33,133 - - 182,449 33,133 Loans Payable 4,961,455 5,037,588 18,682,749 19,856,034 23,644,204 24,893,622 Compensated Absences 1,344,198 1,258,334 87,498 90,235 1,431,696 1,348,569 Total 22,000,479 22,682,339 23,125,247 27,676,269 45,125,726 50,358,608 Less Current Portion (2,069,317) (1,504,863) (1,643,853) (1,590,320) (3,713,170) (3,095,183) Net Long-Term Obligations 19,931,162$ 21,177,476$ 21,481,394$ 26,085,949$ 41,412,556$ 47,263,425$ *2024 balances were restated due to the implementation of GASB Statement No. 101, Compensated Absences. 92 CITY OF HERCULES
MANAGEMENTS DISCUSSION AND ANALYSIS (UNAUDITED) (CONTINUED) June 30, 2025

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

ECONOMIC FACTORS AND NEXT YEARS BUDGET

The City of Hercules' FY 2025-26 Budget is primarily focused on advancing its Capital Improvement Program (CIP) for vital infrastructure upgrades. This ambitious budget encompasses 40 innovative projects designed to enhance community living, including transformative improvements to the Hercules Hub, essential upgrades to facilities such as the Police Lobby and Swim Centers, and the revitalization of local parks like Beechnut Park and Refugio Valley Park. Additionally, it addresses necessary repairs for streets and sewer systems. These initiatives are guided by the 2024-26 Strategic Goals, which prioritize fiscal responsibility, community safety, infrastructure enhancement, and the initiation of new housing programs, particularly aimed at assisting low-income residents.

Key Themes & Goals:

Strategic Alignment: This budget robustly supports the City Council's 2024-26 Strategic Goals, emphasizing financial stability, the creation of a safe community, infrastructure advancement, and stimulating economic growth.

Fiscal Sustainability: Ensuring fiscal health is paramount, with a commitment to building upon actions from previous years that successfully navigated financial challenges.

Capital Improvements (CIP):

Hercules Hub: Ongoing progress on this landmark community project, which aims to serve as a central hub for residents and visitors alike.

Police Department: Exciting construction projects are set to kick off in October 2025, beginning with the renovation of the Police Lobby to improve accessibility and functionality.

Community Facilities: Significant upgrades to heating, ventilation, air conditioning (HVAC), and electrical systems at the Community Swim Center, Ohlone Community Center, and Foxboro Community Center will enhance user experience and operational efficiency.

Parks & Recreation: Design and construction plan for Beechnut Park will introduce vibrant green spaces, while the picnic area at Refugio Valley Park will become a recreational haven. Upgrades to the courts at Foxboro Park and repairs to the Bay Trail wall will further enrich outdoor community offerings.

Streets & Sewers: Ongoing maintenance and thoughtful upgrades will ensure safe and reliable infrastructure for the community.

Community Development & Housing:

Home Repair Program: The launch of a new home repair program will provide essential support to low-income residents, helping them maintain safe and healthy living environments.

Affordable Housing: The City is preparing to champion the development of new affordable housing initiatives, recognizing the critical need for accessible housing options.

Economic Growth: By leveraging business attraction grants and offering robust support for local retailers, the city aims to foster a thriving economic environment that benefits all residents. 93 CITY OF HERCULES
MANAGEMENTS DISCUSSION AND ANALYSIS (UNAUDITED) (CONTINUED) June 30, 2025

20 REQUEST FOR INFORMATION

This financial report is designed to provide a general overview of the Citys finances for all those with an interest in the governments 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.
94 BASIC FINANCIAL STATEMENTS
21 95
22 96

GOVERNMENT-WIDE FINANCIAL STATEMENTS
23 97
24 98
Governmental Business-Type
Activities Activities Total
ASSETS
Cash and investments 44,882,075$ 16,611,554$ 61,493,629$ Cash and investments with fiscal agent 2,285,577 2,888 2,288,465 Cash and investments held in trust 2,643,261 - 2,643,261 Accounts receivable 2,486,421 - 2,486,421 Prepaid items 11,085 - 11,085 Loan receivable 1,251,758 - 1,251,758 Lease receivable 8,360,235 - 8,360,235 Net other postemployment benefits ("OPEB") assets - PEHMCA 336,395 17,400 353,795 Capital Assets:

Nondepreciable 7,094,907 191,700 7,286,607 Depreciable and amortizable, net 66,738,397 50,005,220 116,743,617 Total assets 136,090,111 66,828,762 202,918,873

DEFERRED OUTFLOWS OF RESOURCES
Pension-related deferred outflows of resources 5,705,985 278,792 5,984,777 OPEB-related deferred outflows of resources (PEHMCA) 258,910 13,392 272,302 OPEB-related deferred outflows of resources (SOMAR) 779,789 40,334 820,123 Total deferred outflows of resources 6,744,684 332,518 7,077,202

LIABILITIES
Accounts payable 1,146,188 527,334 1,673,522 Retention payable - 632,081 632,081 Salaries and benefits payable 349,227 14,223 363,450 Accrued interest payable 497,119 14,587 511,706 Deposit payable 1,362,928 - 1,362,928 Claims payable, due in one year 903,613 - 903,613 Long-term debt:

Due within one year 2,069,317 1,643,853 3,713,170 Due in more than one year 19,931,162 24,481,394 44,412,556 Net aggregate pension liabilities - due in more than one year 20,018,986 997,425 21,016,411 Net OPEB liabilities - SOMAR - due in more than one year 1,836,501 94,991 1,931,492 Total liabilities 48,115,041 28,405,888 76,520,929

DEFERRED INFLOWS OF RESOURCES
Pension-related deferred inflows of resources 719,106 45,959 765,065 OPEB-related deferred inflows of resources (PEHMCA) 1,295,317 66,999 1,362,316 OPEB-related deferred inflows of resources (SOMAR) 870,943 45,049 915,992 Leases 8,333,111 - 8,333,111 Total deferred inflows of resources 11,218,477 158,007 11,376,484

NET POSITION
Net investment in capital assets 58,084,454 23,529,978 81,614,432 Restricted for:

Public safety 248,680 - 248,680 Streets and roads 6,515,721 - 6,515,721 Development 4,580,213 - 4,580,213 Debt service 2,285,577 - 2,285,577 Net OPEB assets 336,395 17,400 353,795 Pension 2,643,261 - 2,643,261 Total restricted 16,609,847 17,400 16,627,247 Unrestricted 8,806,976 15,050,007 23,856,983 Total net position 83,501,277$ 38,597,385$ 122,098,662$ Primary Government
City of Hercules
Statement of Net Position
June 30, 2025
See accompanying Notes to the Basic Financial Statements. 25 99
Operating Capital
Charges for Grants and Grants and
Functions/Programs Expenses Services Contributions Contributions Total Primary Government
Governmental Activities:

General government 6,232,379$ 938,388$ -$ -$ 938,388$ Public safety 10,636,628 129,096 316,097 - 445,193 Streets and public works 8,797,923 690,407 5,921,380 364,310 6,976,097 Parks and recreation 3,254,269 1,742,283 - - 1,742,283 Community development 1,271,429 642,987 - - 642,987 Interest 873,180 - - - - Total governmental activities 31,065,808 4,143,161 6,237,477 364,310 10,744,948 Business-Type Activities:

Wastewater 5,487,763 6,330,489 - - 6,330,489 Total business-type activities 5,487,763 6,330,489 - - 6,330,489 Total primary government 36,553,571$ 10,473,650$ 6,237,477$ 364,310$ 17,075,437$ Program Revenues
City of Hercules
Statement of Activities
For the Year Ended June 30, 2025
See accompanying Notes to the Basic Financial Statements. 26 100
Governmental Business-Type
Functions/Programs Activities Activities Total
Primary Government
Governmental Activities:

General government (5,293,991)$ -$ (5,293,991)$ Public safety (10,191,435) - (10,191,435) Streets and public works (1,821,826) - (1,821,826) Parks and recreation (1,511,986) - (1,511,986) Community development (628,442) - (628,442) Interest (873,180) - (873,180) Total governmental activities (20,320,860) - (20,320,860) Business-Type Activities:

Wastewater - 842,726 842,726 Total business-type activities - 842,726 842,726 Total primary government (20,320,860) 842,726 (19,478,134) General Revenues:

Property taxes 1,732,539 - 1,732,539 Sales and use taxes 5,669,937 - 5,669,937 Franchise taxes 918,508 - 918,508 Utility users taxes 4,212,443 - 4,212,443 Other taxes 1,742,620 - 1,742,620 Unrestricted motor vehicle taxes in-lieu 2,655,580 - 2,655,580 Use of money and property 2,997,835 905,811 3,903,646 Total general revenues 19,929,462 905,811 20,835,273 Changes in net position (391,398) 1,748,537 1,357,139 Net Position:

Beginning of year, as previously reported 84,413,398 36,883,037 121,296,435 Change in accounting principle (GASB 101) (Note 17) (520,723) (34,189) (554,912) Beginning of year, as restated 83,892,675 36,848,848 120,741,523 End of year 83,501,277$ 38,597,385$ 122,098,662$ Changes in Net Position
Net (Expense) Revenue and
City of Hercules
Statement of Activities (Continued)
For the Year Ended June 30, 2025
See accompanying Notes to the Basic Financial Statements. 27 101
28 102

FUND FINANCIAL STATEMENTS
29 103
30 104
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.

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.
31 105
32 106
Landscape &
Lighting Assessment Other
General District Hercules Deb t Governmental
Fund (LLAD) No. 83-2 Service Fund Funds Total
ASSETS
Cash and investments 28,838,772$ 1,363,526$ -$ 12,773,112$ 42,975,410$ Cash and investments with fiscal agent - - 2,285,577 - 2,285,577 Cash and investments held in trust 2,643,261 - - - 2,643,261 Accounts receivable 1,509,578 - - 976,843 2,486,421 Prepaid items 11,085 - - - 11,085 Due from other funds 1,208,699 - - - 1,208,699 Advances to other funds 447,174 - - - 447,174 Loans receivable 1,251,758 - - - 1,251,758 Lease receivable 520,154 - 7,840,081 - 8,360,235 Total assets 36,430,481 1,363,526 10,125,658 13,749,955 61,669,620

LIABILITIES
Accounts payable 599,121 85,639 - 420,997 1,105,757 Accrued wages 305,535 10,219 - 19,888 335,642 Deposit payable 1,166,800 - - 196,128 1,362,928 Claims payable 903,613 - - - 903,613 Due to other funds - - - 1,208,699 1,208,699 Advances from other funds - 358,974 - 88,200 447,174 Total liabilities 2,975,069 454,832 - 1,933,912 5,363,813

DEFERRED INFLOWS OF RESOURCES
Unavailable revenue 230,802 - - 592,737 823,539 Leases 493,030 - 7,840,081 - 8,333,111 Total deferred inflows of resources 723,832 - 7,840,081 592,737 9,156,650

FUND BALANCES
Nonspendable 1,262,843 - - - 1,262,843 Restricted 2,643,261 908,694 2,285,577 9,636,480 15,474,012 Committed 7,884,421 - - 2,447,906 10,332,327 Assigned 7,139,026 - - - 7,139,026 Unassigned (deficit) 13,802,029 - - (861,080) 12,940,949 Total fund balances 32,731,580 908,694 2,285,577 11,223,306 47,149,157 Total liabilities, deferred inflows
of resources and fund balances 36,430,481$ 1,363,526$ 10,125,658$ 13,749,955$ 61,669,620$ City of Hercules
Balance Sheet
Governmental Funds
June 30, 2025
Major Funds
See accompanying Notes to the Basic Financial Statements. 33 107
Total fund balances of governmental funds 47,149,157$
Amounts reported for governmental activities in the Statement of Net Position are different because:

Amount reported in Government-Wide Statement of Net Position 73,833,304 Less: Amount reported in Internal Service Funds (768,322) (497,120)
823,539
Compensated absences, net of Internal Service Funds of $64,001 (1,280,197) Loans, leases, and bonds, net of Internal Service Funds of $43,083 (20,613,198) Pension-related deferred outflows of resources, net of Internal Service Funds of $261,092 5,444,893 Net pension liability, net of Internal Service Funds of $934,097 (19,084,889) Pension-related deferred inflows of resources, net of Internal Service Funds of $43,041 (676,065) OPEB-related deferred outflows of resources (PEHMCA), net of Internal Service Funds of $13,392 245,518 OPEB-related deferred outflows of resources (SOMAR), net of Internal Service Funds of $40,334 739,455 Net OPEB assets - PEHMCA, net of Internal Service Funds of $17,400 318,995 Net OPEB liability - SOMAR, net of Internal Service Funds of $94,990 (1,741,511) OPEB-related deferred inflows of resources (PEHMCA), net of Internal Service Funds of $66,999 (1,228,318) OPEB-related deferred inflows of resources (SOMAR), net of Internal Service Funds of $45,048 (825,895) 1,661,931
Net position of governmental activities 83,501,277$
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, 2025
Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the governmental funds.

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. 34 108
Landscape &
Lighting Assessment Other
General District Hercules Deb t Governmental
Fund (LLAD) No. 83-2 Service Fund Funds Total
REVENUES:

Taxes and assessments 13,916,904$ 2,265,856$ -$ 1,654,320$ 17,837,080$ Licenses and permits 561,250 - - 177,647 738,897 Fines and forfeitures 37,136 - - - 37,136 Use of money and property 1,518,332 66,468 1,014,633 465,686 3,065,119 Intergovernmental 2,762,013 - - 2,471,322 5,233,335 Charges for services 2,722,361 - - 403,806 3,126,167 Other revenues 262,084 - - 68,500 330,584 Total revenues 21,780,080 2,332,324 1,014,633 5,241,281 30,368,318 EXPENDITURES:

Current:

General government 5,559,903 - - - 5,559,903 Public safety 9,912,051 - - 22,398 9,934,449 Streets and public works 564,468 1,605,473 - 3,083,462 5,253,403 Parks and public works 3,095,102 - - - 3,095,102 Community development 1,028,404 - - - 1,028,404 Capital outlay 319,279 2,496 - 1,157,956 1,479,731 Debt service:

Principal 162,408 - 862,125 - 1,024,533 Interest and fiscal agent fee 26,965 - 844,604 - 871,569 Total expenditures 20,668,580 1,607,969 1,706,729 4,263,816 28,247,094

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 1,111,500 724,355 (692,096) 977,465 2,121,224

OTHER FINANCING SOURCES (USES)
Inception of lease and subscription liabilities 220,379 - - - 220,379 Transfers in 176,556 32,486 805,903 3,407,422 4,422,367 Transfers (out) (3,724,635) (279,654) - (418,078) (4,422,367) Total other financing sources (uses) (3,327,700) (247,168) 805,903 2,989,344 220,379 NET CHANGES IN FUND BALANCES (2,216,200) 477,187 113,807 3,966,809 2,341,603 FUND BALANCES:

Beginning of year 34,947,780 431,507 2,171,770 7,256,497 44,807,554 End of year 32,731,580$ 908,694$ 2,285,577$ 11,223,306$ 47,149,157$ Major Funds
City of Hercules
Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds
For the Year Ended June 30, 2025
See accompanying Notes to the Basic Financial Statements. 35 109
Net change in fund balances - total governmental funds: 2,341,603$ Amounts reported for governmental activities in the Statement of Activities are different because:

Capital outlay expenditures, net of $182,572 reported in Internal Service Funds 734,218$ Depreciation and amortization expenses, net of $279,493 reported in Internal Service Funds (3,395,571) Net effect of disposal on capital assets (43,988) (2,705,341) 306,089
Inception of lease and subscription liabilities, net of $47,135 reported in Internal Service Funds (220,379) Principal repayment of loans, leases, subscription liability and bonds, net of $28,001 reported in Internal Service Funds 1,024,534 Change in accrued interest expense 15,686
Amortization of bond discount (17,297)
Change in compensated absences, net of Internal Service Funds of $1,430 (84,434) Pension expense of CalPERS Plan, net of pension contribution made after measurement date in the amount of $2,406,067 (841,209) OPEB (PEHMCA) credit 99,127
OPEB (SOMAR) expense (97,231)
(212,546)
Change in net position of governmental activities (391,398)$ 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, 2025
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. 36 110

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.
37 111
38 112
Business-Type
Activities
Enterprise Governmenta l
Fund Activities
Wastewater Internal
Fund Service Funds
ASSETS
Current assets:

Cash and investments 16,611,554$ 1,906,665$
Cash and investments with fiscal agent 2,888 -
Total current assets 16,614,442 1,906,665
Noncurrent assets:

Net OPEB assets - PEHMCA 17,400 17,400
Capital assets:

Nondepreciable 191,700 -
Depreciable and amortizable, net 50,005,220 768,322
Total noncurrent assets 50,214,320 785,722
Total assets 66,828,762 2,692,387

DEFERRED OUTFLOWS OF RESOURCES
Pensions-related deferred outflows of resources 278,792 261,092 OPEB-related deferred outflows of resources (PEHMCA) 13,392 13,392 OPEB-related deferred outflows of resources (SOMAR) 40,334 40,334 Total deferred outflows of resources 332,518 314,818

LIABILITIES
Current liabilities:

Accounts payable 527,334 40,431
Retention Payable 632,081 -
Salaries and benefits payable 14,223 13,585
Accrued interest payable 14,587 -
Long-term debt - due within one year 1,643,853 75,376
Total current liabilities 2,832,078 129,392
Noncurrent liabilities:

Long-term debt - due in more than one year 24,481,394 31,707 Net pension liabilities 997,425 934,097
Net OPEB liabilities - SOMAR 94,991 94,990
Total noncurrent liabilities 25,573,810 1,060,794 Total liabilities 28,405,888 1,190,186

DEFERRED INFLOWS OF RESOURCES
Pensions-related deferred outflows of resources 45,959 43,041 OPEB-related deferred outflows of resources (PEHMCA) 66,999 66,999 OPEB-related deferred outflows of resources (SOMAR) 45,049 45,048 Total deferred inflows of resources 158,007 155,088

NET POSITION
Net investment in capital assets 23,529,978 725,240 Restricted for net OPEB assets 17,400 17,400 Unrestricted 15,050,007 919,291
Total net position 38,597,385$ 1,661,931$
City of Hercules
Statement of Net Position
Proprietary Funds
June 30, 2025
See accompanying Notes to the Basic Financial Statements. 39 113
40 114
Business-Type
Activities
Enterprise Governmenta l
Fund Activities
Wastewater Internal
Fund Service Funds
OPERATING REVENUES:

Charges for services 6,330,489$ 2,275,411$
Other operating revenues - 165,337 Total operating revenues 6,330,489 2,440,748
OPERATING EXPENSES:

Salaries and benefits 705,046 785,235
Services and supplies 3,235,332 1,587,959
Depreciation and amortization 1,031,064 279,493 Total operating expenses 4,971,442 2,652,687
Operating income 1,359,047 (211,939)

NONOPERATING REVENUES (EXPENSES)
Interest income 905,811 -
Interest (expenses) (516,321) (607)
Loss on capital asset disposal - - Total nonoperating revenues (expenses) 389,490 (607) CHANGES IN NET POSITION 1,748,537 (212,546)
NET POSITION:

Beginning of year, as previously reported 36,883,037 1,888,366 Change in accounting principle (GASB 101) (34,189) (13,889) Beginning of year, as restated (Note 17) 36,848,848 1,874,477 End of year 38,597,385$ 1,661,931$
City of Hercules
Statement of Revenues, Expenses, and Changes in Net Position Proprietary Funds
For the Year Ended June 30, 2025
See accompanying Notes to the Basic Financial Statements. 41 115
Business-Type
Activities
Enterprise Governmenta l
Fund Activities
Wastewater Internal
Fund Service Funds
CASH FLOWS FROM OPERATING ACTIVITIES:

Cash receipts from customers 6,330,489$ -$
Cash receipts from internal services provided - 2,440,749 Cash paid to suppliers for goods and services (3,763,479) (1,589,658) Cash paid to employees for services (718,404) (658,040) Net cash provided by operating activities 1,848,606 193,051

CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES:

Payments related to the acquisition of capital assets (1,376,226) (135,436) Principal repayments related to capital purposes (1,548,285) (28,002) Interest repayments related to capital purposes (517,065) (607) Net cash (used in) capital and related
financing activities (3,441,576) (164,045)
CASH FLOWS FROM INVESTING ACTIVITIES:

Investment income 905,811 -
Net cash provided by investing activities 905,811 - NET CHANGES IN CASH AND CASH EQUIVALENTS (687,159) 29,006 CASH AND CASH EQUIVALENTS:

Beginning of year 17,301,601 1,877,659
End of year 16,614,442$ 1,906,665$

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

Cash and investments 16,611,554$ 1,906,665$
Cash and investments with fiscal agent 2,888 - Total cash and cash equivalents 16,614,442$ 1,906,665$ (Continued)
City of Hercules
Statement of Cash Flows
Proprietary Funds
For the Year Ended June 30, 2025
See accompanying Notes to the Basic Financial Statements. 42 116
Business-Type
Activities
Enterprise Governmenta l
Fund Activities
Wastewater Internal
Fund Service Funds

RECONCILIATION OF OPERATING INCOME

TO NET CASH PROVIDED BY
OPERATING ACTIVITIES:

Operating income 1,359,047$ (211,939)$
Adjustments to reconcile operating income
to net cash provided by operating activities:

Depreciation and amortization 1,031,064 279,493 (Increase) Decrease in Assets and Deferred Outflows
Pensions-related deferred outflows 121,318 44,408 OPEB-related deferred outflows (5,486) (5,486) Increase (Decrease) in Liabilities and Deferred Inflows Accounts payable (528,146) (1,698)
Salaries and benefits payable 1,596 2,874 Net pension liability (93,780) 100,918
Net OPEB liability (2,776) 1,287
Pensions-related deferred inflows (39,651) (22,326) OPEB-related deferred inflows 8,157 4,091 Compensated absences (2,737) 1,429
Total adjustments 489,559 404,990
Net cash provided by operating activities 1,848,606$ 193,051$

NONCASH ITEMS
Retention payable 632,081$ -$
Acquisition of subscription assets - 47,135 Subscription liability for the acquisition of a right to use subscription asset - 47,135 (Concluded)
Proprietary Funds
For the Year Ended June 30, 2025
City of Hercules
Statement of Cash Flows (Continued)
See accompanying Notes to the Basic Financial Statements. 43 117
44 118

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. 45 119
46 120
Successor
Agency
Private Purpose Custodial
Trust Fund Funds
ASSETS
Cash and investments 12,871,400$ 457,942$
Cash and investments with fiscal agent - 55,798 Prepaid items 425,877 -
Loans receivable, net 6,586,877 -
Capital Assets:

Nondepreciable 14,090,684 -
Depreciable, net 6,420,883 -
Total assets 40,395,721 513,740

LIABILITIES
Accounts payable 7,737 -
Unearned revenue 950,834 -
Long-term debt:

Due within one year 4,310,000 -
Due in more than one year 76,251,870 -
Total liabilities 81,520,441 -

DEFERRED INFLOWS OF RESOURCES
Deferred amount on refunding 682,527 -
Total deferred inflows of resources 682,527 -

NET POSITION (DEFICIT)
Restricted (41,807,247) -
Individuals, organization, and other government - 513,740 Total net position (deficit) (41,807,247)$ 513,740$
City of Hercules
Statement of Fiduciary Net Position
Fiduciary Funds
June 30, 2025
See accompanying Notes to the Basic Financial Statements. 47 121
Successor
Agency
Private Purpose Custodial
Trust Fund Funds
ADDITIONS:

Redevelopment property tax trust fund 9,957,728$ 230,867$ Investment income 526,190 20,359
Other revenue 311,117 -
Total additions 10,795,035 251,226
DEDUCTIONS:

Community development 3,704,249 -
Administration 38,195 6,885
Depreciation 695,967 -
Interest expenses 4,341,489 51,937
Principal payment to refunding escrow - 166,187 Total deductions 8,779,900 225,009
CHANGES IN FIDUCIARY NET POSITION 2,015,135 26,217 FIDUCIARY NET POSITION (DEFICIT):

Beginning of year (43,822,382) 487,523
End of year (41,807,247)$ 513,740$
City of Hercules
Statement of Changes in Fiduciary Net Position
Fiduciary Funds
For the Year Ended June 30, 2025
See accompanying Notes to the Basic Financial Statements. 48 122
49 NOTES TO THE BASIC FINANCIAL STATEMENTS
123
50 124
City of Hercules
Index to the Notes to the Basic Financial Statements
For the Year Ended June 30, 2025
51 Page
Note 1 Summary of Significant Accounting Policies ........................................................................... .......... 53 A. Financial Reporting Entity .............................................................................................................. 53 B. Basis of Accounting and Measurement Focus ................................................................................ 53 C. Cash and Investments ..................................................................................................................... 56 D. Cash and Investments with Fiscal Agents ...................................................................................... 56 E. Fair Value Measurements ............................................................................................................... 56 F. Interfund Transactions .................................................................................................................... 57 G. Prepaid Items .................................................................................................................................. 57 H. Capital Assets ................................................................................................................................. 57 I. Leases ............................................................................................................................................. 58 J. Subscription Based Information Technology Arrangements (SBITA) Asset and Liabilities ..... 59 K. Long-Term Debt ............................................................................................................................. 60 L. Unearned and Unavailable Revenue ............................................................................................... 60 M. Compensated Absences .................................................................................................................. 60 N. Property Taxes ................................................................................................................................ 60 O. Interfund Transactions .................................................................................................................... 61 P. Claims Payable ............................................................................................................................... 61 Q. Pensions .......................................................................................................................................... 61 R. Other Postemployment Benefits (OPEB) .................................................................................... 62 S. Deferred Outflows of Resources and Deferred Inflows of Resources ............................................ 62 T. Net Position .................................................................................................................................... 6 2 U. Use of Estimates ............................................................................................................................. 63 V. Fund Balances ................................................................................................................................. 63 W. Spending Policy .............................................................................................................................. 6 3 X. Implementation of New GASB Pronouncements ........................................................................... 64 Y. Upcoming New GASB Pronouncements ........................................................................................ 64 Note 2 Cash and Investments ................................................................................................. ......................... 65 A. Demand Deposits ............................................................................................................................ 65 B. Investments Authorized by the California Government Code and the City's Investment Policy ........................................................................................................... 66 C. Investments Authorized by Debt Agreements ................................................................................ 66 D. Risk Disclosures ............................................................................................................................. 67 E. Investment in Local Agency Investment Fund (LAIF) ............................................................... 68 F. Investment in Trust of California CalTRUST ............................................................................. 6 9 G. Investment in Money Market Mutual Funds .................................................................................. 69 H. Fair Value Measurement Disclosure ............................................................................................... 69 Note 3 Loans Receivable ..................................................................................................... ............................. 69 A. Governmental Activities ................................................................................................................. 69 B. Fiduciary Fund Financial Statements ............................................................................................. 70 Note 4 Lease Receivable ..................................................................................................... .............................. 70 A. Bio-Rad Laboratories Lease Receivable ......................................................................................... 70 B. Other Lease Receivable .................................................................................................................. 71 Note 5 Interfund Transactions ............................................................................................... ......................... 72 A. Due From and To Other Funds ....................................................................................................... 72 B. Advances To and From Other Funds .............................................................................................. 72 C. Transfers In and Out ....................................................................................................................... 72 125
City of Hercules
Index to the Notes to the Basic Financial Statements (Continued) For the Year Ended June 30, 2025
52 Page

