Richmond City Council
February 1, 2022

Public Works:

Water Resource Recovery Department
• The City of Richmond's Water Resource Recovery Department administers the Sewer Lateral Grant Program. The program reimburses eligible homeowners in the Richmond Municipal Sewer District (RMSD No. 1) for some of the cost to replace their sewer lateral.

ACKNOWLEDGEMENTS
The preparation of this ACFR represents the culmination of a concerted team effort by the entire staff of the Finance Department. They should be commended for their professionalism, dedication, efficiency, and their personal commitment and determination demonstrated through long days of focused attention to produce this exemplary document.

In addition, staff in all City departments should be recognized for responding so positively to the requests for detailed information that accompanies each annual audit. The role of Badawi & Associates, Certified Public Accountants, should also be acknowledged as a significant contribution to a fine product.

Finally, we wish to express our sincere appreciation to the Mayor and City Council for providing policy direction and a firm foundation of support for the pursuit of excellence in all realms of professional endeavors.

Respectfully submitted,
Finance Director/Treasurer
ix

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People of RichmondPeople of Richmond
Mayor and City CouncilMayor and City Council
City Manager
Laura Snideman
City Manager
Laura Snideman
Public Works Director
Joe Leach
Public Works Director
Joe Leach
Richmond Rent BoardRichmond Rent Board
Confidential
Investigative Appeals
Officer
(Police Commission)
Confidential
Investigative Appeals
Officer
(Police Commission)
City Clerk
Pam Christian
City Clerk
Pam Christian
City Attorney
Teresa Stricker
City Attorney
Teresa Stricker
Executive Assistant
Irene Lozano
Executive Assistant
Irene Lozano
Director of
Information Technology
Sue Hartman
Director of
Information Technology
Sue Hartman
Community
Development Director
Lina Velasco
Community
Development Director
Lina Velasco
Director of Library and
Community Services
LaShonda White
(Interim)
Director of Library and
Community Services
LaShonda White
(Interim)
Fire Chief
Michael Smith (Interim)
Fire Chief
Michael Smith (Interim)
Police Chief
Bisa French
Police Chief
Bisa French
Deputy City Manager
Economic Development
Shasa Curl
Deputy City Manager
Economic Development
Shasa Curl
Deputy City Manager
Internal Services
Anil Comelo (Interim)
Deputy City Manager
Internal Services
Anil Comelo (Interim)
Economic
Development/
Special Events
Economic
Development/
Special Events
Arts & CultureArts & Culture
Public HousingPublic Housing
Environmental &
Health In itiatives
Environmental &
Health In itiatives
Property
Management
Property
Management
PatrolPatrol
TrafficTraffic
In vestigatio nsIn vestigatio ns
Admi ni stration and
Support
Admi ni stration and
Support
Fire PreventionFire Prevention
Emergency Services Emergency Services
Emergency
Operations
Emergency
Operations
TrainingTraining
LibraryLibrary
RecreationRecreation
Neighborhood &
Volunteer Services
Neighborhood &
Volunteer Services
TransportationTransportation
Employment &
Training
Employment &
Training
Engineering and
Capi ta l Improve ment
Program (CIP)
Engineering and
Capi ta l Improve ment
Program (CIP)
Building MaintenanceBuilding Maintenance
Wa ter Re source
Recovery
Wa ter Re source
Recovery
FleetFleet
Public Works
Maintenance and
Abat em en t
Public Works
Maintenance and
Abat em en t
Parks MaintenanceParks Maintenance
Planni ngPlanni ng
BuildingBuilding
Code EnforcementCode Enforcement
Housing PolicyHousing Policy
RDA Successor
Agency
RDA Successor
Agency
Network ServicesNetwork Services
Appl icati on Se rvi ce sAppl icati on Se rvi ce s
KCRT
(Cable TV)
KCRT
(Cable TV)
FinanceFinance
Human ResourcesHuman Resources
Staff Development
and Training
Staff Development
and Training
Depa rtme nt of
Children & Youth
Depa rtme nt of
Children & Youth
Office of
Neighborhood Safety
Office of
Neighborhood Safety
ECIA Grant
Administration
ECIA Grant
Administration
Admi ni stration and
Support
Admi ni stration and
Support
Duplication & Mail Duplication & Mail
PortPort
Rent Program
Nicolas Traylor
Rent Program
Nicolas Traylor
Rev. 6.4.2021
Organizational Chart
xi

CITY OFFICIALS
JUNE 30, 2021

CITY COUNCIL
Mayor.......................................................................................................................................................................................................................................................................Tom Butt Vice Mayor ........................................................................................................................................................................................................................................... Demnlus Johnson III Councilmember ........................................................................................................................................................................................................................................... Nathaniel Bates Councilmember .......................................................................................................................................................................................................................................... Claudia Jimenez Councilmember ........................................................................................................................................................................................................................................ Eduardo Martinez Councilmember ........................................................................................................................................................................................................................................ Gayle McLaughlin Councilmember ................................................................................................................................................................................................................................................. Melvin Willis

ADMINISTRATION AND EXECUTIVE MANAGEMENT
City Manager .............................................................................................................................................................................................................................................. Laura Snideman Deputy City Manager, Economic Development ................................................................................................................................................................................................. Shasa Curl Deputy City Manager, Internal Services ( Interim) .............................................................................................................................................................................................Anil Comelo City Attorney ................................................................................................................................................................................................................................................. Teresa Stricker City Clerk ................................................................................................................................................................................................................................................... Pamela Christian Community Development Director .................................................................................................................................................................................................................. Lina Velasco Director of Information Technology ................................................................................................................................................................................................................. Sue Hartman Director of Library and Community Services (Interim) ............................................................................................................................................................................. LaShonda White Finance Director ............................................................................................................................................................................................................................................. Belinda Brown Fire Chief (Interim) ......................................................................................................................................................................................................................................... Michael Smith Human Resources Director (Interim) .................................................................................................................................................................................................................... Marc Fox Police Chief ........................................................................................................................................................................................................................................................ Bisa French Public Works Director .......................................................................................................................................................................................................................................... Joe Leach Rent Control Executive Director ................................................................................................................................................................................................................... Nicolas Traylor xii

INDEPENDENT AUDITOR’S REPORT
To the Honorable Mayor and Members of the City Council
of the City of Richmond
Richmond, California
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Richmond, California (City), as of and for the year ended June 30, 2021, and the related notes to the financial statements. We were engaged to audit the financial statements of the discretely presented component units as of and for the year ended June 30, 2021. These financial statements collectively comprise the City’s basic financial statements as listed in the table of contents.

Management’s Responsibility for the Financial Statements The City’s management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally acce pted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. 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. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financia l statements are free from material misstatement.

Because of the matter described in the Basis for Disclaimer of Opinion paragraph, we were not able to provide a basis for an audit opinion on the business-type activities, Richmond Housing Authority Enterprise Fund, and the aggregate discretely presented component units.

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

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

2 Except for the matter described in the Basis for Disc laimer of Opinion on the business-type activities, Richmond Housing Authority Enterprise Fund, and th e aggregate discretely presented component units paragraph, we believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Summary of Opinions
Opinion Unit Type of Opinion .

Governmental Activities Unmodified Business-Type Activities Disclaimer Aggregate Discretely Presented Component Units Disclaimer Major Governmental Funds:

General Fund Unmodified Community Development and Loan Programs Special Revenue Unmodified Major Enterprise Funds:

Richmond Housing Authority Disclaimer Port of Richmond Unmodified Municipal Sewer Unmodified Aggregate Remaining Fund Information Unmodified Basis for Disclaimer of Opinion
The financial statements of the Richmond Hous ing Authority and RHA Properties, RHA Housing Corporation and RHA RAD LLC have not been audited for the year ended June 30, 2021. The Richmond Housing Authority’s financial activities are included in the City’s basic financial statements as a major enterprise fund and represent 10.85%, 22.20%, and 6.19% of the assets, net position, and revenues, respectively, of the City’s business-type activities. The financial activities of the RHA Properties, RHA Housing Corporation and RHA RAD LLC are included in the City’s financial activities as discretely presented component units and represent the City’s only discretely presented component units.

Disclaimer of Opinion
Because of the significance of the matter described in the Basis for Disclaimer of Opinion paragraph, we have not been able to obtain sufficient appropriate audit ev idence to provide a basis for an audit opinion on the financial statements of the business-type activities, Richmond Housing Authority Enterprise Fund, and the aggregate discretely presented component units of the City. Accordingly, we do not express an opinion on these financial statements.

Unmodified Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the General Fund, the Community Development and Loan Programs Special Revenue Fund, the Port of Richmond Enterprise Fund, the Municipal Sewer Enterprise Fund, and the aggregate remaining fund information of the City as of June 30, 2021, and the respective

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

3 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.

Other Matters
Required Supplementary Information
Accounting principles generally accepted in the Unit ed States of America require that the management’s discussion and analysis, budgetary comparison in formation, and required pension and other post- employment benefits information on pages 5-18 and 177-201 be presented to supplement the basic financial statements. Such information, 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 su pplementary 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 an d comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Other Information
Our audit was conducted for the purpose of forming opin ions on the financial statements that collectively comprise the City’s basic financial statements. The introductory section, supplemental information and statistical sections are presented for purposes of additi onal analysis and are not a required part of the basic financial statements.

The supplemental 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. Such information has been subjected to the auditing proc edures 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 supplemental information is fairly stated, in all material respects, in relation to the basic financial statements as a whole.

The introductory and statistical section have not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on them. Page 450 of 789
To the Honorable Mayor and Members of the City Council
of the City of Richmond
Richmond, California

4 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 31, 2021 on our consideration of the City’s internal cont rol over financial 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 internal control over financial reporting or on comp liance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance.

Badawi & Associates, CPAs
Berkeley, California
December 31, 2021

5 MANAGEMENT’S DISCUSSION AND ANALYSIS
Fiscal Year Ended June 30, 2021
This narrative overview and analysis of the City of Richmond’s (the “City”) Basic Financial Statements for the fiscal year ended June 30, 2021. We encourage readers to consider the information presented here in conjunction with the accompany ing transmittal letter, basic financ ial statements and notes to the financial statements.

FINANCIAL HIGHLIGHTS
x The City’s total net position increased by $65 million during the fiscal year attributed to a $40 million increase in governmental and $25 million increase in business-type activities. x The liabilities and deferred inflows of the governmental activities of the City exceeded its assets and deferred outflows at the close of the most recent fiscal year by $258.7 million (net deficit).

Alternatively, the assets and deferred outflows of the business-type activities of the City exceeded its liabilities and deferred inflows by $88.1 million.
x At June 30, 2021, the City’s unrestricted net deficit (governmental and business-type activities) totaled $570 million, a $28.3 million decrease from prior year. The unrestricted net deficits represent the net unfunded liabilities of the government. Over time, increases and decreases in this account will allow the reader to determine if the City’s condition is im proving or deteriorating. Restricted net position for governmental and business-type activities increased by a net $22 million to $117.2 million. x The City’s financial statements include a disclaimer of opinion on the financial statements of the Richmond Housing Authority Enterprise Fund (“RHA”), a blended component unit included in the City’s business-type activities, and three discretely presented component units, RHA Properties, RHA Housing Corporation and RHA RAD LLC. As of June 30, 2021, the net position of RHA is $19.5 million or 22% of the City’s business-type activities. Additional information about the disclaimer of opinion can be found in the Independent Auditor’s Report. x The City’s General Fund contingency reserve policy to the minimum 15% of the General Fund’s next year’s budgeted appropriations or $24.8 million and the balance was $22.4 million at June 30, 2021. x The Net Pension Liability of $352.3 million, representing an accounting measure of the City’s unfunded pension obligation, increased by $11.9 million from $340.4 million. The City reports $103.8 million in the Other Post-Employment Benefit (OPEB) liability for this fiscal year which is a decrease of $15.4 million from the $119.2 million obligation reported in the prior year. x The City’s General Fund revenue and other financing sources (uses) exceeded expenditures by $10.4 million in fiscal year 2021. This is primarily attrib utable to other taxes and sales tax fee revenues in excess of expectations for the year.

OVERVIEW OF FINANCIAL STATEMENTS
The City’s basic financial statements are compri sed of government-wide financial statements, fund financial statements, and notes to the financial statem ents. This report also contains other required supplementary information in addition to the basic financial statements themselves.

6 Government-Wide Financial Statements
The government-wide financial statements are designed to provide readers with a broad overview of the City’s finances, in a manner similar to private-sector business.

The Statement of Net Position presents information on all of the City’s assets, deferred outflows of resources, liabilities and deferred inflows of resources with the difference between the four reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating.

The Statement of Activities presents information showing how the government’s net position changed during the 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 the related cash flows.

Both of the government-wide financial statements dist inguish functions of the City that are principally supported by taxes and grants, governmental activities, and business-type activities, which are intended to recover all or a significant portion of their costs through user fees and charges. The City’s activities include five blended component units which consist of the Richmond Housing Authority, Richmond Joint Powers Financing Authority, Richmond Neighborhood Stabil ization Corporation, Richmond Surplus Property Authority and Richmond Parking Authority. Although legally separate, the City is financially accountable for the activities of these entities which are therefore shown as blended as part of the primary government.

RHA Properties, RHA Housing Corporation and RHA RAD LLC are discretely presented component units of the City that are legally separate reporting ent ities but are important because the City is financially accountable for them.

The government-wide financial statements can be found on pages 24-27 of the financial report.

Fund Financial Statements
Fund Financial statements are designed to report information about the groupings of related accounts that are used to maintain control over resources that have been segregated for specific activities or objectives.

The City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements.

Governmental Funds – Governmental funds focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resour ces available at the end of the fiscal year. Such information may be useful in determining what financ ial resources are available in the near future to finance the City’s programs.

Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the informat ion presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions.

Both the governmental fund Balance Sheet and the governmental fund Statement of Revenues, Expenditures, and Changes in Fund Balances provide a reconciliation to facilitate the comparison between governmental funds and governmental activities.

7 The City has 20 governmental funds, of which two are considered major funds for presentation purposes.

Each major fund is presented separately in the gover nmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances. The City’s two major funds are the General Fund and the Community Development and Loan Programs Special Revenue Fund. The basic governmental fund financial statements can be found on pages 31-34 of the financial report. Data from the other eighteen governmental funds are combined into a single, aggregated presentation and reported separately on pages 208-215 of the financial report.

Proprietary Funds – Proprietary funds of the City are two type s: (1) enterprise funds; and (2) internal service funds. The City maintains six enterprise funds that provide the same type of information as the government-wide financial statements, only in more detail. The City maintains four internal service funds to account for its vehicle operations, risk mana gement program, police telecommunications and compensated absences. The proprietary fund financial statements can be found on pages 36-41.

Fiduciary Funds – Fiduciary funds are used to account for reso urces held for the benefit of third parties outside the government. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the City’s own programs. The fiduciary funds for the City consist of Pension Trust Funds, City OPEB Plan Trust Fund, RPOA OPEB Plan Trust Fund, Pt. Molate Private-Purpose Trust Fund, Successor Agency to the Richmond Community Redevelopment Agency Private-Purpose Trust Fund and Custodial Funds. The fiduciary funds financial statements for these funds can be found on pages 43-44.

The notes provide additional information that is essentia l to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 47-173 of this report.

8 GOVERNMENT-WIDE FINANCIAL ANALYSIS
Government-wide Net Position
This Comparative financial information includes the long-term and short-term information about the City’s overall financial condition. Below to provide the reader with highlights of changes from the prior year.

9 Government-wide Activities
The following table indicates the changes in net position for governmental and business-type activities:

FY2021 FY2020 FY2021 FY2020 * FY2021 FY2020
Revenues:

Program revenues:

Charges for serv ices 26,130 $ 29,574 $ 43,150 $ 43,086 $ 69,280 $ 72,660 $ Operating grants/contributions 29,316 25,354 3,772 4,028 33,088 29,382 Capital grants/contributions 4,387 4,987 13 322 4,400 5,309 General revenues:

Property taxes-current collections 65,075 63,005 - - 65,075 63,005 Sales taxes 48,998 44,537 - - 48,998 44,537 Utility user taxes 45,241 45,553 - - 45,241 45,553 Documentary transfer taxes 19,858 8,708 - - 19,858 8,708 Other taxes 7,424 7,127 - - 7,424 7,127 Unrestricted Intergovernmental 6,594 5,368 - - 6,594 5,368 Use of money and property 1,461 2,947 146 770 1,607 3,717 Gain on sale of capital assets 71 82 - - 71 82 Other 1,357 1,992 - - 1,357 1,992 Total revenues 255,912 239,234 47,081 48,206 302,993 287,440 Expenses:

General government 47,854 43,496 - - 47,854 43,496 Public safety 93,442 108,948 - - 93,442 108,948 Public works 33,980 45,051 - - 33,980 45,051 Community development 4,433 4,115 - - 4,433 4,115 Cultural & recreation 9,006 10,410 - - 9,006 10,410 Housing & redevelopment 3,108 2,808 - - 3,108 2,808 Interest and fiscal charges 12,825 14,897 - - 12,825 14,897 Richmond Housing Authority - - 3,608 5,834 3,608 5,834 Port of Richmond - - 6,263 7,745 6,263 7,745 Municipal Sewer - - 20,467 21,768 20,467 21,768 Richmond Marina - - 228 241 228 241 Storm Sewer - - 1,796 1,965 1,796 1,965 Cable TV - - 789 672 789 672 Total expenses 204,648 229,725 33,151 38,225 237,799 267,950 Excess (Deficiency) of Revenues
Over (Under) Expenses 51,264 9,509 13,930 9,981 65,194 19,490 Transfers (11,280) 87 11,280 (87) - - Changes in Net Position 39,984 9,596 25,210 9,894 65,194 19,490 Net position (deficit) at beginning of
year (July 1, 2020 restated) (298,728) (307,789) 62,971 54,849 (235,757) (252,940) Net position (deficit) at end of year (258,744)$ (298,193) $ 88,181 $ 64,743 $ (170,563) $ (233,450) $ * Governmental Activities beginning balance was restated and increased by $0.54 million.

Business-type Activities beginning balance was restated and decreased by $1.77 million in the Richmond Housing Authority, Port of Richmond, Municipal Sewer, Cable TV, and Sorm Sewer.

City of Richmond's Changes in Net Position
For the Years Ended June 30, 2021 and 2020
(in thousands)
Governmental Activities Business-type Activities Totals

10 Governmental Activities

Governmental activities increased the City’s net position by $39.9 million, accounting for 61% of the City’s total increase in net position of $65.1 million. Total revenues of $255.9 million exceeded expenses of $204.6 million by $51 million. Revenues increased $16.6 million or 6.9% primarily due to an increase in Document Transfer Tax. That category went fro m $8.7 million in fiscal year 2020 to $19.8 million in fiscal year. Expenses decreased $25 million or 10% from prior year primarily due to decreases in public safety, and public works.

Business Type Activities

Business-type activities increased the City’s net position by $25.2 million. Key factors contributing to the increase in business-type activities are as follows:

 The Richmond Housing Authority’s (“RHA”) net position increase by $10.6 million, resulting from an operating loss of $2.7 million, offset by grant income of $2 million and net transfers of $11.3 million.

 The Port of Richmond (“Port”) reported operating income of $4.7 million. During the year, the Port incurred $0.3 million of interest expense which resulted in a $4.4 million increase in net position.

 The Municipal Sewer fund reported operating income of approximately $12.2 million. There were $4.9 million of non-operating expenses the majority of which represented interest and swap expenses incurred on various Wastewater Debt issues, resulting in a $7.4 million increase in net position.

 Other Enterprise funds had a combined $2.6 million increase in net position, with operating income of approximately $1.2 million.

Net Program (Expenses) Revenues

Comparisons of the cost of services by function for the City’s government-wide activities are shown in the preceding tables, along with the revenues used to cover the net expenses.

The following table details the net program costs for each of the governmental activities functions:

Total governmental activities expenses of $204.6 million were offset by $59.8 million in program revenues in fiscal year 2021. Program revenues are derived directly from the program itself or from parties outside Net (Expenses)
Expenses Revenues Revenues
Functions
General government 47,854,126$ 15,654,728 $ (32,199,398) $ Public safety 93,441,711 6,419,995 (87,021,716) Public works 33,979,639 17,706,850 (16,272,789) Community development 4,433,192 20,591,632 16,158,440 Cultural and recreational 9,006,470 1,085,617 (7,920,853) Housing and redevelopme 3,108,240 (1,626,016) (4,734,256) Interest on long-term debt 12,825,356 - (12,825,356) Total 204,648,734$ 59,832,806 $ (144,815,928) $
Governmental Activities
Expenses and Program Revenues

11 Total governmental activities expenses of $204.6 million were offset by $59.8 million in program revenues in fiscal year 2021. Program revenues are derived directly from the program itself or from parties outside the reporting government’s taxpayers or citizenry. They reduce the net cost of the function to be financed from the government’s general revenues. During the fiscal year, the net costs funded by the City’s general revenues were $144.8 million.

As reflected in the pie chart below, 44% of the governmental program revenues came from Charges for Services, which includes licenses and permits and fees, fines, forfeitures and penalties, and several other revenues. The remaining 56% percent of government al program revenues come from Operating Grants and Capital Grants Contributions which include restricted revenues such as Gas Tax, Transportation and Sales Tax, and Federal/State Grants.

General revenues are all other revenues not categorized as program revenues and include property taxes, sales taxes, utility users’ tax, do cumentary transfer taxes, investment earnings, grants and contributions not related to specific programs and other miscellaneous general revenues. Total general revenues from governmental activities were $196 million in fiscal year 2021. The three largest components of general revenues received were Property Taxes-current collections of $65 million, Sales Taxes of $49 million and Utility User Taxes of $45 million. The following graph shows the City’s general revenues by source.

Charges for
Services
44%
Operating Grants
& Contributions
49%
Capital Grants &
Contributions
7%
Program Revenues by Source
Governmental Activities

12 The following table details net program costs for business-type activities:

Business-type activities revenue exceeded expenses by $13.8 million, as Municipal Sewer, the Port of Richmond and other Enterprise Funds contributed net revenues of $7. 3 million, $4.4 million, and $2.1 million respectively.

As reflected in the pie chart below, 92% of th e business-type program revenues came from Charges for Services and the remaining 8% were derived from Operating and Capital Grants.

Property Taxes
33%
Sales Taxes
25%
Utility User
Taxes
23%
All Other
19%
Program Net (Expenses)
E xpenses Rev enues Rev enues
Business-type Activities
Richmond Housing Authority 3,607,603$ 2,910,687 $ (696,916) $ Port of Richmond 6,263,232 10,704,024 4,440,792 Municipal Sewer 20,466,640 27,772,641 7,306,001 Richmond Marina 227,391 574,453 347,062 Storm Sewer 1,796,422 3,826,858 2,030,436 Cable TV 788,957 1,145,936 356,979 Total 33,150,245$ 46,934,599 $ 13,784,354 $ E xpenses and Program Rev enues
Business-type Activities
General Revenues by Source
Governmental Activities

13 Program Revenues by Source
Business-Type Activities
FINANCIAL ANALYSIS OF THE CITY’S FUNDS
As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements.

Governmental Funds
The focus of the City’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City’s financial capacity.

At the end of the fiscal year, the City’s governmental funds reported total fund balances of $130.1 million, an increase of $17.5 million, or 15.6% from prior year. Financial highlights for the City’s major funds are discussed below:

General Fund The General Fund is the primary operating fund of the City. It is used to report the financial results of the daily operations of the City. The majo r revenue sources are utility users’ tax, sales tax and property taxes. The major expenditures are salaries and administrative expenses. The City’s general fund revenues increased by $15.3 million or 9.0% while and expenditures decreased by $828 thousand or 0.5%.

The increase in revenues is primarily due to the increased collection of both Sales Tax and Documentary Transfer Tax. Sales Tax increased by $4.4 million or 10% while Documentary Transfer Tax increased by $11.4 million, an increase of over 73.3%. The Sales Tax increase is a result of renewed business activity that had either slowed down or shut down completely during the height of the COVID-19 restrictions. The Documentary Transfer Tax increase stems from the co mbination of some very high dollar property sales coupled with the voter approved tiered rate structure where sales over $10 million are taxed at the rate of 3% of the sale amount.

General Fund expenditures stayed relatively flat with a modest decrease of 0.5%. In Other Financing Sources, there was a significant increase to Operating Transfers-Out. The net increase of $7.8 million or

90.9% is due to a combination of changes. The three main items accounting for this decrease were (1) the CAD/RMS services related to the consortium disba ndment in 2020 where the General Fund transferred Charges for
Services
92%
Operating
Grants &
Contributions
8%
Capital Grants
& Contributions
0%

14 $3.0 million to the CAD Dispatch Fund, (2) a decrease in various General Fund subsidies to other funds including decrease was $1.6 million transferred to the Kids First program in 2020 but zero funds transferred in 2021, and (3) and increase of $10.3 million stemming from the Richmond Housing Authority Write-off of disallowed and uncollectible costs.

At the end of the current fiscal year, the total fund balance increased by $10.4 million from the prior year to $49.1 million. The General Fund reported an unassigned fund balance of $22.4 million, and committed of $9.8 million which represents the following:

Community Development and Loan Programs This fund was established to account for the receipt of Community Development Block Grant, HOME Invest ment Partnership Program and Neighborhood Stabilization Program grant monies and the use of the gr ants. In conjunction with the dissolution of the Redevelopment Agency, this fund also accounts for the low and moderate income housing activities of the City as Housing Successor to the former Redevelopment Agency’s low and moderate income housing activities. As of June 30, 2021, fund balance is $31.2 million which represents a $1.9 million increase from prior year.

Proprietary Funds:

The City’s proprietary funds are enterprise and internal service funds. Proprietary funds provide the same type of information found in the government-wide financial statements but in more detail.

The City’s major enterprise funds are the Richmond Housing Authority, Port of Richmond, and Municipal Sewer.

Richmond Housing Authority . The Richmond Housing Authority (RHA) provides decent affordable housing for low and very low-income residents of Richmond through federally funded housing programs.

RHA’S net position increases $10.6 million to $19.5 million at June 30, 2021.

The Port of Richmond The Port of Richmond (“Port”) is a public enterprise established by the City and is administered as a department of the City. Op erations include the marine terminal facilities and commercial property rentals. The Port’s net position increased by $4.4 million to $15.8 million. The increase is partially due to lower debt service interest expenses and lower contractual service expenses.

Municipal Sewer Fund This fund is used to account for a variet y of sewer service-related revenues and expenses. Municipal Sewer’s net position increased $7.4 million to $49.8 million at June 30, 2021.

15 GENERAL FUND BUDGETARY HIGHLIGHTS
The adopted budget, excluding tran sfers, bond premium and proceeds from sale of property, reflected $155.8 million in estimated revenues and $163.5 million in appropriations.

Budget adjustments reflect extensive analysis and updates arising from Expenditure Review, and Council approved amendments that occurred during the fiscal year.

The final amended budget included a $10.4 million increase in estimated revenue and a $5.2 million increase in appropriations. Actual revenues of $178.8 million were $1 2.6 million more than adjusted operating revenue budget, a variance of 8%. Key elem ents of the variances in revenues are discussed as follows:

Property Taxes totaled $ 45.1 million which is $1 million more than the Revised Budget and $ $1.2million more than the original budget. The increase stems from increases in residual Redevelopment Property Tax Trust Fund (RPTTF) after Recognized Obligation Paym ents Schedule (ROPS) or, in other words, more than expected Successor Agency Residual and Pass-through revenue.

Utility Users Tax (UUT) totaled $45.2 million which was $677 thousand more than expected. The bulk of the increase was in tax collected related to telecommu nications and pre-paid wireless collected at stores and by the State.

Sales Taxes totaled $48.9 million which was $4.6 million above the Revised Budget and $8 million more than the Original Bu dget. This corres ponded to increases in the regular Sales Tax and proportional increases in both half cent Sales Tax measures.

Licenses, Permits and Fees totaled $5.9 million which was $164 thousand more than the Revised Budget amount. The bulk of this stemmed from the collection of Medical Marijuana Permits. The previous years’ saw significant increases due to the collective efforts from the Business License Division, Code Enforcement, Rent Control and Muni Services. It le d to payments from new customers that included, in many cases, past due amounts up to three years back. The majority of the new businesses were residential rental properties. The subsequent years, these businesses just paid the yearly flat rate. The budget did not reflect this expected increase.

The final adjusted appropriations were $168.7 mil lion, an increase of $5.2 million from the original adopted budget appropriation of $163.5 million. The adopted budget appropriation was increased primarily due to increase adjustments in General Government, Public Safety and Capital Outlay. The final budget appropriation for transfers out was $5.4 millio n, an increase of $427 thousand from the original adopted budget appropriation of $4.9 million. The increase was primarily due to adjustments to RHA, and Economic Development transfer for capital project.

CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets
The City’s investment in capital assets for its gove rnmental and business-type activities as of June 30, 2021 amounted to $487.9 million, net of accumulated depreciation. This investment in capital assets includes land, buildings, improvements, machinery and equipment, infrastructure and construction in progress is illustrated below:

16 The City’s infrastructure assets are recorded at historical cost in the government-wide financial statements.

Additional information about the City’s capital asset s can be found in Note 5 on pages 77-79 in the financial statements.

17 Debt Administration:

Long Term Debt – The City’s total debt outstanding at June 30, 2021 decreased $16.7 million from $422.5 million to $405.8 million.

Revenue Bonds had a decrease due to the termination of the 2008A Wastewater SWAP agreement, and the defeasance & refunding of a portion of the 2010B Wastewater Bond.

Lease Revenue Bonds had a decrease due to large principal payment to the 2019B JPFA Lease Revenue Refunding Bond (Pt Potrero) and the 2019A JPFA Lease Revenue Refunding Bond (Civic Center) Pension Obligation Bonds had a decrease due to large principal payment to the 2005 POB and decrease in SWAP payments

The City does not have any general obligation bonds as of June 30, 2021.

Economic Factors, Next Year’s Budget and Inflation Rates

The City’s economic base has mostly recovered from the slowdown related to the effects of the COVID- 19 restrictions. Property values assessed by the County as of January 1, 2021 have increased by 0.15% over the prior year. Flat Assessed Valuation (AV) pr imarily stemmed from a decreased valuation of the Chevron Refinery in Richmond. While the CPI growth was 1.036%, and there was significant property sales during the year, the refinery assessment by the County went from approximately $3 billion in FY2019-20, to under $2.7 billion. Residual Redevel opment Property Tax Trust Fund (RPTTF) after Recognized Obligation Payments Schedule (ROPS) payments have gone from $600 thousand in fiscal year 2015-16 to $2.5 million in fiscal year 2016-17, to $4.0 million in fiscal year 2017-18, to $5.7 million in fiscal year 2018-19, and to $6.5 million in both FY2019-20 and FY2020-21. Sales Tax has rebounded to above pre-pandemic levels. Sales Tax in FY2018-19 was $47.7 million, in FY2019-20, dipped down to $44.5 million, and finally rebounded to $49.0 million in FY2020-21.

In November 2018, Richmond voters approved Measure H which called for a new tiered calculation for the Documentary Transfer Tax. The tax rate goes up based on the sale price of the property. The rate of

0.70% did not change for sales under $1 million, but for sales from $1 million and above the rates changed accordingly:

FY2021 FY2020 FY2021 FY2020 FY2021 FY2020
Revenue bonds - $ - $ 137,886,366$ 141,391,552 $ 137,886,366 $ 141,391,552 $ Lease revenue bonds 103,543,451 107,666,888 13,604,419 17,940,892 117,147,870 125,607,780 Pension obligation bonds 140,816,305 144,339,640 - - 140,816,305 144,339,640 Total bonds payable 244,359,756 252,006,528 151,490,785 159,332,444 395,850,541 411,338,972 Loans payable 1,023,223 1,156,440 3,338,388 3,435,667 4,361,611 4,592,107 Capital leases 5,642,605 6,661,806 - - 5,642,605 6,661,806 Total outstanding debt 251,025,584$ 259,824,774 $ 154,829,173 $ 162,768,111 $ 405,854,757 $ 422,592,885 $ Outstanding Debt
June 30, 2021 and 2020
Governmental Activities Business-Type Activities Totals

18 Measure H
Even before the new tiered system, the Documentary Transfer Tax was one of the most volatile of revenue streams for the City. A few sales can have a dramatic impact on the General Fund. In FY2017-18, before the new tiered rate structure was approved and put in place, the transfer tax collected totaled $6.5 million.

In FY2018-19, with half a year a year of the rate stru cture, the tax collected went up to $8.0 million. In FY2019-20 it went up modestly to $8.7 million. Finall y, in FY2020-21, due to a few very large sales it increased significantly to $19.9 million.

In November 2020, Richmond voters approved Measure U which significantly changed the calculation for the Business License Tax. Currently, most business pay a tax based on number of employees or location.

Measure U imposes a calculation based on Gross Receipts. The percentage charged varies based on both the type of business and the amount of gross receipts with the new rates ranging from 0.06% to 0.68% for businesses and 1.08% to 2.4% for rental properties. The new methodology was expected to bring in an additional $6.4 million for the City once impl emented in FY2021-22. Due to changes in both implementation date (moved from July 1, 2021 to January 1, 2022) and Rent Control credits (fees paid by landlords of small rental units serves as credits to the Business Tax) the amount collected in FY2021-22 will be lower than originally forecasted.

The City continues to closely monitor revenue and expenditures through monthly variance reports to assure adherence to budget controls. Simultaneously, position control is strictly enforced, ensuring that any employee hired is moving into a funded position. For the upcoming fiscal year, staff is working to to align the budget forecast with City Council priorities, review the City’s organizational structure, and provide recommended actions for fiscal sustainability.

This will include planning and addressing pension and Other Post-Employment Benefits (OPEB) funding.

Additionally, the City continues to analyze the structural integrity of all funds and identify additional cost reductions and efficiencies.

REQUESTS FOR INFORMATION
This financial report is designed to provide a general overview of the City’s finances for all of its citizens, taxpayers, customers, investors and creditors. Ques tions concerning any of the information provided in this report or requests for additional information shou ld be addressed to the City of Richmond, Finance Department, 450 Civic Center Plaza, Richmond, CA 94804. Alternatively, you may send your inquiries via e-mail to [email protected].

BASIC

FINANCIAL STATEMENTS
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GOVERNMENT-WIDE

FINANCIAL STATEMENTS
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City of Richmond
Statement of Net Position
June 30, 2021
Governmental Business-type
Activities Activities Total
ASSETS
Current assets:

Cash and investments 137,599,623$ 50,863,729 $ 188,463,352 $ Restricted cash and investments 15,301,838 13,957,785 29,259,623 Receivables:

Accounts, net 14,209,371 6,780,481 20,989,852
Interest 41,633 13,402 55,035
Grants 6,083,133 206,508 6,289,641
Loans ---
Internal balances 15,642,760 (15,642,760) -
Prepaids and supplies 637,513 - 637,513
Total current assets 189,515,871 56,179,145 245,695,016 Noncurrent assets:

Due from developer - 11,221,743 11,221,743
Loans 46,299,190 - 46,299,190
Property held for resale 78,016 - 78,016
Net pension asset 4,441,073 - 4,441,073 Capital assets:

Nondepreciable 58,596,943 40,154,105 98,751,048
Depreciable 744,532,487 356,786,684 1,101,319,171
Less accumulated depreciation (516,973,793) (195,165,429) (712,139,222) Total capital assets 286,155,637 201,775,360 487,930,997 Total noncurrent assets 336,973,916 212,997,103 549,971,019 Total assets 526,489,787 269,176,248 795,666,035

DEFERRED OUTFLOWS OF RESOURCES
Deferred outflows of resources - pension 41,852,998 1,537,803 43,390,801 Deferred outflows of resources - OPEB 2,981,744 152,293 3,134,037 Deferred ouflows - change in fair value of derivative instruments 35,965,971 - 35,965,971 Deferred charge on refunding - 6,247,725 6,247,725
Total deferred outflows of resources 80,800,713 7,937,821 88,738,534

LIABILITIES
Current liabilities:

Accounts payable and accrued liabilities 16,828,865 8,721,491 25,550,356 Interest payable 1,194,997 2,508,603 3,703,600
Refundable deposits 881,371 471,362 1,352,733
Unearned revenue 6,516,377 - 6,516,377
Derivative instrument at fair value 35,965,971 - 35,965,971 Compensated absences - due within one year 35,782 153,064 188,846 Claims liabilities - due within one year 13,033,895 - 13,033,895 Long-term debt - due within one year 15,649,018 6,681,656 22,330,674 Total current liabilities 90,106,276 18,536,176 108,642,452 Noncurrent liabilities:

Unearned revenue - 2,962,194 2,962,194
Compensated absences 13,081,217 46,981 13,128,198
Claims liabilities 31,358,444 - 31,358,444
Long-term debt 235,376,566 148,147,517 383,524,083
Net pension liability 340,627,781 11,745,894 352,373,675 Net OPEB liability 98,856,405 4,944,993 103,801,398
Total noncurrent liabilities 719,300,413 167,847,579 887,147,992 Total liabilities 809,406,689 186,383,755 995,790,444

DEFERRED INFLOWS OF RESOURCES
Deferred inflows of resources - pension 5,671,678 202,155 5,873,833 Deferred inflows of resources - OPEB 50,956,440 2,347,335 53,303,775 Total deferred inflows of resources 56,628,118 2,549,490 59,177,608

NET POSITION
Net investment in capital assets 206,419,763 75,738,268 282,158,031 Restricted for:

Capital projects 8,173,583 - 8,173,583
Debt service 11,850,076 13,859,999 25,710,075
Housing and redevelopment 18,849,330 - 18,849,330
Community development projects 64,528,624 - 64,528,624
Total restricted 103,401,613 13,859,999 117,261,612
Unrestricted (568,565,683) (1,417,443) (569,983,126)
(258,744,307)$ 88,180,824 $ (170,563,483)$ Total net position Primary Government
See accompanying Notes to Basic Financial Statements
24Page 471 of 789
RHA RHA Housing RHA
Properties Corporation RAD LLC
-$ 4,759$ - $ ---
---
---
---
- - 14,510,000
---
---
- 4,759 14,510,000
---
---
---
- - - ---
---
---
---
---
- 4,759 14,510,000
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
- - - ---
---
---
---
---
---
---
---
---
- 4,759 14,510,000
-$ 4,759$ 14,510,000$ Component Unit
s
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City of Richmond
Statement of Activities
For the year ended June 30, 2021
Operating Capital
Charges for Grants and Grants and
Functions/Programs Expenses Services Contributions Contributions Total Primary Government:

Governmental activities:

General government 46,917,122 $ 13,777,010 $ 978,177 $ 899,541 $ 15,654,728$ Public safety 94,378,715 3,674,412 2,495,729 249,854 6,419,995 Public works 33,979,639 7,198,221 8,850,916 1,657,713 17,706,850 Community development 4,534,280 665,999 18,345,791 1,579,842 20,591,632 Cultural and recreational 9,006,470 814,073 271,544 - 1,085,617 Housing and redevelopment 3,007,152 - (1,626,016) - (1,626,016) Interest on long-term debt 12,825,356 - - - - Total governmental activities 204,648,734 26,129,715 29,316,141 4,386,950 59,832,806 Business-type activities
Richmond Housing Authority 3,607,603 861,943 2,048,744 - 2,910,687 Port of Richmond 6,263,232 10,704,024 - - 10,704,024 Municipal Sewer 20,466,640 27,759,474 - 13,167 27,772,641 Richmond Marina 227,391 574,453 - - 574,453 Storm Sewer 1,796,422 2,103,928 1,722,930 - 3,826,858 Cable TV 788,957 1,145,936 - - 1,145,936 Total business-type activities 33,150,245 43,149,758 3,771,674 13,167 46,934,599 Total primary government 237,798,979$ 69,279,473 $ 33,087,815 $ 4,400,117 $ 106,767,405 $ Component units:

RHA Properties - - - - - RHA Housing Corporation 50 - - - -

RHA RAD LLC - - - - - Total component units 50$ - $ - $ - $ - $ General Revenues:

Taxes:

Property taxes - current collections
Sales taxes
Utility user taxes
Documentary transfer taxes
Other taxes
Total taxes
Unrestricted intergovernmental
Use of money and property
Gain (loss) from sale of capital assets
Other
Transfers
Total general revenues and transfers
Change in net position
Net position - beginning of year, as restated
Net position - end of year
Program Revenues
See accompanying Notes to Basic Financial Statements
26Page 473 of 789
Governmental Business-Type RHA RHA Housing RHA
Activities Activities Total Properties Corporation RDA LLC (31,262,394)$ - $ (31,262,394)$ (87,958,720) - (87,958,720) (16,272,789) - (16,272,789) 16,057,352 - 16,057,352 (7,920,853) - (7,920,853) (4,633,168) - (4,633,168) (12,825,356) - (12,825,356) (144,815,928) - (144,815,928) - (696,916) (696,916) - 4,440,792 4,440,792 - 7,306,001 7,306,001 - 347,062 347,062 - 2,030,436 2,030,436 - 356,979 356,979 - 13,784,354 13,784,354 (144,815,928) 13,784,354 (131,031,574)
- - - - (50) -
- - - - (50) -
65,075,408 - 65,075,408 - - - 48,998,406 - 48,998,406 - - - 45,240,705 - 45,240,705 - - - 19,857,680 - 19,857,680 - - - 7,424,135 - 7,424,135 - - - 186,596,334 - 186,596,334 - - - 6,593,602 - 6,593,602 - - - 1,461,004 145,810 1,606,814 - - - 71,458 - 71,458 - - - 1,357,022 - 1,357,022 - - - (11,279,988) 11,279,988 - - - - 184,799,432 11,425,798 196,225,230 - - - 39,983,504 25,210,152 65,193,656 - (50) - (298,727,811) 62,970,672 (235,757,139) - 4,809 14,510,000 (258,744,307)$ 88,180,824 $ (170,563,483)$ - $ 4,759$ 14,510,000$ Primary Government Component Units
Net (Expense) Revenue
and Changes in Net Position
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FUND

FINANCIAL STATEMENTS
Governmental Fund Financial Statements
Proprietary Fund Financial Statements
Fiduciary Fund Financial Statements
29Page 476 of 789

GOVERNMENTAL FUND FINANCIAL STATEMENTS
The funds described below were determined to be major governmental funds by the City in the current fiscal year.