Note 6 Capital Assets ....................................................................................................... .................................. 73 A. Governmental Activities .................................................................................................................. 73 B. Business-Type Activities ................................................................................................................. 74 C. Fiduciary Fund Financial Statements .............................................................................................. 75 Note 7 Long-Term Debt ....................................................................................................... ............................. 75 A. Governmental Activities .................................................................................................................. 75 B. Business-Type Activities ................................................................................................................. 79 C. Fiduciary Fund Financial Statements .............................................................................................. 80 D. Non-City Obligations ....................................................................................................................... 82 Note 8 Retirement Plans .................................................................................................................................... 83 A. General Information About the Pension Plans ................................................................................. 84 B. Pension Liabilities, Pension Expenses, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pension ............................................................... 86 C. Payable to the CalPERS Pension Plans ........................................................................................... 91 D. Liquidating Net Pension Liability .................................................................................................... 91 Note 9 Deferred Compensation Plan ................................................................................................................ 92 A. 457 Plan ........................................................................................................................................... 92 B. 401A Plan ........................................................................................................................................ 92 C. PARS ............................................................................................................................................... 92 Note 10 Other Postemployment Benefits ....................................................................................... .................. 93 A. Retiree Healthcare Plan (PEHMCA) ............................................................................................... 94 B. Retiree Cash Benefit Plan (SOMAR Plan) ...................................................................................... 97 Note 11 Risk Management ..................................................................................................... ......................... 102 Note 12 Commitments and Contingencies ..................................................................................................... 103 A. Lawsuits ......................................................................................................................................... 103 B. Commitments ................................................................................................................................. 103 Note 13 Joint Powers Agreements ............................................................................................. ..................... 104 A. West Contra Costa Transportation Advisory Committee (WCCTAC) ......................................... 104 B. West Contra Costa Integrated Waste Management Authority (WCCIWMA) .............................. 104 C. Pinole/Hercules Wastewater Treatment Plant ............................................................................... 104 Note 14 Stewardship, Compliance, and Accountability ......................................................................... ...... 104 A. Deficit Fund Balances/Net Position ............................................................................................... 104 B. Expenditures in Excess of Appropriations ..................................................................................... 105 Note 15 Fund Balance Classification ......................................................................................... ..................... 106 Note 16 Net Investment in Capital Assets .................................................................................... .................. 107 Note 17 Restatement ......................................................................................................... ............................... 107 126
City of Hercules
Notes to the Basic Financial Statements
For the Year Ended June 30, 2025
53 Note 1 Summary of Significant Accounting Policies
The basic financial statements of the Ci ty of Hercules, California, (the City) have been prepared in accordance with accounting principles generally accepted in the United States of America (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 pr inciples. The following is a summary of the Citys significant policies:

A. Financial Reporting Entity

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

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

Blended Component Units:

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

The Hercules Public Financing Authority The Hercules Public Financing Authority (the Authority) was established July 24, 2001, by and between the City and the Authority, pursuant to the state of California Government Code. The purpose of the Authority is to finance the acquisition, construction, and improvement of public capital improvements, working capital requirements, or insurance programs. Separate detailed fina ncial statements are available from the Citys Finance Department.

B. Basis of Accounting and Measurement Focus

The accounts of the City are organized on the basis of funds, each of which is considered a separate accounting entity. The operations of each fund are accounted for by providing a separate set of self-balancing accounts that comprise its assets, deferred outflows of resources, liabilities, deferred inflows of resources, fund balance or net position, revenues and expenditures or expenses, as appropriate. City resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled.
127
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
54 Note 1 Summary of Significant Accounting Policies (Continued) B. Basis of Accounting and Measurement Focus (Continued) 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 Citys assets, deferred outflows of resources, liabilities, and deferred inflows of resources, including capital assets, as well as infrastructure assets, and long-term liabilities, are included in the accompanying statement of net position. The statement of activities presents changes in net position.

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

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

Charges for services
Operating grants and contributions
Capital grants and contributions

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

Due from and to other funds, which are short-term loans within the primary government.

Advances to and from other funds, which are long-term loans within the primary government.

Transfers in and out, which are flows of assets between funds without the requirement for repayment.

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

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

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

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

128
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
55 Note 1 Summary of Significant Accounting Policies (Continued) B. Basis of Accounting and Measurement Focus (Continued) Governmental Fund Financial Statements (Continued)
The City reports the following major Governmental Funds:

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

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

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

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

Operating revenues in the proprietary funds are those revenues that are generated from the primary operations of the fund. All other revenues are reported as 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 Citys sewer lin es and related facilities. It is a self-supporting activity which provides services on a user charge basis to residences and businesses. 129
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
56 Note 1 Summary of Significant Accounting Policies (Continued) B. Basis of Accounting and Measurement Focus (Continued)

Proprietary Fund Financial Statements (Continued)
Internal service funds are presented in the proprietary fund financial statements. Internal service funds account for activities related to vehicle replacement, technology services, and facilities maintenance. However, internal service balances and activities have been combined with the governmental activities in the government-wide financial statements.

Fiduciary Fund Financial Statements
Fiduciary fund financial statements include a Statement of Net Position and a Statement of Changes in Fiduciary Net Position. The Citys fiduciary funds represent custodial funds and private purpose trust funds. Both custodial funds and the private purpose trust funds are accounted for an economic resources measurement focus 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 Reassessment District 05-01 debt service payments, affordable housing set-aside funds, and for waste management service. The City is responsible for ensuring that the assets reported in these funds are used for their intended purposes.

C. Cash and Investments

The Citys 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 Citys investment pool. These cash pools have the general characteristics of a demand deposit account, therefore, all cash and investments in the proprietary funds are considered cash and cash equivalents for statement of cash flows purposes.

Investments are stated at fair value (quoted market price or best available estimate thereof).

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 Measurements

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.

130
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
57 Note 1 Summary of Significant Accounting Policies (Continued)

E. Fair Value Measurements (Continued)

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

Level 1 Inputs are unadjusted, quoted prices fo r 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 managements 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 lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as due from/to other funds (i.e., current portion of interfund loans).

G. Prepaid Items

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

H. Capital Assets

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

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
Machinery and equipment 5-20 Years
Infrastructure 15-50 Years
131
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
58 Note 1 Summary of Significant Accounting Policies (Continued)

I. 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 lease, 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 straightline 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.

Key estimates and judgments related to leases include how the City determines (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 charged by the lessor as the discount rate. When the interest rate charged by the lessor is not provided, the City generally uses its estimated incremental 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 certain 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.

Right to use the lease assets are reported as intangible assets along with other capital assets and lease liabilities are reported with long-term debt 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 commencement date. Subsequently, the deferred inflows of resources are recognized as revenue over the life of the lease term in a systematic and rational method.
132
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
59 Note 1 Summary of Significant Accounting Policies (Continued) I. Leases (Continued)
Lessor (Continued)

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 incremental 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 lease receivable is composed of fixed payments from the lessee.

The City monitors changes in circumstances that would require a remeasurement of its lease and will remeasure the lease receivable and deferred inflows of resources if certain changes occur that are expected to significantly affect the amount of the lease receivable.

J. Subscription Based Information Technology A rrangements (SBITA) Asset and Liabilities

The City has a policy to recognize a SBITA liability and a right-to-use asset (SBITA asset) in the financial statements with an initial, individual value of $5,000 or more with a contract term greater than one year. SBITA assets are measured as the sum of the initial subscription liability, payments made to the SBITA vendor before the commencement of the lease term, and capitalizable implementation costs less any incentives received from the SBITA vendor at or before the commencement of the subscription term. Subscription assets are amortized using the straight-line method over the subscription term.

Key estimates and judgments related to SBITAs include how the Authority determines (1) the discount rate it uses to discount the expected subscription payments to present value, (2) subscription term, and (3) subscription payments.

The City uses the interest rate charged by the SBITA vendor as the discount rate. When the interest rate charged by the SBITA vendor is not provided, the Authority generally uses its estimated incremental borrowing rate as the discount rate for SBITAs.

The subscription term includes the period during which the City has a noncancelable right to use the underlying IT asset. The subscription term also includes periods covered by an option to extend if it is reasonably certain to be exercised.

Subscription payments included in the measurement of the subscription liability are composed of fixed payments and purchase option years that the Authority is reasonably certain to exercise. The Authority monitors changes in circumstances that would require a remeasurement of a subscription and will remeasure any subscription asset and liability if certain changes occur that are expected to significantly affect the amount of the subscription liability.

Right-to-use subscription assets are reported along with other capital assets and subscription liabilities are reported with long-term debt on the statement of net position.
133
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
60 Note 1 Summary of Significant Accounting Policies (Continued) K. Long-Term Debt

In the government-wide financial statements, long-term debt and other long-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 withheld from the actual debt proceeds received, are reported as debt service expenditures.

L. Unearned and Unavailable Revenue

In the government-wide financial statements, unearned revenue is recognized for transactions for which revenue has not yet been earned. Typical transactions recorded as unearned revenues in the government-wide financial statements are cell phone site license lease payments received in advance, prepaid charges for services and facility rentals paid in advance.

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

M. Compensated Absences

The City recognizes a liability for compensated absences that are attributable to services already rendered, accumulated, and are more likely than not to be paid or settled. The City's compensated absences include vested accrued vacation and accumulated sick leave as well as certain forms of leave that do not accumulate but are more likely than not to be paid in accordance with GASB Statement No. 101, Compensated Absences. The City's liability for compensated absences is recorded in governmental or business-type activities as appropriate. The liability for compensated absences is determined annually. For all governmental funds, amounts expected to be "permanently liquidated," such as what is due to be paid because of a realized employment action, are recorded as fund liabilities; the long-term portion is recorded in the Statement of Net Position.

The liability for compensated absences is recognized as leave is earned, based on the employees pay rate in effect at the financial statement date, including any applicable salary-related costs. The liability includes only leave attributable to services already rendered and that is more likely than not to be paid.

N. Property Taxes

Property tax revenue is recognized in the fiscal year for which the taxes have been levied providing they become available. Available means due, or past due and receivable within the current period and collected within the current period or expected to be collected soon enough thereafter (not to exceed 60 days) to be used to pay liabilities in the current period.
134
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
61 Note 1 Summary of Significant Accounting Policies (Continued)

N. Property Taxes (Continued)

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

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

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

P. Claims Payable

The City records a liability to reflect an actuarial estimate of ultimate uninsured losses for both general liability claims (including property damage claims) and workers compensation claims. The estimated liability for workers compensation claims and general liability claims includes incurred but not reported (IBNR) claims. There is no fixed payment schedule to pay these liabilities.

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, 2023
Measurement Date June 30, 2024
Measurement Period July 1, 2023 - June 30, 2024

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 funds share of the unpaid liability is recorded as a long- term liability of the fund.
135
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
62 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 net position of the plans and additions to/deductions from OPEB Plan's fiduciary net position have been determined on the same basis as they are reported by the plan (Note 10). For this purpose, the OPEB plan recognizes benefit payments when due and payable in accordance with the benefit terms. Investments are reported at fair value.

The following timeframes are used for OPEB reporting:

OPEB
Valuation Date June 30, 2025
Measurement Date June 30, 2025
Measurement Period July 1, 2024 - June 30, 2025
Gains and losses related to changes in total OPEB liability and fiduciary net position are recognized in OPEB expense systematically over time. The first amortized amounts are recognized in OPEB expense for the year the gain or loss occurs. The remaining amounts are categorized as deferred outflows and deferred inflows of resources related to OPEB and are to be recognized in future OPEB expense. The amortization period differs depending on the source of gain or loss. The difference between projected and actual earnings is amortized on a straight-line basis over 5 years. All other amounts are amortized on a straight-line basis over the average expected remaining service lives of all members that are provided with benefits (active, inactive, and retired) at the beginning of the measurement period.

S. Deferred Outflows of Resources and Deferred Inflows of Resources

The Statement of Net Position and the Balance Sheet Governmental Funds report 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.

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

Net Investment in Capital Assets This component of net position consists of capital assets, net of accumulated depreciation and amortization and reduced by any debt outstanding and any deferred outflows/inflows of resources related to such borrowings that are attributable to the acquisition, construction or improvement of those assets. If there are significant unspent related debt proceeds at year-end, the portion of the debt attributable to the unspent proceeds is not included in the calculation of net investment in capital assets. Rather, that portion of the debt is offset by unspent proceeds.

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 position is the amount of the assets, deferred outflows of resources, liabilities, and deferred inflows of resources that are not included in the determination of net investment in capital assets or the restricted component of net position. 136
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
63 Note 1 Summary of Significant Accounting Policies (Continued) U. Use of Estimates

The preparation of financial statements in accordance with U.S. GAAP 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 that cannot be spent because they are not in a spendable form, such as loans receivable or prepaid items, or because resources legally or contractually must remain intact.

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

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

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

W. Spending Policy

Government-Wide Financial Statements and the Proprietary Fund Financial Statements When expenses are incurred for purposes for which both restricted and unrestricted components of net position are available, the Citys policy is to apply the restricted 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 Citys policy is to apply restricted fund balan ces first, then unrestricted fund balances as needed.

137
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
64 Note 1 Summary of Significant Accounting Policies (Continued)

W. Spending Policy (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. 101 In June 2022, the GASB issued Statement No. 101, Compensated Absences . The objective of this Statement is to better meet the information needs of financial statement users by updating the recognition and measurement guidance for compensated absences. That objective is achieved by aligning the recognition and measurement guidance under a unified model and by amending certain previously required disclosures. The requirements of this Statement are effective for fiscal years beginning after December 15, 2023, and all reporting periods thereafter. Implementation of this Statement resulted in a restatement of the beginning fund balance as of July 1, 2024, as presented in Note 17.

GASB Statement No. 102 In December 2023, the GASB issued Statement No. 102, Certain Risk Disclosures .

The objective of this Statement is to provide users of government financial statements with information about risks related to a governments vulnerabilities due to certain concentrations or constraints that is essential to their analyses for making decisions or assessing accountability. The requirements of this Statement are effective for fiscal years beginning after June 15, 2024, and all reporting periods thereafter. The City has not identified any exposures that require disclosure under this statement.

Y. Upcoming New GASB Pronouncements

The City is currently evaluating its accounting practices to determine the potential impact on the financial statements for the following GASB Statements:

GASB Statement No. 103 In April 2024, GASB issued Statement No. 103, Financial Reporting Model Improvements. The objective of this Statement is to improve key components of the financial reporting model to enhance its effectiveness in providing information that is essential for decision making and assessing a governments accountability. Application of this statement is effective for the Citys fiscal year ending June 30, 2026.

GASB Statement No. 104 In September 2024, GASB issued Statement No. 104, Disclosures of Certain Capital Assets. This Statement requires certain types of capital assets to be disclosed separately in the capital assets note disclosures required by Statement 34. Lease assets recognized in accordance with Statement No. 87, Leases, and intangible right-to-use assets recognized in accordance with Statement No. 94, Public-Private and Public-Public Partnerships and Availability Payment Arrangements, should be disclosed separately by major class of underlying asset in the capital assets note disclosures. Subscription assets recognized in accordance with Statement No. 96, Subscription-Based Information Technology Arrangements , also should be separately disclosed. In addition, this Statement requires intangible assets other than those three types to be disclosed separately by major class.

Application of this statement is effective fo r the Citys fiscal year ending June 30, 2026. 138
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
65 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, 2025:

Governmental Business-type Fiduciary
Activities Activities Funds Total
Cash and investments 44,882,075$ 16,611,554$ 13,329,342$ 74,822,971$ Cash and investments with fiscal agent 2,285,577 2,888 55,798 2,344,263 Cash and investments held in trust 2,643,261 - - 2,643,261 Total 49,810,913$ 16,614,442$ 13,385,140$ 79,810,495$ Primary Government

The Citys cash and investments at June 30, 2025 in more detail:

Cash on hand 2,005$
Deposits with financial institutions 12,511,768
Deposits with trust 2,643,261
Investments 64,653,461
Total 79,810,495$

A. Demand Deposits

The carrying amounts of the Citys demand deposits were $12,511,768 at June 30, 2025. Bank balances at that date were $12,686,530 and the total amount of which was insured or collateralized with accounts held by the pledging financial institutions in the Citys name as discussed below.

The California Government Code requires California banks and savings and loan associations to secure the Citys 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 Citys name.

The market value of pledged securities must equal at least 110% of the Citys cash deposits. California law also allows institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the Citys 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.
139
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
66 Note 2 Cash and Investments (Continued)
B. Investments Authorized by the California Government Code and the City's Investment Policy The table below identifies the investment types that are authorized by the City's investment policy and the California Government Code. The table also identifies certain 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.

Maximum Maximum
Maximum 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
Medium-Term Notes 5 Years 30% 15%
Money M arket Mutual Funds N/A 20% 10%
Insured or Passbook Savings Accounts N/A None $100,000

*The table is based on state law requirements or investment policy requirements, whichever is more restrictive.

C. Investments Authorized by Debt Agreements

Maximum Maximum
Maximum Percentage Investment
Authorized Investment Type Maturity of Portfolio in One Issuer Local Agency Investment Fund (State Pool) N/A $50 M illion $50 M illion U.S. Treasury Obligations 30 Years 20% None
U.S. Government Agency Issues 30 Years 20% None
Insured Deposits with Banks and Savings and Loans N/A None None Bankers Acceptance (Must be Dollar Denominated) 6 M onths 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 M arket Funds N/A None None
Insured or Passbook Savings Accounts N/A None $100,000
Guaranteed Investment Contract N/A None None

140
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
67 Note 2 Cash and Investments (Continued)

C. Investments Authorized by Debt Agreements (Continued)

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

D. Risk Disclosures

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

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

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

Maturity
12 Months
Investment Type Total or Less
Investments:

Local Agency Investment Fund 62,286,360$ 62,286,360$ CalTRUST Short Term Fund 22,839 22,839 Investments with fiscal agents:

Money Market M utual Funds 2,344,262 2,344,262 Total 64,653,461$ 64,653,461$

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 Citys portfolio, not to exceed three years.

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

Percentage
Maturity of Portfolio
Up to One Year 10% Minimum
One Year to Five Years 60% Maximum
More Than Five Years 30% Maximum
141
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
68 Note 2 Cash and Investments (Continued)
D. Risk Disclosures (Continued)

Disclosures Relating to Credit Risk
Generally, credit risk is the risk that an issuer of an investment 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.

Minimum
Legal Not
Investment Type Total Rating AAA Rated
Investments:

Local Agency Investment Fund 62,286,360$ N/A -$ 62,286,360$ CalTRUST Short Term Fund 22,839 N/A - 22,839 Investments with fiscal agents:

Money Market Mutual Funds 2,344,262 N/A 2,344,262 - Total 64,653,461$ 2,344,262$ 62,309,199$ S&P Rating as of Fiscal Year Ended

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

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

For investments identified herein as held by bond trustee, the bond trustee selects the investment under the terms of the applicable trust agreement, acquires the investment, and holds the investment on behalf of the reporting government.

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. As of June 30, 2025, the City had $62,286,360 invested in LAIF. LAIF determines fair value on its investment portfolio based on market quotations for those securities where market quotations are readily available and based on amortized cost or best estimate for those securities where market value is not readily available. LAIF is reported at amortized cost, which approximates fair value. 142
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
69 Note 2 Cash and Investments (Continued)
F. Investment in Trust of California CalTRUST

The Investment Trust of California, doing business as CalTRUST, is a California joint powers agency which provides California public agencies with investment management services for surplus funds to consolidate investment activities of its participants and thereby reduces duplication, achieves economies of scale and carries out coherent and consolidated investment strategies through the issuance of shares of beneficial interest in investments purchased by CalTRUST. CalTRUST currently offers three accounts or series as a means for Public Agencies to invest their funds. As of June 30, 2025, the City held $22,839 in the CalTRUST Short-Term Fund Series.

CalTRUST investments do not fall under the fair value hierarchy (i.e. uncategorized) as there is no active market for the investments.

G. Investment in Money Market Mutual Funds

At June 30, 2025, investments in money market mutual funds are reported at fair value. The City values investments in money market mutual funds at the 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 funds offer same day liquidity and as of June 30, 2025 the City had $2,344,262 invested in Money Market Mutual Funds.

H. Fair Value Measurement Disclosure

The investments are reported at fair value. The following table presents the fair value measurement of investments on a recurring basis within GASB 72 fair value hierarchy in which the fair value measurements fall at June 30, 2025:

Investment Type Uncategorized Total
Investments:

Local Agency Investment Fund 62,286,360$ 62,286,360$ Money Market M utual Funds 2,344,262 2,344,262 CalTRUST Short Term Fund 22,839 22,839 Total 64,653,461$ 64,653,461$

Note 3 Loans Receivable

A. Governmental Activities

At June 30, 2025, loans receivable consisted of the following:

Bio-Rad Loan 1,251,758$
Total 1,251,758$

Bio-Rad Loan
The City advanced Bio-Rad Laboratories, Inc. $2,000,000 to construct various tenant improvements in one or more of the buildings located at 203-295 Linus Pauling Drive. The terms of the loan call for monthly payments of $10,418, at an interest rate of 4.5% per annum, with repayments commencing May 15, 2010, through September 14, 2038. The balance outstanding as of June 30, 2025 was $1,251,758. 143
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
70 Note 3 Loans Receivable
B. Fiduciary Fund Financial Statements

At June 30, 2025, loans receivable consisted of the following:

Business Development Loans 395,757$
Bridge Housing Corporation 2,339,547
First Time Homebuyers 842,923
Homeowner Retention/Loss Mitigation 1,882,029
Revitalization and Beautification 146,463
Other Assistance Programs 980,158
Total 6,586,877$

Amounts shown above are net of an allowance for uncollectible accounts of $335,016 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, 2025, lease receivable consisted of the following:

Bio-Rad Laboratories, Inc. 7,840,081$
Other lease receivable 520,154
Total 8,360,235$

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 Venture Commerce Center located at 203-295 Linus Pauling Drive, including five (5) buildings consisting of approximately 96,847 rentable square feet, together with the parking lot and associated improvements serving the buildings.

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

The City granted to Bio-Rad Laboratories, Inc. the option to purchase the premises, Bio-Rad Laboratories, Inc. may elect to exercise the Purchase Option by delivering to the City written notice of such election within 30 days prior to either of the following dates: (i) the fifteenth (15th) anniversary date; (ii) the twentieth (20th) anniversary date; or (iii) the twenty-fifth (25th) anniversary date, If Bio-Rad Laboratories, Inc. has not elected to exercise the Purchase Option during the time period said above, then the Purchase Option shall automatically be deemed elected by Bio- Rad Laboratories, Inc. as of the expiration date unless Bio-Rad Laboratories, Inc., provides prior written notice to the City of Hercules within fifteen (15) days prior to the expiration date electing not to pursue the Purchase Option, If Bio-Rad Laboratories, Inc. elects to exercise the Purchase Option on the expiration date, the purchase price for the premises shall be one dollar ($1.00).
144
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
71 Note 4 Lease Receivable
A. Bio-Rad Laboratories Lease Receivable (Continued)

Total lease revenue of $26,723,100 will be received from the Bio-Rad Laboratories, Inc. during the term of lease.

The interest rate on the lease payments is 8.0381%. Monthly lease payments vary from $55,300 to $83,699 will be received on the first day of each month without notice, offset, deduction, or demand, in advance, during the lease term. For the year ended June 30, 2025, the City recognized $281,064 in lease revenue and $646,166 in interest revenue.

The outstanding receivable is in the amount of $7,840,081. The same amount was recognized under deferred inflows of resources related to the lease as of June 30, 2025. The future required payments for this lease, including interest, is as follows:

Year Ending June 30, Principal Interest Total
2026 311,131$ 622,351$ 933,482$
2027 343,720 596,014 939,734
2028 379,042 566,943 945,985
2029 423,101 534,737 957,838
2030 475,459 498,651 4,913,870
2031-2035 3,120,911 1,812,369 4,933,280 2036-2039 2,786,717 381,834 3,168,551 7,840,081$ 5,012,899$ 16,792,740$
Governmental Activities

B. Other Lease Receivable

Lease receivables consist of agreements with others fo r the righttouse 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, 2025, the City recognized $91,726 in lease revenue and $8,737 in interest revenue.