Individual nonmajor governmental funds may be found in the supplemental section.

The General Fund is used for all the general revenues of the City not specifically levied or collected for other City funds and the related expenditures. The General Fund accounts for all financial resources of a governmental unit which are not accounted for in another fund.

The Community Development and Loan Programs Special Revenue Fund accounts for the receipt of Community Development Block Grant, HOME Investment Partnership Program, and Neighborhood Stabilization Program grant monies and the use of the grants. The Fund also accounts for the low and moderate income housing activities of the City as Housing Successor to the former Redevelopment Agency. Related to the grant disallowed costs discussed in the notes to the financial statements, the City purchased certain loans that had previously been funded with Community Development Block Grant and HOME funds. The grants and loan programs are to be used to provide, within the City of Richmond, new affordable housing, improve existing conditions, assist homeless and disabled with housing, and to expand economic opportunities in business, and employment for low and moderate income residents. 30Page 477 of 789
City of Richmond
Balance Sheet
Governmental Funds
June 30, 2021
Community
Development Othe r Total
General and Loan Governmental Governmental
Fund Program s Funds Funds
ASSETS
Cash and investments 33,213,554$ 5,399,224 $ 46,949,540 $ 85,562,318 $ Restricted cash and investments - 2,007,696 12,060,716 14,068,412 Receivables:

Accounts, net 11,562,758 2,292 2,635,321 14,200,371
Interest 10,836 1,915 12,690 25,44
1 Grants 29,677 172,449 5,881,007 6,083,133
Loans 3,041,758 42,478,419 779,013 46,299,190
Due from other funds 5,732 - - 5,732
Advances to other funds 13,062,225 - - 13,062,225
Property held for resale - 78,016 - 78,016
Prepaids and supplies 637,513 - - 637,513
Total assets 61,564,053 50,140,011 68,318,287 180,022,351

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES AND FUND BALANCES
Liabilities:

Accounts payable and accrued liabilities 6,242,621 75,645 8,900,866 15,219,132 Refundable deposits 215,438 - 665,933 881,37 1
Due to other funds - - 5,732 5,732
Unearned revenue 3,615,918 - 2,900,459 6,516,377
Total liabilities 10,073,977 75,645 12,472,990 22,622,612 Deferred inflows of resources:

Unavailable revenue 2,376,034 18,849,330 6,055,015 27,280,379 Total deferred inflows of resouces 2,376,034 18,849,330 6,055,015 27,280,379 Fund Balances:

Nonspendable 14,399,738 - - 14,399,738
Restricted - 31,215,036 48,946,958 80,161,994
Committed 9,800,000 9,800,000
Assigned 2,436,475 - 2,521,099 4,957,574
Unassigned 22,477,829 - (1,677,775
) 20,800,054
Total fund balances 49,114,042 31,215,036 49,790,282 130,119,360 Total liabilities, deferred inflows
of resources, and fund balances 61,564,053$ 50,140,011 $ 68,318,287 $ 180,022,351 $ See accompanying Notes to Basic Financial Statements
31Page 478 of 789
Total Fund Balances - Total Governmental Funds 130,119,360$ Capital assets used in governmental activities were not current financial resources.

Therefore, they were not reported in the Governmental Funds Balance Sheet. Except for the internal service funds reported below, the capital assets were adjusted as follows:

Government-
Wide Statement
of Net Position
Internal Service
Funds Total
Nondepreciabl
e 58,596,943$ (2,826,937 )$ 55,770,006
Depreciable, net 227,558,694 (5,102,152 ) 222,456,542
Total capital assets 286,155,637$ (7,929,089 )$ 278,226,548 Internal service funds were used by management to charge the costs of certain activities, such as insurance, to individual funds. The assets and liabilities of the Internal service funds were included in governmental activities in the Government- Wide Statement of Net Position. 10,351,005
Unavailabl
e revenues recorded in th e fund financial statement s resulting from activities in which revenues were earned but were not available are reclassified as revenues in the Government-Wide Financial Statements. 27,280,379 In th
e Government-Wide Financial Statements , deferred employer contributions for pension and OPEB, certain differences between actuarial estimates and actual results, and other adjustments resulting from changes in assumptions and benefits are deferred in the current year.

Deferred outflows of resources related to pension 41,371,442 Deferred outflows of resources related to OPEB 2,937,303 Deferred inflows of resources related to pension (5,608,373) Deferred inflows of resources related to OPEB (50,271,453) Long-term liabilities were not due and payable in the current period. Therefore, they were not reported in the Governmental Funds Balance Sheet.

Government-
Wide Statement
of Net Position
Internal Service
Funds Total
Compensated absences - due within one year (35,782) $ 35,782 $ - $ Interest payable (1,194,997) 9,717 (1,185,280) Long-term debt - due within one year (15,649,018) 251,951 (15,397,067) Compensated absences - due in more than one year (13,081,217) 75,445 (13,005,772) Long-term debt - due in more than one year (235,376,566) 1,736,079 (233,640,487) Net pension liability/asset (336,186,708) 3,678,178 (332,508,530) Net OPEB liability (98,856,405) 1,443,023 (97,413,382 ) Total long-term liabilities (700,380,693)$ 7,230,175 $ (693,150,518 ) Net Position of Governmental Activities (258,744,307)$
City of Richmond
Reconciliation of the Governmental Funds Balance Sheet
to the Government-Wide Statement of Net Position
June 30, 2021
Amounts reported for governmental activities in the statement of net position are different because:

See accompanying Notes to Basic Financial Statements
32Page 479 of 789
City of Richmond
Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds
For the year ended June 30, 2021
Community
Development Other Total
General and Loan Governmental Governmental
Fund Program s Funds Funds
REVENUES:

Property taxes 45,140,902 $ - $ 25,153,585$ 70,294,487 $ Sales taxes 48,998,406 - - 48,998,406 Utility user taxes 45,240,705 - - 45,240,705 Other taxes 27,066,292 - - 27,066,292 Licenses, permits and fees 3,235,491 665,999 14,415,062 18,316,552 Fines, forfeitures and penalties 454,778 - 692 455,470 Use of money and property 107,022 202,108 163,086 472,216 Intergovernmental 803,692 1,579,842 21,528,800 23,912,334 Charges for services 6,730,499 - 8,641,090 15,371,589 Rent 699,301 - - 699,301 Other 403,034 898,903 189,377 1,491,314 Total revenues 178,880,122 3,346,852 70,091,692 252,318,666 EXPENDITURES:

Current:

General government 30,245,217 - 16,247,767 46,492,984 Public safety 96,372,052 - 2,247,410 98,619,462 Public works 24,754,571 - 7,278,273 32,032,844 Community development - 505,501 5,201,909 5,707,410 Cultural and recreational 9,087,406 - 718,644 9,806,050 Housing and redevelopment - 945,529 2,179,259 3,124,788 Capital outlay 113,178 - 5,968,835 6,082,013 Debt service:

Principal 910,082 - 13,513,000 14,423,082 Interest and fiscal charges 137,257 - 6,907,538 7,044,795 Total expenditures 161,619,763 1,451,030 60,262,635 223,333,428

REVENUES OVER (UNDER)
EXPENDITURES 17,260,359 1,895,822 9,829,057 28,985,238 OTHER FINANCING SOURCES (USES):

Proceeds from sale of property 71,458 - - 71,458 Transfers in 9,454,780 - 6,069,525 15,524,305 Transfers out (16,318,786) - (10,714,975) (27,033,761) Total other financing sources (uses) (6,792,548) - (4,645,450) (11,437,998) Net change in fund balances 10,467,811 1,895,822 5,183,607 17,547,240 FUND BALANCES (DEFICITS):

Beginning of year 38,646,231 29,319,214 44,606,675 112,572,120 End of year 49,114,042$ 31,215,036 $ 49,790,282 $ 130,119,360 $ See accompanying Notes to Basic Financial Statements
33Page 480 of 789
City of Richmond
Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Government-Wide Statement of Activities For the year ended June 30, 2021
Net Change in Fund Balances - Total Governmental Funds 17,547,240$ Governmental funds reported capital outlay as expenditures. However, in the Government-Wide Statement of Activities, the cost of those assets was allocated over their estimated lives as depreciation expense. This was the amount of capital assets recorded in the current period, net of the amount related to internal service funds. 6,309,279
Depreciation expens e on capital asset s was reported in th e Government-Wide Statement of Activities , but did not require the use of current financial resources. Therefore, depreciation expense was not reported as expenditures in the governmental funds, net of the amount related to internal service funds. (10,428,862) Accrued compensated leave payments were reported as expenditures in the governmental funds, however expense is recognized in the Government-Wide Statement of Activities based on earned leave accruals. (125,790) Debt proceeds provide current financial resource s to governmental funds , but issuing debt increased long- term liabilities in the Government-Wide Statement of Net Position. Repayment of debt was an expenditure in governmental funds, but the repayment reduced long-term liabilities in the Government-Wide Statement of Net Position.

Long-term debt repayment
s 14,423,082
Capital appreciation bond accretion (6,729,666)
Amortization of bonds premium 863,438
Interest payable 168,165
Current year employer pension and OPEB contribution s are recorded as expenditures in the governmental funds, however, these amounts are reported as a deferred outflow of resources in the Government-Wide Statement of Net Position. 39,468,325
Pension expens
e is reported in th e Government-Wide Statement of Activitie s does not requir e the use of current financial resources, and therefore is not reported as expenditures in governmental funds. (39,668,043) OPEB expens e is reported in th e Government-Wide Statement of Activitie s does not requir e the use of current financial resources, and therefore is not reported as expenditures in governmental funds. 13,584,158 Unavailable revenues recorded in th e fund financial statement s resulting from activities in which revenues were earned but were not available are reclassified as revenues in the Government-Wide Financial Statements. 1,939,642
Internal service funds were used by management to charge the costs of certain activities, such as insurance and fleet management, to individual funds. The net revenue of the internal service funds was reported with governmental activities. 2,632,536
Change in Net Position of Governmental Activities 39,983,504$ Amounts reported for governmental activities in the Government-Wide Statement of Activities were different because:

See accompanying Notes to Basic Financial Statements
34Page 481 of 789

PROPRIETARY FUND FINANCIAL STATEMENTS
Proprietary funds account for operations financed and operated in a manner similar to a private business enterprise.

The intent of the City is that most of the cost of providing goods and services be financed primarily through user charges.

The concept of major funds extends to proprietary funds. The City has identified the funds below as major proprietary funds in the current fiscal year.

Generally accepted accounting principles do not provide for the disclosure of budget versus actual comparisons regarding proprietary funds that are major.

The Richmond Housing Authority fund accounts for all funds provided by the Department of Housin g and Urban Development (HUD) to assist low income families in obtaining decent, safe and sanitary housing.

The Port of Richmond fund accounts for all financial transactions relating to the City-owned marine terminal facilities and commercial property rentals.

The Municipal Sewer fund account s for all financial transaction s relating to the Cit y's Wastewater Collection and Treatment. Services are on a user charge basis to residents and business owners located in Richmond. 35Page 482 of 789
City of Richmond
Statement of Net Position
Proprietary Funds
For the year ended June 30, 2021
Richmond Housing Port of Municipal Other Enter prise
Authority Richmond Sewer Funds
ASSETS
Current assets:

Cash and investments 2,754,022 $ 3,257,402 $ 39,028,273 $ 5,824,032 $ Restricted cash and investments 97,786 150,62 7 13,619,646 89,726 Receivables:

Accounts, net 238,43 1 6,028,758 78,503 434,789
Interest - 672 11,243 1,487
Grants 206,508 - - -
Total current assets 3,296,747 9,437,459 52,737,665 6,350,034 Noncurrent assets
:

Receivables:

Due from developer 11,221,743 - - -
Advances to other funds - - - -
Capital assets:

Nondepreciable 1,708,686 4,937,160 29,653,565 3,854,694 Depreciable 44,836,474 87,500,286 189,100,926 35,348,998 Less accumulated depreciation (30,158,605) (55,946,334) (75,942,119) (33,118,371) Net capital assets 16,386,555 36,491,112 142,812,372 6,085,32 1 Total noncurrent assets 27,608,298 36,491,112 142,812,372 6,085,32 1 Total assets 30,905,045 45,928,57 1 195,550,037 12,435,355

DEFERRED OUTFLOWS OF RESOURCES
Deferred outflows of resources - pension 584,453 217,455 425,93 1 309,964 Deferred outflows of resources - OPEB 59,616 16,259 46,880 29,538 Deferred charge on refunding - - 6,247,725 -
Total deferred outflows of resources 644,069 233,714 6,720,536 339,502

LIABILITIES
Current liabilities:

Accounts payable and accrued liabilities 1,602,423 293,306 6,491,825 333,937 Interest payable - 96,750 2,315,458 96,395
Due to other funds - - - - Refundable deposits 143,766 238,423 - 89,173
Compensated absences - current 3,073 5,81 1 102,443 41,737 Claims payable - current - - - -
Long-term debt - current - 4,100,000 2,480,000 101,656
Total current liabilities 1, 749,262 4,734,290 11,389,726 662,898 Noncurrent liabilities:

Advances from other funds - 13,062,225 - 2,580,535
Unearned revenue 1,814,047 520,000 36,280 591,867
Compensated absences 13,146 22,797 5,200 5,838
Claims payable ----
Long-term debt 1,001,530 9,504,419 135,406,366 2,235,202 Net pension liability 4,464,114 1,660,942 3,253,302 2,367,536 Net OPEB liability 1,935,762 527,935 1,522,213 959,083
Total noncurrent liabilities 9,228,599 25,298,318 140,223,36 1 8,740,061 Total liabilities 10,977,861 30,032,608 151,613,087 9,402,959

DEFERRED INFLOWS OF RESOURCES
Deferred inflows of resources - pension 76,829 28,586 55,993 40,747 Deferred inflows of resources - OPEB 918,886 250,605 722,578 455,266 Total deferred inflows of resources 995,715 279,19 1 778,571 496,013

NET POSITION (DEFICIT)
Net investment in capital assets 15,385,025 22,886,693 33,718,087 3,748,463 Restricted for debt service - 150,62 7 13,619,646 89,726 Unrestricted 4,190,513 (7,186,834) 2,541,182 (962,304)
Total net position 19,575,538$ 15,850,486 $ 49,878,915 $ 2,875,885 $ Business-type Activities
See accompanying Notes to Basic Financial Statements.
36Page 483 of 789
Governmental
Activities
Total Enterprise Internal Service
Funds Funds
50,863,729$ 52,037,305 $
13,957,785 1,233,426
6,780,481 9,000
13,402 16,192
206,508 -
71,821,905 53,295,923
11,221,743 -
- 2,580,535
40,154,105 2,826,937
356,786,684 24,784,013
(195,165,429) (19,681,861)
201,775,360 7,929,089
212,997,103 10,509,624
284,819,008 63,805,547
1,537,803 481,556
152,293 44,44
1 6,247,725 -
7,937,821 525,997
8,721,491 1,609,733
2,508,603 9,717
- -
471,362 -
153,064 35,782
- 13,033,895
6,681,656 251,95 1
18,536,176 14,941,078
15,642,760 -
2,962,194 -
46,981 75,445
- 31,358,444
148,147,517 1,736,079
11,745,894 3,678,178
4,944,993 1,443,023
183,490,339 38,291,169
202,026,515 53,232,247
202,155 63,305
2,347,335 684,987
2,549,490 748,292
75,738,268 7,174,485
13,859,999 -
(1,417,443) 3,176,520
88,180,824$ 10,351,005 $
37Page 484 of 789
City of Richmond
Statement of Revenues, Expenses and Changes in Fund Net Position Proprietary Funds
For the year ended June 30, 2021
Richmond Housing Port of Municipal Other Enterprise
Authority Richmond Sewe r Funds
OPERATING REVENUES:

Rental 427,343 $ - $ - $ - $ Service charges - 2,800,099 27,759,474 3,244,57 1
Lease income - 7,809,710 - 579,696
Other 434,600 94,215 - 50
Total operating revenues 861,943 10,704,024 27,759,474 3,824,317 OPERATING EXPENSES:

Salaries and benefits 62,911 449,534 1,251,923 670,75 1 General and administrative 2,597,050 1,636,96 1 9,863,869 1,832,695 Maintenance 941,732 294,062 573,845 -
Depreciation - 3,544,329 3,581,983 130,65 1
Claims losses ----
Other 5,910 7,909 249,17 1 -
Total operating expenses 3,607,603 5,932,795 15,520,791 2,634,097 OPERATING INCOME (LOSS) (2,745,660) 4,771,229 12,238,683 1,190,220 NONOPERATING REVENUES (EXPENSES):

Interest income 575 3,719 120,417 21,099
Grants 2,048,744 - - 1,722,930
Interest expense - (330,437) (4,945,849) (178,673)
Total nonoperating revenues (expenses) 2,049,319 (326,718) (4,825,432) 1,565,356 Income (loss) before
contributions and transfers (696,341) 4,444,511 7,413,251 2,755,576 CONTRIBUTIONS AND TRANSFERS:

Capital contributions -- 1 3 , 1 6 7-
Transfers in 11,435,028 - - -
Transfers out
(68,262) -- (86,778)
Total contributions and transfers 11,366,766 - 13,167 (86,778) Change in net position 10,670,425 4,444,511 7,426,418 2,668,798 NET POSITION:

Beginning of year, as restated 8,905,113 11,405,975 42,452,497 207,087 End of year 19,575,538$ 15,850,486 $ 49,878,915 $ 2,875,885 $ Business-type Activities
See accompanying Notes to Basic Financial Statements.
38Page 485 of 789
Governmental
Activities
Total Enterprise Internal Service
Funds Funds
427,343$ - $
33,804,144 21,737,290
8,389,406 -
528,865 -
43,149,758 21,737,290
2,435,119 3,492,528
15,930,575 1,097,35 1
1,809,639 1,780,97 1
7,256,963 985,343
- 13,476,986
262,990 1,005
27,695,286 20,834,184
15,454,472 903,106
145,810 289,507
3,771,674 1,292,953
(5,454,959) (82,498)
(1,537,475) 1,499,962
13,916,997 2,403,068
13,167 -
11,435,028 426,018
(155,040) (196,550)
11,293,155 229,468
25,210,152 2,632,536
62,970,672 7,718,469
88,180,824$ 10,351,005 $
39Page 486 of 789
City of Richmond
Statement of Cash Flows
Proprietary Funds
For the year ended June 30, 2021
Richmond Housing Port of Municipal Other Enter prise
Authority Richmond Sewer Funds
CASH FLOWS FROM OPERATING ACTIVITIES:

Receipts from customers/interfund services 4,695,718 $ 10,242,797 $ 27,775,903 $ 4,433,434 $ Payments to suppliers (3,774,281) (1,877,077) (8,856,762) (1,741,693) Payments to employees (452,790) (656,163) (1,581,608) (879,209) Insurance premiums and claims paid ----
Net cash provided by (used in) operating activities 468,647 7,709,557 17,337,533 1,812,532

CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES:

Interfund receipts (payments) (15,255,272) (286,375) 901,396 (46,719) Receipts from other governments 3,091,786 - - -
Transfers in 11,435,028 - - -
Transfers out
(68,262) -- (86,778)
Net cash provided by (used in)
noncapital financing activities (796,720) (286,375) 901,396 (133,497)

CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES:

Grant receipts - - 13,167 1,722,930
Acquisition of capital assets - - (9,430,481) (1,702,010) Principal payments on capital debt - (3,945,000) (2,515,000) (97,279) Interest paid - (748,210) (5,633,851) (182,686)
Net cash provided by (used in)
capital and related financing activities - (4,693,210) (17,566,165) (259,045) CASH FLOWS FROM INVESTING ACTIVITIES:

Interest 575 3,613 145,832 25,423 Net cash provided by (used in) investing activities 575 3,613 145,832 25,423 Net cash flows (327,498) 2,733,585 818,596 1,445,413 CASH AND INVESTMENTS - Beginning of year 3,179,306 674,444 51,829,323 4,468,345 CASH AND INVESTMENTS - End of year 2,851,808$ 3,408,029 $ 52,647,919 $ 5,913,758 $

RECONCILIATION OF OPERATING INCOME (LOSS) TO NET
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES:

Operating income (loss) (2,745,660)$ 4,771,229 $ 12,238,683 $ 1,190,220 $ Adjustments to reconcile operating income (loss) to
net cash provided by (used in) operating activities:

Depreciation expense - 3,544,329 3,581,983 130,65 1
Changes in assets and liabilities:

Receivables, net 2,755,944 (461,227) 16,429 17,250
Accounts payable and accrued liabilities (226,505) 19,355 1,830,123 90,348 Refundable deposits (3,084) 42,500 - 654
Unearned revenue 1,077,831 - - 591,867
Compensated absences payable 4,078 (99,967) (19,439) (13,542) Claims payable ----
Net pension liability and deferred outflows/inflows 7,854 2,923 5,725 4,165 Net OPEB liability and deferred outflows/inflows (401,811) (109,585) (315,971) (199,081) Net cash provided by (used in) operating activities 468,647$ 7,709,557 $ 17,337,533 $ 1,812,532 $ Business-type Activities
See accompanying Notes to Basic Financial Statements
40Page 487 of 789
Governmental
Activities
Total Enterprise Internal Service
Funds Funds
47,147,852$ 22,103,102 $
(16,249,813) (1,609,394)
(3,569,770) (3,965,175)
- (12,325,014)
27,328,269 4,203,519
(14,686,970) 9,703,154
3,091,786 -
11,435,028 426,018
(155,040) (151,591)
(315,196) 9,977,581
1,736,097 1,292,953
(11,132,491) (2,003,389)
(6,557,279) (242,336)
(6,564,747) (83,682)
(22,518,420) (1,036,454)
175,443 338,761
175,443 338,76 1
4,670,096 13,483,407
60,151,418 39,787,324
64,821,514$ 53,270,73 1$
15,454,472$ 903,106 $
7,256,963 985,343
2,328,396 365,812
1,713,321 1,269,933
40,070 -
1,669,698 -
(128,870) (179,588)
- 1,151,972
20,667 6,474
(1,026,448) (299,533)
27,328,269$ 4,203,519 $
41Page 488 of 789

FIDUCIARY FUND FINANCIAL STATEMENTS
Fiduciary funds are presented separately from the Government-Wide and Fund financial statements.

Trust funds are used to account for assets held by the City as a trustee agent for individuals, private organizations, or other governments.

Custodial funds are used to account for assets held by the City as an agent for individuals, private organizations, or other governments.

The financial activities of the Trust and Custodial funds are excluded from the City-wide financial statements, but are presented in separate Fiduciary Fund financial statements. 42Page 489 of 789
City of Richmond
Statement of Fiduciary Net Position
Fiduciary Funds
June 30, 2021
Pension Private-Purpose
Trust Funds Trust Funds Custodial Funds
ASSETS
Cash and investments - $ 7,075,368$ 6,572,233 $ Restricted cash and investments 1,226,909 17,705,972 923,497 Pension and OPEB plan cash and investments:

Local Agency Investment Fund 186,062 - - Mutual fund investments 13,042,440 - - Accounts receivable - 33,665 - Interest receivable 467 22,272 2,005 Grants receivable - 451,406 - Loans receivable - 1,021,000 - Prepaids and other assets - 5,716,860 - Total assets 14,455,878 32,026,543 7,497,735

DEFERRED OUTFLOWS OF RESOURCES
Deferred ouflows of resources - deferred loss on refunding - 436,160 - Total deferred outflows of resources - 436,160 -

LIABILITIES
Accounts payable and accrued liabilities - 266,262 5,656 Interest payable - 697,901 - Long-term debt:

Due within one year - 6,645,000 - Due in more than one year - 53,465,925 - Total liabilities - 61,075,088 5,656 NET POSITION:

Restricted for employees' pension and OPEB benefits 14,455,878 - - Held in trust for other governments - (28,612,385) - Restricted for individuals, organizations, and other governments - - 7,492,079 Total net position 14,455,878$ (28,612,385) $ 7,492,079 $ See accompanying Notes to Basic Financial Statements.
43Page 490 of 789
City of Richmond
Statement of Changes in Fiduciary Net Position
Fiduciary Funds
For the year ended June 30, 2021
Pension Private-Purpose
Trust Funds Trust Funds Custodial Funds
ADDITIONS:

Property taxes -$ 12,927,768$ 1,204,334 $ Contributions to trust - employers 1,256,029 451,406 1,501,073 Net investment income:

Net increase (decrease) in fair value of investments 2,392,584 - - Interest income 214,608 1,046,644 27,306 Less investment management fees (72,568) - - Gain from sale of property - 925,585 - Total additions 3,790,653 15,351,403 2,732,713 DEDUCTIONS:

Community development - 1,970,023 - Pension and OPEB benefits 1,864,713 - - Payments in accordance with trust agreements - 211,835 - Interest and fiscal charges - 4,128,651 975,778 Other - - 500,856 Total deductions 1,864,713 6,310,509 1,476,634 Change in net position 1,925,940 9,040,894 1,256,079 NET POSITION:

Beginning of year, as restated 12,529,938 (37,653,279) 6,236,000 End of year 14,455,878$ (28,612,385) $ 7,492,079 $ See accompanying Notes to Basic Financial Statements.
44Page 491 of 789
45 NOTES TO BASIC

FINANCIAL STATEMENTS

46 This page intentionally left blank.

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
47 1. SUMMARY OF SIGNIFICAN T ACCOUNTING POLICIES
The basic financial statements of the City of Richmond , California (City) have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to governmental agencies. The Governmental Accounting Standards Boards (GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting princi ples. The City’s significant accounting policies are described below.

A. Financial Reporting Entity
The City was incorporated in 1905 under the laws of the State of California and adopted its charter in 1909. The City operates under a Council-Manager form of government and provides the following services to its citizens as authorized by its charte r: police and fire protection, planning and community development, streets and roads, parks and recreation, sewage treatment, drainage and capital projects. In addition, the City has a port, marina, municipal and storm sewer enterprises, a housing authority, a joint powers financing authority, and a parking authority which is inactive.

The accompanying basic financial statements present the financial activity of the City, which is the primary government presented, along with the financ ial activities of its component units, which are entities for which the City is financially accountable. Although they are separate legal entities, blended component units are in substance part of the City’s operations and are reported as an integral part of the City’s financial statements. The discretely presented component unit, on the other hand, is reported in a separate column in the basic financial statements to emphasize it is legally separate from the government.

Primary Government
The financial statements of the primary government of the City include the activities of the City as well as the Richmond Housing Authority, the Richmond Joint Powers Financing Authority, the Richmond Neighborhood Stabilization Corpor ation, the Richmond Parking Authority and the Richmond Surplus Property Authority all of which are controlled by and dependent on the City. While these are separate legal entities, their financial activities are integral to those of the City. Their financial activities have been aggregated and merged (termed “blended”) with those of the primary government of the City in the accompanying financial statements.

Blended Component Units
Richmond Housing Authority (Housing Authority) – Formed in 1941 as a separate legal entity under the provisions of the Housing Act of 1937, the Housing Authority was established to use funds provided by the Department of Housing and Urban Development (HUD) to rehabilitate local deteriorated housing and to subsidize low-income families in obtaining decent, safe, and sanitary housing needs.

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
48 1. SUMMARY OF SIGNIFICANT AC COUNTING POLICIES, Continued A. Financial Reporting Entity, Continued
Blended Component Units, Continued
Although the Housing Authority is a separate legal enti ty, it is an integral part of the City. The City exercises significant financial and management control over the Housing Authority and members of City Council serve as the governing board of the Housing Authority. The financial statements of the Housing Authority are included in the City’s basic financial st atements as an enterprise fund. Separate financial statements for the Housing Authority may be obtained by contacting the Richmond Housing Authority, 330 24th Street, Richmond, California 94804.

Richmond Joint Powers Financing Authority (JPFA) – A joint exercise of powers authority formed on December 1, 1989, by and between the City and the former Redevelopment Agency, the JPFA was created to assist the City, the Redevelopment Agency, and other local public agencies in financing and refinancing capital improvements and working capital pursuant to the Marks-Roos Local Bond Pooling Act of 1985.

The JPFA is authorized to purchase obligations of the City, Redevelopment Agency, and other local public agencies.

Although the JPFA is a separate legal entity, it is an integral part of the City. The City exercises significant financial and management control over the JPFA and the members of the City Council serve as the Board of Directors. The operations of the JPFA are included in the City’s basic financial statements as a debt service fund. Separate financial statements for the JPFA may be obtained by contacting the Office of Finance, City of Richmond, 450 Civic Center Plaza, Richmond, California 94804.

Richmond Neighborhood Stabilization Corporation (RNSC) – A California nonprofit public benefit Corporation formed in July 2009 by the City and the former Redevelopment Agency under the laws of the State of California. The Corporation was organize d for the purpose of administering and operating the City’s Neighborhood Stabilization Program (NSP), which includes purchasing, developing, financing, rehabilitating, land banking and/or demolishing bl ighted properties and foreclosed or abandoned properties utilizing the NSP funds or other public and private funding sources, and assisting the City and the Agency in providing affordable home ownership opportunities for households of low and moderate income by facilitating the financing necessary for th e sale and resale of deed-restricted affordable ownership units to low and moderate income households at affordable costs, and other similar functions.

The Corporation is governed by a board of directors consisting of the City Manager, the Finance Director, and five other City and Housing Authority Directors. Al though the RNSC is a separate legal entity, it is an integral part of the City. The City exercises significant financial and management control over the RNSC and members of the Board of Directors are ap pointed by City Council and City management has operational responsibility for the RNSC. The operatio ns of the RNSC are included in the City’s basic financial statements as a special revenue fund. Se parate financial statements for the RNSC may be obtained by contacting the Office of Finance, Ci ty of Richmond, 450 Civic Center Plaza, Richmond, California 94804.

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

49 1. SUMMARY OF SIGNIFICANT AC COUNTING POLICIES, Continued

A. Financial Reporting Entity, Continued

Blended Component Units, Continued

Richmond Surplus Property Authority – Formed to become the owner of certain property declared surplus by the U.S. Government, the Authority is a separa te legal entity but it is an integral part of the City. The City exercises significant financial and management control over the Authority and members of the City Council serve as the governing board of the Authority. The Authority was reactivated in fiscal year 2011 to facilitate certain Port of Richmond transactions. The financ ial activities of the Authority are included in the Port of Richmond Enterprise Fund. Separate financial statements are not issued for the Authority.

Richmond Parking Authority (Parking Authority) – Formed in 1975 pursuant to the provisions of California statutes for the purpose of financing the cons truction of off-street parking facilities. Although the Parking Authority is a separate legal entity, it is an integral part of the City. The City exercises significant financial and management control over the Parking Authority and members of the City Council serve as the governing board of the Parking Authority. The Parking Authority is inactive.

Discretely Presented Component Units

RHA Properties – A joint powers agreement between the City and the Housing Authority formed in 2004 for the purpose of owning and managing the operat ions of an affordable housing residential complex known as The Hilltop at Westridge Apartments in the City, dedicated to the needs of elderly persons. The City and the Housing Authority funded the acquisition of this complex through the issuance of debt. The City and Housing Authority exercise significant financial and management control over RHA Properties and appoint members of the Board of Directors, however RHA Properties manages its own programs separate from the City or the Housing Authority. Therefore, the financial activities of RHA Properties are discretely presented in the RHA Properties Component Unit column of the Statement of Net Position and the Statement of Activities.

RHA Housing Corporation – RHA Housing Corporation was incorporated and registered on January 26, 2004 as a California nonprofit public benefit corporat ion to benefit and support the RHA with respect to the Easter Hill development. RHA Housing Corporat ion entered into RAD Conversion redevelopment activities and it acts as the sole and managing me mber of RHA RAD LLC. The Corporation’s fiscal year ends on December 31. The City and Housing Author ity exercise significant financial and management control over RHA Housing Corporation and appoint members of the Board of Directors, however RHA Housing Corporation manages its own programs separa te from the City or the Housing Authority.

Therefore, the financial activities of RHA Housing Corporation are discretely presented in the RHA Housing Corporation Component Unit column of the Statement of Net Position and the Statement of Activities. Separate financial stat ements for RHA Housing Corporation may be obtained by contacting the Richmond Housing Authority, 330 24th Street, Richmond, California 94804.

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
50 1. SUMMARY OF SIGNIFICANT AC COUNTING POLICIES, Continued A. Financial Reporting Entity, Continued
Discretely Presented Component Units, Continued
RHA RAD LLC – A California limited liability company was formed on July 11, 2013 by RHA Housing Corporation, the sole and managing member. The company is operated exclusively to further the tax exempt charitable purposes of the sole and managi ng member to provide affordable housing for low- income persons where no adequate housing exists for such persons, and to own and operate housing for the benefit of low-income persons who are in need of affordable, decent, safe and sanitary housing and related services, where an inadequate supply of housing exists for such persons. The City and Housing Authority exercise significant financial and management control over RHA RAD LLC and RHA Housing Corporation is the sole member of RHA RAD LLC, however RHA RAD LLC manages its own programs separate from the City or the Housing Authority. Therefore, the financial activities of RHA RAD LLC are discretely presented in the RHA RAD LLC Component Unit column of the Statement of Net Position and the Statement of Activities. Separate financial statements for RHA RAD LLC may be obtained by contacting the Richmond Housing Authority, 330 24th Street, Richmond, California 94804.

In order for the Authority to proceed in its particip ation into the RAD Program as discussed in Note 16, RHA RAD LLC shall act as the managing general partner of RHA RAD Housing Partnership LP.

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 in a separate set of self-balancing accounts that comprise its assets , liabilities, deferred outflows/inflows of resources, fund equity, revenues, and expenditures or expenses. City resources are allocated to and accounted for in individual funds based upon the purpose for which they are to be spent and the means by which spending activities are controlled.

Government-Wide Financial Statements
The Government-Wide Financial Statements include a Statement of Net Position and a Statement of Activities. These statements present summaries of Governmental and Business-Type Activities for the City accompanied by a total column. Governmental activities generally are financed through taxes, intergovernmental revenues, and other non-exchange transactions. Business-type activities are financed in whole or in part by fees charged to external parties. Fiduciary activities of the City are not included in these statements; they are presented separately.

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
51 1. SUMMARY OF SIGNIFICANT AC COUNTING POLICIES, Continued B. Basis of Accounting and Measurement Focus, Continued Government-Wide Financial Statements, Continued
The Statement of Activities presents a comparison between direct expenses and program revenues for each segment of the business-type activities of the City and for each function of the City’s governmental activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Program revenues include (a) charges paid by the recipients of goods or services offered by the programs, (b) grants and contributions that are restricted to meeting the operational needs of a particular program and (c) fees, grants and contributions that are restricted to financing the acquisition or construction of capital assets. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues.

The Government-wide financial statements are presented on an “economic resources” measurement focus and the accrual basis of accounting. Accordingly, all of the City’s assets, deferred outflows/inflows of resources and liabilities, includ ing capital assets as well as infr astructure assets and long-term liabilities, are included in the Statement of Net Position. The Statement of Activities presents all the City’s revenues, expenses and other 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.

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 except those representing balances between the governmental activities and the business-type activities, which are presented as internal balances and eliminated in the total column. In the Statement of Activities, internal service fund transactions have been eliminated. However, transactions between governmental and business-type activities have not been eliminated. The following interfund activities have been eliminated:
x Due to/from other funds
x Advances to/from other funds
x Transfers in/out
The City applies all applicable GASB pronou ncements including all NCGA Statements and Interpretations currently in effect.

Governmental Fund Financial Statements
Governmental Fund Financial Statements include a Balance Sheet and a Statement of Revenues, Expenditures and Changes in Fund Balances for all major governmental funds and in the aggregate for all non-major funds. An accompanying schedule is pr esented to reconcile and explain the differences in net position as presented in these statements to the net position presented in the Government-Wide financial statements.

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
52 1. SUMMARY OF SIGNIFICANT AC COUNTING POLICIES, Continued B. Basis of Accounting and Measurement Focus, Continued Governmental Fund Financial Statements, Continued
All governmental funds are accounted for on the “c urrent financial resources” measurement focus and the modified accrual basis of accounting. Accordingl y, only current assets and current liabilities are included on the Balance Sheets. The Statement of Revenues, Expenditures and Changes in Fund Balances presents increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets.

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.

Accordingly, revenues are recorded when received su ch as business licenses and fines and penalties in cash, except that revenues subject to accrual (generally ninety days after the fiscal year-end) are recognized when due. The primary revenue sources which have been treated as susceptible to accrual by the City are property taxes, sales taxes, transient occupancy taxes, franchise taxes, certain other intergovernmental revenues, and earnings on investme nts. Expenditures are recorded in the accounting period in which the related fund liability is incurred also generally ninety days after the fiscal year end.

Reconciliations of the Fund Financial Statements to the Government-Wide Financial Statements are provided to explain the differences between the two approaches.

The City reports the following major governmental funds in the accompanying financial statements:

General Fund – the General Fund is used for all the general revenues of the City not specifically levied or collected for other City funds and the related expenditures. The General Fund accounts for all financial resources of a governmental unit which are not accounted for in another fund.

Community Development and Loan Programs Special Revenue Fund – accounts for the receipt of Community Development Block Grant, HOME Investment Partnership Program, and Neighborhood Stabilization Program grant monies and the use of the grants. The Fund also accounts for the low and moderate income housing activities of the City as Housing Successor to the former Redevelopment Agency. Related to the grant disallowed costs discussed in Note 4, the City purchased certain loans that had previously been funded with Community Development Block Grant and HOME funds. The grants and loan programs are to be used to provid e, within the City of Richmond, new affordable housing, improve existing housing conditions, assi st homeless and disabled with housing, and to expand economic opportunities in business, and employment for low and moderate income residents.

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
53 1. SUMMARY OF SIGNIFICANT AC COUNTING POLICIES, Continued B. Basis of Accounting and Measurement Focus, Continued Proprietary Fund Financial Statements
Proprietary Fund Financial Statements include a Statement of Net Position, a Statement of Revenues, Expenses and Changes in Fund Net Position, and a Statement of Cash Flows for each major proprietary fund and in the aggregate for all non-major funds. A 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.

Proprietary funds are accounted for using the “economic resources” measurement focus and the accrual basis of accounting. Accordingly, all assets, liabilities and deferred outflows/inflows of resources (whether current or non-current) 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, regardless of when cash changes hands.

Operating revenues in the proprietary funds are th ose revenues that are generated from the primary operations of the fund. All other revenues are reported as non-operating revenues. Operating expenses are those expenses that are essential to the primary operations of the fund. All other expenses are reported as non-operating expenses.

The City reports the following major enterprise funds as proprietary funds of the City:

Richmond Housing Authority – This fund accounts for all funds provided by the Department of Housing and Urban Development (HUD) to assist low income families in obtaining decent, safe and sanitary housing.

Port of Richmond – This fund accounts for all financial transactions relating to the City-owned marine terminal facilities and commercial property rentals.

Municipal Sewer – This fund accounts for all financia l transactions relating to the City’s Wastewater Collection and Treatment. Services are on a user charge basis to residents and business owners located in Richmond.

The City also reports the following proprietary fund type:

Internal Service Funds – The funds account for insurance reserves, equipment services and replacement and police telecommunications, all of which are provided to other departments on a cost- reimbursement basis.