The outstanding receivables are in the amount of $520,154. In relation to the lease, the City recognized an amount of $493,030 as deferred inflows of resources as of June 30, 2025. The future required payments for these leases, including interest, are as follows:

Year Ending June 30, Principal Interest Total
2026 138,546$ 14,252$ 159,316$
2027 138,734 10,667 153,627
2028 100,044 6,890 109,434
2029 75,621 3,553 80,918
2030 25,062 1,756 28,084
2031-2032 42,147 2,319 45,519 520,154$ 39,437$ 576,898$
Governmental Activities

145
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
72 Note 5 Interfund Transactions
A. Due From and To Other Funds
At June 30, 2025, the Citys Due to and from Other Funds are as follows:

Due From Other Funds (Receivable) Due To Other Funds (Payable) Amount General Fund Nonmajor Governmental Funds 1,208,699$
Total 1,208,699$

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

B. Advances To and From Other Funds

At June 30, 2025, the Citys Advances To and From Other Funds are as follows:

Advance To Other Funds (Receivable) Advances From Other Funds (Payable) Amount General Fund Landscape & Lighting Assessment District
(LLAD) No. 83-2 Special Revenue Fund 358,974$
General Fund Nonmajor Governmental Funds 88,200
Total 447,174$
The advances were for the City Council approved capital improvements.

C. Transfers In and Out

The City had the following transfers for the year ended June 30, 2025:

Transfer In Transfer Out Amount
General Fund Nonmajor Governmental Funds 176,556$
Landscape & Lighting Assessment District
(LLAD) No. 83-2 Special Revenue Fund Nonmajor Governmental Funds 32,486 Hercules Debt Service Fund General Fund 805,903
Nonmajor Governmental Funds General Fund 2,918,732
Nonmajor Governmental Funds Landscape & Lighting Assessment District (LLAD) No. 83-2 Special Revenue Fund 279,654
Nonmajor Governmental Funds Nonmajor Governmental Funds 209,036 Total 4,422,367$

$176,556 transferred to the General Fund from the Nonmajor Special Revenue Funds were for the receipt of AB COPS grant.

$32,486 transfers to the Landscape & Lighting Assessment District (LLAD) No. 83-2 Special Revenue Fund from the Nonmajor Governmental Funds was for th e Citys general benefit contributions.

$805,903 transferred to the Hercules Debt Service Fund from the General Fund was for the debt service payments. 146
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
73 Note 5 Interfund Transactions (Continued)
C. Transfers In and Out (Continued)

$3,407,422 transferred to the Nonmajor Governmental Funds includes:

$2,918,732 from the General Fund was for the debt service payments. $279,654 from the Landscape & Lighting Assessment District (LLAD) No. 83-2 Special Revenue Fund was for Citys general benefit contributions.
$209,036 from Nonmajor Governmental Funds were for the Citys general benefit contributions and to reimburse the stormwater for the street sweeping services approve by Council through Solid Waste Project Fund Expenditure Plan.

Note 6 Capital Assets

A. Governmental Activities

Summary of changes in governmental activities capital assets for the year ended June 30, 2025 was as follows:

Balance Reclassification/ Balance
July 1, 2024 Additions Retirements Transfers June 30, 2025 Nondepreciable assets:

Land 5,081,587$ -$ -$ -$ 5,081,587$ Construction in progress 1,565,252 449,068 (1,000) - 2,013,320 Total nondepreciable assets 6,646,839 449,068 (1,000) - 7,094,907 Depreciable assets:

Land improvements 16,001,080 - - - 16,001,080 Building and improvements 26,792,183 46,950 - - 26,839,133 Machinery and equipment 7,892,230 135,435 - - 8,027,665 Infrastructure 115,367,125 - - - 115,367,125 Subtotal 166,052,618 182,385 - - 166,235,003 Less: accumulated depreciation:

Land improvements (10,488,900) (251,156) - - (10,740,056) Building and improvements (12,800,682) (745,639) - - (13,546,321) Machinery and equipment (7,954,160) (300,098) - - (8,254,258) Infrastructure (64,859,739) (2,275,114) - - (67,134,853) Subtotal (96,103,481) (3,572,007) - - (99,675,488) Total depreciable assets, net 69,949,137 (3,389,622) - - 66,559,515 Intangible, being amortized
Right-to-use lease assets 9,357 11,406 - - 20,763 Right-to-use subscription assets 90,502 273,931 (42,988) - 321,445 Total intangible assets, being amortized 99,859 285,337 (42,988) - 342,208 Less: accumulated amortization:

Right-to-use lease assets (3,858) (7,555) - - (11,413) Right-to-use subscription assets (56,411) (95,502) - - (151,913) Total accumulated amortization (60,269) (103,057) - - (163,326) Total intangible assets, being amortized, net 39,590 182,280 (42,988) - 178,882 Governmental activities capital assets, net 76,635,566$ (2,758,274)$ (43,988)$ -$ 73,833,304$

147
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
74 Note 6 Capital Assets (Continued)

A. Governmental Activities (Continued)

Depreciation and amortization expenses were charged to functions/programs of governmental activities for the year ended June 30, 2025 as follows:

Depreciation and Amortization Expenses Allocation
General government 482,549$
Public safety 109,175
Public works 2,585,599
Parks and recreation 218,248
Internal service funds 279,493
Total 3,675,064$

B. Business-Type Activities

Summary of changes in business-type activities capital assets for the year ended June 30, 2025 was as follows:

Balance Reclassification/ Balance
July 1, 2024 Additions Retirements Transfers June 30, 2025 Nondepreciable assets:

Land 191,700$ -$ -$ -$ 191,700$ Construction in progress 13,642,030 1,439,043 - (15,081,073) - Total nondepreciable assets 13,833,730 1,439,043 - (15,081,073) 191,700 Depreciable assets:

Building and improvements 38,325,271 - - (26,990,073) 11,335,198 Machinery and equipment 250,345 - - - 250,345 Infrastructure 14,945,319 - - 42,071,146 57,016,465 Subtotal 53,520,935 - - 15,081,073 68,602,008 Less: accumulated depreciation:

Building and improvements (11,245,788) (144,187) - 157,647 (11,232,328) Machinery and equipment (224,513) (4,559) - - (229,072) Infrastructure (6,095,423) (882,318) - (157,647) (7,135,388) Subtotal (17,565,724) (1,031,064) - - (18,596,788) Total depreciable assets, net 35,955,211 (1,031,064) - 15,081,073 50,005,220 Total capital assets, net 49,788,941$ 407,979$ -$ -$ 50,196,920$

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

Depreciation Expenses Allocation
Wastewater 1,031,064$
Total 1,031,064$
148
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
75 Note 6 Capital Assets (Continued)

C. Fiduciary Fund Financial Statements
Summary of changes in Fiduciary Fund capital assets for the year ended June 30, 2025 was as follows:

Balance Reclassification/ Balance
July 1, 2024 Additions Retirements Transfers June 30, 2025 Nondepreciable assets:

Land 236,986$ -$ -$ -$ 236,986$ Construction in progress 13,853,698 - - - 13,853,698 Total nondepreciable assets 14,090,684 - - - 14,090,684 Depreciable assets:

Land improvements 9,776,751 - - - 9,776,751 Building and improvements 4,967,778 - - - 4,967,778 Machinery and equipment 116,445 - - - 116,445 Infrastructure 6,206,831 - - - 6,206,831 Subtotal 21,067,805 - - - 21,067,805 Less: accumulated depreciation:

Land improvements (5,788,186) (304,778) - - (6,092,964) Building and improvements (3,550,193) (99,437) - - (3,649,630) Machinery and equipment (87,634) (5,810) - - (93,444) Infrastructure (4,524,942) (285,942) - - (4,810,884) Subtotal (13,950,955) (695,967) - - (14,646,922) Total depreciable assets, net 7,116,850 (695,967) - - 6,420,883 Total capital assets, net 21,207,534$ (695,967)$ -$ -$ 20,511,567$

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 695,967$
Total 695,967$

Note 7 Long-Term Debt
A. Governmental Activities

Summary of changes in Governmental Activities long-term debt for the year ended June 30, 2025 was as follows:

Balance
July 1, 2024 Balance Due within Due in More
(As Restated) Additions Deletions June 30, 2025 One Year Than One Year Publicly Offered:
2009 PFA Taxable Lease Revenue Bonds 7,675,000$ -$ (275,000)$ 7,400,000$ 300,000$ 7,100,000$ Less: Discount on issuance (242,144) - 17,297 (224,847) (17,297) (207,550) 2020 PFA Lease Revenue Refunding Bonds 5,041,619 - (457,061) 4,584,558 465,032 4,119,526 H.E.L.P. Loan 1,287,588 - (76,133) 1,211,455 83,731 1,127,724 R.D.L.P. Loan 3,750,000 - - 3,750,000 - 3,750,000 Engie Energy Conservation Loan 3,873,163 - (130,064) 3,743,099 143,641 3,599,458 Lease liability 5,646 11,406 (7,485) 9,567 7,641 1,926 Subscription liability 33,133 256,108 (106,792) 182,449 78,423 104,026 Compensated absences 1,258,334 578,759 (492,895) 1,344,198 1,008,146 336,052 Total 22,682,339$ 846,273$ (1,528,133)$ 22,000,479$ 2,069,317$ 19,931,162$

149
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
76 Note 7 Long-Term Debt (Continue )
A. Governmental Activities (Continued)
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 beginning on July 1, 2010, in amounts 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, 2025 are $7,400,000 and $224,847, 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 taxation 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
2026 300,000$ 606,578$ 906,578$
2027 325,000 580,796 905,796
2028 350,000 552,953 902,953
2029 380,000 522,840 902,840
2030 410,000 490,253 900,253
2031-2035 2,625,000 1,851,150 4,476,150
2036-2040 3,010,000 530,880 3,540,880
Total 7,400,000$ 5,135,450$ 12,535,450$
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, with interest rates ranging from 4.60% to 5.00%. The purpose of the bonds was to finance and to refinance the acquisition and or construction of certain real property and public capital 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: $458,382, $435,857, and $53,463 during years ended 2021, 2022, and 2023, respectively. The principal outstanding balance at June 30, 2025 is $4,584,558. 150
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
77 Note 7 Long-Term Debt (Continued)
A. Governmental Activities (Continued)

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

Year Ending
June 30, Principal Interest Total
2026 465,032$ 96,180$ 561,212$ 2027 477,396 85,766 563,162 2028 489,075 75,087 564,162 2029 500,055 64,157 564,212 2030 509,751 52,999 562,750 2031-2035 2,143,249 95,999 2,239,248 Total 4,584,558$ 470,188$ 5,054,746$

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, also consisting of 26,825 square feet of ground-floor commercial space. The Agency has authorized the making of a loan in the amount of $1,600,000 known as the Housing Enabled by Local Partnerships (H.E.L.P.) to the City for the purpose of assisting in operating a local housing program. Under the terms of this original agreement the City 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, 2025 is $1,211,455.

The annual debt service requirements to maturity for the H.E.L.P. Loan as of June 30, 2025 are as follows:

Year Ending
June 30, Principal Interest Total
2026 83,731$ 16,269$ 100,000$ 2027 1,127,724 16,515 1,144,239 Total 1,211,455$ 32,784$ 1,244,239$

Residential Development Loan Program Loan (R.D.L.P Loan) In February 2007, the City entered into a loan agreement with the California Housing Finance Agency (Agency) in the amount of $3,750,000 ($1,750,000 for predevelopment costs and $2,000,000 for construction costs). The funds will be used to assist with site acquisition, predevelopment, and construction costs for 23 affordable ownership units within a 52-unit condominium project, which is a component to the Sycamore Downtown Street project, a mixed-use, mixed-income development. Under the terms of the original agreement, the City agreed to repay the Agency $3,750,000, four years from February 2007 at 3% simple per annum interest. In October 2013, the City and Agency amended the agreement to extend the due date of the loan and accumulated interest until April 2027 and to reduce the interest rate to 1.5% simple interest effective October 31, 2013. The balance at June 30, 2025 is $3,750,000.

151
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
78 Note 7 Long-Term Debt (Continued)
A. Governmental Activities (Continued)

The annual debt service requirements to maturity for the R.D.L.P. Loan as of June 30, 2025 are as follows:

Year Ending
June 30, Principal Interest Total
2026 -$ 100,000$ 100,000$ 2027 3,750,000 113,572 3,863,572 Total 3,750,000$ 213,572$ 3,963,572$

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 rate is 2.71%, 30/360 basis, and payment commencing August 14, 2020 and ending on September 14, 2040. The balance at June 30, 2025 is $3,743,099.

The annual debt service requirements to maturity for the rental payment as of June 30, 2025 are as follows:

Year Ending
June 30, Principal Interest Total
2026 143,641$ 101,438$ 245,079$ 2027 158,064 97,545 255,609 2028 173,379 93,262 266,641 2029 189,633 88,563 278,196 2030 206,878 83,424 290,302 2031-2035 1,331,568 322,657 1,654,225 2036-2040 1,282,608 136,155 1,418,763 2041 257,328 6,974 264,302 Total 3,743,099$ 930,018$ 4,673,117$

Lease Liabilty
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, 2025 are as follows:

Year Ending
June 30, Principal Interest Total
2026 7,641$ 145$ 7,786$ 2027 1,926 25 1,951 Total 9,567$ 170$ 9,737$ 152
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
79 Note 7 Long-Term Debt (Continued)
A. Governmental Activities (Continued)

Subscription Liability
The City has entered into subscriptions for information technology arrangements. The terms of the arrangements range from 24 to 36 months with implicit rates used between 2.354% to of 2.876%. Principal and interest to maturity are as follows:

Year Ending
June 30, Principal Interest Total
2026 78,423$ 5,135$ 83,558$ 2027 78,205 2,921 81,126 2028 25,821 628 26,449 Total 182,449$ 8,684$ 191,133$

Compensated Absences
The liability is measured using the employee's pay rate at the financial statement date. There is no fixed payment schedule for earned but unpaid compensated absences.

B. Business-Type Activities

Summary of changes in Business-Type Activities long-term debt for the year ended June 30, 2025 was as follows:

Balance
July 1, 2024 Balance Due within Due in More
(As Restated) Additions Deletions June 30, 2025 One Year Than One Year State Water Resources Construction Loan
Construction Loan 19,856,034$ -$ (1,173,285)$ 18,682,749$ 1,193,230$ 17,489,519$ Wastewater Revenue Bonds, Series 2021A 7,730,000 - (375,000) 7,355,000 385,000 6,970,000 Compensated absences 90,235 17,661 (20,398) 87,498 65,623 21,875 Total 27,676,269$ 17,661$ (1,568,683)$ 26,125,247$ 1,643,853$ 24,481,394$ State Water Resources Construction Loan
In June 2016, the City entered into an installment sale agreement with the California State Water Resources Control Board in the amount of $26,500,000. The funds are for construction costs for the Pinole-Hercules Wastewater Pollution Control Plant Improvement Project. The interest rate on the loan is 1.7%. The first principal and interest payment are due August 31, 2019, and is contingent on the total drawdowns at project completion. The loan matures on August 31, 2038. The City has drawn down $25,458,720 of the loan principal including construction loan interest as of June 30, 2025. The balance at June 30, 2025 is $18,682,749.

153
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
80 Note 7 Long-Term Debt (Continued)

B. Business-Type Activities (Continued)
The annual debt service requirements to maturity for as of June 30, 2025 are as follows:

Year Ending
June 30, Principal Interest Total
2026 1,193,230$ 317,606$ 1,510,836$ 2027 1,213,515 297,322 1,510,837 2028 1,234,145 276,692 1,510,837 2029 1,255,127 255,712 1,510,839 2030 1,276,463 234,374 1,510,837 2031-2035 6,715,284 838,902 7,554,186 2036-2039 5,794,985 248,363 6,043,348 Total 18,682,749$ 2,468,971$ 21,151,720$ Wastewater Revenue Bonds, Series 2021A
In July, 2021, the City issued the Direct Purchase Lease in the amount of $8,450,000. The bonds bear interest at

2.38%. Interest on the bonds is payable semi-annually on February 1 and August 1 in each year, commencing February 1, 2022. Principal payments are due in annual installments ranging from $355,000 to $545,000, commencing August 1, 2022 through August 1, 2040. The principal balance at June 30, 2025 is $7,355,000.

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, 2025 are as follows:

Year Ending
June 30, Principal Interest Total
2026 385,000$ 170,468$ 555,468$ 2027 395,000 161,186 556,186 2028 400,000 151,725 551,725 2029 410,000 142,086 552,086 2030 420,000 132,209 552,209 2031-2035 2,255,000 504,501 2,759,501 2036-2040 2,545,000 219,258 2,764,258 2041 545,000 6,486 551,486 Tota
l 7,355,000$ 1,487,919$ 8,842,919$
C. Fiduciary Fund Financial Statements

A summary of changes in Fiduciary Fund long-term debt for the year ended June 30, 2025 was as follows:

Balance Balance Due within Due in More
July 1, 2024 Additions Deletions June 30, 2025 One Year Than One Year Publicly Offered:
2022A T ax Allocation 29,510,000$ -$ -$ 29,510,000$ -$ 29,510,000$ Plus: Bond Premium 2,713,678 - (150,065) 2,563,613 - 2,563,613 2022B Tax Allocation - Federally Taxable 48,580,000 - (455,000) 48,125,000 4,310,000 43,815,000 Notes Payable 363,257 - - 363,257 - 363,257 T otal 81,166,935$ -$ (605,065)$ 80,561,870$ 4,310,000$ 76,251,870$

154
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
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 2005 Tax Allocation Bonds, 2007A 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 Series B bonds bear interest rates range from 2.568% to 5.013%.

Principal payments for the Series A bonds commence in fiscal year 2035 and conclude in fiscal year 2043, with annual maturities ranging from $2,240,000 to $3,300,000. Principal on the Series B bonds is payable annually on August 1 in each year, commencing 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, 2025 for the Series A and B are $29,510,000 and $48,125,000, respectively.

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 writing.

The annual debt service requirements to maturity for as of June 30, 2025 are as follows:

2022 Series A
Year Ending
June 30, Principal Interest Total
2026 -$ 1,475,500$ 1,475,500$ 2027 - 1,475,500 1,475,500 2028 - 1,475,500 1,475,500 2029 - 1,475,500 1,475,500 2030 - 1,475,500 1,475,500 2031-2035 2,240,000 7,321,500 9,561,500 2036-2040 17,835,000 4,288,375 22,123,375 2041-2043 9,435,000 722,875 10,157,875 Total 29,510,000$ 19,710,250$ 49,220,250$

2022 Series B
Year Ending
June 30, Principal Interest Total
2026 4,310,000$ 2,067,790$ 6,377,790$ 2027 4,465,000 1,904,991 6,369,991 2028 4,635,000 1,723,327 6,358,327 2029 4,830,000 1,522,466 6,352,466 2030 5,040,000 1,303,816 6,343,816 2031-2035 24,845,000 2,753,930 27,598,930 Total 48,125,000$ 11,276,320$ 59,401,320$ 155
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
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, Bio Rad Laboratories, and Eden Housing) in the Redevelopment Area. Under the terms of these agreements, the Agency signed notes under which it promised to reimburse the owners by the year 2016 for the amount of incremental assessments levied on their properties, up to the cost of constructing public improvements. Payment on these notes is contingent on the property taxes and special assessments levied on these owners. As of June 30, 2025, the Agencys long-term notes payable for East Group a nd Bio Rad Laboratories were $147,097 and $216,160, respectively.

D. Non-City Obligations

The following 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, 2025
3,006,859$ 2,123,354$ Refunding Reassessment District 2005-1 (John Muir Parkway)

156
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
83 Note 8 Retirement Plans
Summary of 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, 2025 are as follows:

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

Pension contributions made after measurement date:

CalPERS Miscellaneous 932,181$ 109,499$ 1,041,680$ CalPERS Safety 1,473,886 - 1,473,886 Total pension contribution made after measurement date 2,406,067 109,499 2,515,566 Change of assumptions:

CalPERS Miscellaneous 218,242 25,636 243,878 CalPERS Safety 284,021 - 284,021 Total difference due to change in assumption 502,263 25,636 527,899 Difference between projected and actual investment earnings:

CalPERS Miscellaneous 488,827 57,421 546,248 CalPERS Safety 557,204 - 557,204 Total difference between projected and actual investment earnings: 1,046,031 57,421 1,103,452 Adjustment due to difference in proportions
CalPERS Safety 76,708 - 76,708 Total adjustment due to difference in proportions 76,708 - 76,708 Difference between expected and actual experience
CalPERS Miscellaneous 734,142 86,236 820,378 CalPERS Safety 940,774 - 940,774 Total difference between expected and actual experience 1,674,916 86,236 1,761,152 Total deferred outflows of resources
CalPERS Miscellaneous 2,373,392 278,792 2,652,184 CalPERS Safety 3,332,593 - 3,332,593 Total deferred outflows of resources 5,705,985$ 278,792$ 5,984,777$ Net pension liabilities:

CalPERS Miscellaneous 8,491,187$ 997,425$ 9,488,612$ CalPERS Safety 11,527,799 - 11,527,799 Total net pension liabilities 20,018,986$ 997,425$ 21,016,411$

157
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
84 Note 8 Retirement Plans (Continued)

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

Adjustment due to difference in proportions
CalPERS Miscellaneous 82,420$ 9,681$ 92,101$ Total adjustment due to difference in proportions 82,420 9,681 92,101 Difference between expected and actual experience:

CalPERS Miscellaneous 28,646 3,365 32,011 CalPERS Safety 30,589 - 30,589 Total difference between projected and actual investment earnings: 59,235 3,365 62,600 Employer contributions in excess of proportionate share of contribution
CalPERS Miscellaneous 280,190 32,913 313,103 CalPERS Safety 297,261 - 297,261 Total employer contributions in excess of proportionate share of contribution 577,451 32,913 610,364 Total deferred inflows of resources
CalPERS Miscellaneous 391,256 45,959 437,215 CalPERS Safety 327,850 - 327,850 Total deferred inflows of resources 719,106$ 45,959$ 765,065$ Pension expenses (credits):

CalPERS Miscellaneous 1,356,635$ 159,358$ 1,515,993$ CalPERS Safety 1,951,669 - 1,951,669 Total net pension expenses 3,308,304$ 159,358$ 3,467,662$

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 disab ility benefits, 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 California. Benefit provisions and all other requirements are established by State statute and City ordinance. Copies of CalPERS annua l 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, 2023, the following employees were covered by the benefit terms:

Miscellaneous Miscellaneous Safety Safety Safety
Classic PEPRA Classic Tier 2 PEPRA
Active employees 22 27 7 1 19 Transferred employees 47 15 4 1 8 Separated employees 89 15 4 2 6 Retired employees and beneficiaries 99 1 40 - - Tota
l 257 58 55 4 33 158
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
85 Note 8 Retirement Plans (Continued)

A. General Information About the Pension Plans (Continued)

Benefits Provided

CalPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of full-time employment. Members with five years of total service are eligible to retire at age 50 with statutorily reduced benefits. All members are eligible for nonduty disability benefits after 10 years of service.

The death benefit is one of the following: the Basic Death Benefit, the 1957 Survivor Benefit, or the Optional Settlement 2W Death Benefit. The cost-of-living adjustments for each plan are applied as specified by the Public Employees Retirement Law.

The Plans provisions and benefits in effect at June 30, 2024, are summarized below:

Miscellaneous Miscellaneous S afety S afety S afety
Classic PEPRA Classic 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
M onthly 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% 7.75% 9.00% 9.00% 13.75% Required employer contribution rate 11.84% 7.68% 27.11% 24.15% 13.54%

A participant is eligible for non-industrial disability retirement 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 eligible for this benefit. An employee's survivor who is eligible for any other pre-retirement death 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 monthly full-time rate of compensation during the 12 months preceding death.

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

Benefit terms provide for annual cost-o f-living adjustments to each employees 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%.
159
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
86 Note 8 Retirement Plans (Continued)

A. General Information About the Pension Plans (Continued)

Contributions

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

For the year ended June 30, 2025, the contributions recognized as part of pension expense for each Plan were as follows:

Miscellaneous Safety CalPERS Total
Contributions - employer 1,041,680$ 1,473,886$ 2,515,566$

B. Pension Liabilities, Pension Expenses, and Deferred Outflows 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, 2024 (the measurement date), the total pension liability was determined by rolling forward the June 30, 2023 total pension liability. The June 30, 2024 total pension liabilities were based on the following actuarial methods and assumptions:

Actuarial Cost Method Entry Age Actuarial Cost Method
Actuarial Assumptions:

Discount Rate
Inflation
Salary Increases
Mortality Rate Table 1
Post Retirement Benefit Increase

6.90%

2.30%
Varies by Entry Age and Service
Derived using CalPERS Membership Data for all Funds.

The lesser of contract COLA or 2.30% until Purchasing Power Protection Allowance floor on purchasing power applies, 2.30% thereafter.

1The mortality table used was developed based on CalPERS-specific data. The probabilities of mortality are based on the 2021 CalPERS Experience Study and Review of Actuarial Assumptions . Mortality rates incorporate full generational mortality improvement using 80% of Scale MP-2020 published by the Society of Actuaries. For more details on this table, please refer to the 2021 experience study report from November 2021 that can be found on the CalPERS website.

Change of Assumptions

There were no changes of assumptions in 2024.
160
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
87 Note 8 Retirement Plans (Continued)
B. Pension Liabilities, Pension Expenses, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pension (Continued)

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 both short-term and long-term market return expectations. Using historical returns of all of the funds asset classes, expected compound (geometric) returns were calculated over the next 20 years using a building-block approach. The expected rate of return was then adjusted to account for assumed administrative expenses of 10 Basis points. The expected real rates of return by asset class are as follows:

Asset Class
1 Assumed Asset
Allocation Real Return
1,2
Global Equity - Cap-weighted 30.00% 4.54%
Global Equity - Non-Cap-weighted 12.00% 3.84%
Private Equity 13.00% 7.28%
Treasury 5.00% 0.27%
Mortgage-backed Securities 5.00% 0.50%
Investment Grade Corporates 10.00% 1.56%
High Yield 5.00% 2.27%
Emerging Market Debt 5.00% 2.48%
Private Debt 5.00% 3.57%
Real Assets 15.00% 3.21%
Leverage -5.00% -0.59%
100.00%
2 Figures are based on the 2021 Asset Liability Management study. 1 An expected inflation of 2.30% used for this period.