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
54 1. SUMMARY OF SIGNIFICANT AC COUNTING POLICIES, Continued B. Basis of Accounting and Measurement Focus, Continued Fiduciary Fund Financial Statements
Fiduciary Fund Financial Statements include a Statement of Fiduciary Net Position, and a Statement of Changes in Fiduciary Net Position. The City’s Fiduciary funds represent Pension and OPEB Trust funds, Private-Purpose Trust funds and Cust odial funds. Custodial funds are cu stodial in nature (assets equal liabilities) and do not involve measurement of results of operations. Pension Trust funds and Private- Purpose Trust funds are accounted for on an econom ic resources measurement focus under the accrual basis of accounting.

The City reports the following fiduciary fund types:

Trust Funds - The Pension and OPEB Trust Funds account for assets held by the City as an Agent for various functions. The General Pension, Police and Firemen’s and Garfield Pension Funds account for the accumulation of resources to be used for retiree pension payments at appropriate amounts and times in the future. The Pt. Molate Private-Purpose Trust Fund is used to account for assets held by the City as an agent for the U.S. Navy and a priv ate developer for the cleanup of Point Molate as discussed in Note 16. The Successor Agency to the Richmond Community Redevelopment Agency Private-Purpose Trust Fund was established as of February 1, 2012 to account for the activities of the Successor Agency to the former Richmond Community Redevelopment Agency as discussed in Note

17. The financial activities of the Trust Funds are excluded from the Government-wide financial statements, but are presented in the separate Fiduciary Fund financial statements.

Custodial Funds – These funds are used to account for assets held by the City as an agent for individuals, private organizations, and other governments, including special assessment districts within the City and non-public organizations. The financial activities of these funds are excluded from the government-wide financial statement, but are presented in separate Fiduciary Fund financial statements.

C. Cash and Investments
The City maintains a cash and investments pool that is available for use by all funds. Each fund’s portion of this pool is displayed as cash and investments on the balance sheet for governmental funds and the statements of net position for proprietary and fiduciary funds. Investments are stated at fair value.

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
55 1. SUMMARY OF SIGNIFICANT AC COUNTING POLICIES, Continued C. Cash and Investments, Continued
In accordance with GASB Statement No. 40, Deposit and Investment Disclosures (Amendment of GASB Statement No. 3) , certain disclosure requirements for deposits and investment risks were made in the following areas:
x Interest Rate Risk
x Credit Risk
o Overall
o Custodial Credit Risk
o Concentrations of Credit Risk
In addition, other disclosures are specified includin g use of certain methods to present deposits and investments, highly sensitive investments, credit quality at year-end, and other disclosures.

In accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools, highly liquid money market investments with maturities of one-year or less at time of purchase are stated at amortized cost. All other investments are stated at fair value. The City categorizes the fair value measurements of its investments based on the hierarchy established by generally accepted accounting principles. The fair value hierarchy, which has three levels, is based on the valuation inputs used to measure an asset’s fair value: Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significan t other observable inputs; and Level 3 inputs are significant unobservable inputs. The City did not have any investments measured using Level 3 inputs as of June 30, 2021.

The City participates in an investment pool manage d by the State of California entitled Local Agency Investment Fund (LAIF) which has invested a portion of the pooled funds in Structured Notes and Asset- Backed Securities. LAIF’s investments are subject to credit risk with the full faith and credit of the State of California collateralizing these investments. In addition, these Structured Notes and Asset-Backed Securities are subject to market risk as to the change in interest rates.

Cash equivalents are considered amounts in demand deposits and short-term investments with a maturity date within three months of the date acquired by the City and are presented as “cash and investments” in the accompanying basic financial statements.

For the purpose of the statement of cash flows, the City considers all pooled cash and investments (consisting of cash and investments and restricted cash and investments) held by the City as cash and cash equivalents because the pool is used essentially as a demand deposit account from the standpoint of the funds. The City also considers all non-pooled cash and investments (consisting of cash with fiscal agent and restricted cash and investments held by fiscal agent) as cash and cash equivalents because investments meet the criteria for cash and equivalents defined above.

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
56 1. SUMMARY OF SIGNIFICANT AC COUNTING POLICIES, Continued D. Prepaids and Supplies
Certain payments to vendors reflect costs applicable to future fiscal years and are recorded as prepaid items in both government-wide and fund financial stat ements. The cost of prepaid items is recorded as expenditures/expenses when consumed, rather than when purchased. Prepaid items in governmental funds are equally offset by nonspendable fund balance which indicates that they do not constitute available spendable resources even though they are a component of net current assets.

Supplies are valued at cost using the weighted av erage method. Supplies of the governmental funds consist of expendable supplies held for consumption. The cost is re corded as an expenditure in the governmental funds at the time individual inventor y items are consumed rather than when purchased.

Reported governmental fund inventories are equa lly offset by nonspendable fund balance which indicates that they do not constitute available spendable resources even though they are a component of net current assets.

E. Capital Assets
Capital assets are valued at historical cost or at estimated acquisition value on the date donated. If actual historical costs are not available, assets have been valued at approximate historical cost. The City’s policy is to capitalize assets costing at least $5,000, and th e Housing Authority’s policy is to capitalize assets costing at least $1,000. Depreciation is recorded on a straight-line basis over the following estimated useful lives:

Infrastructure includes streets systems, parks and recreation lands and improvement systems, storm water collection systems, and buildings combined with site amenities such as parking and landscaped areas used by the City in the conduct of its business. Each major infrastructure system is divided into subsystems. For example, the street system includes pavement, curbs and gutters, sidewalks, medians, streetlights, traffic control devices such as signs, signals and pavement markings, landscaping and land.

In the case of the initial capitalization of general infrastructure assets reported by governmental activities, the City chose to include all such items regardless of their acquisition date or amount.

Net interest costs incurred during the construction of capital assets for the business-type and proprietary funds are capitalized as part of the asset’s cost.

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
57 1. SUMMARY OF SIGNIFICANT AC COUNTING POLICIES, Continued F. Property Held for Resale
Property held for resale is accounted for at the lower of cost or net realizable value or agreed upon sales price if a disposition agreement has been made with a developer.

The City received five properties for resale in fisc al year 2013 with a book value of $573,822 from the acceptance of a deed in lieu of foreclosure on the pr operty related to developer defaults on prior loans under the Richmond Neighborhood Stabilization loan program discussed in Note 4. These properties were rehabilitated during fiscal years 2014 and 2015 in creasing the carrying value by a total of $749,716 and $39,303, respectively. In fiscal year 2014, the Ci t y r e c e i v e d a n a d d i t i o n a l f o u r p r o p e r t i e s w i t h a carrying value of $648,238. Six properties were sold in fiscal year 2016, the remaining two properties held for resale had a book value of $671,255 as of June 30, 2017. In fiscal year 2018, one property was sold during the year, and the carrying value of the one re maining property held for resale was $78,016 as of June 30, 2021.

G. Property Taxes
The State of California’s Constitution limits the combined maximum property tax rate on any given property to one percent of its assessed value except for voter approved incremental property taxes.

Assessed value equals purchase price and may be adjusted by no more than two percent per year unless the property is modified, sold, or transferred. The State Legislature distributes property tax receipts from among the counties, cities, school districts, and other districts.

Contra Costa County assesses properties and bills for and collects property taxes as follows:

The term “unsecured” refers to taxes on personal property other than land and buildings. These taxes are secured by liens on the property being taxed. Property taxes levied are recorded as revenue in the fiscal year of levy.

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

58 1. SUMMARY OF SIGNIFICANT AC COUNTING POLICIES, Continued

H. Deferred Outflows/Inflows of Resources

In addition to assets, the statement of net position or balance sheet report a separate section for deferred outflows of resources. This separate financial st atement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The first item that qualifies for reporting in this category is the deferred charge on refunding re ported in the statement of net position. A deferred charge on refunding results from the difference in the carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded or refunding debt. The City also has deferred outflows of resources related to change in fair value of derivative instruments, pensions and OPEB as discussed in Notes 7, 11, and 12.

In addition to liabilities, the stat ement of net position or balance sh eet report a separate section for deferred inflows of resources. This separate financial statement elemen t, deferred inflows of resources, represents an acquisition of net position or fund balance that applies to a future period(s) and so will not b e r e c o g n i z e d a s a n i n f l o w o f r e s o u r c e s ( r e v e n u e ) until that time. The first item which qualifies for reporting in this category arises only under a modified accrual basis of accounting. Accordingly, the item, unavailable revenue, is only reported in the governmental funds balance sheet. The governmental funds report unavailable revenues from three sources: loans receivable, grants receivable and interest on interfund advances. See Note 8 for further discussion . The City also has deferred inflows of resources related to pensions and OPEB as discussed in Notes 11 and 12. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available.

I. Net Position and Fund Balances

Net Position

In the City-wide financial statements, Net Position is classified as follows:

Net Investment in Capital Assets – This amount consists of capital assets net of accumulated depreciation plus deferred outflows of resources associated with the refunding of related capital debt, reduced by outstanding debt that was used for the acquisition, construction, or improvement of these capital assets.

Restricted Net Position – This amount is restricted by external creditors, grantors, contributors, laws or regulations of other governments. In addition, net position restricted for pension benefits are restricted as a result of enabling legislation.

Unrestricted Net Position – This amount is all net position that does not meet the definition of “net investment in capital assets” or “restricted net position.”

When an expense is incurred for purposes for which bo th restricted and unrestricted net position are available, the City’s policy is to apply restricted net position first.

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
59 1. SUMMARY OF SIGNIFICANT AC COUNTING POLICIES, Continued I. Net Position and Fu nd Balances, Continued
Fund Balances
Governmental fund balances represent the net current assets of each fund. Net current assets generally represent a fund’s cash and receivables, less its liabilities.

The City’s fund balances are classified based on sp ending constraints imposed on the use of resources.

For programs with multiple funding sources, the Ci ty prioritizes and expends funds in the following order: Restricted, Committed, Assigned, and Unassigned. Each category in the following hierarchy is ranked according to the degree of spending constraint:

Nonspendable represents balances set aside to indi cate items do not represent available, spendable resources even though they are a component of assets. Fund balances required to be maintained intact, such as Permanent Funds, and assets not expected to be converted to cash, such as prepaids, interfund advances and notes receivable are included. However, if proceeds realized from the sale or collection of nonspendable assets are restricted, committed or assigned, then nonspendable amounts are required to be presented as a component of the applicable category.

Restricted fund balances have external restrictions imposed by creditors, grantors, contributors, laws, regulations, or enabling legislation which requires the resources to be used only for a specific purpose.

Committed fund balances have constraints imposed by formal action of the City Council which may be altered only by the same formal action of the City Council. The highest level of formal action of the City Council is an Ordinance.

Assigned fund balances are amounts constrained by the City’s intent to be used for a specific purpose, but are neither restricted nor committed. Intent is expressed by the City Council or its designee, the Finance Director, and may be changed at the discretion of the City Council or its designee, during the budget approval process or via budget amendments in accordance with the City’s adopted budget policy. This category includes encumbrances; nonspe ndables, when it is the City’s intent to use proceeds or collections for a specific purpose, and residual fund balances, if any, of Special Revenue, Capital Projects and Debt Service Funds which have not been restricted or committed.

Unassigned fund balance represents residual amounts that have not been restricted, committed, or assigned. This includes the residual general fund balance and residual fund deficits, if any, of other governmental funds.

J. Compensated Absences
Compensated absences comprise unused vacation and certain other compensated time off, which are accrued and charged to expense as earned. Governmental funds include only amounts that have matured, while their long-term liabilities are recorded in the Statement of Net Position.

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
60 1. SUMMARY OF SIGNIFICANT AC COUNTING POLICIES, Continued K. Bond Issuance Costs, Original Issue Discounts and Premiums and Deferred Charge on Refunding For proprietary fund types, bond premiums and discounts are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. Any differences between proprietary refunded debt and the debt issued to refund it, called a deferred charge on refunding, is amortized over the remaining life of either the refunded debt or the refunding debt, whichever is shorter. The deferr ed charge on refunding is reported as a deferred i n f l o w o r o u t f l o w o f r e s o u r c e s , a s a p p l i c a b l e . B o n d i s s u a n c e c o s t s , o t h e r t h a n p r e p a i d i n s u r a n c e , a r e expensed in the year incurred.

L. Pension
For purposes of measuring the 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 City’s California Public Employees’ Retirement System (CalPERS) and additions to/deductions from the Plans’ fiduciary net position have been determined on the same basis as they are reported by CalPERS.

For this purpose, benefit payments (including refund s of employee contributions) are recognized when currently due and payable in accordance with the benefit terms. Investments are reported at fair value.

M. Other Post Employment 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 City’s OPEB Plans and additions to/deductions from the OPEB Plan’s fiduciary net position have been determined on the same basis as they are reported by the CalPERS Trust and the PARS Trust. For this purpose, benefit payments are recognized when currently due and payable in accordance with the benefit terms. Investments are reported at fair value.

N. Use of Estimates
The preparation of financial statements in conformi ty with generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

2. CASH AND INVESTMENTS
The City maintains a cash and investment pool for a ll funds. Certain restricted funds that are held and invested by independent outside custodians through contractual agreements are not pooled. These restricted funds include cash and investment held by trustees. Interest income earned on pooled cash and investments is allocated to the various funds based on the period-end cash and investment balances. Interest income from cash and investments with fiscal agents is credited directly to the related funds.

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
61 2. CASH AND INVESTMENTS, Continued
The following is a summary of cash and investments at June 30, 2021:

A. Classification
Cash and investments at June 30, 2021 consist of the following:

B. Deposits
The carrying amount of the City’s cash deposit was $31,128,826 at June 30, 2021. Bank balances before reconciling items were a positive amount of $36,499,665 at June 30, 2021. The City’s cash deposit was fully insured up to $250,000 by the Federal Deposit Insurance Corporation (FDIC). The remaining amount was collateralized with securities held by pledging the financial institutions.

Primary Government:

Local Agency Investment Funds (LAIF) 74,999,067 $
CalTrust Short-Term Fund 102,265,767
CalTrust Medium-Term Fund 87,973
Money Market Mutual Funds (U.S. Securities) 4,485,11 1
Held by Trustee:

Money Market Mutual Funds (U.S. Securities) 36,600,190
Investment Agreement 1,039,778
Guaranteed Investment Contracts 625,001
Total investments 220,102,887
Cash in banks and on hand - Primary Government 31,124,067 Cash in banks - RHA Housing Corporation 4,759
Total cash on hand and deposits 31,128,826
Total cash and investments 251,231,713 $

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
62 2. CASH AND INVESTMENTS, Continued
B. Deposits, Continued
The California Government Code (Code) Section 53652 requires California banks and savings and loan associations to secure the City’s cash deposits by pledging securities as collateral. The Code states that collateral pledged in this manner shall have the effect of perfecting a security interest in such collateral superior to those of a general creditor. Thus, collateral for cash deposits is considered to be held in the City’s name.

The fair value of pledged securities must equal at le ast 110% of the City’s cash deposits. California law also allows institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the City’s total cash deposits.

C. Investments Authorized by the Code and the City’s Investment Policy Under the provisions of the City’s Investment Policy, and in accordance with California Government Code, the following investments are authorized:

Investments are stated at fair value using the aggregate method in all funds, resulting in the following investment income in all funds for the year ended June 30, 2021:

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
63 2. CASH AND INVESTMENTS, Continued
C. Investments Authorized by the Code an d the City’s Investment Policy, Continued The City’s portfolio value fluctuates in an inverse relationship to any change in interest rate. Accordingly, if interest rates rise, the portfolio value will decline. If interest rates fall, the portfolio value will rise. The portfolio for year-end reporting purposes is treated as if it were all sold. Therefore, fund balance must reflect the portfolio’s change in value. These portfolio value changes are unrealized unless sold. Generally, the City’s practice is to buy and hold investments until maturity dates. Consequently, the City’s investments are carried at fair value.

The City is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by Code Section 16429 under the oversight of the Treasurer of the State of California. The City’s investments with LAIF at June 30, 2021 include a portion of the pool funds invested in Structured Notes and Asset-Backed Securities. These investments included the following:

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

Asset-Backed Securities, the bulk of which are mortgage backed securities, entitle their purchasers to receive a share of the cash flows from a pool of asse ts such as principal and interest repayments from a pool of mortgages (such as collateralized mortgage obligations) or credit card receivables.

At June 30, 2021, the City had $74,999,067 invested in LAIF, which had invested 2.31% of the pool investment funds in Structured Notes and Asset-Backed Securities as compared to 3.37% in the previous year. The LAIF fair value factor of 1.000083 was used to calculate the fair value of the investments in LAIF.

The City reports its investment in CalTrust at the fair value amount provided by CalTrust, which is the same as the value of the pool shares. The balance in the Short-Term Fund is available for withdrawal on demand and the balance in the Medium-Term Fund is available for withdrawal upon two days’ notice, and is based on the accounting records maintained by CalTrust. Included in CalTrust’s investment portfolio are: United States Treasury Notes, Bills, Bonds or Certificates of Indebtedness; registered state warrants or treasury notes or bonds; California local agency bonds, notes, warrants or other indebtedness; federal agency or United States government-spons ored enterprise obligations; bankers acceptances; commercial paper; negotiable certificates of deposit; repurchase agreements; medium-term notes; money market mutual funds; notes, bonds or other obligatio n secured by a first priority security interest in securities authorized under Government Code Section 53651; and mortgage passthrough securities, collateralized mortgage obligations, and other asset – backed securities. CalTrust’s Short-Term Fund has a target portfolio duration of 0 to 2 years and CalTrust’s Medium-Term Fund has a target portfolio duration of 1.5 to 3.5 years. At June 30, 2021 the Short-Term Fund investments matured in an average of 332 days and the Medium-Term Fund investments matured in an average of 722 days.

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
64 2. CASH AND INVESTMENTS, Continued
C. Investments Authorized by the Code an d the City’s Investment Policy, Continued Money market funds and mutual funds are available for withdrawal on demand and as of June 30, 2021 have an average maturity from 40 to 49 days.

Prohibited Investments
Under the City’s Investment Policy, the City imposed restrictions on investments. The City cannot invest in any funds in inverse floaters, range notes, or interest only Separate Trading of Registered Interest and Principal of Securities (STRIPS) that are derived from a pool of mortgages, or in any security that could result in zero interest accrual if held to maturity (other than money market mutual funds).

D. Investments Authorized by the Code an d the Housing Authority’s Investment Policy The California Government Code allows the Authority to invest in the following; provided approved percentages and maturities are not exceeded. The tabl e below also identifies certain provisions of the California Government Code:

There are no restrictions on the maximum amount invested in each security type or maximum that can be invested in any one issuer.

The Authority does not have reverse repurchase agreements.

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
65 2. CASH AND INVESTMENTS, Continued
E. Investments Authorized by Debt Issues and Lease Agreements Under the terms of the City’s and Authority’s debt issues and lease agreements, the City and Authority are subject to various restrictions in the type, maturi ty and credit ratings of investments of the unspent proceeds of these issues. These restrictions are generally no more restrictive than those listed above regarding investment of the City’s and Authority’s funds. In addition, some bond indentures authorize investments in guaranteed investment contracts and investment agreements with maturity dates that coincide with the applicable debt maturities. At June 30, 2021, the City and Authority were in compliance with the terms of all these restrictions.

F. Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Normally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. One of the ways 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 fluctuatio ns is provided by the following table that shows the distribution of the City’s investments by maturity or earliest call date:

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
66 2. CASH AND INVESTMENTS, Continued
G. Credit Risk
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 actual rating at June 30, 2021 for each investment type:

H. Custodial Credit Risk
For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty, the City will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. None of the City’s investments were subject to custodial credit risk for the current year.

I. Fair Value Hierarchy
The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure fair value of the assets. Level 1 inputs are quoted prices in an active market for identical assets; Level 2 inputs are significant other observable inputs; and Level 3 inputs are significant unobservable inputs.

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
67 2. CASH AND INVESTMENTS, Continued
I. Fair Value Hierarchy, Continued
The following is a summary of the fair value hierarchy of the fair value of investments of the City as of June 30, 2021:

J. Concentration of Credit Risk
The City had no significant investments in the securities of any individual issuers, other than U.S.

Treasury securities, investment pools and money market funds at June 30, 2021.

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
68 3. INTERFUND TRANSACTIONS
A. Due To/From Other Funds
Due to/from other fund balances arise in the normal course of business and represent short-term borrowings occurring as a result of expenditures wh ich are paid prior to the receipt of revenues. These balances are expected to be repaid shortly after the end of the fiscal year when revenues are received.

Current amounts due from one fund to another at June 30, 2021 were as follows:

B. Advances To/From Other Funds
At June 30, 2021 the funds below had made advances which were not expected to be repaid within the next year.

Under the terms of a May 2013 Memorandum of Understanding (MOU) between the Housing Authority and RHA Properties, RHA Properties had paid a financial sanction imposed by the Office of the Inspector General (OIG) of $2,257,799 to the Housing Authority from the sale proceeds of the Westridge at Hilltop Apartments. The Housing Authority used those proceeds to retire outstanding debt owed to the General Fund in fiscal year 2017. The Department of Ho using and Urban Development (HUD) disputed the use of the sale proceeds for the repayment of the Gene ral Fund loan, as discussed in Note 16. Although management disputed HUD’s claim, in April 2018 the City and RHA entered into a settlement agreement with HUD under which the City agreed to retu rn $2,096,527 to the Housing Authority, which reestablished the General Fund’s loan to the Housing Authority.

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
69 3. INTERFUND TRANSACTIONS, Continued
B. Advances To/From Other Funds, Continued
During fiscal year 2018, the prior short- term amount due to the General Fund of $119,443 to the Housing Authority for Hope VI was added to the advance. The balance of the advance was $2,215,970 as of June 30, 2021. This advance was written off during the fiscal year due to the inability of the Housing Authority to repay it.

In fiscal 2007, the former Redevelopment Agency advanced $174,067 to the Richmond Housing Authority Enterprise Fund, collateralized by a deed of trust on the Westridge at Hilltop Apartments, to assist the Authority with its lease payments for the 2003 A-S Multifamily Housing Revenue Bonds. The loan bears interest of 3%. In fiscal 2012, the advance receivable was transferred to the City as Housing Successor to the former Redevelopment Agency and is recorded in the Community Development and Loan Programs Special Revenue Fund. This advance was written off during the fiscal year du e to the inability of the Housing Authority to repay it.

In fiscal years 2007 through 2014, the General Fund and the Municipal Sewer and Storm Sewer Enterprise Funds made advances to the Richmond Housing Authority Enterprise Fund for police, sewer, and other services as well as the Housing Authority’s empl oyee payroll. The advance repayment terms were amended in April 2010 and the advance bears no interest and was payable in 135 monthly installments of $30,000 and one final installment of $22,446 on or before August 1, 2021. On June 28, 2011 the agreement was amended to make the monthly payments $50,000 for the remaining 71 payments, starting July 1, 2011, and one final installment of $36,634. However, in lieu of monthly payments, repayment may be in a lump sum on August 1, 2021. During fiscal year 2013 , $6,600,000 of the advance was assumed by RHA Properties and was classified as a loan receivable, as discussed in Note 4. No repayments were made during fiscal year 2021 and the remaining balance of the interfund advance as of June 30, 2021 is $1,068,847. This advance was written off during th e fiscal year due to the inability of the Housing Authority to repay it.

In fiscal 2006 the General Fund established repayment terms for its advance of $17,139,855 to the Port of Richmond Enterprise Fund to assist the Port with various lease transactions and other projects. The advance did not bear interest for the first three years; the next five years it bore an interest rate of 4%, with the balance payable on or before June 30, 2015. The advance repayment terms were amended in October 2013, effective June 30, 2013, to convert the accrued unpaid interest of $745,119 to principal and reduce the advance balance by $842,877, and the advance no longer bears interest. Annual principal payments of $150,000 are due beginning June 30, 2014 through June 30, 2066, with a final principal payment of $32,593 due on June 30, 2067, and in addition to those payments, the annual berthing cost of the vessel Red Oak Victory at the Port that is to be paid by the Gene ral Fund will instead offset and reduce the principal balance of the advance based on an established rental schedule. Historical rental payments from August 2004 to June 30, 2012 totaling $842,877 were applied to the principal balance of the loan as of June 30, 2013.

Another provision of the amended agreement provides that upon the sale of any Port property, including Terminal One and Terminal Four, the proceeds from the sale are to be used to repay and reduce the principal balance of the advance. The balance of the advance as of June 30, 2021 is $13,062,225.

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
70 3. INTERFUND TRANSACTIONS, Continued
B. Advances To/From Other Funds, Continued
In fiscal 2008 the General Fund advanced $1,758,342 to the Storm Sewer Enterprise Fund for the purpose of providing a clean storm sewer system and street sweeping activities. In fiscal year 2009 the advance was moved to the Insurance Reserves Internal Servic e Fund. The advance bears interest of 4.34% and is payable as follows: Semi-annual principal and interest payments in the amount of $52,460 are to be made April 30 and December 31 of each year commencing in December 2009 until December 2038. The final interest payment of $52,298 and the outstanding principal balance is due April 30, 2039. The Storm Sewer Enterprise Fund did not make the required payments during fiscal years 2015, 2016, 2017, 2018, 2019, 2020, and 2021; therefore unpaid interest of $73,150 was added to the balance of the loan. The balance of the advance and accrued interest as of June 30, 2021 is $2,580,535.

C. Transfers In/Out
With Council approval, resources may be transferred from one City fund to another. The purpose of the majority of the transfers is to move General Fund resources to provide an annual subsidy to the Cost Recovery Fund and other non-major governmental funds, as well fund debt service, pension costs and capital projects. Transfers between funds during the fiscal year ended June 30, 2021 were as follows:

None of these transfers were unusual or non-recurring in nature, except for the transfer from General Fund to the Richmond Housing Authority Fund to write off interfund borrowings in the Authority Fund due to inability to repay, the Secured Pension Override Special Revenue Fund to the General Fund in the amount of $9,171,451 to fund current year pension contributions to CalPERS, which is included in transfers from Non-Major Governmental Funds, and the transfer from the General Fund to the Community Development and Loan Programs Special Revenue Fund related to the purchase of loans discussed in Note 4.

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
71 4. NOTES AND LOANS RECEIVABLE
At June 30, 2021, notes and loans receivable consisted of the following:

Balance at
June 30, 2021
General Fund:

RHA RAD Project Loan 745,510 $
Deferred Loans 353,334
Infill Phase II Loan 1,464,886
Nevin Court Homeowner Development Project 478,028
Subtotal - General Fund Loans 3,041,758
Richmond Neighborhood Stabilization Loans 779,013
Community Development Block Grant, Home Investment
Partnership Program, EDA, CALHome Loans and City Loans
Deferred Loans 3,333,871
Home Improvement Program Loans 794,315
Rental Rehabilitation Loans 378,310
The Carquinez Project 148,490
Creely Avenue Housing Rehabilitation Loan (Arbors) 2,436,714 Lillie Mae Jones Project Loan 988,460
Greater Richmond Interface Program 892,638
CALHome Program 2,446,323
RHA RAD Project Loan 3,732,603
Subtotal - CDBG, HOME, EDA, CALHome Loans, City Loans 15,151,724 Housing Successor Loans:

Rental Rehabilitation Loans 20,000
The Carquinez Project 1,152,508
Creely Avenue Housing Rehabilitation Loan (Arbors) 2,283,645 Lillie Mae Jones Project Loan 1,999,301
Miraflores Loan 3,201,291
MacDonald Place Senior Housing 3,722,901
Greater Richmond Interface Program 296,066
Silent Second Mortgage Loans 1,788,014
Deferred Loans 758,127
Chesley Avenue Mutual Housing Development 6,188,187
Easter Hill Project 4,756,268
RHA RAD Project Loan 1,160,387
Subtotal - Housing Successor Loans 27,326,695
Total Notes and Loans Receivable 46,299,190 $

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
72 4. NOTES AND LOANS RECEIVABLE, Continued
RHA RAD Project
In December 2014, the General Fund loaned $700,000 to the Richmond Housing Authority Enterprise Fund for predevelopment costs related to the Triangle Court and Friendship Manor Rental Assistance Demonstration (RAD) Projects.

In December 2015, the loan agreement was replaced and the City entered into an amended agreement to loan $5,400,000 to the RHA Housing Corporation for the furtherance of the development of the RAD Projects as discussed in Note 16. Funding for the loan was revised in fiscal year 2018 and is as follows: $700,000 from the City’s General Fund, $3,600,000 will come from housing-in-lieu fund s and $1,100,000 from the Housing Successor funds. The hous ing-in-lieu funds and Housing Successor Funds are included in the Community Development and Loan Programs Fund. RHA Housing Corporation assigned the loan agreement and associated obligations to RHA RAD Housing Partners L.P. on December 22, 2015 upon closing of the financing for the rehabilitation of the RAD projec ts. See Note 16 for additional information related to the RAD projects. The loan is secured by a leasehold deed of trust, assignment of rents and security agreement. The loan bears simple interest of 1% and th e loan is repayable from residual receipts, as defined in the loan agreement, starting May 1 of the year after issuance of the Certificate of Completion, and unpaid principal and accrued interest is due December 1, 2070 . As noted above, $700,000 of the General Fund loan was disbursed in December 2014 and the balance at June 30, 2021, including accrued interest, was $745,510.

As of June 30, 2021, $4,892,990 of the funds had been drawn down from the Housing Successor Community Development and Loan Programs Fund.

Deferred Loans
Deferred loans are granted to low and moderate income families to assist them in purchasing their homes.

Emergency repair loans not exceeding $10,000 funded by the HOME Investment Partnership Program (HIPP) are provided to low income families in Richmond to assist them in rehabilitating their existing housing units.

These loans are required to be repaid over a period of 15 years to 30 years.

During fiscal year 2019, the City’s General Fund purchased a portion of the deferred loans in the amount of $353,335 and the loans were transferred to the General Fund.

Scattered Site Infill Housing Development (Infill Phase II) Under a loan agreement dated September 30, 2010, the City loaned Community Housing Development Corporation of North Richmond $1,198,013 to fund construction of 36 townhomes to be made available for very-low and low income households. Funding for the loan was as follows: $602,556 in HOME funds, $266,000 in CDBG funds and $329,457 in CDBG-R. Alth ough the developer has not drawn down all of the proceeds from the HOME funds portion of the loan , the Department of Housing and Urban Development (HUD) has indicated that future drawdowns will not be reimbursed by the grantor. Related to the grant disallowed costs discussed in Note 17, during fiscal year 2018 the City purchased $1,331,709 of the loan balance that had previously been funded with Community Development Block Grant and HOME funds.

During fiscal year 2019, the City’s General Fund purchased the loan balance in the amount of $1,099,594 and the loan and accrued interest of $265,104 were transferred to the General Fund.

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
73 4. NOTES AND LOANS RECEIVABLE, Continued
Scattered Site Infill Housing Development (Infill Phase II), Continued The current funding was for predevelopment activities in conjunction with the construction and development of the townhomes. The loan is secured by a deed of trust on the property. The outstanding balance of the loan bears simple interest at the rate of 3% per year. The pa yment of principal and interest is deferred and due at the end of the term due September 30, 2065. As of June 30, 2021, $1,464,886 had been drawn down on the loan.

Nevin Court Homeowner Development Project
In May 2005, the City entered into an agreement with Community Housing and Development Corporation of North Richmond (Development), in the original amount of $227,000 to construct and develop 10 single family homes for low and moderate income households. The agreement was amended in November 2008, to increase the loan to $377,000. In fiscal year 2010, the Development drew down $343,839, in fiscal year 2016 an additional $21,453 was drawn, and the outstanding balance of the loan is $490,203, which includes accrued interest of $124,911. The loan bears interest of 3% per year and the unpaid balance is due in November 2063.

During fiscal year 2019, the City’s General Fund purchased the loan balance in the amount of $365,292 and the loan and accrued interest of $124,911 were transferred to the General Fund. As of June 30, 2021, $478,028, which includes accrued interest of $43,947, had been drawn down on the loan.

Richmond Neighborhood Stabilization Loans
The Richmond Neighborhood Stabilization Corporatio n (RNSC) operates a residential rehabilitation loan program financed by Department of Housing and Urban Development grants that have passed through the City under its Neighborhood Stabilization Program (NSP 1) and additional allocation under the third round of funding referred to as (NSP3). The program prov ides affordable home ow nership opportunities for households of low and moderate income by facilit ating the development financing necessary for the purchase, rehabilitation, and resale of deed-restricted affordable ownership units. During fiscal year 2014, the City foreclosed on seven of the loans with a carrying value of $780,153 and reacquired the properties which have been recorded as property held for resale as disc ussed in Note 2. As of June 30, 2021, the total balance of outstanding loans for NSP1 was $779,013 and no NSP3 loans had been issued. Loans are payable upon the resale of improved properties.

Home Improvement Program Loans
“Silent second” mortgage loans are provided to low and moderate income first time homebuyers as gap financing to provide the minimum amount needed to close the gap between the primary lender’s requirements and the borrower’s ability to pay down payments or closing costs.

Home improvement program loans include amortized loans to assist low income families in Richmond in the improvement of their homes. The interest rates for these loans range from 0% to 3% and are payable over a period of 15 to 30 years.

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
74 4. NOTES AND LOANS RECEIVABLE, Continued
Rental Rehabilitation Loans
Rental Rehabilitation Loans help make rental units affordable to low and very low income housing families.

Loans assist private and non-profit owners in purchasing and rehabilitating existing multifamily housing units.

The Carquinez Project
Under a loan agreement dated Nove mber 14, 2008, the former Redevelopment Agency loaned Carquinez Associates, L.P. $1,000,000 to fund rehabilitation of a five-story buildin g, with 36 apartm ents housing low- income seniors. On August 23, 2010 the agreement was amended to provide the Developer with a total amount of $1,301,000. Funding for the loan is as follows: $1,152,510 funded by Series 2007 Bonds and $148,900 funded by CDBG. Repayments on the loan are to be made from residual receipts as defined in the agreement.

The loan does not bear interest and the unpaid pr incipal balance is due in November 2043. With the dissolution of the Redevelopment Agency as discussed in Note 18, the City agreed to become the successor to the Redevelopment Agency’s housing activities and as a result City, as Housing Successor, assumed the loans receivable of the Redevelopment Agency’s Lo w and Moderate Income Housing Fund, including the balance of the Carquinez loan as of February 1, 2012.

Creely Avenue Housing Rehabilitation (Arbors)
On September 15, 2006, the former Redevelopment Agency and the City loaned Arbors Preservation Limited Partnership the amount of $2,558,557, to construct ex tremely low, very low and low income rental housing units and a new community room on Creely Avenue. On October 31, 2008, the loan was amended to provide the developer a total loan amount of $3,208,113. Funding for the loan is as follows: $2,160,282 in HOME funds, $103,377 in CDBG funds and $1,594,057 in 2007 Series B bond funds. Although the developer has not drawn down all of the proceeds from the HOME funds portio n of the loan, the Department of Housing and Urban Development (HUD) has indicated that future drawdown s will not be reimbursed by the grantor. The loan bears simple interest at the rate of 3% per year. All un paid principal and interest on the loan is due on April 29, 2063. With the dissolution of the Redevelopment Ag ency as discussed in Note 18, the City agreed to become the successor to the Redevelopment Agency’s housing activities and as a result the City, as Housing Successor, assumed the loans receivable of the Redevelopment Agency’s Low and Moderate Income Housing Fund, including the balance of the Arbors loan as of February 1, 2012.

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
75 4. NOTES AND LOANS RECEIVABLE, Continued
Lillie Mae Jones Project
On January 19, 2010, the former Redevelopment Agency and the City entered into an agreement with Lillie Mae Jones Plaza, L.P. and the Community Housing De velopment Corporation of North Richmond to loan $3,119,000 to construct and provide 26 housing units to very low and low income households. Funding for the loan is as follows: $1,081,291 in HOME funds, $84,000 in Section 108 funds and $1,953,709 in 2007 Series B bonds. Although the developer has not drawn down all of the proceeds of the HOME funds portion of the loan, HUD has indicated that future drawdowns will not be reimbursed by the grantor. The loan bears an interest rate of 3% per year and repayments on the loan are to be made from residual receipts as defined in the agreement. All unpaid principal and accrued interest is due in January 2065. The agreement was amended in November 2011, due to securing a $293,884 loan from County of Contra Costa with Mental Health Services Act, which specifies that two units are required to be available to and occupied by Mental Health Services Act Eligible Tenants pursuant to the County Regulatory Agreement with Lillie Mae Jones Plaza, L.P. With the dissolution of the Redevelopment Agency as discussed in Note 18, the City agreed to become the successor to the Redevelopment Agency’s housing activities and as a result the City, as Housing Successor, assumed the loans receivable of the Redevelopment Agency’s Low and Moderate Income Housing Fund, including the balance of the Lillie Mae Jones loan as of February 1, 2012. As of June 30, 2021, Lillie Mae Jones has drawn down $2,987,761.

EDA Loans
The Agency’s Revolving Loan Fund (RLF) is a commun ity based program with the goal of fostering local economic growth through the creation and retention of employment opportunities for Richmond residents and complementing community and individual develo pment initiatives. With the dissolution of the Redevelopment Agency as discussed in Note 18, the EDA loan program that was funded with grant funds from the Economic Development Administration is now administered by the City effective February 1, 2012.

As of June 30, 2021, the loan was transferred to CHDC and the amount is $0.

CALHome Program
The CALHome loan program provides housing assistance to Richmond residents to assist with first-time homeowner down payments or rehabilitation projects fo r owner-occupied homes. The loans are secured by deeds of trust on the properties. Principal and interest on the loans are deferred for 30 years, unless otherwise specified in the promissory note. With the dissolution of the Redevelopment Agency as discussed in Note 18, the CALHome loan program that was funded with gran t funds is now administered by the City effective February 1, 2012.

Housing Successor Loans
With the dissolution of the Redevelopment Agency as discussed in Note 18, the City agreed to become the successor to the Redevelopment Agency’s housing activi ties and as a result City, as Housing Successor, assumed the loans receivable of the Redevelopment Agency’s Low and Moderate Income Housing Fund, including the balance of certain loans discussed above and all of the loans below as of February 1, 2012.

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
76 4. NOTES AND LOANS RECEIVABLE, Continued
Miraflores Loan
Under an amended loan agreement dated June 21, 20 11, the City agreed to loan Community Housing Development Corporation of North Richmond and Eden Housing, Inc., $1,465,000 to fund the construction of 110 senior housing units for low and moderate income residents. Fu nding for the loan is as follows:
$449,000 in CDBG funds, $925,000 in HOME funds, and $91,000 Redevelopment Agency Low and Moderate Income Housing Fund funds. Although the developer has not drawn down all of the proceeds of the HOME funds portion of the loan, HUD has indicated that future drawdowns will not be reimbursed by the grantor.

Related to the grant disallowed costs by HUD in previous years, the City purchased $1,208,258 of the loan balance that had previously been funded by CDBG an d HOME funds and the loans were transferred to the Housing Successor. With the dissolution of the Redevelopment Agency as discussed in Note 18, the portion of the Miraflores loan that was funded by the Redevelopment Agency’s Low and Moderate Income Housing Fund was assumed by the City as Housing Successor.

The loan does not bear interest and the unpaid princi pal balance was due September 22, 2015, unless it was converted to a permanent loan. The loan was converted in to a permanent loan on June 25, 2015. In addition to the converted permanent loan, the Housing Successor approved an additional predevelopment loan in the amount of $1,500,000. As of June 30, 2021, $3,201,291 of the loan had been drawn down.

MacDonald Place Senior Housing
On June 26, 2007, the former Redevelopment Agency agreed to loan MacDonald Housing Partners, L.P., and Richmond Labor and Love Community Development Corporation the amount of $4,720,000, to construct senior housing units, a management office, small meeting rooms and ancillary retail use, and a separate space for community services. The loan’s principal is due 57 years from the date of disbursement. The loan bears simple of interest of 2% per year payable from any re sidual receipts available from the prior calendar year with an additional 1% per year, but only to the extent that funds are available to pay such contingent interest from the Agency’s share of residual receipts, as defined in the agreement.

Heritage Park Development
In 1999, the former Redevelopment Agency loaned Hilltop Group, LP a total of $500,000, collateralized by deeds of trust and bearing interest at an effective rate of 1½% starting September 2004. The loans were used to finance the development of the Heritage Park Develo pment in the City. Monthly installments of interest and principal in the total amount of $3,115 are payable through September 1, 2019.

Silent Second Mortgage Loans
Loans were provided to qualifying individuals for the difference between the amount received by the individuals who qualified for low and moderate income housing loans and the amount needed to purchase the homes. The loans are to be forgiven in the future if the property owners do not sell or refinance the property.