Discount Rate

The discount rate used to measure the total pension liability was 6.90%. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current member contribution rates and that contributions from employers will be made at statutorily required rates, actuarially determined. Based on those assumptions, the Plans 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.

161
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
88 Note 8 Retirement Plans (Continued)
B. Pension Liabilities, Pension Expenses, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pension (Continued)

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

The following presents the Citys proportionate share of th e net pension liability of the Plan as of the measurement date, calculated using the discount rate of 6.90%, as well as what the Citys proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1 percentage-point lower (5.90%) or 1 percentage- point higher (7.90%) than the current rate:

Discount Rate - 1% Current Discount Discount Rate + 1%
(5.90%) Rate (6.90%) (7.90%)
M iscellaneous 14,633,528$ 9,488,612$ 5,253,588$ Safety 18,062,615$ 11,527,799$ 6,183,239$ Plan's Net Pension Liability

Pension Plan Fiduciary Net Position

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

Proportionate Share of Net Pension Liability and Pension Expense

The following table shows the plans 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: 6/30/23 (Valuation date) 35,723,812$ 26,171,330 9,552,482$ Balance at: 6/30/24 (Measurement date) 38,127,330 28,638,718 9,488,612 Net changes during 2023-2024 2,403,518$ 2,467,388$ (63,870)$ Safety
Balance at: 6/30/23 (Valuation date) 45,006,766 33,263,601 11,743,165$ Balance at: 6/30/24 (Measurement date) 47,839,392 36,311,593 11,527,799 Net changes during 2023-2024 2,832,626$ 3,047,992$ (215,366)$

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 plans proportionate share, total amounts of liabilities and assets are first calculated for the risk pool as a whole on the valuation date (June 30, 2023). The risk po ols fiduciary net position (FNP) subtracted from its total pension liability (TPL) determines the net pension liability (NPL) at the valuation date.

162
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
89 Note 8 Retirement Plans (Continued)
B. Pension Liabilities, Pension Expenses, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pension (Continued)

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

(2) Using standard actuarial roll forward methods, the risk pool TPL is then computed at the measurement date (June 30, 2024). 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 pools FNP at the measurement date denotes the aggregate risk pools FNP at June 30, 2024 less the sum of all additional side fund (or unfunded liability) contributions made by all employers during the measurement period (2023-24).

(3) The individual plans TPL, FNP and NPL are also calcu lated at the valuation date. TPL is allocated based on the rate plans share of the actuarial accrued liability. FNP is allocated based on the rate plans share of the market value assets.

(4) Two ratios are created by dividing the plans individu al TPL and FNP as of the valuation date from (3) by the amounts in step (1), the risk pools total TPL and FNP, respectively.

(5) The plans 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 plans 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 fund (or unfunded liability) contributions made by the employer on behalf of the plan during the measurement period.

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

Deferred outflows of resources, deferred inflows of resources, and pension expense are allocated based on the Citys share of contribution during the measurement period.

The Citys proportionate share of th e net pension liability was as follows:

Miscellaneous S afety
Proportion - June 30, 2023 0.07657% 0.09413%
Proportion - June 30, 2024 0.07824% 0.09506%
Change - Increase/(Decrease) 0.00167% 0.00093%

For the year ended June 30, 2025, the City recognized pension expense of $1,515,993 and $1,951,669, for the Miscellaneous and Safety plans, respectively.

163
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
90 Note 8 Retirement Plans (Continued)
B. Pension Liabilities, Pension Expenses, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pension (Continued)

Deferred Outflows and Deferred Inflows of Resources Related to Pensions

At June 30, 2025, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Deferred Outflows Deferred Inflows
of Resources of Resources
Contributions made after the measurement date 1,041,680$ -$ Change of assumptions 243,878 -
Difference between expected and actual
experience 820,378 (32,011)
Net difference between projected and actual
earnings on pension plan investments 546,248 - Employer contributions in excess/(under)
proportionate share of contributions - (313,103) Adjustments due to difference in proportions - (92,101) Total 2,652,184$ (437,215)$
Deferred Outflows Deferred Inflows
of Resources of Resources
Contributions made after the measurement date 1,473,886$ -$ Change of assumptions 284,021 -
Difference between expected and actual
experience 940,774 (30,589)
Net difference between projected and actual
earnings on pension plan investments 557,204 - Employer contributions in excess/(under)
proportionate share of contributions - (297,261) Adjustments due to difference in proportions 76,708 - Total 3,332,593$ (327,850)$
Deferred Outflows Deferred Inflows
of Resources of Resources
Contribution made after the measurement date 2,515,566$ -$ Change of assumptions 527,899 -
Difference between expected and actual
experience 1,761,152 (62,600)
Net difference between projected and actual
earnings on pension plan investments 1,103,452 - Employer contributions in excess/(under)
proportionate share of contributions - (610,364) Adjustments due to difference in proportions 76,708 (92,101) Total 5,984,777$ (765,065)$
Miscellaneous Plan
Safety Plan
CalPERS Aggregate Total

164
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
91 Note 8 Retirement Plans (Continued)
B. Pension Liabilities, Pension Expenses, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pension (Continued)

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

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 2023-24 measurement period is 3.8 years, which was obtained by dividing the total service years of 630,177 (the sum of remaining service lifetimes of the active employees) by 166,163 (the total number of participants:
active, inactive, and retired).

$1,041,680 and $1,473,886 reported as deferred outflows of resources related to pensions for miscellaneous plan and safety plan, respectively, resulting from the Citys 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, 2026. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:

Measurement Period
Ending June 30 M iscellaneous Plan Safety Plan Total
2025 296,389$ 495,768$ 792,157$ 2026 1,098,568 1,249,415 2,347,983 2027 (34,477) (23,678) (58,155) 2028 (187,191) (190,648) (377,839) 2029 - - - Thereafter - - - Total 1,173,289$ 1,530,857$ 2,704,146$ Deferred Outflows/(Inflows) of ResourcesC. Payable to the CalPERS Pension Plans

At June 30, 2025, the City had no outstanding amounts owed to the CalPERS pension plans for contributions for the year ended June 30, 2025.

D. Liquidating Net Pension Liability

Pension liabilities are liquidated principally by all the funds.

165
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
92 Note 9 Deferred Compensation Plan
A. 457 Plan
The City offers its employees a deferred compensation plan created in accordance with Internal Revenue Code Section 457. The Plan is available to full-time employees. The Internal Revenue Service regulations allow an employer to designate a 457(b) Deferred Compensation Plan as an alternative to social security. The plan permits employees to defer a portion of their salary until future years. The deferred compensation is not available to employees until termination, retirement, death, or unforeseeable emergency. All amounts of compensation deferred under the plan, all property and rights purchased with those amounts, and all income attributable to those amounts, property, or rights are (until paid or made available to the employee or other beneficiary) held in trust by Mission Square, the Citys third-party administrator, 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 Citys Annual Comprehensive Financial Report.

In the year 2021, The City evaluated the requirements of GASB Statement No. 84, Fiduciary Activities and GASB Statement No. 97, Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans and determined that plan didnt meet the criteria to be reported as a fiduciary activity, as required by the above mentioned GASB Statements. Moreover, the plan is classified as other employee benefits for financial reporting purposes.

As of June 30, 2025, the amount held by the Trustee for the City employees is $12,109,385.

B. 401A Plan
The City contributes 4% of total gross salary to the plan for senior managers.

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

166
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
93 Note 10 Other Postemployment Benefits
The City provides Retiree Healthcare Plan (PEHMCA) and Retiree Cash Benefit Plan (SOMAR Plan). Summary of 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, 2025 are as follows:

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

Difference between expected and actual experience
SOMAR 575,344$ 29,759$ 605,103$ Total difference between expected and actual experience 575,344 29,759 605,103 Changes of assumptions
PEHMCA 258,910 13,392 272,302 SOMAR 204,445 10,575 215,020 Total difference due to change in assumptions 258,910 13,392 272,302 Total deferred outflows of resources
PEHMCA 258,910 13,392 272,302 SOMAR 779,789 40,334 820,123 Total deferred outflows of resources 1,038,699$ 53,726$ 1,092,425$ Net OPEB liabilities (assets):

PEHMCA (336,395)$ (17,400)$ (353,795)$ SOMAR 1,836,501 94,991 1,931,492 Total net OPEB liabilities (assets) 1,500,106$ 77,591$ 1,577,697$ Deferred inflows of resources:

Difference between expected and actual experience
PEHMCA 1,125,409$ 58,211$ 1,183,620$ SOMAR 209,984 10,862 220,846 Total difference between expected and actual experience 1,335,393 69,073 1,404,466 Changes of assumptions
PEHMCA 129,575 6,702 136,277 SOMAR 660,959 34,187 695,146 Total changes of assumptions 790,534 40,889 831,423 Difference between projected and actual investment earnings:

PEHMCA 40,333 2,086 42,419 Total difference between projected and actual investment earnings: 40,333 2,086 42,419 Total deferred inflows of resources
PEHM CA 1,295,317 66,999 1,362,316 SOMAR 870,943 45,049 915,992 Total deferred inflows of resources 2,166,260$ 112,048$ 2,278,308$ OPEB expenses (credits):

PEHMCA (20,559)$ (1,063)$ (21,622)$ SOMAR 148,938 7,704 156,642 Total OPEB expenses 128,380$ 6,640$ 135,020$

167
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
94 Note 10 Other Postemployment Benefits (Continued)
A. Retiree Healthcare Plan (PEHMCA)
Plan Descriptions and Administration

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

The City has prefunded a portion of its OPEB benefits in a Public Agency Retirement Services (PARS) trust. The PARS Trust is a tax qualified irrevocable trusts, organized under Internal Revenue Code (IRC) Section 115, established to pre-fund OPEB as described in GASB Statement 75. PARS issues annual audited financial statements for each participating agency of the Trust. PARS is considered an agency agent multiple -employer plan, required to provide financial statements and required supplementary information (Schedule of Changes in Fiduciary Net Position by Plan) that are prepared in accordance 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 ($149/month for 2024 and $158/month for 2025).

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, 2025 were $88,320 including the implied rate subsidy in the amount of $40,809.

Employees Covered by Benefit Terms

At June 30, 2025, valuation date, the following employees were covered by the benefit terms:

Active Employees Eligible for Future Benefits 64
Retirees Currently Receiving Benefits 18
82 168
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
95 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, 2025 using the following actuarial assumptions:

Actuarial Assumptions:

Cost Method Entry age actuarial cost method
Discount Rate 5.15%
Inflation 2.50%
Aggregate payroll increases 2.75%
Expected long-term investment rate of return1 5.15%
Mortality, Termination, and Disability 2021 CalPERS Mortality Healthcare Trend Rate 4%
1The mortality assumptions are based on the 2021 CalPERS Mortality for Miscellaneous and Schools Employees table created by CalPERS for the miscellaneous participant type and the 2021 CalPERS Mortality for Safety Employees for the safety participant type . CalPERS periodically studies mortality for participating agencies and establishes mortality tables that are modified versions of commonly used tables.

This table incorporates mortality projection as deemed appropriate based on CalPERS analysis.

Changes of Assumptions
There were no changes of assumptions in 2025.

Discount Rate
The discount rate used to measure the total Plans OPEB liability was 5.15%. The projection of cash flows used to determine the discount rate assumed that City contributions will be made at rates equal to the actuarially determined contribution rates. Based on those assumptions, the City plan's fiduciary net position was projected to be available to make all projected OPEB payments for current active and inactive employees. Therefore, the long-term expected rate of return on OPEB plan investments was applied to all periods of projected benefit payments to determine the total OPEB liability.

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

Asset Class New Strategic Allocation
Long-Term Expected
Real Rate of Return
All Domestic Equities 30.00% 7.25%
All Fixed Income 65.00% 4.25%
Short-Term Gov't Fixed 5.00% 3.00%
100.00%
169
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
96 Note 10 Other Postemployment Benefits (Continued)
A. Retiree Healthcare Plan (PEHMCA) (Continued)

Changes in the Net OPEB Liability (Asset)

This table shows the changes in the total OPEB liability, the plan fiduciary net position, and the net OPEB liability (asset) of the PEHMCA Plan as of June 30, 2025:

Total OPEB Plan Fiduciary Net OPEB
Liability Net Position Liability (Asset)
Balance at June 30, 2024 2,617,441$ 2,888,601$ (271,160)$ Changes Recognized for the Measurement Period:

Service Cost 139,382 - 139,382 Interest on the total OPEB liability 136,113 - 136,113 Contributions from the employer - 88,320 (88,320) Expected investment income - 148,314 (148,314) Investment (gains)/losses - 102,206 (102,206) Experience (gains)/losses (36,723) - (36,723) Changes in assumptions - - Administrative expenses - (17,433) 17,433 Benefit payments (88,320) (88,320) - Net Changes during July 1, 2024 to June 30, 2025 150,452 233,087 (82,635) Balance at June 30, 2025 (Measurement Date) 2,767,893$ 3,121,688$ (353,795)$

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

The following presents the net OPEB as set of the Plan, as well as what the Citys 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%)
(2,421)$ (353,795)$ (648,919)$ Net OPEB Liability (Asset)

The following presents the net OPEB liability (asset) of the Plan, as well as what the Plans 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%
(728,124)$ (353,795)$ 114,400$ Net OPEB Liability (Asset)

170
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
97 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, 2025, the City recognized OPEB expense (gain) of $(21,622) for the Plan. OPEB expense (gain) represents the change in the net OPEB liability during the measurement period, adjusted for actual contributions and the deferred recognition of changes in investment gain/loss, and actuarial assumptions or method.

At June 30, 2025, 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 -$ (1,183,620)$ Changes of assumptions 272,302 (136,277) Net difference between projected and actual earning on
OPEB plan investments - (42,419) Total 272,302$ (1,362,316)$

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
2026 (128,169)$
2027 (224,112)
2028 (225,567)
2029 (205,727)
2030 (185,289)
Thereafter (121,150)
Total (1,090,014)$

Liquidating PEHMCA OPEB Liability
OPEB liabilities are liquidated principally by the General Fund and the Wastewater Enterprise Fund.

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 stated dollar amount prior to age 65 and the Kaiser Senior Advantage retiree only premium after age 65, offset by the PEMHCA Plan minimum, described above. The monthly dollar amounts under the SOMAR Plan are $388 per month and $292 per month in 2024 for Police and Executive Management, respectively, and $335 per month in 2025 for both groups. The amounts are contractually indexed each year by 3%.
171
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
98 Note 10 Other Postemployment Benefits (Continued)

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

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 Employees 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 Service
Sick Leave
Balance
% of Optional
Money
Available
10 480 50
11 528 55
12 576 60
13 624 65
14 672 70
15 720 75
16 768 80
17 846 85
18 864 90
19 912 95
20-24 960 100
25 No Minimum
amount required 100

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

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

The SOMAR benefit is expected to last into perpetuity. Payment are made on a bi-annual basis.

Employees Covered by Benefit Terms

At the June 30, 2025 measurement date, the following employees were covered by the benefit terms:

Participating active employees 34
Inactive employees receiving benefits 16
Total 50

172
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
99 Note 10 Other Postemployment Benefits (Continued)

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

Benefits Provided

The SOMAR plans provisions and be nefits in effect at June 30, 2025, are summarized below:

Executives 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
Minimum age Retirement Retirement
Amount $335 per month pre-
65; based on Kaiser
premium post-65
$335 per month pre-
65; based on Kaiser
premium post-65

Contributions

For the year ended June 30, 2025, the contributions recognized as part of OPEB expense for the SOMAR plan were as follows:

SOMAR Plan
Contributions - employe
r 48,809$

Actuarial Assumptions

The net OPEB liability of the SOMAR Plan was determined using an actuarial valuation as of June 30, 2025 using the following actuarial assumptions.

Actuarial Assumptions:

Cost method
Discount Rate 5.20%
Inflation 2.50%
Aggregate payroll increases 2.75%
Mortalit y1, retirement, and turnover 2021 CalPERS tables Entry age normal

1The mortality assumptions are based on the 2021 CalPERS Mortality for Miscellaneous and Schools Employees table created by CalPERS for the miscellaneous participant type and the 2021 CalPERS Mortality for Safety Employees for the safety participant type . CalPERS periodically studies mortality for participating agencies and establishes mortality tables that are modified versions of commonly used tables.

This table incorporates mortality projection as deemed appropriate based on CalPERS analysis.

Changes of Assumptions

The interest assumption changed from 3.93% to 5.20%. Assumed rates of retirement, termination, and mortality have been updated to align with those currently being used by the statewide pension systems. 173
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
100
Note 10 Other Postemployment Benefits (Continued)
B. Retiree Cash Benefit Plan (SOMAR Plan) (Continued)

Changes in the Net OPEB Liability

This table shows the changes in the total OPEB liability, the plan fiduciary net position, and the net OPEB liability of the SOMAR plan as of June 30, 2025:

Total OPEB Plan Fiduciary Net OPEB
Liability Net Position Liability
Balance at June 30, 2024 1,905,286$ -$ 1,905,286$ Changes Recognized for the Measurement Period:

Service cost 89,107 - 89,107 Interest on the total pension liability 75,670 - 75,670 Changes of benefit terms - - - Difference between expected and actual experience 335,867 - 335,867 Changes of assumptions (425,629) - (425,629) Contributions from the employer as benefit payments - 48,809 (48,809) Net investment income - - - Administrative expenses - - - Benefit payments (48,809) (48,809) - Net changes during July 1, 2024 to June 30, 2025 26,206 - 26,206 Balance at June 30, 2025 (measurement date) 1,931,492$ -$ 1,931,492$ SOMAR Plan

Discount Rate

The discount rate used to measure the total OPEB liability for the SOMAR plan was 5.20% based on the Bond Buyer 20 Bond Index.

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

The following presents the net OPEB liability of the SO MAR Plan, as well as what the SOMAR Plans 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%
(4.20%) Rate (5.20%) (6.20%)
2,255,754$ 1,931,492$ 1,672,784$ SOMAR Plan's Total OPEB Liability
174
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
101
Note 10 Other Postemployment Benefits (Continued)
B. Retiree Cash Benefit Plan (SOMAR Plan) (Continued)

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

For the year ended June 30, 2025, the City recognized OPEB expense of $156,642 for the SOMAR plan. OPEB expense represents the change in the net OPEB liability during the measurement period, adjusted for actual contributions and the deferred recognition of changes in investment gain/loss, and actuarial assumptions or method.

At June 30, 2025, 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 605,103$ (220,846)$ Changes of assumptions 215,020 (695,146)
Total 820,123$ (915,992)$
SOMAR 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 SOMAR Plan
Period Deferred Outflows/
Ending June 30 (Inflows) of Resources
2026 (8,135)$
2027 (8,135)
2028 (8,135)
2029 (8,135)
2030 (8,141)
Thereafter (55,188)
Total (95,869)$

Liquidating SOMAR OPEB Liability

OPEB liabilities are liquidated principally by the General Fund and the Wastewater Enterprise Fund.

Payable to the OPEB Plan

At June 30, 2025, the City had no outstanding amounts owed to the SOMAR OPEB plan for contributions for the year ended June 30, 2025.

Plan administration

The City has OPEB plan that provides health care benefits to retirees. The plan is not administered through a qualifying trust and is unfunded. Benefits are paid directly by the City as claims are incurred. The funded status of the plan is fully reflected on the balance sheet as a liability, as there are no plan assets to offset the Supplemental Optional Monies Allowance for Retirees (SOMAR).
175
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
102
Note 11 Risk Management

General Liability Insurance
Coverage is maintained with the Municipal 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 California Affiliated Risk Management Authority (CARMA).

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

MPA $0 to $500,000
CSAC Excess Insurance Authority $500,000 to $50,000,000 Liberty Insurance Corporation Statutory excess of $50,000,000

At June 30, 2025, the Citys estimat ed claims liabilities were as follows:

General liabilities 378,760$
Workers' compensation 524,853
Tota
l 903,613$

The Citys claims liability of $903,613 are considered to be current and reported under the general fund. Changes in the claims liabilities for the fiscal years ended June 30, 2025, 2024 and 2023 are as follows:

Claims and
Beginning Changes in Claims Ending
Fiscal Year Balance Estimates Payments Balance
2022-2023 233,954$ 482,177$ (317,758)$ 398,373$ 2023-2024 398,373 600,431 (503,358) 495,446 2024-2025 495,446 743,843 (335,676) 903,613

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 2,000,000 Pollution Liability 250,000 25,000,000 Crime Coverage 2,500 5,000,000 Boiler and M achinery 10,000 100% of primary $25,000,000; 100% of $75,000,000 excess of
$25,000,000
176
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
103
Note 11 Risk Management (Continued)
Miscellaneous Coverages (Continued)
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 Citys deposits with the MPA are in accordance with formulas established by the MPA. Actual surpluses or losses are shared according to a formula developed from overall loss costs and spread to member entities on a percentage basis after a retrospective rating. Audited financial statements can be obtained from the Municipal Pooling Authority, 1911 San Miguel Drive, #200, Walnut Creek, California 94596.

Note 12 Commitments and Contingencies

A. Lawsuits

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

B. Commitments

The City uses an encumbrance system as an extension of normal budgetary accounting for governmental funds.

Under this system, purchase orders, contracts, and other commitments for the expenditure of monies are recorded to reserve that portion of applicable appropriations. Outstanding encumbrances at year-end are automatically reappropriated for the following year. The encumbrances are mainly for the Public Works Department for consulting services and the design phase or construction for multi-year capital projects. Capital projects with outstanding balances are the Hercules HUB, Beechnut Park, Falcon Way Street Maintenance, Refugio Lake Dredging. Consulting services with outstanding encumbrances are for the Public Relations, mainly for community outreach.

At June 30, 2025, the outstanding commitments are in the amount of $3,354,527. These will be recorded in the following funds:

Governmental Funds:

General Fund 565,164$
Landscape & Lighting Assessment District (LLAD) No. 83-2 Special Revenue Fund 52,248 Other Governmental Funds 1,214,271
Proprietary Funds:

Wastewater Enterprise Fund 1,392,447
Internal Service Funds 71,337
Fidiciary Funds:

Successor Agency Private Purpose Trust Fund 59,060
Total 3,354,527$
177
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
104
Note 13 Joint Powers Agreements

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

A. West Contra Costa Transportation Advisory Committee (WCCTAC)

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

The Citys 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 collected from the ratepayers within WCCIWMA's jurisdiction. Audited financial statements can be obtained from the WCCIWMA, One Alvarado Square, San Pablo, California 94806.

C. Pinole/Hercules Wastewater Treatment Plant

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

Note 14 Stewardship, Compliance, and Accountability

A. Deficit Fund Balances/Net Position

At June 30, 2025, the following funds had a deficit fund balance/net position:

Nonmajor Special Revenue Funds:

Victoria by the bay LLAD No. 2002-01 (859,842)$
Baywood LLAD No. 2004-1 (1,238)
Internal Service Funds:

Facilities Maintenance (228,699)
Fiduciary Funds:

Successor Agency Private Purpose Trust Fund (41,807,247)$ 178
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
105
Note 14 Stewardship, Compliance, and Accountability (Continued) A. Deficit Fund Balances/Net Position (Continued)
Victoria by the bay LLAD No. 2002-01 Special Revenue Fund negative fund balance of $859,842 will be financed through future assessments.

Baywood Landscape & Lighting Assessment District (LLAD) No. 2004-1 Special Revenue Fund negative fund balance of $1,238 will be financed through future assessments.

The Facilities Maintenance Internal Service Fund negative net position of $228,699 will be eliminated from future user charges.

Private Purpose Trust Fund negative net position of $41,807,247 will be financed through future Redevelopment Property Tax Trust Fund.