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
77 4. NOTES AND LOANS RECEIVABLE, Continued
Chesley Avenue Mutual Housing Development
On December 1, 2003, the former Redevelopment Agency loaned Chesley Avenue Limited Partnership the amount of $4,741,492, which includes accrued interest of $1,272,798 to construct very low and low income housing units. The loan’s principal is due in 2058; interest is payable starting May 1, 2006, at the rate of 2% per annum or in the amount of 95% of any residual receipts remaining from the prior year, whichever is less.

As of June 30, 2021, $6,188,187, which includes accrue d interest of $1,446,695, had been drawn down on the loan.

Easter Hill Project
The loan from the former Redevelopment Agency to Easter Hill Development, L.P. is providing financial assistance in the development of the Easter Hill Proj ect. The Easter Hill Project consists of single and multifamily home components. Easter Hill Development, L.P. shall use the loan to pay for predevelopment, acquisition and construction costs. The outstanding balance of the loan bears simple interest at the rate of 2% per year. Repayments on the loan are to be made from residual receipts as defined in the agreement. All unpaid principal and accrued interest on the loan is due February 1, 2069.

5. CAPITAL ASSETS
The following is a summary of capital assets for governmental activities:

Balance at Balance at
July 1, 2020 Additions Retirements Transfers Adjustment June 30, 2021 Governmental Activities
Capital assets not being depreciated:

Land 29,468,867 $ 292,421 $ - $ - $ (5,399,724)$ 24,361,564 $ Construction in progress 29,311,328 7,231,841 - (2,262,959) (44,831) 34,235,379 Total capital assets not being depreciated 58,780,195 7,524,262 - (2,262,959) (5,444,555) 58,596,943 Capital assets being depreciated:

Buildings and improvements 155,736,112 46,206 - 1,100,084 - 156,882,402 Machinery and equipment 47,122,474 742,072 - - - 47,864,546 Land improvements and infrastructure 533,222,939 - - 1,162,875 5,399,725 539,785,539 Total cap ital assets being depreciated 736,081,525 788,278 - 2,262,959 5,399,725 744,532,487 Less accumulated depreciation for:

Buildings and improvements (48,618,286) (3,500,479) - 1,071,271 (179,876) (51,227,370) Machinery and equipment (38,926,693) (1,750,728) - - 179,876 (40,497,545) Land improvements and infrastructure (418,014,608) (6,162,999) - (1,071,271) - (425,248,878) Total accumulated depreciation (505,559,587) (11,414,206) - - - (516,973,793) Capital asset being depreciated, net 230,521,938 (10,625,928) - 2,262,959 5,399,725 227,558,694 Governmental activity capital assets, net 289,302,133$ (3,101,666) $ - $ - $ (44,830)$ 286,155,637$

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
78 5. CAPITAL ASSETS, Continued
Governmental activities depreciation expenses for capital assets is charged to functions and programs based on their usage of the related assets. The amounts allocated to each function or program for the year ended June 30, 2021 were as follows:

The following is a summary of capital assets for business-type activities:

Balance at Balance at
July 1, 2020 Additions Retirements Transfers Adjustments June 30, 2021 Business-type Activities
Capital assets not being depreciated:

Land 7,195,986 $ - $ - $ - $ - $ 7,195,986$ Construction in progress 21,825,629 7,656,932 - - 3,475,558 32,958,119 Total capital assets not being depreciated 29,021,615 7,656,932 - - 3,475,558 40,154,105 Capital assets being depreciated:

Buildings and improvements 79,908,481 - - - - 79,908,481 Machinery and equipment 17,840,183 - - - - 17,840,183 Infrastructure 259,038,020 - - - - 259,038,020 Total capital assets being depreciated 356,786,684 - - - - 356,786,684 Less accumulated depreciation for:

Buildings and improvements (55,479,053) (754,669) - - - (56,233,722) Machinery and equipment (15,062,439) (591,661) - - - (15,654,100) Infrastructure (117,366,975) (5,910,632) - - - (123,277,607) Total accumulated depreciation (187,908,467) (7,256,962) - - - (195,165,429) Capital asset being depreciated, net 168,878,217 (7,256,962) - - - 161,621,255 Business-type activity capital assets, net 197,899,832$ 399,970 $ - $ - $ 3,475,558$ 201,775,360 $

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
79 5. CAPITAL ASSETS, Continued
Included in buildings and improvements is the Rich mond Housing Authority’s Hacienda Property with a net book value of $7,203,134 at June 30, 2021 has been uninhabitable for an extended period of time and as a result necessitates major rehabilitation. The property was appraised in July 2019 at $6,290,000 “as is” and Mercy Housing is in negotiation with the City and th e Housing Authority to acquire the improvements and to undertake significant renovation that would result in to 150 units, a fitness center and a library. The current site encompasses a total of 2.98 acres of land which is intended to be split into two parcels upon approval by HUD for which the currently improved portion of 1.9 41 acres will be subject to a ground lease to Mercy Housing and the remaining 1.043 acres will be retained by the City for future development.

Business-type activities depreciation expenses for capital assets allocated to each program for the year ended June 30, 2021 were as follows:

6. COMPENSATED ABSENCES PAYABLE
Changes in compensated absence liabilities for the year ended June 30, 2021 were as follows:

The long-term portion of governmental activities co mpensated absences is liquidated primarily by the General Fund. Compensated absences for business-type activities are liquidated by the fund that has recorded the liability. Page 526 of 789
City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
80 7. LONG-TERM DEBT
A. Governmental Activities
Following is a summary of governmental activities long-term debt transactions during the fiscal year ended June 30, 2021:

Bonds Payable
Bonds payable at June 30, 2021 consisted of the following:
1999 Series A City of Richmond Taxable Lim ited Obligation Pension Bonds – Original Issue $36,280,000
The bonds were issued to fund a portion of the unfunded accrued actuarial liability in the City’s pension plans together with the prepayment of certain pension benefit costs of the Beneficiaries and to pay the costs of issuance associated with the issuance of the bonds. Interest rates vary from 6.37% to a maximum of 7.39% and are payable semiannually on February 1, and August 1. The term bonds consist of $8,960,000 due August 1, 2020 with an interest rate of 7.57% and $3,435,000 due August 1, 2029 with an interest rate of 7.62%. The bonds are payable from certain pension tax override revenues received by the City from a special tax pursuant to City Council Ordinance 9-99 adopted by the City Council on March 30, 1999. Principal and interest paid for the curren t fiscal year and total pension tax revenues were $1,086,838 and $11,352,354, respectively.

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
81 7. LONG-TERM DEBT, Continued
A. Governmental Activities, Continued
1999 Series A City of Richmond Taxable Lim ited Obligation Pension Bonds – Original Issue $36,280,000, Continued
The annual debt service requirements on the bonds are as follows:
2005 Taxable Pension Funding Bonds – Original Issue $114,995,133 These Bonds from direct placements were issued to prepay the unfunded liability of the Miscellaneous and Safety pension plans provided through the California Public Employees’ Retirement System. The Bonds consist of three series as shown below:

Credit Adjustment – The Bonds were issued on November 1, 2005 in a private placement at the initial interest rates. Included in the Indenture were provis ions which adjust the initial interest rates on each series based on the City’s meeting certain conditions. As a result of the City issuing its June 30, 2005 financial statements and receiving an upgraded credit rating of A3 by Moody’s by May 1, 2006, the initial interest rates were reduced by 1/10th of one percent.

Current Interest Bonds – The Series 2005A Bonds were fully repaid during fiscal year 2015.

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
82 7. LONG-TERM DEBT, Continued
A. Governmental Activities, Continued
2005 Taxable Pension Funding Bonds – Original Issue $114,995,133, Continued Capital Appreciation Bonds – The Series 2005B-1 Bonds and 2005B-2 Bonds are capital appreciation bonds, which means no interest is paid until the Adjusted Maturity Value is reached on the Full Accretion Date.

Capital appreciation bonds are issued at a deep disc ount which then “accretes” over time. The discount on these bonds represented as the effective interest rate on each series is shown above.

Mandatory Index Rate Conversion – On the respective Full Accretion Date, the Series 2005B-1 or 2005B- 2 Bonds convert from Capital Appreciation Bonds to Index Rate Bonds. From that date forward, the Bonds bear interest at a rate based on the 1 month LIBOR index plus 1.4%. This rate fluctuates according to the market conditions and is limited to 17 percent per year. Following the applicable Full Accretion Date, interest on the converted bond series is due semiannually each February 1 and August 1. The Series 2005B- 1 Bonds are due in annual installments from 2014 to 2023 ranging from $4,468,000 to $11,593,000.

The 2005B-2 Bonds are due in annual installments from 2024 to 2034 ranging from $6,466,000 to $18,538,000.

Optional Auction Rate Conversion – On the respective Full Accretion Date, the 2005B-1 and the 2005B-2 Bonds may be converted to Auction Rate Bonds provided that certain conversion requirements are met.

Auction rates fluctuate according to the market conditions and is lim ited to a maximum 17 percent per year and a minimum of 80 percent of the LIBOR index rate. The Series 2005B-1 Bonds did not convert to auction rate bonds, and were instead converted to index rate bonds, as discussed above.

Swap Agreements – The City entered into two interest rate swap agreements related to the 2005B-1 and 2005B-2 Bonds. The interest rate swap related to the 2005B-1 Bonds became effective August 1, 2013 while the 2005B-2 Bonds does not become effective until August 1, 2023, in the same amount as the outstanding principal balances of the Bonds on that date. The co mbination of the variable rate bonds and a floating swap rate will create synthetic fixed-rate debt for the City. The synthetic fixed rate for the 2005B-1 Bonds was 7.0745% at June 30, 2021.

At June 30, 2021, the Bonds consisted of the following:

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
83 7. LONG-TERM DEBT, Continued
A. Governmental Activities, Continued
2005 Taxable Pension Funding Bonds – Original Issue $114,995,133, Continued The annual debt service requirements are as follows:

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
84 7. LONG-TERM DEBT, Continued
A. Governmental Activities, Continued
Richmond Joint Powers Financing Authority Lease Revenue Bonds, Series 2016 – Original Issue - $28,390,000
On February 1, 2016, the Authority issued Series 2016 Lease Revenue Bonds in the amount of $28,390,000. The proceeds from the Bonds were used to pay the obligations of the City related to the termination of the interest rate swap agreement and the option on swap agreement (swaption) related to the Authority’s Series 2009 Lease Revenue Refunding Bonds and to pay the costs associated with the issuance of the Series 2016 Bonds. On February 3, 2016 the interest rate swap agreement and the swaption related to the Series 2009 Bonds were terminated with a swap termination payment of $28,554,000.

The Bonds bear interest rates of 4.00% to 5.50%. Principal payments are due annually on November 1 through 2037 and semi-annual interest payments are due May 1 and November 1 commencing on May 1, 2016.

At June 30, 2021, the 2016 Bonds consisted of the following:

The annual debt service requirements are as follows:

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
85 7. LONG-TERM DEBT, Continued
A. Governmental Activities, Continued
Richmond Joint Powers Financing Authority Lease Revenue Bonds, Series 2019A – Original Issue - $63,970,000
The Series 2019A Bonds are being issued to: redeem $77,315,000 outstanding principal amount of the Authority’s Lease Revenue Refunding Bonds (Civic Center Project) Series 2009, purchase a reserve facility for deposit into the reserve account established for the Series 2019A Bonds, fund a deposit into the Interest Account within the Revenue Fund to capitalize a portion of the interest due on May 1, 2020, and pay costs associated with the issuance of the Series 2019A Bonds. The Bonds are payable solely from, and secured solely by, Revenues of the Authority, consisting primarily of Base Rental Payments to be received by the Authority from the City of Richmond under a Facility Lease, dated as of August 1, 2019, by and between the City and the Authority, for the right to use and the occupancy of certain real property and facilities.

The Series 2019A Bonds will mature on November 1 an nually commencing November 1, 2020. Interest o n t h e S e r i e s 2 0 1 9 A B o n d s i s p a y a b l e a t t h e r a t e o f 5 % o n N o v e m b e r 1 a n d M a y 1 o f e a c h y e a r , commencing May 1, 2020. The refunding resulted in an overall debt service savings of $29,893,316. The net present value of the debt service savings is called an economic gain and amounted to $25,000,596.

At June 30, 2021, the 2019A Bonds consisted of the following:

The annual debt service requirements are as follows:

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
86 7. LONG-TERM DEBT, Continued
A. Governmental Activities, Continued
Interest Rate Swap and Swaption Agreements
The City entered into an interest swap agreement in connection with the 2005B-1 Taxable Pension Funding Bonds. The transaction allows the City to create a synthetic fixed rate or a synthetic variable rate on the Bonds, protecting it against increases and decreases in short-term interest rates and fair value. The various risks associated with the swap agreements are disclosed below. For the swap agreement pertaining to the 2005B-2 Taxable Pension Funding Bonds, the disclosure is included below, but the swap agreement does not become effective until August 1, 2023.

On May 13, 2015, Moody’s Investor Services (“Moody’s”) downgraded the City’s issuer rating from “A1” to “Ba1” and the rating on its 1999 Taxable Limited Obligation Pension Bonds from “A2” to “Baa2”. In addition, the City and its Wastewater Enterprise bonds were placed under review for possible downgrades. On August 4, 2015, Moody’s further downgraded the City’s issuer rating from “Ba2” to “Ba1” and its rating on the City’s Taxable Pension Obligation Bonds and 1999 Taxable Limited Obligation Pension Bonds (“POB’s) from “Baa2”. In addition, Moody’s downgraded its rating on the City’s Wastewater Revenue Bonds, Series 2006A to “Baa2” from “A2”. On November 21, 2018, Moody’s upgraded the City’s issuer rating to “Baa3” from “Bal” and the Pension Obligation Bond rating from “Ba1” to “Ba2”. On September 1, 2015, Standard and Poor’s Rating Services (“S&P”) lowered the City’s Issuer Credit Rating from “AA-” to “BBB+” placing the City on CreditWatch. Other credit ratings downgrades included S&P’s assigned underlying rating (SPUR) for the Wastewater Enterprise Fund that was lowered from “A+” to “BBB”.

Moody’s downgrade of the City’s issuer rating to “Ba1” resulted in allowing the counterparty, JPMorgan Chase Bank, NA (“JPM”) to declare an Additional Termination Event (ATE) with the interest rate swaps the City entered in conjunction with the 2005 Taxable POBs (2007 Swaps). This means that JPM could exercise a right to terminate the 2007 Swaps and demand immediate payment of an approximately $31.5 million settlement amount that represented the present value of the City’s expected future performance obligations under the 2007 Swaps at the time of the AT E. The City entered into a restructuring of certain of its obligations through the issuance by the Ri chmond Joint Powers Financing Authority of Lease Revenue Bonds Series 2016A (tax-exempt) to fund the cost of terminating the Civic Center Swaps relating to the Richmond Joint Powers Financing Authority Series 2009 Civic Center Lease Revenue Bonds held by Royal Bank of Canada (RBC). RBC simultaneously entered into a novation of the 2007 Swaps with JPM. By terminating the Civic Center Swaps, the City reduced RBC’s credit exposure to the City sufficiently to allow RBC to accept the additional credit exposure associated with stepping into JPM’s position in the 2007 swaps through novation. Contemporaneous with the novation from JPM to RBC, RBC and the City amended and restated the 2007 Swaps, including eliminating the existence of the ATE by removing reference to a Moody’s rating in the ATE provisions, reducing the Standard & Poor’s rating threshold for a future ATE to BBB- from BBB and pr oviding a mandatory early termination of the 2007 Swaps in 2023. The early termination will require the City to either refund or restructure the 2007 Swap at that date if a termination payment is due at the time. In addition, terminating the Civic Center Swaps eliminated the risk of an ATE with respect to the Civic Center Swaps, which require the City to maintain its Issuer Credit Rating at the current level of BBB+ to avoid an ATE.

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
87 7. LONG-TERM DEBT, Continued
A. Governmental Activities, Continued
Interest Rate Swap and Swaption Agreements, Continued
The City’s issuer credit rating from S&P was BBB+ as of June 30, 2017. On December 4, 2017, the City received an updated issuer credit rating from S&P up grading the previous BBB+ issuer credit rating to an A- issuer credit rating.

Terms. The terms, including the counterparty credit ratings of the outstanding swaps, as of June 30, 2021, are included below. The swap agreements contain scheduled reductions to the outstanding notional amount on an annual basis.

Hedging Derivatives - Pay-Fixed, Receive-Variable Swap Agreements For the following Pay-Fixed, Receive-Variable swap ag reements, the City owes interest calculated at a fixed rate to the counterparty of the swaps. In return, the counterparty owes the City interest based on a variable rate that approximates the rate required by the Bonds. Debt principal is not exchanged; it is only the basis on which the swap receipts and payments are calculated.

Fair value. Fair value of the swaps takes into consid eration the prevailing interest rate environment, the specific terms and conditions of each transaction and any upfront payments that may have been received.

Fair value was estimated using the zero-coupon discounting method. This method calculates the future payments required by the swaps, assuming that the current forward rates implied by the LIBOR swap yield curve are the market’s best estimate of futu re spot interest rates. These payments are then discounted using the spot rates implied by the curre nt yield curve for a hypothetical zero-coupon rate bond due on the date of each future net settlement on the swap. The swaps are classified in Level 2 of the fair value hierarchy, using a market approach that considers observable swap rates commonly quoted for the full term of the swaps.

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
88 7. LONG-TERM DEBT, Continued
A. Governmental Activities, Continued
Hedging Activities - Pay-Fixed, Receive-Variable Swap Agreements, Continued As of June 30, 2021, the fair value for the each of the outstanding swaps was in favor of the respective counterparties. The fair value represents the maximum loss that would be recognized at the reporting date if the counterparty failed to perform as contracted. The City has accounted for the change in fair value of each of the effective hedges as noted below:

Credit risk. The fair values of the swaps represent the City’s credit exposure to the counterparties. As of June 30, 2021, the City was not exposed to credit risk on the outstanding swaps because the swaps had negative fair values. However, if interest rates change and the fair value of the swaps were to become positive, the City would be exposed to credit risk.

Interest rate risk. The City will be exposed to interest rate ri sk for the Pay-Fixed, Receive-Variable swaps only if the counterparty to the swaps defaults or if the swaps are terminated.

Basis risk. Basis risk is the risk that the interest rate paid by the City on the underlying variable rate bonds to the bondholders temporarily differs from the variab le swap rate received from the counterparty. The City bears basis risk on the Pay-Fixed, Receive-Variable swaps. The swaps have basis risk since the City receives a percentage of the LIBOR Index to offset the actual variable bond rate the City pays on the underlying Bonds. The City is exposed to basis risk should the floating rate that it receives on a swap be less than the actual variable rate the City pays on the bonds. Depending on the magnitude and duration of any basis risk shortfall, the expected cost of the basis risk may vary.

A portion of this basis risk is tax risk. The City is exposed to tax risk when the relationship between the taxable LIBOR based swap and tax-exempt variable rate bond changes as a result of a reduction in federal and state income tax rates. Should the relationship between LIBOR and the underlying tax- exempt variable rate bonds converge the City is exposed to this basis risk.

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
89 7. LONG-TERM DEBT, Continued
A. Governmental Activities, Continued
Pay-Fixed, Receive-Variable Swap Agreements, Continued
Termination risk. The City may terminate if the other party fails to perform under the terms of the contract.

The City will be exposed to variable rates if the counterparties to the swap contracts default or if the swap contracts are terminated. A termination of the swap contracts may also result in the City’s making or receiving a termination payment based on market interest rates at the time of the termination. If at the time of termination the swaps have a negative fair value, the City would be liable to the counterparty for a payment equal to the swap’s fair value.

Swap payments and associated debt. Using rates as of June 30, 2021, debt service requirements of the City’s outstanding fixed rate 2005 Taxable Pension Funding Bonds and net swap payments, assuming current interest rates remain the same for their term, are as follows. The 2005B-2 Bond is not included in the table, because the swap is not effective until August 1, 2023. As rates vary, net swap payments will vary.

Loans Payable
Loans payable from direct borrowing at June 30, 2021 consisted of the following:

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
90 7. LONG-TERM DEBT, Continued
A. Governmental Activities, Continued
California Energy Commission Phase 1 – Original Amount $621,558 On April 22, 2013, the City entered into a direct borrowing loan agreement with the California Energy Commission in the amount of $621,558. The purpose of the loan is to provide funding for the replacement of street lighting with new LED lights. The loan bears a 3% interest rate and is due in semi-annual payments in December and June through December 2025.