B. Expenditures in Excess of Appropriations

The following funds had expenditures in excess of appropriations:

Excess of
Expenditures over
Fund Appropriations Expenditures Appropriations
Major Governmental Funds:

General Fund
General Government 5,355,513$ 5,559,903$ 204,390$ Public safety 9,251,817 9,912,051 660,234 Parks and recreation 2,570,386 3,095,102 524,716 Capital outlay 9,953 319,279 309,326 Principal - 162,408 162,408 Hercules Debt Service Fund
Interest and fiscal agent fee 841,628 844,604 2,976 Nonmajor Governmental Funds:

Bayside LLAD No. 2005-1
Special Revenue Fund 148,809 155,222 6,413 Stormwater Special Revenue Fund 493,586 495,318 1,732

179
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
106
Note 15 Fund Balance Classification
The Governmental Funds fund balance classi fication at June 30, 2025 is follows:

Landscape &
Lighting Assessment Hercules Nonmajor
General District Debt Service Governmental
Fund (LLAD) No. 83-2 Fund Funds Total
Nonspendable:

Prepaid items 11,085$ -$ -$ -$ 11,085$ Loan receivable 1,251,758 - - - 1,251,758 Total Nonspendable 1,262,843 - - - 1,262,843 Restricted for:

Pension Section 115 trust 2,643,261 - - - 2,643,261 Debt Service - - 2,285,577 - 2,285,577 State Gas T ax - - - 549,181 549,181 Measure "C" Street - - - 776,021 776,021 C.O.P.S. Program (AB 3229) - - - 80,823 80,823 Landscape & Lighting Assessment District No. 83-2 - 908,694 - - 908,694 Hercules Village LLAD No. 2002-2 - - - 109,877 109,877 Bayside LLAD No. 2005-1 - - - 116,766 116,766 Arterial - - - 515,191 515,191 Stormwater 17,320 17,320
Development Services - - - 1,939,116 1,939,116 AB 939 JPA - - - 965,496 965,496 Regional Water Quality - - - 57,962 57,962 Asset Forfeiture - - - 167,857 167,857 Bart Park & Ride - - - 6,779 6,779 Road Maintenance and Rehab Program (SB1) - - - 1,692,994 1,692,994 Development Impact Fees - - - 2,641,097 2,641,097 Total Restricted 2,643,261 908,694 2,285,577 9,636,480 15,474,012 Committed to:

Capital reserve 5,384,421 - - - 5,384,421 CalHFA loan repayment 2,500,000 - - - 2,500,000 Capital projects - - - 2,447,906 2,447,906 Total Committed 7,884,421 - - 2,447,906 10,332,327 Assigned:

Assigned by City Manager:

Capital Projects 1,488,109 - - - 1,488,109 Earthquake Insurance Deductible 500,000 - - - 500,000 Reusable Bags 13,930 - - - 13,930 PEG Fees 274,000 - - - 274,000 Economic uncertainty 4,862,987 - - - 4,862,987 Total Assigned 7,139,026 - - - 7,139,026 Unassigned (deficit) 13,802,029 - - (861,080) 12,940,949 Total Unassigned 13,802,029 - - (861,080) 12,940,949 Total Fund Balances 32,731,580$ 908,694$ 2,285,577$ 11,223,306$ 47,149,157$ Major Funds

180
City of Hercules
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
107
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
Total capital assets, net 73,833,304$ 50,196,920$ 124,030,224$ Unspent capital bond proceeds - 2,888 2,888 Capital related debt (15,694,826) (26,037,749) (41,732,575) Retention payable - (632,081) (632,081) Capital assets related accounts payable (54,024) - (54,024) Net investment in capital assets 58,084,454$ 23,529,978$ 81,614,432$

Note 17 Restatement

Implementation of GASB Statement No. 101, Compensated Absences

Effective for the fiscal year ended June 30, 2025, the City implemented GASB Statement No. 101, Compensated Absences. The implementation of GASB 101 resulted in a change in accounting principle, and prior year amounts have been restated accordingly. The effect on the beginning net position is as follows:

June 30, 2024 Change in
As Previously Accounting June 30, 2024
Reported Principle As Restated
Government-Wide
Governmental Activities 84,413,398$ (520,723)$ 83,892,675$ Business-Type Activities 36,883,037 (34,189) 36,848,848 Total primary government 121,296,435$ (554,912)$ 120,741,523$ Internal Service Funds 1,888,366$ (13,889)$ 1,874,477$

181
108
182
109

REQUIRED SUPPLEMENTARY INFORMATION
(UNAUDITED)
183
110
184
City of Hercules
Required Supplementary Information (Unaudited)
For the Year Ended June 30, 2025

111

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

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

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

2. Public hearings are conducted to obtain taxpayer comments.

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

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

5. Formal budgetary integration is employed as a management control device. General Fund and Special Revenue Funds budgets are adopted on a basis consistent with accounting principles generally accepted in the United States (US GAAP) and are consistent with the basis used for financial reporting. Accordingly, actual revenues and expenditures can be compared with related budget amounts without any reconciliation. Commitments for material and services, such as purchase orders and contracts, are recorded during the year as encumbrances to assist in controlling expenditures. Appropriations, which are encumbered at year-end lapse, then are added to the following years budgeted appropriations. However, encumbrances at y ear-end are reported as reservations of fund balance.

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 proceeds 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, 2025, based on the calculations by City Management, proceeds of taxes did not exceed the appropriations limit.

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

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

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

9. Budget appropriations for the various governmental funds become effective July 1. The City Council may amend the budget during the fiscal year. The legal level of budgetary control has been established at the fund level. During the fiscal year ended June 30, 2025, there was no adopted budget for the Regional Water Quality Special Revenue Fund.
185
General Fund
Variance with
Original Final Actuals Final Budget
REVENUES:

Taxes and assessments 13,269,000$ 13,269,000$ 13,916,904$ 647,904$ Licenses and permits 414,000 414,000 561,250 147,250 Fines and forfeitures 45,000 45,000 37,136 (7,864) Use of money and property 775,000 775,000 1,518,332 743,332 Intergovernmental 2,655,000 2,655,000 2,762,013 107,013 Charges for services 2,208,797 2,208,797 2,722,361 513,564 Other revenues 185,470 185,470 262,084 76,614 Total revenues 19,552,267 19,552,267 21,780,080 2,227,813 EXPENDITURES:

Current:

General government 5,203,080 5,355,513 5,559,903 (204,390) Public safety 9,124,961 9,251,817 9,912,051 (660,234) Streets and public works 535,674 881,642 564,468 317,174 Parks and recreation 2,563,856 2,570,386 3,095,102 (524,716) Community development 1,083,489 1,116,599 1,028,404 88,195 Capital outlay 43,200 9,953 319,279 (309,326) Debt services:

Principal - - 162,408 (162,408) Interest and fiscal agent fee 200,000 200,000 26,965 173,035 Total expenditures 18,754,260 19,385,910 20,668,580 (1,282,670)

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 798,007 166,357 1,111,500 945,143 OTHER FINANCING SOURCES (USES):

Inception of subscription liability - - 220,379 220,379 Transfers in 176,556 176,556 176,556 - Transfers (out) (3,249,280) (3,343,181) (3,724,635) (381,454) Total financing sources (uses) (3,072,724) (3,166,625) (3,327,700) (161,075) NET CHANGES IN FUND BALANCE (2,274,717)$ (3,000,268)$ (2,216,200) 784,068$ FUND BALANCE:

Beginning of year 34,947,780
End of year 32,731,580$
City of Hercules
Required Supplementary Information (Unaudited)
Budgetary Comparison Schedule
For the Year Ended June 30, 2025
Budgeted Amounts
112
186
Landscape & Lighting Assessment District (LLAD) No. 83-2 Special Revenue Fund Original Final Variance with
Budget Budget Actuals Final Budget
REVENUES:

Taxes and assessments 2,265,861$ 2,265,861$ 2,265,856$ (5)$ Use of money and property - - 66,468 66,468 Total revenues 2,265,861 2,265,861 2,332,324 66,463 EXPENDITURES:

Current:

Streets and public works 1,770,000 1,772,738 1,605,473 167,265 Capital outlay - - 2,496 (2,496) Total expenditures 1,770,000 1,772,738 1,607,969 164,769

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 495,861 493,123 724,355 231,232 OTHER FINANCING SOURCES (USES):

Transfers in 26,783 26,783 32,486 5,703
Transfers (out) (333,780) (333,780) (279,654) 54,126
Total financing sources (uses) (306,997) (306,997) (247,168) 59,829 NET CHANGE IN FUND BALANCE 188,864$ 186,126$ 477,187 291,061$ FUND BALANCE:

Beginning of year 431,507
End of year 908,694$
City of Hercules
Required Supplementary Information (Unaudited)
Budgetary Comparison Schedule (Continued)
For the Year Ended June 30, 2025
113
187
Measurement Date: June 30, 2024 June 30, 2023 June 30, 2022 June 30, 2021 June 30, 2020 City's Proportion of the Net Pension Liability 0.08% 0.08% 0.08% 0.83% 0.19% City's Proportionate Share of the Net Pension Liability 9,488,612$ 9,552,482$ 8,968,007$ 4,514,222$ 7,840,808$ City's Covered Payroll 4,498,471$ 4,009,532$ 3,590,446$ 2,848,532$ 3,376,629$ City's Proportionate Share of the Net Pension Liability as a Percentage of Covered Payroll 211% 238% 250% 158% 232% Plan's Fiduciary Net Position as a Percentage of the
Plan's Total Pension Liability 75.11% 73.26% 73.13% 85.66% 73.63% Measurement Date: June 30, 2024 June 30, 2023 June 30, 2022 June 30, 2021 June 30, 2020 City's Proportion of the Net Pension Liability 0.10% 0.09% 0.09% 0.10% 0.09% City's Proportionate Share of the Net Pension Liability 11,527,799$ 11,743,165$ 10,787,186$ 5,378,400$ 9,924,963$ City's Covered Payroll 3,380,267$ 3,536,469$ 3,339,846$ 2,805,237$ 2,702,843$ City's Proportionate Share of the Net Pension Liability as a Percentage of Covered Payrol
l 341.03% 332.06% 322.98% 191.73% 367.20%
Plan's Fiduciary Net Position as a Percentage of the
Plan's Total Pension Liability 75.90% 73.91% 75.17% 86.21% 73.17% Miscellaneous Plans
Safety Plans
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, 2025
Last Ten Fiscal Years
California Public Employees' Retirement System (CalPERS) 114
188
Measurement Date: June 30, 2019 June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015 City's Proportion of the Net Pension Liability 0.17% 0.16% 0.17% 0.17% 0.18% City's Proportionate Share of the Net Pension Liability 7,154,193$ 6,686,045$ 6,891,269$ 6,031,627$ 4,815,777$ City's Covered Payroll 3,411,264$ 3,369,924$ 3,154,200$ 2,697,183$ 2,655,670$ City's Proportionate Share of the Net Pension Liability as a Percentage of Covered Payroll 210% 198% 218% 224% 181% Plan's Fiduciary Net Position as a Percentage of the
Plan's Total Pension Liability 75.07% 77.69% 75.39% 75.87% 78.32% Measurement Date: June 30, 2019 June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015 City's Proportion of the Net Pension Liability 0.16% 0.14% 0.16% 0.16% 0.18% City's Proportionate Share of the Net Pension Liability 9,847,764$ 9,268,866$ 9,323,198$ 8,509,821$ 7,337,854$ City's Covered Payroll 2,668,574$ 2,436,633$ 2,591,015$ 2,220,165$ 2,118,549$ City's Proportionate Share of the Net Pension Liability as a Percentage of Covered Payrol
l 369.03% 380.40% 359.83% 383.30% 346.36%
Plan's Fiduciary Net Position as a Percentage of the
Plan's Total Pension Liability 70.82% 73.39% 71.74% 72.69% 71.64% Miscellaneous Plans
Safety Plans
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) For the Year Ended June 30, 2025
Last Ten Fiscal Years
California Public Employees' Retirement System (CalPERS) 115
189
Fiscal Year: 2024-2025 2023-24 2022-23 2021-22 2020-21
Actuarially Determined Contribution1 1,041,680$ 891,236$ 862,807$ 961,252$ 224,145$ Contribution in Relation to the Actuarially Determined
Contribution1 (1,041,680) (891,236) (862,807) (961,252) (224,145) Contribution Deficiency (Excess) -$ -$ -$ -$ -$ City's Covered Payroll2 4,624,428$ 4,498,471$ 4,009,532$ 3,590,446$ 3,477,928$ Contributions as a Percentage of Covered Payroll 22.53% 19.81% 21.52% 26.77% 6.44% Fiscal Year: 2024-2025 2023-24 2022-23 2021-22 2020-21
Actuarially Determined Contribution2 1,473,886$ 1,473,886$ 1,240,453$ 1,127,304$ 443,902$ Contribution in Relation to the Actuarially Determined
Contribution2 (1,473,886) (1,473,886) (1,240,453) (1,127,304) (443,902) Contribution Deficiency (Excess) -$ -$ -$ -$ Cit
y's Covered Payroll3 3,474,914$ 3,380,267$ 3,536,469$ 3,339,846$ 2,783,928$ Contributions as a Percentage of Covered Payroll 42.42% 43.60% 36.13% 33.75% 15.95% Notes to the Schedule:

Methods and assumptions used to determine contribution rates:

Actuarial cost method Actuarial cost method
Amortization method/period For details, see June 30, 2021, funding valuation report.

Asset valuation method Fair Value of Assets. For details, see June 30, 2021, funding valuation report.

Inflation 2.30%
Salary increases Varies by entry age and service
Payroll Growth 2.80%
Investment rate of return 6.80% Net of pension plan investment and administrative expenses; includes Inflation.

Retirement age
Mortality
2 Employers are assumed to make contributions equal to the actuarially determined contributions. How ever, some employers may choose to make additional contributions tow ards their unfunded liability. Employer contributions for such plans exceed the actuarially determined contributions.

The probabilities of retirement are based on the 2021 CalPERS Experience Study for the period from 1997 to 2015.

The probabilities of mortality are based on the 2021 CalPERS Experience Study and Review of Actuarial Assumptions. Mortality rates incorporate full generational mortality improvement using 80% of Scale MP-2020 published by the Society of Actuaries. 3 Includes one years payroll growth using 2.80% payroll growth assumption for fiscal year 2022 through 2024; 2.75% payroll growth assumption for fiscal years 2018 through 2021; 3.00% payroll growth assumption for fiscal years 2015 through 2017.

The actuarial methods and assumptions used to set the actuarially determined contributions for Fiscal Year 2023-24 were derived from the June 30, 2023 funding valuation report.

City of Hercules
Required Supplementary Information (Unaudited)
Schedule of the City's Contributions to the Pension Plan For the Year Ended June 30, 2025
California Public Employees' Retirement System (CalPERS) Last Ten Fiscal Years 1
Miscellaneous Plans
Safety Plans
1As prescribed in GASB 68, paragraph 46, the information presented in the Schedule of Plan Contributions should also be presented as of the employers most recent fiscal year-end. The employer is responsible for determining this information as prescribed by the standard as this data is not available to CalPERS. 116
190
Fiscal Year: 2019-20 2018-19 2017-18 2016-17 2015-16
Actuarially Determined Contribution1 774,757$ 770,639$ 659,810$ 558,315$ 529,212$ Contribution in Relation to the Actuarially Determined
Contribution1 (774,757) (770,639) (659,810) (558,315) (529,212) Contribution Deficiency (Excess) -$ -$ -$ -$ -$ City's Covered Payroll2 3,376,629$ 3,411,264$ 3,369,924$ 3,154,200$ 2,697,183$ Contributions as a Percentage of Covered Payroll 22.94% 22.59% 19.58% 17.70% 19.62% Fiscal Year: 2019-20 2018-19 2017-18 2016-17 2015-16
Actuarially Determined Contribution2 1,384,112$ 1,080,225$ 1,033,755$ 1,203,357$ 1,024,115$ Contribution in Relation to the Actuarially Determined
Contribution2 (1,384,112) (1,080,225) (1,033,755) (1,203,357) (1,024,115) Contribution Deficiency (Excess) -$ -$ -$ -$ -$ Cit
y's Covered Payroll3 2,702,843$ 2,668,574$ 2,436,633$ 2,591,015$ 2,220,165$ Contributions as a Percentage of Covered Payroll 51.21% 40.48% 42.43% 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, 2025
Last Ten Fiscal Years
California Public Employees' Retirement System (CalPERS) Miscellaneous Plans
Safety Plans
117
191
Measurement period, year ending: 6/30/2025 6/30/2024 6/30/2023 6/30/2022 Total OPEB liability
Service cost 139,382$ 135,652$ 138,804$ 135,089$ Interest 136,113 127,006 131,816 124,870 Differences between expected and actual experience (36,723) - (595,870) - Changes of assumptions - - 331,830 - Benefit payments, including refunds of member contributions (88,320) (87,069) (109,733) (144,124) Net change in total OPEB liability 150,452 175,589 (103,153) 115,835 Total OPEB liability - beginning 2,617,441 2,441,852 2,545,005 2,429,170 Total OPEB liability - ending (a) 2,767,893$ 2,617,441$ 2,441,852$ 2,545,005$ OPEB fiduciary net position
Contributions - employer 88,320$ 87,069$ 109,733$ 144,124$ Net investment income (loss) 250,520 236,200 124,112 (330,465) Benefit payments, including refunds of member contributions (88,320) (87,069) (109,733) (144,124) Administrative expense (17,433) (15,915) (15,045) (16,734) Net change in plan fiduciary net position 233,087 220,285 109,067 (347,199) Plan fiduciary net position - beginning 2,888,601 2,668,316 2,559,249 2,906,448 Plan fiduciary net position - ending (b) 3,121,688 2,888,601 2,668,316 2,559,249 Plan net OPEB liability (asset) - ending (a) - (b) (353,795)$ (271,160)$ (226,464)$ (14,244)$ Plan fiduciary net position as a percentage of
the total OPEB liability (asset) 112.78% 110.36% 109.27% 100.56% Covered payroll 12,192,908$ 11,866,577$ 11,548,980$ 11,239,883$ -2.90% -2.29% -1.96% -0.13%
1 Historical information is presented only for periods for which GASB 75 is applicable.

Plan net OPEB liability (asset) as a percentage of covered payroll Last Ten Fiscal Years1
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, 2025
118
192
Measurement period, year ending: 6/30/2021 6/30/20202 6/30/2019 6/30/2018 Total OPEB liability
Service cost 167,563$ 175,142$ 127,197$ 99,270$ Interest 139,104 188,135 180,251 179,763 Differences between expected and actual experience (311,195) (1,203,506) 40,091 437,919 Changes of assumptions 65,097 (293,525) - - Benefit payments, including refunds of member contributions (123,619) (115,990) (166,793) (105,034) Net change in total OPEB liability (63,050) (1,249,744) 180,746 611,918 Total OPEB liability - beginning 2,492,220 3,741,964 3,561,218 2,949,300 Total OPEB liability - ending (a) 2,429,170$ 2,492,220$ 3,741,964$ 3,561,218$ OPEB fiduciary net position
Contributions - employer 22,016$ 215,990$ 361,275$ 205,034$ Net investment income (loss) 359,682 123,227 155,134 123,771 Benefit payments, including refunds of member contributions (123,619) (115,990) (166,793) (105,034) Administrative expense (16,223) (13,381) - - Net change in plan fiduciary net position 241,856 209,846 349,616 223,771 Plan fiduciary net position - beginning 2,664,592 2,454,746 2,105,130 1,881,359 Plan fiduciary net position - ending (b) 2,906,448 2,664,592 2,454,746 2,105,130 Plan net OPEB liability (asset) - ending (a) - (b) (477,278)$ (172,372)$ 1,287,218$ 1,456,088$ Plan fiduciary net position as a percentage of
the total OPEB liability (asset) 119.65% 106.92% 65.60% 59.11% Covered payroll 10,939,059$ 10,646,286$ 10,336,200$ 10,035,146$ Plan net OPEB liability (asset) as a percentage of covered payroll -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 Years1
City of Hercules
Required Supplementary Information (Unaudited)
Schedule of Changes in Net OPEB Liability and Related Ratios - PEHMCA Plan (Continued) For the Year Ended June 30, 2025
119
193
Fiscal Year: 2024-25 2023-24 2022-23 2021-22 2020-21
Actuarially Determined Contribution 88,320$ 87,069$ 109,733$ 144,124$ 22,016$ Contribution in Relation to the Actuarially
Determined Contribution2 (88,320) (87,069) (109,733) (144,124) (22,016) Contribution Deficiency (Excess) -$ -$ -$ -$ -$ City's Covered Payroll 12,192,908$ 11,866,577$ 11,548,980$ 11,239,883$ 10,939,059$ Contributions as a Percentage of Covered Payroll 0.72% 0.73% 0.95% 1.28% 0.20% 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, 2025
Last Ten Fiscal Years1
120
194
Fiscal Year: 2019-20 2018-19 2017-181
Actuarially Determined Contribution 215,990$ 361,275$ 205,034$ Contribution in Relation to the Actuarially
Determined Contribution2 (215,990) (361,275) (205,034) Contribution Deficiency (Excess) -$ -$ -$ City's Covered Payroll 10,646,286$ 10,336,200$ 10,035,146$ Contributions as a Percentage of Covered Payroll 2.03% 3.50% 2.04% Last Ten Fiscal Years1
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 (Continued) For the Year Ended June 30, 2025
121
195
Measurement period, year ending: 6/30/2025 6/30/2024 6/30/2023 Total OPEB liability
Service cost 89,107$ 93,662$ 67,118$ Interest 75,670 69,546 47,903 Differences between expected and actual experience 335,867 - 411,971 Changes of assumptions (425,629) (92,016) 57,838 Benefit payments, including refunds of member contributions (48,809) (48,879) (42,990) Net change in total OPEB liability 26,206 22,313 541,840 Total OPEB liability - beginning 1,905,286 1,882,973 1,341,133 Total OPEB liability - ending (a) 1,931,492$ 1,905,286$ 1,882,973$ Fiduciary net position
Contributions - employer 48,809$ 48,879$ 43,718$ Net investment income - - - Benefit payments, including refunds of member contributions (48,809) (48,879) (43,718) 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) 1,931,492$ 1,905,286$ 1,882,973$ Plan fiduciary net position as a percentage 0.00% 0.00% 0.00% of the total OPEB liability
Covered payroll -$ -$ -$

0.00% 0.00% 0.00%
of covered payroll
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.

Plan net OPEB liability (asset) as a percentage
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, 2025
122
196
Measurement period, year ending: 6/30/2022 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 0.00% 0.00% 0.00% of the total OPEB liability
Covered payroll -$ -$ -$

Last Ten Fiscal Years1
Plan net OPEB liability (asset) as a percentage
City of Hercules
Required Supplementary Information (Unaudited)
Schedule of Changes in Net OPEB Liability and Related Ratios - SOMAR Plan (Continued) For the Year Ended June 30, 2025
123
197
Fiscal Year: 2024-25 2023-24 2022-23
Actuarially Determined Contribution 48,809$ 48,879$ 43,718$ Contribution in Relation to the Actuarially
Determined Contribution (48,809) (48,879) (43,718) 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, 2025
Schedule of the City's Contributions to the OPEB Plan
Required Supplementary Information (Unaudited)
124
198
Fiscal Year: 2021-22 2020-21 2019-202
Actuarially Determined Contribution 43,536$ 43,536$ 40,738$ Contribution in Relation to the Actuarially
Determined Contribution (43,536) (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.

Last Ten Fiscal Years1
SOMAR 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 (Continued) For the Year Ended June 30, 2025
125
199
126
200

SUPPLEMENTARY INFORMATION
127
201
128
202
Original Final Variance with
Budget Budget Actual Final Budget
REVENUES:

Use of money and property 905,296$ 905,296$ 1,014,633$ 109,337$ Total revenues 905,296 905,296 1,014,633 109,337 EXPENDITURES:

Debt services:

Principal 862,125 862,125 862,125 - Interest and fiscal agent fee 841,628 841,628 844,604 (2,976) Total expenditures 1,703,753 1,703,753 1,706,729 (2,976)

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (798,457) (798,457) (692,096) 106,361

OTHER FINANCING SOURCES
Transfers in 798,457 798,457 805,903 7,446 Total financing sources 798,457 798,457 805,903 7,446 NET CHANGE IN FUND BALANCE -$ -$ 113,807 113,807$ FUND BALANCE:

Beginning of year 2,171,770
End of year 2,285,577$
City of Hercules
Schedule of Revenues, Expenditures and Change in Fund Balance - Budget and Actual Hercules Debt Service Fund
For the Year Ended June 30, 2025
129
203
130
204

NONMAJOR GOVERNMENTAL FUNDS
131
205
132
206
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 Fund - 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 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.

Bayside LLAD No. 2005-1 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.

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 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.

Road Rehabilitation Maintenance Fund -This fund accounts for the State Legislature passed SB1 which increases the funding for street projects. Revenue is restricted for street-related construction and/or maintenance projects starting from 2017.

Victoria by the bay LLAD No. 2002-1 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.

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 Cit
y's portion of sales tax dedicated to transportation programs. 133
207
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)
134
208
Victoria by
C.O.P.S. the ba y
State Gas Measure C Program LLAD
Tax Street (AB 3229) No. 2002-1
ASSETS
Cash and investments 526,275$ 781,815$ 80,823$ -$ Accounts receivable 62,218 - 101,537 - Total assets 588,493$ 781,815$ 182,360$ -$

LIABILITIES
Accounts payable 34,018$ -$ -$ 67,526$ Accrued wages 5,294 5,794 - 1,415
Deposit payable - - - - Due to other funds - - - 790,901 Advances from other funds - - - - Total liabilities 39,312 5,794 - 859,842

DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - - 101,537 - Total deferred inflows of resources - - 101,537 -

FUND BALANCES
Restricted 549,181 776,021 80,823 - Committed - - - - Unassigned (deficit) - - - (859,842) Total fund balances (deficit) 549,181 776,021 80,823 (859,842) Total liabilities, deferred inflows
of resources and fund balances 588,493$ 781,815$ 182,360$ -$ (Continued)
Special Revenue Funds
City of Hercules
Combining Balance Sheet
Nonmajor Governmental Funds
June 30, 2025
135
209
Hercules
Village Baywoo d Bayside
LLAD LLAD LLAD Arterial
No. 2002-2 No. 2004-1 No. 2005-1 Roadways
ASSETS
Cash and investments 129,039$ 98,464$ 130,578$ 553,139$ Accounts receivable - - - - Total assets 129,039$ 98,464$ 130,578$ 553,139$

LIABILITIES
Accounts payable 18,598$ 10,633$ 13,130$ 37,096$ Accrued wages 564 869 682 852
Deposit payable - - - - Due to other funds - - - - Advances from other funds - 88,200 - - Total liabilities 19,162 99,702 13,812 37,948

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

FUND BALANCES
Restricted 109,877 - 116,766 515,191 Committed - - - - Unassigned (deficit) - (1,238) - - Total fund balances (deficit) 109,877 (1,238) 116,766 515,191 Total liabilities, deferred inflows
of resources and fund balances 129,039$ 98,464$ 130,578$ 553,139$ (Continued)
Special Revenue Funds
City of Hercules
Combining Balance Sheet (Continued)
Nonmajor Governmental Funds
June 30, 2025
136
210
Regional
Development AB939 Wate r
Stormwater Services JPA Quality
ASSETS
Cash and investments -$ 1,885,666$ 886,126$ 57,962$ Accounts receivable 41,388 53,450 79,720 - Total assets 41,388$ 1,939,116$ 965,846$ 57,962$

LIABILITIES
Accounts payable 20,000$ -$ -$ -$ Accrued wages 4,068 - 350 -
Deposit payable - - - - Due to other funds - - - - Advances from other funds - - - - Total liabilities 24,068 - 350 -

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

FUND BALANCES
Restricted 17,320 1,939,116 965,496 57,962 Committed - - - - Unassigned (deficit) - - - - Total fund balances (deficit) 17,320 1,939,116 965,496 57,962 Total liabilities, deferred inflows
of resources and fund balances 41,388$ 1,939,116$ 965,846$ 57,962$ (Continued)
Special Revenue Funds
City of Hercules
Combining Balance Sheet (Continued)
Nonmajor Governmental Funds
June 30, 2025
137
211
Capital Project
Funds
Road
Asset Bart Rehabilitation City Capital
Forfeiture Park and Ride Maintenance Projects Fund
ASSETS
Cash and investments 363,985$ 7,872$ 1,633,385$ 2,972,368$ Accounts receivable - - 59,609 578,921 Total assets 363,985$ 7,872$ 1,692,994$ 3,551,289$

LIABILITIES
Accounts payable -$ 1,093$ -$ 194,385$ Accrued wages - - - - Deposit payable 196,128 - - - Due to other funds - - - 417,798 Advances from other funds - - - - Total liabilities 196,128 1,093 - 612,183

DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - - - 491,200 Total deferred inflows of resources - - - 491,200

FUND BALANCES
Restricted 167,857 6,779 1,692,994 - Committed - - - 2,447,906 Unassigned (deficit) - - - Total fund balances (deficit) 167,857 6,779 1,692,994 2,447,906 Total liabilities, deferred inflows
of resources and fund balances 363,985$ 7,872$ 1,692,994$ 3,551,289$ (Continued)
Special Revenue Funds
City of Hercules
Combining Balance Sheet (Continued)
Nonmajor Governmental Funds
June 30, 2025
138
212
Capital Project
Funds
Development
Impact
Fees Total
ASSETS
Cash and investments 2,665,615$ 12,773,112$
Accounts receivable - 976,843
Total assets 2,665,615$ 13,749,955$

LIABILITIES
Accounts payable 24,518$ 420,997$
Accrued wages - 19,888
Deposit payable - 196,128
Due to other funds - 1,208,699
Advances from other funds - 88,200 Total liabilities 24,518 1,933,912

DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - 592,737
Total deferred inflows of resources - 592,737

FUND BALANCES
Restricted 2,641,097 9,636,480
Committed - 2,447,906
Unassigned (deficit) - (861,080) Total fund balances (deficit) 2,641,097 11,223,306 Total liabilities, deferred inflows
of resources and fund balances 2,665,615$ 13,749,955$ (Concluded)
City of Hercules
Combining Balance Sheet (Continued)
Nonmajor Governmental Funds
June 30, 2025
139
213
Victoria by
C.O.P.S. the ba y
State Gas Measure C Program LLAD
Tax Street (AB 3229) No. 2002-1
REVENUES:

Taxes and assessments -$ -$ -$ 520,569$ Licenses and permits - - - - Use of money and property 32,155 31,171 - - Intergovernmental 733,801 554,631 194,663 - Charges for services - - - - Other revenues - - - - Total revenues 765,956 585,802 194,663 520,569 EXPENDITURES:

Current:

Public safety - - - - Streets and public works 552,012 344,818 - 680,859 Capital outlay 137,779 230,541 - - Total expenditures 689,791 575,359 - 680,859

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 76,165 10,443 194,663 (160,290)

OTHER FINANCING SOURCES (USES)
Transfers in - - - 13,052 Transfers (out) (55,965) - (176,556) (29,529) Total financing sources (uses) (55,965) - (176,556) (16,477) NET CHANGES IN FUND BALANCES 20,200 10,443 18,107 (176,767) FUND BALANCES (DEFICIT):

Beginning of year 528,981 765,578 62,716 (683,075) End of year 549,181$ 776,021$ 80,823$ (859,842)$ (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, 2025
140
214
Hercules
Village Baywoo d Bayside
LLAD LLAD LLAD Arterial
No. 2002-2 No. 2004-1 No. 2005-1 Roadways
REVENUES:

Taxes and assessments 178,701$ 177,884$ 162,856$ -$ Licenses and permits - - - - Use of money and property 6,361 3,850 6,592 20,547 Intergovernmental - - - - Charges for services - - - - Other revenues - - - - Total revenues 185,062 181,734 169,448 20,547 EXPENDITURES:

Current:

Public safety - - - - Streets and public works 198,935 139,191 155,222 350,216 Capital outlay - - - - Total expenditures 198,935 139,191 155,222 350,216

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (13,873) 42,543 14,226 (329,669)

OTHER FINANCING SOURCES (USES)
Transfers in 4,347 3,259 2,822 340,210 Transfers (out) (8,051) (2,841) (20,136) - Total financing sources (uses) (3,704) 418 (17,314) 340,210 NET CHANGES IN FUND BALANCES (17,577) 42,961 (3,088) 10,541 FUND BALANCES (DEFICIT):

Beginning of year 127,454 (44,199) 119,854 504,650 End of year 109,877$ (1,238)$ 116,766$ 515,191$ (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, 2025
141
215
Regional
Development AB939 Wate r
Stormwater Services JPA Quality
REVENUES:

Taxes and assessments 241,252$ 312,765$ -$ -$ Licenses and permits - - 177,647 - Use of money and property - 90,010 50,950 3,056 Intergovernmental - 15,000 - - Charges for services - - - - Other revenues - - 35,000 - Total revenues 241,252 417,775 263,597 3,056 EXPENDITURES:

Current:

Public safety - - - - Streets and public works 495,318 - 58,797 - Capital outlay - - 11,417 - Total expenditures 495,318 - 70,214 -

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (254,066) 417,775 193,383 3,056

OTHER FINANCING SOURCES (USES)
Transfers in 467,407 - - - Transfers (out) - - (125,000) - Total financing sources (uses) 467,407 - (125,000) - NET CHANGES IN FUND BALANCES 213,341 417,775 68,383 3,056 FUND BALANCES (DEFICIT):

Beginning of year (196,021) 1,521,341 897,113 54,906 End of year 17,320$ 1,939,116$ 965,496$ 57,962$ (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, 2025
142
216
Capital Project
Funds
Road
Asset Bart Rehabilitation City Capital
Forfeiture Park and Ride Maintenance Projects Fund
REVENUES:

Taxes and assessments -$ -$ -$ 60,293$ Licenses and permits - - - - Use of money and property 9,783 32 67,285 17,539 Intergovernmental - - 709,040 264,187 Charges for services - - - - Other revenues - 33,500 - - Total revenues 9,783 33,532 776,325 342,019 EXPENDITURES:

Current:

Public safety 22,398 - - - Streets and public works - 26,488 65,092 16,514 Capital outlay - - - 778,219 Total expenditures 22,398 26,488 65,092 794,733

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (12,615) 7,044 711,233 (452,714)

OTHER FINANCING SOURCES (USES)
Transfers in - - - 2,576,325 Transfers (out) - - - - Total financing sources (uses) - - - 2,576,325 NET CHANGES IN FUND BALANCES (12,615) 7,044 711,233 2,123,611 FUND BALANCES (DEFICIT):

Beginning of year 180,472 (265) 981,761 324,295 End of year 167,857$ 6,779$ 1,692,994$ 2,447,906$ (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, 2025
143
217
Capital Project
Funds
Development
Impact
Fees Total
REVENUES:

Taxes and assessments -$ 1,654,320$ Licenses and permits - 177,647
Use of money and property 126,355 465,686
Intergovernmental - 2,471,322
Charges for services 403,806 403,806
Other revenues - 68,500
Total revenues 530,161 5,241,281
EXPENDITURES:

Current:

Public safety - 22,398
Streets and public works - 3,083,462 Capital outlay - 1,157,956
Total expenditures - 4,263,816

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 530,161 977,465

OTHER FINANCING SOURCES (USES)
Transfers in - 3,407,422
Transfers (out) - (418,078)
Total financing sources (uses) - 2,989,344 NET CHANGES IN FUND BALANCES 530,161 3,966,809 FUND BALANCES (DEFICIT):

Beginning of year 2,110,936 7,256,497
End of year 2,641,097$ 11,223,306$
(Concluded)
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances (Continued) City of Hercules
For the Year Ended June 30, 2025
Nonmajor Governmental Funds
144
218
Original Final Variance with
Budget Budget Actual Final Budget
REVENUES:

Use of money and property -$ -$ 32,155$ 32,155$ Intergovernmental 727,585 727,585 733,801 6,216 Total revenues 727,585 727,585 765,956 38,371 EXPENDITURES:

Current:

Streets and public works 516,664 506,686 552,012 (45,326) Capital outlay 153,200 198,068 137,779 60,289 Total expenditures 669,864 704,754 689,791 14,963

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 57,721 22,831 76,165 53,334 OTHER FINANCING (USES):

Transfers (out) (55,965) (55,965) (55,965) - Total financing (uses) (55,965) (55,965) (55,965) - NET CHANGE IN FUND BALANCE 1,756$ (33,134)$ 20,200 53,334$ FUND BALANCE:

Beginning of year 528,981
End of year 549,181$
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, 2025
145
219
Original Final Variance with
Budget Budget Actual Final Budget
REVENUES:

Use of money and property -$ -$ 31,171$ 31,171$ Intergovernmental 520,000 520,000 554,631 34,631 Total revenues 520,000 520,000 585,802 65,802 EXPENDITURES:

Current:

Streets and public works 342,886 332,908 344,818 (11,910) Capital outlay 258,300 358,172 230,541 127,631 Total expenditures 601,186 691,080 575,359 115,721 NET CHANGE IN FUND BALANCE (81,186)$ (171,080)$ 10,443 181,523$ FUND BALANCE:

Beginning of year 765,578
End of year 776,021$
City of Hercules
Schedule of Revenues, Expenditures and Change in Fund Balance - Budget and Actual Measure C Street Special Revenue Fund
For the Year Ended June 30, 2025
146
220
Original Final Variance with
Budget Budget Actual Final Budget
REVENUES:

Intergovernmental 150,000$ 150,000$ 194,663$ 44,663$ Total revenues 150,000 150,000 194,663 44,663

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 150,000 150,000 194,663 44,663 OTHER FINANCING (USES):

Transfers (out) (176,556) (176,556) (176,556) - Total financing (uses) (176,556) (176,556) (176,556) - NET CHANGE IN FUND BALANCE (26,556)$ (26,556)$ 18,107 44,663$ FUND BALANCE:

Beginning of year 62,716
End of year 80,823$
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, 2025
147
221
Original Final Variance with
Budget Budget Actual Final Budget
REVENUES:

Taxes and assessments 647,122$ 647,122$ 520,569$ (126,553)$ Total revenues 647,122 647,122 520,569 (126,553) EXPENDITURES:

Current:

Streets and public works 677,580 687,183 680,859 6,324 Total expenditures 677,580 687,183 680,859 6,324

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (30,458) (40,061) (160,290) (120,229) OTHER FINANCING SOURCES (USES):

Transfer in 13,052 13,052 13,052 - Transfers (out) (29,529) (29,529) (29,529) - Total financing (uses) (16,477) (16,477) (16,477) - NET CHANGE IN FUND BALANCE (46,935)$ (56,538)$ (176,767) (120,229)$ FUND BALANCE (DEFICIT):

Beginning of year (683,075)
End of year (859,842)$
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, 2025
148
222
Original Final Variance with
Budget Budget Actual Final Budget
REVENUES:

Taxes and assessments 178,701$ 178,701$ 178,701$ -$ Use of money and property - - 6,361 6,361 Total revenues 178,701 178,701 185,062 6,361 EXPENDITURES:

Current:

Streets and public works 217,363 217,877 198,935 18,942 Total expenditures 217,363 217,877 198,935 18,942

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (38,662) (39,176) (13,873) 25,303 OTHER FINANCING SOURCES (USES):

Transfers in 4,347 4,347 4,347 - Transfers (out) (8,051) (8,051) (8,051) - Total financing sources (uses) (3,704) (3,704) (3,704) - NET CHANGE IN FUND BALANCE (42,366)$ (42,880)$ (17,577) 25,303$ FUND BALANCE:

Beginning of year 127,454
End of year 109,877$
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, 2025
149
223
Original Final Variance with
Budget Budget Actual Final Budget
REVENUES:

Taxes and assessments 177,885$ 177,885$ 177,884$ (1)$ Use of money and property - - 3,850 3,850 Total revenues 177,885 177,885 181,734 3,849 EXPENDITURES:

Current:

Streets and public works 177,670 178,184 139,191 38,993 Total expenditures 177,670 178,184 139,191 38,993

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 215 (299) 42,543 42,842 OTHER FINANCING SOURCES (USES):

Transfers in 3,259 3,259 3,259 - Transfers (out) (2,841) (2,841) (2,841) - Total financing sources (uses) 418 418 418 - NET CHANGE IN FUND BALANCE 633$ 119$ 42,961 42,842$ FUND BALANCE (DEFICIT):

Beginning of year (44,199)
End of year (1,238)$
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, 2025
150
224
Original Final Variance with
Budget Budget Actual Final Budget
REVENUES:

Taxes and assessments 162,856$ 162,856$ 162,856$ -$ Use of money and property - - 6,592 6,592 Total revenues 162,856 162,856 169,448 6,592 EXPENDITURES:

Current:

Streets and public works 141,104 148,809 155,222 (6,413) Total expenditures 141,104 148,809 155,222 (6,413)

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 21,752 14,047 14,226 179 OTHER FINANCING SOURCES (USES):

Transfers in 2,822 2,822 2,822 - Transfers (out) (20,136) (20,136) (20,136) - Total financing sources (uses) (17,314) (17,314) (17,314) - NET CHANGE IN FUND BALANCE 4,438$ (3,267)$ (3,088) 179$ FUND BALANCE:

Beginning of year 119,854
End of year 116,766$
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, 2025
151
225
Original Final Variance with
Budget Budget Actual Final Budget
REVENUES:

Use of money and property -$ -$ 20,547$ 20,547$ Total revenues - - 20,547 20,547 EXPENDITURES:

Current:

Streets and public works 365,916 365,916 350,216 15,700 Total expenditures 365,916 365,916 350,216 15,700

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (365,916) (365,916) (329,669) 36,247 OTHER FINANCING SOURCES:

Transfers in 340,210 340,210 340,210 - Total financing sources 340,210 340,210 340,210 - NET CHANGE IN FUND BALANCE (25,706)$ (25,706)$ 10,541 36,247$ FUND BALANCE:

Beginning of year 504,650
End of year 515,191$
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, 2025
152
226
Original Final Variance with
Budget Budget Actual Final Budget
REVENUES:

Taxes and assessments 230,645$ 230,645$ 241,252$ 10,607$ Total revenues 230,645 230,645 241,252 10,607 EXPENDITURES:

Current:

Streets and public works 449,029 493,586 495,318 (1,732) Total expenditures 449,029 493,586 495,318 (1,732)

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (218,384) (262,941) (254,066) 8,875 OTHER FINANCING SOURCES:

Transfers in 125,000 125,000 467,407 342,407 Total financing sources 125,000 125,000 467,407 342,407 NET CHANGE IN FUND BALANCE (93,384)$ (137,941)$ 213,341 351,282$ FUND BALANCE (DEFICIT):

Beginning of year (196,021)
End of year 17,320$
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, 2025
153
227
Original Final Variance with
Budget Budget Actual Final Budget
REVENUES:

Taxes and assessments -$ -$ 312,765$ 312,765$ Use of money and property - - 90,010 90,010 Intergovernmental - - 15,000 15,000 Total revenues - - 417,775 417,775 EXPENDITURES:

Current:

Streets and public works - 8,726 - 8,726 Community development 170,000 170,000 - 170,000 Total expenditures 170,000 178,726 - 178,726 NET CHANGES IN FUND BALANCE (170,000)$ (178,726)$ 417,775 596,501$ FUND BALANCE:

Beginning of year 1,521,341
End of year 1,939,116$
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, 2025
154
228
Original Final Variance with
Budget Budget Actual Final Budget
REVENUES:

Licenses and permits 176,000$ 176,000$ 177,647$ 1,647$ Use of money and property 9,000 9,000 50,950 41,950 Other revenues - - 35,000 35,000 Total revenues 185,000 185,000 263,597 78,597 EXPENDITURES:

Current:

Streets and public works 3,227 25,393 58,797 (33,404) Capital outlay 260,113 260,113 11,417 248,696 Total expenditures 263,340 285,506 70,214 215,292

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (78,340) (100,506) 193,383 293,889 OTHER FINANCING (USES):

Transfers (out) (125,000) (125,000) (125,000) - Total financing (uses) (125,000) (125,000) (125,000) - NET CHANGE IN FUND BALANCE (203,340)$ (225,506)$ 68,383 293,889$ FUND BALANCE:

Beginning of year 897,113
End of year 965,496$
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, 2025
155
229
Original Final Variance with
Budget Budget Actual Final Budget
REVENUES:

Use of money and property -$ -$ 9,783$ 9,783$ Total revenues - - 9,783 9,783 EXPENDITURES:

Current:

Public safety 117,000 148,282 22,398 125,884 Total expenditures 117,000 148,282 22,398 125,884 NET CHANGE IN FUND BALANCE (117,000)$ (148,282)$ (12,615) 135,667$ FUND BALANCE:

Beginning of year 180,472
End of year 167,857$
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, 2025
156
230
Original Final Variance with
Budget Budget Actual Final Budget
REVENUES:

Use of money and property -$ -$ 32$ 32$ Other revenue 89,000 89,000 33,500 (55,500) Total revenues 89,000 89,000 33,532 (55,468) EXPENDITURES:

Current:

Streets and public works 89,000 90,968 26,488 64,480 Total expenditures 89,000 90,968 26,488 64,480 NET CHANGE IN FUND BALANCE -$ (1,968)$ 7,044 9,012$ FUND BALANCE (DEFICIT):

Beginning of year (265)
End of year 6,779$
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, 2025
157
231
Original Final Variance with
Budget Budget Actual Final Budget
REVENUES:

Use of money and property -$ -$ 67,285$ 67,285$ Intergovernmental 673,002 673,002 709,040 36,038 Total revenues 673,002 673,002 776,325 103,323 EXPENDITURES:

Current:

Streets and public works 965,100 1,075,271 65,092 1,010,179 Total expenditures 965,100 1,075,271 65,092 1,010,179 NET CHANGE IN FUND BALANCE (292,098)$ (402,269)$ 711,233 1,113,502$ FUND BALANCE:

Beginning of year 981,761
End of year 1,692,994$
City of Hercules
Schedule of Revenues, Expenditures and Change in Fund Balance - Budget and Actual Road Rehabilitation Maintenance Special Revenue Fund
For the Year Ended June 30, 2025
158
232
Original Final Variance with
Budget Budget Actual Final Budget
REVENUES:

Taxes and assessments 56,000$ 56,000$ 60,293$ 4,293$ Use of money and property 6,000 6,000 17,539 11,539 Intergovernmental 1,127,500 1,127,500 264,187 (863,313) Total revenues 1,189,500 1,189,500 342,019 (847,481) EXPENDITURES:

Current:

Street and public works - 164,077 16,514 147,563 Capital outlay 3,626,323 4,488,337 778,219 3,710,118 Total expenditures 3,626,323 4,652,414 794,733 3,857,681

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (2,436,823) (3,462,914) (452,714) 3,010,200 OTHER FINANCING SOURCES:

Transfers in 2,450,823 2,544,724 2,576,325 31,601 Total financing sources 2,450,823 2,544,724 2,576,325 31,601 NET CHANGE IN FUND BALANCE 14,000$ (918,190)$ 2,123,611 3,041,801$ FUND BALANCE:

Beginning of year 324,295
End of year 2,447,906$
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, 2025
159
233
Original Final Variance with
Budget Budget Actual Final Budget
REVENUES:

Use of money and property -$ -$ 126,355$ 126,355$ Charges for services - - 403,806 403,806 Total revenues - - 530,161 530,161 EXPENDITURES:

Current:

Streets and public works 200,000 200,000 - 200,000 Capital outlay - 39,387 - 39,387 Total expenditures 200,000 239,387 - 239,387 NET CHANGE IN FUND BALANCE (200,000)$ (239,387)$ 530,161 769,548$ FUND BALANCE:

Beginning of year 2,110,936
End of year 2,641,097$
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, 2025
160
234

INTERNAL SERVICE FUNDS
Vehicle Replacement Fund This fund accounts for the purchase of automotive for various City departments.

Technology Services Fund This fund is used to account for maintenance and operations of the information technology for various City departments.

Internal Service Funds are used to finance and account for special activities and services performed by a designated department for other departments in the city on a cost reimbursement basis.

Facilities Maintenance This fund accounts for the repair and maintenance of City facilities and for provision of custodial and maintenance services related thereto.
161
235
162
236
Vehicle Technolog y Facilities
Replacement Services Maintenance Total
ASSETS
Current assets:

Cash and investments 279,651$ 1,447,115$ 179,899$ 1,906,665$ Total current assets 279,651 1,447,115 179,899 1,906,665 Noncurrent assets:

Net OPEB asset - PEHMCA - 11,600 5,800 17,400 Capital assets:

Depreciable and amortizable, net 534,108 234,214 - 768,322 Total noncurrent assets 534,108 245,814 5,800 785,722 Total assets 813,759 1,692,929 185,699 2,692,387

DEFERRED OUTFLOWS OF RESOURCES
Pensions-related deferred outflows of resources - 150,509 110,583 261,092 OPEB-related deferred inflows of resources (PEHMCA) - 8,928 4,464 13,392 OPEB-related deferred outflows of resources (SOMAR) - 26,889 13,445 40,334 Total deferred outflows of resources - 186,326 128,492 314,818

LIABILITIES
Current liabilities:

Accounts payable - 4,201 36,230 40,431 Salaries and benefits payable - 8,556 5,029 13,585 Compensated absences, due in one year - 33,931 14,070 48,001 Subscription liability, due in one year - 27,375 - 27,375 Total current liabilities - 74,063 55,329 129,392 Noncurrent liabilities:

Compensated absences - 11,310 4,690 16,000 Subscription liability - 15,707 - 15,707 Net pension liability - 538,468 395,629 934,097 Net OPEB liability - SOMAR - 63,327 31,663 94,990 Total noncurrent liabilities - 628,812 431,982 1,060,794 Total liabilities - 702,875 487,311 1,190,186

DEFERRED INFLOWS OF RESOURCES
Pensions-related deferred outflows of resources - 24,811 18,230 43,041 OPEB-related deferred outflows of resources (PEHMCA) - 44,666 22,333 66,999 OPEB-related deferred outflows of resources (SOMAR) - 30,032 15,016 45,048 Total deferred inflows of resources - 99,509 55,579 155,088

NET POSITION
Net investment in capital assets 534,108 191,132 - 725,240 Restricted for net OPEB assets - 11,600 5,800 17,400 Unrestricted (deficit) 279,651 874,139 (234,499) 919,291 Total net position 813,759$ 1,076,871$ (228,699)$ 1,661,931$ City of Hercules
Combining Statement of Net Position
Internal Service Funds
June 30, 2025
163
237
Vehicle Technolog y Facilities
Replacement Services Maintenance Total
OPERATING REVENUES:

Charges for services 158,000$ 1,070,728$ 1,046,683$ 2,275,411$ Other operating revenues - 165,337 - 165,337 Total operating revenues 158,000 1,236,065 1,046,683 2,440,748 OPERATING EXPENSES:

Salaries and benefits - 478,187 307,048 785,235 Services and supplies 57,550 575,752 954,657 1,587,959 Depreciation and amortization 222,419 57,074 - 279,493 Total operating expenses 279,969 1,111,013 1,261,705 2,652,687 OPERATING INCOME (LOSS) (121,969) 125,052 (215,022) (211,939) NONOPERATING (EXPENSES):

Interest (expenses) - (607) - (607) INCOME (LOSS) BEFORE TRANSFERS (121,969) 124,445 (215,022) (212,546) CHANGES IN NET POSITION (121,969) 124,445 (215,022) (212,546) NET POSITION (DEFICIT):

Beginning of year, as previously reported 935,728 962,816 (10,178) 1,888,366 Change in accounting principle (GASB 101) - (10,390) (3,499) (13,889) Beginning of year, as restated (Note 17) 935,728 952,426 (13,677) 1,874,477 End of year 813,759$ 1,076,871$ (228,699)$ 1,661,931$ City of Hercules
Combining Statement of Revenues, Expenses, and Changes in Net Position Internal Service Funds
For the Year Ended June 30, 2025
164
238
Vehicle Technolog y Facilities
Replacement Services Maintenance Total
CASH FLOWS FROM OPERATING ACTIVITIES:

Cash receipts from internal services provided 158,000$ 1,236,066$ 1,046,683$ 2,440,749$ Cash paid to suppliers for goods and services (57,550) (591,794) (940,314) (1,589,658) Cash paid to employees for services - (424,503) (233,537) (658,040) Net cash provided by (used in) operating activities 100,450 219,769 (127,168) 193,051

CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES:

Payments related to the acquisition of capital assets (135,436) - - (135,436) Principal repayments related to capital purposes - (28,002) - (28,002) Interest repayments related to capital purposes - (607) - (607) Net cash (used in) capital and related
financing activities (135,436) (28,609) - (164,045) NET CHANGES IN CASH AND CASH EQUIVALENTS (34,986) 191,160 (127,168) 29,006 CASH AND CASH EQUIVALENTS:

Beginning of year 314,637 1,255,955 307,067 1,877,659 End of year 279,651$ 1,447,115$ 179,899$ 1,906,665$

RECONCILIATION OF OPERATING INCOME (LOSS)

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

Operating income (loss) (121,969)$ 125,052$ (215,022)$ (211,939)$ Adjustments to reconcile operating income (loss)
to net cash provided by (used in) operating activities:

Depreciation and amortization 222,419 57,074 - 279,493 (Increase) Decrease in Assets and Deferred Outflows
Pensions-related deferred outflows - 35,337 9,071 44,408 OPEB-related deferred outflows - (3,657) (1,829) (5,486) Increase (Decrease) in Liabilities and Deferred Inflows Accounts Payable - (16,041) 14,343 (1,698) Salaries and benefits payable - 1,861 1,013 2,874 Net pension liability - 31,617 69,301 100,918 Net OPEB liability - 858 429 1,287 Pensions-related deferred inflows - (14,954) (7,372) (22,326) OPEB-related deferred inflows - 2,728 1,363 4,091 Compensated absences - (106) 1,535 1,429 Total adjustments 222,419 94,717 87,854 404,990 Net cash provided by (used in) operating activities 100,450$ 219,769$ (127,168)$ 193,051$ City of Hercules
Combining Statement of Cash Flows
Internal Service Funds
For the Year Ended June 30, 2025
165
239
166
240

FIDUCIARY-CUSTODIAL FUNDS
Taylor Woodrow Fund This fund is to be use for the benefit of the qualified buyers or affordable unit owners.

Reassessment District 05-01 Fund This fund account for the collection of assessment and the disbursement to Reassessment District 2005-1 (John Muir Parkway) district bond holders for debt without City commitment. 167
241
168
242
Taylor
Reassessment Woodrow
District Maintenance
05-01 LMOD Total
ASSETS
Cash and investments 379,223$ 78,719$ 457,942$ Cash and investments with fiscal agents 55,798 - 55,798 Total assets 435,021 78,719 513,740

NET POSITION
Restricted for individuals, organization, and other government 435,021 78,719 513,740 Total net position 435,021$ 78,719$ 513,740$ City of Hercules
Combining Statement of Fiduciary Net Position
Fiduciary Funds - Custodial Funds
June 30, 2025
169
243
Taylor
Reassessment Woodrow
District Maintenance
05-01 LMOD Total
ADDITIONS:

Taxes and assessments 230,867$ -$ 230,867$ Investment income 16,207 4,152 20,359 Total additions 247,074 4,152 251,226 DEDUCTIONS:

Administration 6,885 - 6,885
Interest and fiscal agent fee 51,937 - 51,937 Principal payment to refunding escrow 166,187 - 166,187 Total deduction
s 225,009 - 225,009
CHANGES IN FIDUCIARY NET POSITION 22,065 4,152 26,217 NET POSITION:

Beginning of year 412,956 74,567 487,523 End of year 435,021$ 78,719$ 513,740$ City of Hercules
Combining Statement of Changes in Fiduciary Net Position Fiduciary Funds - Custodial Funds
For the Year Ended June 30, 2025
170
244

STATISTICAL SECTION
171
245
172
246
Debt Capacity (pages 192-198)
These schedules present information to help the reader assess the affordability of the Citys current levels of outstanding debt and the Citys ability to issue additional debt in the future.

Demographic and Economic Information (page 199)
These schedules offer demographic and economic indicators to help the reader understand the environment with which the Citys financial activities take place.

Operating Information (pages 200-207)
These schedules contain service and infrastructure data to help the reader understand how the information in the Citys 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' annual comprehensive 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 174-183)
These schedules contain trend information to help the reader understand how the Citys financial performance and well-being have changed over time.

Revenue Capacity (pages 184-191)
These schedules contain information to help the reader assess the Citys most significant local revenue sources, transient occupancy tax (TOT) and property taxes.
173
247
2016 2017 2018 2019 2020
Governmental activities
Net investment in capital assets 67,814,198$ 73,286,966$ 76,304,118$ 76,082,830$ 73,639,890$ Restricted 7,026,074 18,239,035 21,086,055 21,495,653 20,047,707 Unrestricted 34,482,114 27,146,535 24,579,483 26,259,010 23,471,208 Total governmental activities net position 109,322,386$ 118,672,536$ 121,969,656$ 123,837,493$ 117,158,805$ Business-type activities
Net investment in capital assets 11,637,225$ 9,503,346$ 10,572,862$ 9,384,765$ 11,587,259$ Restricted - - - 7,582,403 7,674,002 Unrestricted 22,643,219 27,529,908 29,000,343 23,910,447 23,244,232 Total business-type activities net position 34,280,444$ 37,033,254$ 39,573,205$ 40,877,615$ 42,505,493$ Primary government
Net investment in capital assets 79,451,423$ 82,790,312$ 86,876,980$ 85,467,595$ 85,227,149$ Restricted 7,026,074 18,239,035 21,086,055 29,078,056 27,721,709 Unrestricted 57,125,333 54,676,443 53,579,826 50,169,457 46,715,440 Total primary government net position 143,602,830$ 155,705,790$ 161,542,861$ 164,715,108$ 159,664,298$ Source: City Finance Department
Fiscal Year
City of Hercules
Net Position by Component
Last Ten Fiscal Years
(Accrual Basis of Accounting)
174
248
2021 2022 2023 2024* 2025
Governmental activities
Net investment in capital assets 69,628,982$ 60,257,709$ 60,790,322$ 59,889,211$ 58,084,454$ Restricted 20,047,707 7,183,715 10,730,230 13,368,313 16,609,847 Unrestricted 24,205,660 10,532,917 11,624,496 10,635,151 8,806,976 Total governmental activities net position 113,882,349$ 77,974,341$ 83,145,048$ 83,892,675$ 83,501,277$ Business-type activities
Net investment in capital assets 7,230,469$ 15,704,349$ 19,602,539$ 20,884,471$ 23,529,978$ Restricted 7,679,725 - - - 17,400 Unrestricted 29,474,812 18,566,052 15,798,815 15,964,377 15,050,007 Total business-type activities net position 44,385,006$ 34,270,401$ 35,401,354$ 36,848,848$ 38,597,385$ Primary government
Net investment in capital assets 76,859,451$ 75,962,058$ 80,392,861$ 80,773,682$ 81,614,432$ Restricted 27,727,432 7,183,715 10,730,230 13,368,313 16,627,247 Unrestricted 53,680,472 29,098,969 27,423,311 26,599,528 23,856,983 Total primary government net position 158,267,355$ 112,244,742$ 118,546,402$ 120,741,523$ 122,098,662$ *The 2024 balances were restated due to implementation of GASB 101.

Source: City Finance Department
Fiscal Year
City of Hercules
Net Position by Component (Continued)
Last Ten Fiscal Years
(Accrual Basis of Accounting)
175
249
2016 2017 2018 2019 2020
Expenses
Governmental Activities:

General Government 3,706,717$ 4,025,706$ 4,105,705$ 5,094,236$ 4,634,707$ Public Safety 5,299,440 5,365,068 7,034,658 7,055,390 8,844,059 Public Works 4,667,439 5,035,767 6,894,640 6,727,710 8,447,150 Parks and recreation 2,216,525 3,050,786 2,657,763 2,564,008 2,786,635 Community Development 400,754 640,428 491,562 630,341 595,927 Interest on Long-Term Debt 1,301,053 1,220,791 1,141,982 1,256,456 1,159,848 Total Governmental Activities 17,591,928 19,338,546 22,326,310 23,328,141 26,468,326 Business-Type Activities:

Sewer 3,854,974 3,092,380 3,750,261 5,343,759 4,593,120 Total Business-Type Activities Expenses 3,854,974 3,092,380 3,750,261 5,343,759 4,593,120 Total Primary Government Expenses 21,446,902$ 22,430,926$ 26,076,571$ 28,671,900$ 31,061,446$ Program Revenues
Governmental Activities:

General Government 128,430$ 113,875$ 3,866,023$ 1,816,337$ 719,485$ Public Safety 543,761 1,171,960 524,703 882,823 743,462 Public Works 12,784,856 12,014,579 5,218,076 4,433,560 5,546,868 Parks and recreation 1,538,554 1,715,375 1,696,769 1,731,066 1,030,758 Community Development 364,191 823,972 1,534,666 1,658,265 517,920 Total Government Activities Program Revenues 15,359,792 15,839,761 12,840,237 10,522,051 8,558,493 Business-Type Activities:

Sewer 5,595,044 5,797,766 6,145,215 6,003,202 5,719,257 Total Business-Type Activities Program Revenue 5,595,044 5,797,766 6,145,215 6,003,202 5,719,257 Total Primary Government Program Revenues 20,954,836$ 21,637,527$ 18,985,452$ 16,525,253$ 14,277,750$ Net (Expense)/Revenue
Governmental Activities (2,232,136) (3,498,785) (9,486,073) (12,806,090) (17,909,833) Business-Type Activities 1,740,070 2,705,386 2,394,954 659,443 1,126,137 Total Primary Government Net Expense (492,066)$ (793,399)$ (7,091,119)$ (12,146,647)$ (16,783,696)$ Source: City Finance Department
Fiscal Year
City of Hercules
Changes in Net Position
Last Ten Fiscal Years
(Accrual Basis of Accounting)
176
250
2021 2022 2023 2024 2025
Expenses
Governmental Activities:

General Government 4,435,331$ 4,768,150$ 4,929,390$ 5,378,751$ 6,232,379$ Public Safety 9,273,713 6,581,205 7,556,734 10,027,823 10,636,628 Public Works 7,715,011 8,560,194 8,220,052 8,736,149 8,797,923 Parks and recreation 2,104,559 2,312,529 2,503,805 2,955,545 3,254,269 Community Development 918,476 1,253,855 483,875 1,297,680 1,271,429 Interest on Long-Term Debt 959,355 1,007,813 905,708 1,022,790 873,180 Total Governmental Activities 25,406,445 24,483,746 24,599,564 29,418,738 31,065,808 Business-Type Activities:

Sewer 3,894,420 5,221,938 5,086,004 5,262,133 5,487,763 Total Business-Type Activities Expenses 3,894,420 5,221,938 5,086,004 5,262,133 5,487,763 Total Primary Government Expenses 29,300,865$ 29,705,684$ 29,685,568$ 34,680,871$ 36,553,571$ Program Revenues
Governmental Activities:

General Government 1,343,812$ 1,030,250$ 816,793$ 767,385$ 938,388$ Public Safety 540,238 3,539,598 3,781,755 541,352 445,193 Public Works 4,196,125 5,827,479 5,575,763 8,436,772 6,976,097 Parks and recreation 396,289 1,034,873 1,423,942 1,649,166 1,742,283 Community Development 552,090 8,329,364 389,324 316,243 642,987 Total Government Activities Program Revenues 7,028,554 19,761,564 11,987,577 11,710,918 10,744,948 Business-Type Activities:

Sewer 5,769,396 5,852,278 5,922,758 5,891,836 6,330,489 Total Business-Type Activities Program Revenue 5,769,396 5,852,278 5,922,758 5,891,836 6,330,489 Total Primary Government Program Revenues 12,797,950$ 25,613,842$ 17,910,335$ 17,602,754$ 17,075,437$ Net (Expense)/Revenue
Governmental Activities (18,377,891) (4,722,182) (12,611,987) (17,707,820) (20,320,860) Business-Type Activities 1,874,976 630,340 836,754 629,703 842,726 Total Primary Government Net Expense (16,502,915)$ (4,091,842)$ (11,775,233)$ (17,078,117)$ (19,478,134)$ Source: City Finance Department
Fiscal Year
City of Hercules
Changes in Net Position (Continued)
Last Ten Fiscal Years
(Accrual Basis of Accounting)
177
251
2016 2017 2018 2019 2020
General Revenues and Other Changes in Net Position
Governmental Activities:

Taxes:

Secured and unsecured property taxes 1,233,207$ 1,286,788$ 1,376,354$ 1,378,493$ 1,415,995$ Sales Taxes and use taxes 3,211,109 3,324,807 3,206,095 3,988,702 4,212,285 Franchise Tax 960,124 878,574 862,946 852,751 948,503
Other Taxes 3,628,145 3,712,519 3,906,865 4,506,706 4,402,327 Unrestricted Motor Vehicle Taxes In-Lieu 1,645,846 1,799,014 1,911,327 1,990,306 2,128,054 Use of Money and properties 1,133,587 1,114,795 1,334,955 1,588,558 1,748,131 Miscellaneous 1,029,258 448,688 1,189,560 368,411 -
Special items - - - - (3,624,150) Transfers (10,452) - - - - Total Government Activities 12,830,824 12,565,185 13,788,102 14,673,927 11,231,145 Business-Type Activities:

Use of Money and properties 24,058 47,424 200,280 482,095 501,741 Miscellaneous - - - 162,872 - Special items - - - - - Transfers 10,452 - - - - Total Business-Type Activities 34,510 47,424 200,280 644,967 501,741 Total Primary Government 12,865,334$ 12,612,609$ 13,988,382$ 15,318,894$ 11,732,886$ Change in Net Position
Governmental Activities 10,598,688$ 12,565,185$ 13,788,102$ 14,673,927$ 11,231,145$ Business-Type Activities 1,774,580 47,424 200,280 644,967 501,741 Total Primary Government 12,373,268$ 12,612,609$ 13,988,382$ 15,318,894$ 11,732,886$ Source: City Finance Department
Fiscal Year
City of Hercules
Changes in Net Position (Continued)
Last Ten Fiscal Years
(Accrual Basis of Accounting)
178
252
2021 2022 2023 2024 2025
General Revenues and Other Changes in Net Position
Governmental Activities:

Taxes:

Secured and unsecured property taxes 1,451,716$ 1,514,791$ 1,638,449$ 1,653,626$ 1,732,539$ Sales Taxes and use taxes 4,775,496 6,263,066 6,192,500 5,753,278 5,669,937 Franchise Tax 862,104 970,054 988,108 972,391 918,508
Other Taxes 4,293,889 5,343,970 4,646,410 4,963,727 5,955,063 Unrestricted Motor Vehicle Taxes In-Lieu 2,239,058 2,341,444 2,456,900 2,556,520 2,655,580 Use of Money and properties 1,456,269 773,519 1,860,327 3,076,628 2,997,835 Miscellaneous - - - - - Special items - (39,586,347) - - - Transfers - - - - - Total Government Activities 15,078,532 (22,379,503) 17,782,694 18,976,170 19,929,462 Business-Type Activities:

Use of Money and properties 4,537 (157,318) 294,199 851,980 905,811 Miscellaneous - - - - - Special items - (10,587,627) - - - Transfers - - - - - Total Business-Type Activities 4,537 (10,744,945) 294,199 851,980 905,811 Total Primary Government 15,083,069$ (33,124,448)$ 18,076,893$ 19,828,150$ 20,835,273$ Change in Net Position
Governmental Activities (3,299,359)$ (27,101,685)$ 5,170,707$ 1,268,350$ (391,398)$ Business-Type Activities 1,879,513 (10,114,605) 1,130,953 1,481,683 1,748,537 Total Primary Government (1,419,846)$ (37,216,290)$ 6,301,660$ 2,750,033$ 1,357,139$ Source: City Finance Department
Fiscal Year
City of Hercules
Changes in Net Position (Continued)
Last Ten Fiscal Years
(Accrual Basis of Accounting)
179
253
2016 2017 2018 2019 2020
General Fund
Nonspendable 28,643,374$ 30,092,172$ 27,799,824$ 29,402,817$ 29,769,663$ Restricted - - - - - Committed - - - - - Assigned 2,171,733 2,176,150 2,321,483 5,937,646 6,205,655 Unassigned 8,291,363 9,426,610 14,194,525 10,027,085 8,398,945 Total General Fund 39,106,470$ 41,694,932$ 44,315,832$ 45,367,548$ 44,374,263$ All Other Governmental Funds
Nonspendable 6,714,263$ 11,013$ 11,013$ 11,013$ -$ Restricted 12,443,589 20,587,964 20,556,143 21,446,237 19,621,155 Committed - - - - 428,552 Assigned 1,314,160 - - - - Unassigned (deficit) (7,036,753) (4,048,580) (1,473,498) (226,591) (98,458) Total all other governmental funds 13,435,259$ 16,550,397$ 19,093,658$ 21,230,659$ 19,951,249$ Source: Finance Department
Fiscal Year
City of Hercules
Fund Balances of Governmental Funds
Last Ten Fiscal Years
(Modified Accrual Basis of Accounting)
180
254
2021 2022 2023 2024 2025
General Fund
Nonspendable 30,034,997$ 10,806$ 9,975$ 1,321,919$ 1,262,843$ Restricted - 2,054,252 2,141,823 2,391,824 2,643,261 Committed - - - 7,884,421 7,884,421 Assigned 5,915,247 6,022,247 6,022,247 8,595,020 7,139,026 Unassigned 10,008,178 22,926,831 25,703,647 14,754,596 13,802,029 Total General Fund 45,958,422$ 31,014,136$ 33,877,692$ 34,947,780$ 32,731,580$ All Other Governmental Funds
Nonspendable -$ -$ -$ -$ -$ Restricted 19,549,409 7,026,830 8,337,682 10,459,039 12,830,751 Committed 1,391,188 1,998,781 688,951 324,295 2,447,906 Assigned - - - - - Unassigned (deficit) (162,793) (734,289) (624,175) (923,560) (861,080) Total all other governmental funds 20,777,804$ 8,291,322$ 8,402,458$ 9,859,774$ 14,417,577$ Source: Finance Department
Fiscal Year
City of Hercules
Fund Balances of Governmental Funds (Continued)
Last Ten Fiscal Years
(Modified Accrual Basis of Accounting)
181
255
2016 2017 2018 2019 2020
Revenues
Taxes and Assessments 9,032,585$ 9,202,688$ 9,352,260$ 10,726,652$ 10,727,692$ Licenses and permits 344,374 496,355 1,081,912 844,806 796,397 Fines and forfeitures 60,434 47,824 48,579 50,058 62,582 Use of money and property 1,183,964 1,192,976 1,443,270 1,728,361 1,702,755 Intergovernmental 5,677,447 14,911,152 7,650,796 4,455,255 4,073,720 Charges For Services 4,660,592 5,157,696 5,684,127 7,964,546 5,282,444 Other Revenues 1,029,258 448,688 1,204,989 92,602 67,355 Total Revenues 21,988,654 31,457,379 26,465,933 25,862,280 22,712,945 Expenditures
Current:

General government 2,952,966 3,153,498 3,492,082 4,542,651 4,070,428 Public Safety 5,589,583 6,022,005 6,295,019 6,776,245 7,634,971 Streets and Public Works 2,772,877 3,469,283 4,300,078 4,357,212 4,080,345 Parks And Recreation 1,961,669 1,883,159 2,101,369 2,128,110 2,165,547 Community Development 399,215 640,625 468,011 616,899 557,672 Capital outlay 8,504,827 9,079,227 2,757,245 2,261,555 3,434,295 Debt service:

Principal 626,149 653,144 580,473 613,153 646,201
Interest And Fiscal Agent Fees 1,164,163 1,136,588 1,307,495 1,285,738 1,239,573 Total Expenditures 23,971,449 26,037,529 21,301,772 22,581,563 23,829,032 Excess (deficiency) of revenues over
(under) expenditures (1,982,795) 5,419,850 5,164,161 3,280,717 (1,116,087) Other Financing Sources (Uses)
Issuance of Debt - - - - - Proceeds from loan - - - - - Proceeds from refunding bond - - - - - Payment to refunded bond escrow agent - - - - - Inception of Subscription Liability - - - - - Transfers in 11,787,077 2,705,171 1,408,803 2,511,094 1,730,899 Transfers (out) (11,803,454) (2,705,171) (1,408,803) (2,603,094) (1,730,899) Contributed Capital - - - - 655,467 Total other financing sources (uses) (16,377) (92,000) 655,467 Special/Extraordinary Item - - - - (1,812,075) Net Change in fund balances (1,999,172)$ 5,419,850$ 5,164,161$ 3,188,717$ (2,272,695)$ Debt service as a percentage of
noncapital expenditures 12% 11% 10% 9% 9%
NOTE:

Source: City Finance Department
Fiscal Year
City of Hercules
Changes in Fund Balances of Governmental Funds
Last Ten Fiscal Years
(Modified Accrual Basis of Accounting)
182
256
2021 2022 2023 2024 2025
Revenues
Taxes and Assessments 14,098,060$ 16,889,724$ 16,705,743$ 16,617,812$ 17,837,080$ Licenses and permits 952,294 707,300 647,374 621,826 738,897 Fines and forfeitures 36,586 48,663 46,057 34,409 37,136 Use of money and property 1,456,271 783,885 1,871,556 3,085,819 3,065,119 Intergovernmental 4,589,299 15,618,709 8,052,573 7,085,810 5,233,335 Charges For Services 1,150,164 2,319,388 2,339,112 2,750,986 3,126,167 Other Revenues 239,610 279,797 203,170 223,696 330,584
Total Revenues 22,522,284 36,647,466 29,865,585 30,420,358 30,368,318 Expenditures
Current:

General government 3,854,043 4,081,705 4,538,391 4,768,426 5,559,903 Public Safety 7,774,932 7,879,451 8,499,781 9,184,101 9,934,449 Streets and Public Works 4,638,912 4,514,842 5,486,683 5,503,215 5,253,403 Parks And Recreation 1,434,988 1,910,716 2,408,849 2,677,208 3,095,102 Community Development 792,456 1,061,135 537,341 1,285,428 1,028,404 Capital outlay 4,163,726 2,862,062 2,962,714 2,541,812 1,479,731 Debt service:

Principal 469,113 1,198,248 1,549,333 945,985 1,024,533 Interest And Fiscal Agent Fees 1,224,118 983,728 916,671 1,004,603 871,569 Total Expenditures 24,352,288 24,491,887 26,899,763 27,910,778 28,247,094 Excess (deficiency) of revenues over
(under) expenditures (1,830,004) 12,155,579 2,965,822 2,509,580 2,121,224 Other Financing Sources (Uses)
Issuance of Debt - - 8,870 - - Proceeds from loan 4,209,354 - - - - Proceeds from refunding bond 5,876,843 - - - - Payment to refunded bond escrow agent (5,705,000) - - - - Inception of Subscription Liability - - 17,823 220,379 Transfers in 1,405,555 5,723,857 6,928,066 2,343,631 4,422,367 Transfers (out) (964,912) (5,728,857) (6,928,066) (2,343,631) (4,422,367) Contributed Capital - - - - - Total other financing sources (uses) 4,821,840 (5,000) 8,870 17,823 220,379 Special/Extraordinary Item (604,025) (39,586,347) - - - Net Change in fund balances 2,387,811$ (27,435,768)$ 2,974,692$ 2,527,403$ 2,341,603$ Debt service as a percentage of
noncapital expenditures 8% 10% 10% 8% 7%
NOTE:

Source: City Finance Department
Fiscal Year
City of Hercules
Changes in Fund Balances of Governmental Funds (Continued) Last Ten Fiscal Years
(Modified Accrual Basis of Accounting)
183
257
Less: Taxable
Residential Commercial Industrial Other Unsecured Tax-Exempt Assessed Fiscal Year Property Property Property Property Property Property Value 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 2023* 4,125,334,599 125,232,941 234,134,858 80,249,088 67,088,160 132,094,636 4,499,945,010 2024 4,273,873,157 137,069,942 247,257,157 83,941,490 70,491,928 137,165,124 4,675,468,550 2025 4,409,331,306 139,846,022 264,665,881 94,090,099 76,722,483 140,217,746 4,844,438,045 * Includes State Unitary value of $109,236 Assessed Value of Property in 2023.

City of Hercules
Assessed and Estimated Actual Value of Taxable Propert
y
Last Ten Fiscal Years
Source: County Assessor data, MuniServices, LLC / Avenu Insights & Analytics ( 1. ) Total tax rate is the city share of the 1% Proposition 13 tax for TRA 4-001.

Based on these calculations a multiplier value was extrapolated and applied to current assessed values. ( 2. ) Estimated Actual Value is derived from a series of calculations comparing median assessed values from 1940 to current median sale prices. 184
258
Factor of
Taxable
Total Tax Estimated Actual Assessed
Fiscal Year Rate (1) Taxable Value (2) Value (2)
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
2023* 5.4221% 8,735,158,394 1.941170
2024 5.4221% 9,260,921,468 1.980747
2025 5.4221% 9,386,854,445 1.937656
* Includes State Unitary value of $109,236 Assessed Value of Property in 2023.

City of Hercules
Assessed and Estimated Actual Value of Taxable Property (Continued) Last Ten Fiscal Years
Source: County Assessor data, MuniServices, LLC / Avenu Insights & Analytics ( 1. ) Total tax rate is the city share of the 1% Proposition 13 tax for 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. 185
259
Category 2016 2017 2018 2019 2020
Residential 2,762,167,273$ 2,984,511,909$ 3,171,302,525$ 3,322,501,416$ 3,549,607,367$ Industrial 178,580,502 192,358,822 199,079,514 196,779,448 199,145,259 Commercial 78,083,558 79,706,704 86,604,265 85,620,650 90,938,555 Vacant 27,684,893 31,332,357 61,123,014 62,680,104 53,134,753 Institution 506,873 15,803,658 16,119,728 16,442,120 16,770,959 Recreation 9,461,565 9,716,963 9,502,881 10,179,175 11,038,616 Social 856,982 870,050 826,000 842,520 1,334,000 Miscellaneous 808,536 820,864 837,279 854,023 871,101 Rural 216,599 219,900 224,297 228,781 233,355 Unitary 11,977 11,977 11,977 79,567 79,567 Gross Secured Value 3,058,378,758 3,315,353,204 3,545,631,480 3,696,207,804 3,923,153,532 Unsecured 54,269,399 58,945,949 56,327,147 56,782,463 59,062,998 Exemptions 77,407,676 94,538,055 96,165,729 97,967,035 108,788,587 3,035,240,481$ 3,279,761,098$ 3,505,792,898$ 3,655,023,232$ 3,873,427,943$ Source: County Assessor data, MuniServices, LLC / Avenu Insights & Analytics Use code categories are based on Contra Costa County Assessor's data Fiscal Year
City of Hercules
Assessed Value of Property by Use Code
Last Ten Fiscal Years
186
260
Category 2021 2022 2023 2024 2025
Residential 3,785,286,659$ 3,945,445,134$ 4,125,334,599$ 4,273,873,157$ 4,409,331,306$ Industrial 204,766,171 209,565,059 234,134,858 247,257,157 264,665,881 Commercial 88,476,522 115,669,026 125,232,941 137,069,942 139,846,022 Vacant 51,585,587 52,389,446 50,702,734 51,531,451 60,693,861 Institution 17,106,375 17,283,594 17,629,262 17,981,845 18,994,247 Recreation 11,570,506 9,100,314 9,244,452 8,738,210 8,852,973 Social 1,360,679 1,374,774 1,402,269 1,430,313 3,980,281 Miscellaneous 888,520 897,723 915,841 3,900,237 1,458,918 Rural 238,021 240,485 245,294 250,198 109,236 Unitary 79,567 79,567 109,236 109,236 583 Gross Secured Value 4,161,358,607 4,352,045,122 4,564,951,486 4,742,141,746 4,907,933,308 Unsecured 58,291,816 57,802,705 67,088,160 70,491,928 76,722,483 Exemptions 111,756,157 131,601,392 132,094,636 137,165,124 140,217,746 4,107,894,266$ 4,278,246,435$ 4,499,945,010$ 4,675,468,550$ 4,844,438,045$ Source: County Assessor data, MuniServices, LLC / Avenu Insights & Analytics Use code categories are based on Contra Costa County Assessor's data Fiscal Year
City of Hercules
Assessed Value of Property by Use Code (Continued)
Last Ten Fiscal Years
187
261
2019-20 2020-21 2021-22 2022-23 2023-24 2024-25
Basic City and County Levy
City of Hercules 0.054221 0.054221 0.054221 0.054221 0.054221 0.054221 County of Contra Costa 0.945779 0.945779 0.945779 0.945779 0.945779 0.945779 Total 1% Breakout 1.000000 1.000000 1.000000 1.000000 1.000000 1.000000 Override Assessments
Bart 0.012000 0.013900 0.006000 0.014000 0.013400 0.014800 East Bay Reg Pk Bd 0.009400 0.001400 0.002000 0.005800 0.005700 0.001300 West CC Unified Bd 98 0.004500 0.003200 0.002200 0.001300 0.000000 0.000000 West Contra Costa Unified 0.185400 0.198600 0.250500 0.217500 0.075400 0.194500 WCCUSD 2012 Bond 0.048000 0.041400 0.041200 0.037600 0.171000 0.054400 Community College 0.018800 0.016100 0.017600 0.016200 0.014600 0.014200 Total Override Rate 0.278100 0.274600 0.319500 0.292400 0.280100 0.279200 Total Tax Rate 1.278100 1.274600 1.319500 1.292400 1.280100 1.279200 Rates are not adjusted for Education Revenue Augmentation Fund.

Tax Rate Area 4-001 is represented for this reports.
*2019-20 is the city's first ACFR Statistical publication, therefore, nine year ago data is unavailable.

Source: County Auditor Controller data, Avenu Insights & Analytics City of Hercules
Direct and Overlapping Property Tax Rates
Last Six Fiscal Years
188
262
2024-25 2015-16
Percentage Percentage
($) of Total City of Total City
Taxable Assessed Assessed Assessed
Taxpayer Value Value Value Value
Bio-Rad Laboratories Inc 211,640,304$ 4.37% 154,464,318$ 5.09% Hercules Block Q&R Dev Partner 80,705,530 1.67% WCV Aventine Hercules LLC 67,944,198 1.40% Hercules Land Partners LP 28,783,133 0.59% Trestle Hercules LLC 25,774,476 0.53% 4,137,375 0.14% Mary Terrace LLC 23,568,974 0.49%
HD Development Of Maryland 20,039,850 0.41% 17,390,487 0.57% Hercules Real E Invest LLC 16,320,000 0.34% Tulloch John Brian TRE 13,555,642 0.28% 8,939,857 0.29% Hercules SPE MW LLC 13,346,732 0.28%
Vacaville Mobile Home Park LLC 11,429,344 0.24% 9,700,000 0.32% Santa Clara Vly Housing Group 11,000,000 0.23% 6,500,000 0.21% CS Creekside Hercules LLC 8,752,793 0.18% 7,428,426 0.24% Dathe Robert P & Carlotta R 8,287,682 0.17% 7,033,691 0.23% Hercules Sycamore Hills LLC 8,129,185 0.17% 6,899,175 0.23% La Costalot LLC 8,106,607 0.17% 5,656,000 0.19% GTY Pacific Leasing LLC 7,762,944 0.16% Hercules Real Est Ltd Ptnship 7,613,401 0.16% 5,021,000 0.17% DR Horton Bay Inc 7,358,040 0.15%
Alcatraz475 LP 6,848,343 0.14%
1560 Sycamore LLC 6,698,941 0.14% 5,317,000 0.18% North First Street Properties 6,633,542 0.14% Arrow Investment Partners LLC 6,017,832 0.12% 3,430,000 0.11% Madison MRH-1 Franklin LLC 5,550,000 0.11% Multiple O Holdings LLC 5,493,131 0.11% 4,661,978 0.15% Peninsular Investments Inc. 9,200,000 0.30% LD Hercules Land LLC 8,000,000 0.26%
Orinda Investors LP 7,154,081 0.24%
Three Trees Holdings I LLC 6,900,000 0.23% Mechanics Bank Of Richmond 6,787,473 0.22% City Ventures Homebuilding LLC 5,161,756 0.17% Adalan Properties LLC 4,326,545 0.14%
Creekside Shopping Center LLC 4,140,000 0.14% ORB Partnership 3,630,732 0.12%
Hercules Bayfront LLC 3,481,403 0.11%
Bay To Bay Properties 3,391,001 0.11%
Total Top 25 Taxpayers 617,360,624$ 12.74% 308,752,298$ 10.17% Total Taxable Value 4,844,438,045$ 100.00% 3,035,240,481$ 100.00% Source: County Assessor data, MuniServices, LLC / Avenu Insights & Analytics City of Hercules
Principal Property Taxpayers
Last Fiscal Year and Nine Years Ago
189
263
Percent
of Total
Current Percent Total Tax
Fiscal Total Tax of Levy Tax Collections
Year Tax Levy (a) Collections Collected Collections to Tax Levy 2015 1,044,373$ 878,899$ 84% 878,899$ 84% 2016 1,110,223 1,044,373 94% 1,044,373 94%
2017 1,168,687 1,110,223 95% 1,110,223 95%
2018 1,233,140 1,168,687 95% 1,168,687 95%
2019 1,296,155 1,233,140 95% 1,233,140 95%
2020 1,342,265 1,296,155 97% 1,296,155 97%
2021 1,378,587 1,342,265 97% 1,342,265 97%
2022 1,446,942 1,446,942 100% 1,446,942 100%
2023 1,638,449 1,638,449 100% 1,638,449 100%
2024 1,653,656 1,653,656 100% 1,653,656 100%
2025 1,732,539 1,732,539 100% 1,732,539 100%
Source: City of Hercules Records
City of Hercules
Property Tax Levies and Collections
Last Ten Fiscal Years
190
264
Taxpayer Business Type Taxpayer Business Type
Big Lots Department Stores Admiralty Diesel Services Heavy Industry Bio Rad Laboratories Chemical Products Big Lots Department Stores Burger King Restaurants Restaurants Bio Rad Laboratories Chemical Products Cabalen Filipino Cuisine Restaurants Burger King Restaurants Restaurants City Mechanical Incorporated Bldg.Matls-Whsle Cigarette City Miscellaneous Retail Dragon Terrace Restaurant Restaurants Claws And Craws Restaurants Home Depot Bldg.Matls-Retail Conservation Mechanical System Bldg.Matls-Whsle Jack In The Box Restaurants Restaurants Dragon Terrace Restaurant Restaurants Kinder's Food Markets Home Depot Bldg.Matls-Retail
L & L Hawaiian Barbecue Restaurants Jack In The Box Restaurants Restaurants Lit Foods Restaurants Kinder's Food Markets
Lucky Food Centers Food Markets Leila By The Bay Restaurants Mazatlan Taqueria And Grill Restaurants Lucky Food Centers Food Markets Mcdonald's Restaurants Restaurants Mazatlan Taqueria And Grill Restaurants Rite Aid Drug Stores Drug Stores Mcdonald's Restaurants Restaurants Round Table Pizza Restaurants Mountain Mike's Pizza Restaurants Safeway Service Stations Service Stations Pacific Biolabs Biotechnology Safeway Stores Food Markets Rite Aid Drug Stores Drug Stores Shell Service Stations Service Stations Round Table Pizza Restaurants Starbucks Coffee Food Markets Shell Service Stations Service Stations Taco Bell Restaurants Starbucks Coffee Food Markets
The Powder Keg Pub Restaurants Taco Bell Restaurants
Tommys BBQ Company Restaurants The Powder Keg Pub Restaurants Union 76 Service Stations Service Stations Union 76 Service Stations Service Stations Willow Food & Liquor Food Markets Willow Food & Liquor Food Markets Source: MuniServices, LLC / Avenu Insights & Analytics Top Sales Tax Producers listed in alphabetical order. 2024-24 2015-16
City of Hercules
Principal Sales Tax Producers
Current Year and Nine Years Ago
191
265
Loans &
Fiscal Revenue Lease, SBITA
Year Bonds Purchases Total
2016 16,025,000$ 6,186,255$ 22,211,255$ 2017 15,625,000 5,933,111 21,558,111
2018 15,205,000 6,172,638 21,377,638
2019 14,760,000 6,004,485 20,764,485
2020 14,290,000 5,828,284 20,118,284
2021 14,261,843 9,768,525 24,030,368
2022 13,765,105 9,512,473 23,277,578
2023 13,160,739 9,185,625 22,346,364
2024 12,474,475 8,949,530 21,424,005
2025 11,759,711 8,896,570 20,656,281
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.

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
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Total Governmental Activities Total Business-Type Activities 192
266
Loans & Total Percentage Debt
Fiscal Revenue Lease Primary of Personal Per
Year Bonds Purchases Total Government Income (a) Capita (a) 2016 10,830,000$ -$ 10,830,000$ 33,041,255$ 3.51% 1,306 2017 10,585,000 - 10,585,000 32,143,111 3.26% 1,244 2018 10,335,000 6,786,667 17,121,667 38,499,305 3.53% 1,483 2019 10,075,000 15,165,494 25,240,494 46,004,979 3.99% 1,754 2020 9,810,000 22,305,600 32,115,600 52,233,884 4.47% 2,046 2021 9,535,000 25,457,694 34,992,694 59,023,062 4.62% 2,282 2022 9,250,000 24,356,298 33,606,298 56,883,876 3.84% 2,180 2023 8,095,000 21,009,706 29,104,706 51,451,070 2.96% 1,957 2024 7,730,000 19,856,034 27,586,034 49,010,039 2.54% 1,880 2025 7,355,000 18,682,749 26,037,749 46,694,030 2.23% 1,781 NOTE: Debt amounts exclude any premiums, discounts, or other amortization amounts.

City of Hercules
Ratio of Outstanding Debt by Type (Continued)
Last Ten Fiscal Years
Business-Type Activities
193
267
194
268
2024-25 Assessed Valuation: $4,875,025,245 Total Debt City's Share of
OVERLAPPING TAX AND ASSESSMENT DEBT: 6/30/25 % Applicable (a) Debt 6/30/25 Bay Area Rapid Transit District 2,391,260$ 0.00465 11,119,359$ Contra Costa Community College District 591,875,000 0.0175 10,357,813 John Swett Unified School District 66,140,926 0.0543 3,591,452 West Contra Costa Unified School District 1,279,679,975 0.10686 136,746,602 West Contra Costa Healthcare Parcel Tax Obligations 40,155,000 0.10308 4,139,177 East Bay Regional Park District 145,930,000 0.00726 1,059,452 California Statewide Communities development Authority Assessment Districts 4,360,771 1 4,360,771 City of Hercules 1915 Act Bonds 2,123,354 1 2,123,354 TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT 173,497,980$
DIRECT AND OVERLAPPING GENERAL FUND DEBT:

Contra Costa County General Fund Obligations 150,845,000$ 1.745% 2,632,246$ Contra Costa Mosquito District General Fund Obligation 8,050,000 1.745% 140,473 West Contra Costa Unified School District Certificates of Participation 2,845,000 10.686% 304,017 City of Hercules General Fund Obligations 11,984,558 100.000% 11,984,558 TOTAL GROSS DIRECT AND OVERLAPPING GENERAL FUND DEBT 15,061,293$ Less: Contra Costa County obligations supported from revenue funds 604,378 TOTAL NET DIRECT AND OVERLAPPING GENERAL FUND DEBT 14,456,915$ OVERLAPPING TAX INCREMENT DEBT (Successor Agency): $77,635,000 100% 77,635,000$ TOTAL DIRECT DEBT 11,984,558
TOTAL GROSS OVERLAPPING DEBT 254,209,715$
TOTAL NET OVERLAPPING DEBT 253,605,337$
GROSS COMBINED TOTAL DEBT 266,194,273$ (b)
NET COMBINED TOTAL DEBT 265,589,895$
(b) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded capital lease obligations.

Ratios to 2024-25 Assessed Valuation:

Total Overlapping Tax and Assessment Debt
..................................................... 3.56% Total Direct Debt ($14,041,843)
........................................................................ 0.25% Gross Combined Total Debt
................................................................................ 5.46% Net Combined Total Debt
.................................................................................... 5.45% Ratios to Redevelopment Successor Agency Incremental Valuation $1,906,782,024 Total Overlapping Tax Increment Debt
............................................................... 4.07% 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, 2025
195
269
2016 2017 2018 2019 2020
Assessed Valuation 3,035,240,481$ 3,279,761,098$ 3,505,792,898$ 3,655,023,232$ 3,873,427,943$ Conversion Percentage 25% 25% 25% 25% 25%
Adjusted Assessed Valuation 758,810,120$ 819,940,275$ 876,448,225$ 913,755,808$ 968,356,986$ Debt Limit Percentage 15% 15% 15% 15% 15%
Debt Limit 113,821,518$ 122,991,041$ 131,467,234$ 137,063,371$ 145,253,548$ Total net debt applicable to limit:

General Obligation Bonds - - - - - Legal Debt Margin 113,821,518$ 122,991,041$ 131,467,234$ 137,063,371$ 145,253,548$ 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.

City of Hercules
Legal Debt Margin Information
Last Ten Fiscal Years
For the Fiscal Year Ended June 30, 2025
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. 196
270
2021 2022 2023 2024 2025
Assessed Valuation 4,107,894,266$ 4,278,246,435$ 4,499,945,010$ 4,675,468,550$ 4,844,438,045$ Conversion Percentage 25% 25% 25% 25% 25%
Adjusted Assessed Valuation 1,026,973,567$ 1,069,561,609$ 1,124,986,253$ 1,168,867,138$ 1,211,109,511$ Debt Limit Percentage 15% 15% 15% 15% 15%
Debt Limit 154,046,035$ 160,434,241$ 168,747,938$ 175,330,071$ 181,666,427$ Total net debt applicable to limit:

General Obligation Bonds - - - - - Legal Debt Margin 154,046,035$ 160,434,241$ 168,747,938$ 175,330,071$ 181,666,427$ Total debt applicable to the limit
as a percentage of debt limit 1
Source: City Finance Department
County Tax Assessor's Office
1 Section 43605 of the California Government Code for General Obligation Bonds.

For the Fiscal Year Ended June 30, 2025
City of Hercules
Legal Debt Margin Information (Continued)
Last Ten Fiscal Years
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. 197
271
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 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 2023 5,922,758 - 3,473,988 2,448,770 1,451,141 611,583 2,062,724 1.19 2024 5,891,836 - 3,709,347 2,182,489 1,528,672 544,758 2,073,431 1.05 2025 6,330,489 - 3,940,378 2,390,111 1,548,285 516,321 2,064,606 1.16 NOTE:
(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
(a) Includes all Sewer Service Charges operating revenues, non-operating interest revenue, other non-operating revenue.

0.00 1.00

2.00 3.00

4.00 5.00

6.00 7.00

8.00 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Coverage
198
272
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
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 2023 26,297 1,739,577,055 66,151 42.7 29,672 3.7% 3.4% 1,147,653 2024 26,063 1,928,864,510 74,008 42.6 29,528 3.9% 3.5% 1,146,626 2025 26,225 2,092,601,846 79,794 43.5 29,284 4.2% 4.1% 1,158,225 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
199
273
Percentage Percentage
Number of of Total City Number of of Total City
Business Name Employees Employment Employees Employment Bio-Rad Laboratories Inc 2,000 13.9% 2,406 17.3% West Contra Costa Unified School District 243 1.69% 234 1.68% The Home Depot 147 1.02% 79 0.57% Safeway 140 0.97%
Contra Costa County Social Services 138 0.96% 104 0.75% Pacific BioLabs Inc 99 0.69% 94 0.68% City of Hercules 64 0.44% 52 0.37% Lucky Supermarkets 60 0.42% 100 0.72% Blize Healthcare California Inc. 53 0.37% Kinder's Meats & Deli BBQ & Catering 46 0.32% 40 0.29% Benda Tool & Model Works (Includes A & B Die Casting) 32 0.23% A & B Die Casting 24 0.17%
Total Top 10 Employers 2,990 20.76% 3,165 22.77%
Total City Labor Force (1) 14,400 13,900

Source: MuniServices, LLC \ Avenu Insights & Analytics
Results based on direct correspondence with city's local businesses. (1) Total City Labor Force provided by EDD Labor Force Data. *2018-19 was the earliest year that the data is available 2024-25 2018-19
City of Hercules
Principal Employers
Current Fiscal Year and Six Years Ago
200
274
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Function
General Government 10.00 10.00 10.00 10.00 11.00 11.00 11.00 12.00 13.00 13.00 Public Safety 24.00 24.00 26.00 26.00 28.00 29.00 28.00 30.00 30.00 31.00 Public Works (a) 11.00 11.00 11.00 11.00 11.00 11.00 11.00 11.00 11.00 12.00 Community Development 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 3.00 3.00 Parks and Recreation (b) 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 5.00 Total 51.00 51.00 53.00 53.00 56.00 57.00 56.00 59.00 61.00 64.00 NOTE:
(a) Public Works includes Wastewater and Solid Waste.
(b) Parks and Recreation includes Library, Recreation and Park.

Source: City of Hercules Operating Budget
For the Fiscal Year Ended June 30, 2025
City of Hercules
Full-Time Equivalent City Government Employees by Function Last Ten Fiscal Years
0 10
20 30
40 50
60 70FTE's
General Government Public Safety Public Works (a)
Community Development Parks and Recreation (b)
201
275
2016 2017 2018 2019 2020
General Information
Area in square miles 18.20 18.20 18.20 18.20 18.20 Number of registered voters - - 18,738 - 14,804 Education:

Student enrollment 2,928 2,799 2,823 2,823 2,825 Elementary schools 1,240 1,228 1,211 1,243 1,296 Junior high schools 673 636 632 584 594 High schools 1,015 935 980 996 935 Teachers (full & part time) 144 148 127 134 127 Function/Program
Police:

Police calls for Service 7,707 13,142 16,245 16,918 29,935 Law violations:

Part I and Part II crimes 571 957 867 831 1,162 Physical arrests (adult and juvenile) 245 403 449 495 398 Traffic violations 518 793 1,074 1,383 975 Sewer
Sewer service connections 8,265 8,271 8,271 8,327 8,326 Source: City of Hercules
For the Fiscal Year Ended June 30, 2025
City of Hercules
Operating Indicators by Function/Progra
m
Last Ten Fiscal Years
202
276
2021 2022 2023 2024 2025
General Information
Area in square miles 18.20 18.20 18.20 18.20 18.20 Number of registered voters - 14,213 - - 17,510 Education:

Student enrollment 2,797 2,753 2,539 2,595 2,709 Elementary schools 1,327 1,305 1,215 1,262 1,291 Junior high schools 603 596 590 593 609 High schools 867 852 734 740 809 Teachers (full & part time) 125 124 124 113 137 Function/Program
Police:

Police calls for Service 16,192 26,071 25,196 24,223 25,696 Law violations:

Part I and Part II crimes 1,689 1,445 1,266 1,060 1,022 Physical arrests (adult and juvenile) 508 528 624 480 441 Traffic violations 607 902 524 987 1,146 Sewer
Sewer service connections 8,401 8,410 8,410 8,410 8,433 Source: City of Hercules
For the Fiscal Year Ended June 30, 2025
City of Hercules
Operating Indicators by Function/Program (Continued)
Last Ten Fiscal Years
203
277
2016 2017 2018 2019 2020
Planning & Building:

Number of Building Permits issued 622 782 778 753 389
Recreation and Parks:

Youth & Teens:

Number of youth programs 12 12 10 38 8 Number of youth attendees 519 250 637 550 112 Aquatics:

Number of aquatics programs 4 4 4 4 2 Number of aquatics attendees 2,266 1,739 1,390 1,686 533 Recreation Classes:

Number of recreation programs 6 7 7 7 4 Number of recreation attendees 709 441 914 817 124 Preschool/GradeSchool Programs:

Number of preschool/gradeschool programs 9 11 11 11 8 Number of preschool/gradeschool attendees 2,900 2,949 3,510 3,319 869 Seniors:

Number of senior programs 14 14 14 14 14 Number of senior attendees 10,707 11,445 10,573 12,577 2,778 Number of meals served 8,787 9,811 8,880 7,259 3,399 Finance:

Number of Business Licenses issued 734 665 819 995 971 Source: City of Hercules
For the Fiscal Year Ended June 30,
City of Hercules
Operating Indicators by Function/Program (Continued)
Last Ten Fiscal Years
204
278
2021 2022 2023 2024 2025
Planning & Building:

Number of Building Permits issued 675 1,016 1,013 830 972 Recreation and Parks:

Youth & Teens:

Number of youth programs - 10 13 - - Number of youth attendees - 243 178 - - Aquatics:

Number of aquatics programs 4 9 308 328 332 Number of aquatics attendees 1,098 1,943 2,128 2,390 2,405 Recreation Classes:

Number of recreation programs 3 16 24 95 84 Number of recreation attendees 16 500 398 631 505 Preschool/GradeSchool Programs:

Number of preschool/gradeschool programs - 11 9 9 11 Number of preschool/gradeschool attendees - 2,510 2,482 3,755 3,765 Seniors:

Number of senior programs - 14 21 25 26 Number of senior attendees - 5,984 15,655 21,045 24,527 Number of meals served 8,212 5,124 6,662 8,858 9,011 Finance:

Number of Business Licenses issued 1,103 1,184 1,147 1,157 1,123 Source: City of Hercules
For the Fiscal Year Ended June 30,
City of Hercules
Operating Indicators by Function/Program (Continued)
Last Ten Fiscal Years
205
279
2016 2017 2018 2019 2020
Function/Program
Police:

Police stations 1 1 1 1 1
Public works:

Miles of streets 58 58 58 58 58
Miles of bike lanes 7 7 7 7 7
Street and parking lot fixtures 1,466 1,466 1,466 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 11 11
City parks acreage 98 98 98 98 98
Playgrounds 7 7 7 7 7
City trails/Bike paths 1 2 2 2 2
Community Swim Center 1 1 1 1 1
Community centers 2 2 2 2 2
Performing arts centers
Teen Center 1 1 1 1 1
Swimming pools (a) 2 2 2 2 2
Tennis courts (b) 8 8 8 8 8
diamonds 2 2 2 2 2
Soccer/football fields (c) 1 1 1 1 1
Library:

City Libraries 1 1 1 1 1
Source: City of Hercules
For the Fiscal Year Ended June 30, 2025
City of Hercules
Capital Asset Statistics by Function/Program
Last Ten Fiscal Years
206
280
2021 2022 2023 2024 2025
Function/Program
Police:

Police stations 1 1 1 1 1
Public works:

Miles of streets 58 58 58 58 58
Miles of bike lanes 7 7 7 7 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 13 13 13 13
City parks acreage 98 99 99 99 99
Playgrounds 7 8 8 8 8
City trails/Bike paths 2 2 2 2 2
Community Swim Center 1 1 4 4 4
Community centers 2 4 1 1 1
Performing arts centers
Teen Center 1 1 1 1 1
Swimming pools (a) 2 2 3 3 3
Tennis courts (b) 8 8 2 2 2
diamonds 2 2 1 1 1
Soccer/football fields (c) 1 1 1 1 1
Library:

City Libraries 1 1 1 1 1
Source: City of Hercules
For the Fiscal Year Ended June 30, 2025
City of Hercules
Capital Asset Statistics by Function/Program (Continued) Last Ten Fiscal Years
207
281
208
282

REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND

OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN

ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Independent Auditors Report
To the Honorable Mayor and the Members of the City Council of the City of Hercules
Hercules, California
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States (Government Auditing Standards) , the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Hercules, California (the City), as of and for the year ended June 30, 2025, and the related notes to the financial statements which collectively comprise the Citys basic financial statements, and have issued our report thereon dated December 18, 2025.

Report on Internal Control Over Financial Reporting

In planning and performing our audit of the financial statements, we considered the Citys internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Citys internal control. Accordingly, we do not express an opinion on the effectiveness of the Citys internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements, on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a ma terial misstatement of the entitys financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or, significant deficiencies.

Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses or significant deficiencies may exist that were not identified.

283
To the Honorable Mayor and the Members of the City Council of the City of Hercules
Hercules, California

Page 2 ends

Hercules City CouncilJanuary 27, 2026

Hercules City Council
January 27, 2026