The annual debt service requirements on the loan are as follows:

California Energy Commission Phase 2 – Original Amount $1,239,036 During fiscal year 2015, the City entered into a direct borrowing loan agreement with the California Energy Commission in the amount of $1,239,036. The purpose of the loan is to provide funding for the replacement of street lighting with new LED lights. Th e loan bears interest at 1% and is due in semi- annual payments in December and June through June 2030.

The annual debt service requirements on the loan are as follows:

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
91 7. LONG-TERM DEBT, Continued
A. Governmental Activities, Continued
Capital Leases
Capital leases payable from direct borrowing at June 30, 2021 consisted of the following:

Qualified Energy Conservation Lease – Original Amount $1,052,526 On December 22, 2010 the City entered into a direct borrowing capital lease with Bank of America in the amount of $1,052,526 to finance the purchase and installation of energy conservation equipment at various City-owned buildings. The City received an allocation of the national Qualified Energy Conservation Bond which includes a direct subsidy from the United States Treasury for the interest payable on the bonds under the Hiring Incentives to Restore Employment Act (HIRE Act). The subsidy will be payable on or about the date that the City makes its debt service payments and is equal to 59.79% of the interest payable on the lease. The subsidy received in fiscal year 2019 was $23,026. The lease bears interest at a rate of 6.79% and principal and interest payments are due semi-annually each June 15 and December 15 commencing on December 15, 2011 through June 15, 2026.

The annual debt service requirements on the capital lease are as follows:

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
92 7. LONG-TERM DEBT, Continued
A. Governmental Activities, Continued
Richmond Joint Powers Financing Authority Recovery Zone Economic Development Lease – Original Amount $1,316,000
On December 22, 2010 the Authority entered into a direct borrowing capital lease with Bank of America in the amount of $1,316,000 to finance the improvements to three of the City’s fire stations and a senior center. The City agreed to lease the three fire stations to the Authority in exchange for lease payments in the amount of the debt. The Authority received the lease proceeds under an allocation of the National Recovery Zone Economic Development Bonds under the American Recovery and Reinvestment Act of 2009, which includes a direct subsidy from the United States Treasury for the interest payable on the Bonds. The lease subsidy will be payable on or about the date that the Authority makes its debt service payments and is equal to 45% of the interest payable on the lease upon filing of a request by the Authority.

The total subsidy received in fiscal year 2019 was $19, 824. The lease bears interest at a rate of 6.50% and principal and interest payments on the lease are due semi-annually each June 15 and December 15, commencing on June 15, 2011, through 2026.

The annual debt service requirements on the capital lease are as follows:

Holman Capital Corporation Lease #4 – West Contra Costa Family Justice Center - Original Amount $2,000,000
On November 1, 2012 the City entered into a direct borrowing lease agreement with Holman Capital Corporation in the amount of $2,000,000 to finance improvements to the City’s West Contra Costa Family Justice Center. The lease bears an interest rate of 3.17%. Principal and interest payments on the lease are due semi-annually on each July 14 and January 14 commencing on July 14, 2013 through January 14, 2023.

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
93 7. LONG-TERM DEBT, Continued
A. Governmental Activities, Continued
Holman Capital Corporation Lease #4 – West Contra Costa Family Justice Center - Original Amount $2,000,000, Continued
The annual debt service requirements on the capital lease are as follows:

Street Light Capital Lease - Original Amount $4,641,936 On July 31, 2013 the City entered into a direct borrowing lease agreement with Bank of America in the amount of $4,641,936 to finance the purchase of streetlights and the associated upgrade costs. The lease bears an interest rate of 2.55%. Principal and inte rest payments on the lease are due semi-annually on each October 30 and April 30 commencing on April 30, 2014 through October 30, 2026.

The annual debt service requirements on the capital lease are as follows:

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
94 7. LONG-TERM DEBT, Continued
A. Governmental Activities, Continued
Holman Capital Corporation Lease #5 – Fire Apparatus Equipment Lease - Original Amount $2,687,645 On May 17, 2018 the City entered into a direct borrowing lease agreement with Holman Capital Corporation in the amount of $2,687,645 to finance the purchase of one Spartan Ladder Truck and two Spartan Pumper Trucks, which are pledged as collateral for the lease. The lease bears an interest rate of

3.91%. Principal and interest payments on the lease are due quarterly on each August 17, November 17, February 17, and May 17 commencing on August 17, 2018 through May 17, 2028.

The annual debt service requirements on the capital lease are as follows:

B. Business-Type Activities
The following is a summary of long-term debt of business-type activities during the fiscal year ended June 30, 2021:

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
95 7. LONG-TERM DEBT, Continued
B. Business-Type Activities, Continued
Bonds payable at June 30, 2021 consisted of the following:

Richmond Joint Powers Financing Authority Point Potrero Lease Revenue Bonds, Series 2019B – Original Issue ($20,580,000)
The Series 2019B Bonds are being issued to: (i) defease and redeem on a current basis all of the Authority’s $26,830,000 outstanding Point Potrero Lease Revenue Bonds, Series 2009A and (ii) pay certain costs associated with the issuance of the Series 2019B Bonds. The Series 2019B Bonds are payable solely from, and secured solely by, Revenues of the Authority, cons isting primarily of Base Rental Payments to be received by the Authority from the City under a Facility Lease, dated as of August 1, 2019, by and between the City of Richmond and the Authority, for the right to use and the possession of certain real property and facilities, consisting of Wharves No. 7 and 8 at the Point Potrero Marine Terminal of the Port of Richmond. The amount of the Base Rental Payments is calculated to be sufficient to pay principal of and interest on the Series 2019B Bonds when due. Interest on the Series 2019B Bonds is payable on May 1 and November 1 of each year, commencing November 1, 2019. The refunding resulted in an overall debt service savings of $4,351,195. The net present value of the debt service savings is called an economic gain and amounted to $4,177,680.

At June 30, 2021 the 2019B Bonds consisted of the following:

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
96 7. LONG-TERM DEBT, Continued
B. Business-Type Activities, Continued
Richmond Joint Powers Financing Authority Point Potrero Lease Revenue Bonds, Series 2019B – Original Issue ($20,580,000), Continued
The annual debt service requirements on the 2019B Bonds are as follows:

Richmond Wastewater Revenue Bonds Taxable Buil d America Bonds, Series 2010B – Original Issue $41,125,000
On October 7, 2010 the City issued Series 2010B Wastewater Revenue Bonds Taxable Build America Bonds in the amount of $41,125,000. The proceeds of these Bonds were used to finance improvements to the City’s wastewater collection, treatment and disposal system. The taxable 2010B Bonds were sold as “Build America Bonds” pursuant to the American Recovery and Reinvestment Act of 2009. The interest on Build America Bonds was not tax-exempt and therefore the bonds carried a higher interest rate. However, this higher interest rate was offset by a subsidy payable by the United States Treasury equal to 35% of the interest payable on the Bonds. The subsidy was be payable on or about the date that the City makes its debt service payments. During the fiscal year ended June 30, 2019, the City issued Series 2019B Wastewater Revenue Bonds to partially refund and defease $36,480,000 of the 2010B Bonds (described below). The bonds were paid in full as of June 30, 2021.

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
97 7. LONG-TERM DEBT, Continued
B. Business-Type Activities, Continued
Richmond Wastewater Revenue Bonds, Series 2017A – Original Issue $33,530,000 On July 19, 2017 the City issued Series 2017A Wastewater Revenue Bonds in the amount of $33,530,000.

The proceeds from the Bonds were used to finance improvements to the City’s wastewater collection, treatment and disposal system and to refund all of the City’s outstanding Wastewater Revenue Refunding Bonds, Series 2006A. Principal payments are due annually on August 1. Interest rates on the Bonds range from 2% to 5.25% and payments are due semiannually on August 1 and February 1 beginning February 1, 2018. The bonds mature on August 1, 2047.

At June 30, 2021 the Series 2017A Bonds consisted of:

The annual debt service requirements on the 2017A Bonds are as follows:

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
98 7. LONG-TERM DEBT, Continued
B. Business-Type Activities, Continued
Richmond Wastewater Revenue Bond Series 2019A and Wastewater Revenue Refunding Bonds, Series 2019B – Original Issue Series 2019A ($22,510,000) and Series 2019B ($66,075,000) On June 26, 2019 the City issued Series 2019A Wastewater Revenue Bonds and the 2019B Wastewater Revenue Refunding Bonds in the amounts of $22,510,000 and $66,075,000, respectively. The proceeds from the 2019A Bonds were used to finance improvements to the City’s wastewater collection, treatment and disposal system. The proceeds from the 2019B Bonds were used to refund all of the City’s outstanding Wastewater Revenue Refunding Bonds, Series 2008A, and to partially refund and defease the City’s outstanding Wastewater Revenue Refunding Bonds, Series 2010B. The outstanding balance of the defeased 2010B Bonds was $36,480,000 at June 30, 2019. Principal payments are due annually on August

1. Interest rates on the Bonds range from 3% to 5% and payments are due semiannually on August 1 and February 1 beginning February 1, 2020. The refundin g resulted in an overall debt service savings of $6,799,507. The net present value of the debt service savings is called an economic gain and amounted to $4,738,022. The bonds mature on August 1, 2049.

At June 30, 2021 the Series 2019A Bonds consisted of:

The annual debt service requirements on the 2019A Bonds are as follows:

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
99 7. LONG-TERM DEBT, Continued
B. Business-Type Activities, Continued
Richmond Wastewater Revenue Bond Series 2019A and Wastewater Revenue Refunding Bonds, Series 2019B – Original Issue Series 2019A ($22,510,000) and Series 2019B ($66,075,000), Continued At June 30, 2021 the Series 2019B Bonds consisted of:

The annual debt service requirements on the 2019B Bonds are as follows:

Pledge of Wastewater Revenues
The City has pledged future wastewater customer revenues, net of specified operating expenses, to repay the 2017A, 2019A and 2019B Bonds through 2050. The Municipal Sewer Enterprise Fund’s total principal and interest remaining to be paid on the bonds is $206,801,213. The Municipal Sewer Enterprise Fund’s principal and interest paid for th e current year, and total customer net revenues were $8,148,851 and $15,510,420, respectively.

Notes and Loans Payable – Direct Borrowing
Notes and loans payable at June 30, 2021, consisted of the following:

For the Years
Ending June 30, Principal Interest Total
2022 1,115,000 $ 3,018,975 $ 4,133,975 $
2023 1,170,000 2,961,850 4,131,850
2024 2,815,000 2,862,225 5,677,225
2025 2,930,000 2,718,600 5,648,600
2026 3,050,000 2,569,100 5,619,100
2027-2031 17,300,000 10,373,750 27,673,750 2032-2036 21,225,000 4,064,325 25,289,325 2037-2041 16,470,000 1,166,475 17,636,475 Total 66,075,000$ 29,735,300 $ 95,810,300 $

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
100

7. LONG-TERM DEBT, Continued
B. Business-Type Activities, Continued
Notes and Loans Payable – Direct Borrowing, Continued
T h e C i t y h a s f o u r d i r e c t b o r r o w i n g l o a n a g r e e m e n t s w i t h t h e C a l i f o r n i a D e p a r t m e n t o f B o a t i n g a n d Waterways for total borrowings of $3,772,278. Procee d s f r o m t h e l o a n s w e r e u s e d t o f i n a n c e m a r i n a construction projects. The loans bear interest at rates ranging from 4.5% to 7.9% and are due in annual installments through August 2042. The total amount outstanding at June 30, 2021 was $2,336,857.

The annual debt service requirements on these loans are as follows:

RHA RAD Housing Partners, LP Promissory Note
On December 17, 2014, the Housing Authority’s Co mponent Unit, RHA Housing Corporation, entered into an agreement with the City and promised to pay the City a principal amount of $700,000, plus accrued interest. The proceeds of the Note were then lo aned from RHA Housing Corporation to the Housing Authority to finance acquisitions and development of the properties undergoing rehabilitation work in conjunction with a RAD conversion (Friendship M anor/Triangle Court). On December 22, 2015, the official closing of the RAD conversion took place, at which time the Note was assigned to a newly created entity, RHA RAD Housing Partners, L.P. The Note payable to the City was assigned from RHA Corporation to RHA RAD Housing Partners, L.P. al ong with a note receivable from the Housing Authority. The principle balance shall bear 1% simple interest. The term of the Note shall expire fifty- five years after. The balance of the promissory note at June 30, 2019 was $700,000.

In fiscal year 2015, the City had advanced the $700,000 to the Richmond Housing Authority Enterprise Fund, however, in fiscal year 2016 that loan was assigned to RHA RAD Housing Partners L.P. as discussed in Note 4. Therefore, the Richmond Housing Authority Enterprise Fund now owes this amount to RHA RAD Housing Partners L.P. and the interfund advance was converted to long-term debt in fiscal year 2016.

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
101

7. LONG-TERM DEBT, Continued
B. Business-Type Activities, Continued
Contra Costa County Loan Payable
On December 1, 2019, the Richmond Housing Authority entered into a loan agreement with the County of Contra Costa in the amount of $401,523 to assist in the repair of the elevators at Nevin Plaza which is a 142 unit public housing development for senior and di sabled residents. The loan repayment is deferred for 20 years unless a transfer or default occurs prior to the 20 years term. The loan bear no interest.

C. Events of Default, Termination Even ts and Subjective Acceleration Clauses Below is a summary of certain events of defaul t and termination events with finance related consequences, along with the subjective acceleration clauses, as applicable, for all of the City’s outstanding long-term debt obligations. Each agre ement may contain additional events of default, termination events or other subjective acceleration clauses.

Events of default Termination events Subjective
with finance-related with finance-related acceleration
consequences consequences clauses
Governmental Activities
Bonds Payable
Pension Obligation Bonds - 1999 Series A (A) N/A (A)
Pension Funding Bond Series 2005 (Direct Placement) (A) N/A (A) JPFA Lease Revenue Refunding Bonds - 2009 (B) (B) N/A
JPFA Lease Revenue Bonds - 2016 (B) (B) N/A
JPFA Lease Revenue Bonds - 2019 (B) (B) N/A
Loans Payable
California Energy Commission Loan #1 (C) (C) (C)
California Energy Commission Loan #2 (C) (C) (C)
Capital Leases
Qualified Energy Conservation Lease (D) (D) N/A
JPFA Recovery Zone Economic Development Lease (E) (E) N/A Holman Capital Corporation Lease #4 (F) (F) N/A
Street Light Capital Lease (G) (G) N/A
Holman Capital Corporation Lease #5 (H) (H) N/A
Business-Type Activities
Bonds Payable
2019B Point Potrero Lease Revenue Bonds (B) (B) N/A
Wastewater Revenue Bonds Series 2017A (A) N/A (A)
Wastewater Revenue Bonds Series 2019A (I) N/A (I)
Wastewater Revenue Bonds Series 2019B (I) N/A (I)
Notes and Loans Payable
California Department of Boating and Waterways (J) (J) (J) RHA RAD Housing Partners L.P. Promissory Note (K) (K) (K)

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
102

7. LONG-TERM DEBT, Continued
C. Events of Default, Termination Events and Subjective Acceleration Clauses, Continued (A) If the City fails to pay debt service when due, the delinquent principal and interest is due and payable immediately. If the City files for reorganization under bankruptcy laws, the aggregate outstanding principal balance and accrued interest are immediately due and payable. (B) If the City fails to pay rental payable when due or the Authority fails to pay debt service when due, the delinquent principal and interest is due and payable immediately. In the event of default, the Authority has the option to exercise the right of entry and re-entry upon the leased property, including the right to re-lease the property if the City does not pay the delinquent rent. (C) Events of default include the failure to comply with any of the terms in the loan agreement, failure to pay principal or interest when due, failure of the City to undertake in a timely way the activities for which said Loan Agreement was executed, failure of the Ci ty to obtain prior written Commission approval before undertaking a change in the scope of the activities for which said Loan Agreement was executed, or the City becoming insolvent or bankrupt. On the occurrence of any event of default, the Commission may declare all or any portion of the principal and a ccrued interest on the loan to be immediately due and payable. If the City fails to comply with the terms of the loan agreement, the Commission may declare the agreement to have been breached and be released from any further performance. (D) Events of default include: (a) Failure to (i) pay any rental payment or other payment required to be paid under the agreement within 10 days after the date when due or (ii) maintain insurance as required; (b) failure to observe and perform any covenant, condition or agreement for a period of 30 days after written notice; (c) any false, incorrect or misleading statements, representations or warranties made by the City pursuant to the agreement; (d) any default occurs under any other agreement for borrowing money, lease financing of property; (e) the City file s becomes insolvent or files for bankruptcy. In the event of default, the lessor has the right to take various steps, including take possession of the equipment or accelerate the repayment of the principal and outstanding interest. (E) If the City fails to pay lease payments when due or observe other covenants in the lease agreement within thirty days of the written notice of the failure, the outstanding balances are due and payable immediately. If the City files for reorganization under bankruptcy laws, the aggregate outstanding principal balance and accrued interest are immediatel y due and payable. In the event of default, the Authority has the option to exercise the right of entry and re-entry upon the leased property, including the right to re-lease the property if the City does not pay the delinquent lease payments. (F) If the City fails to pay lease payments when due or observe other covenants in the lease agreement within thirty days of the written notice of the failure, the outstanding balances are due and payable immediately. If the City files for reorganization under bankruptcy laws, the aggregate outstanding principal balance and accrued interest are immediately due and payable.

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
103

7. LONG-TERM DEBT, Continued
C. Events of Default, Termination Events and Subjective Acceleration Clauses, Continued (G) If the City fails to pay lease payments when due or observe other covenants in the lease agreement, the outstanding balances are due and payable immediately. If the City files for reorganization under bankruptcy laws, the aggregate outstanding principal balance and accrued interest are immediately due and payable. Upon events of default, the Energy Commission may terminate the Agreement upon five days written notice to the City.
(H) If the City fails to pay lease payments when due or observe other covenants in the lease agreement within thirty days of the written notice of the failure, the outstanding balances are due and payable immediately. If the City files for reorganization under bankruptcy laws, the aggregate outstanding principal balance and accrued interest are immediatel y due and payable. In the event of default, the Lessor has the option to exercise the right of entry and re-entry upon the leased property, including the right to re-lease the property if the City does not pay the delinquent lease payments. (I) If the City fails to pay debt service when due, the delinquent principal and interest is due and payable immediately. If the City files for reorganization under bankruptcy laws, the aggregate outstanding principal balance and accrued interest are immediately due and payable. In the event of default, the City is required to transfer all Net Revenues held by the City to the Trustee, except as noted in the Indenture of Trust.
(J) If the City fails to pay debt service when due, the delinquent principal and interest is due and payable immediately. If the City files for reorganization under bankruptcy laws, the aggregate outstanding principal balance and accrued interest are immediately due and payable. In the event of default, the Department of Boating and Waterways has the option to declare all unperformed obligations immediately due and payable without further demand or notice to the City. (K) Events of default include the failure to repay th e principal and any interest on the loan within ten days of receipt of written notice that such payment is due pursuant to the loan documents, breach of covenants included in the loan documents, or becoming insolvent or bankrupt. In the event of default, the principal and accrued interest are immediately due and payable.

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
104

7. LONG-TERM DEBT, Continued
D. Special Assessment Debt Without City Commitment
Special assessment districts have been established in various parts of the City to provide improvements to properties located in those districts. Properties in these districts are assessed for the cost of improvements; these assessments are payable solely by property owners over the term of the debt issued to finance these improvements. The City is not legally or morally obligated to pay these debts or be the purchaser of last resort of any foreclosed properties in these special assessment districts, nor is it obligated to advance City funds to repay these debts in the event of default by any of these districts. At June 30, 2021, the balances of these Districts’ outstanding debt were as follows:

Richmond JPFA Reassessment Revenue Refunding Bonds, Series 2016 (Country Club Vista) $5,940,000 E. Conduit Debt
The City has assisted private-sector entities by sponsoring their issuance of debt for purposes the City deems to be in the public interest. These debt issues are secured solely by the property financed by the debt. The City is not legally or morally obligated to pa y these debts or be the purchaser of last resort of any foreclosed properties secured by these debts, nor is it obligated to advance City funds to repay these debts in the event of default by any of these issuer s. At June 30, 2021, the balance of this issuers’ outstanding debt was as follows:

Richmond Community Foundation, Richmond Housing Rehabilitation Program, Social Impact Bonds, Taxable Series 2015A $3,000,000

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
105

8. UNAVAILABLE AND UNEARNED REVENUE
At June 30, 2021, the following unavailable revenues were recorded in the Fund Financial Statements because the funds were not available to finance expenditures of the current period:

At June 30, 2021, the following unearned revenues were recorded in the City-wide financial statements on the Statement of Net Position:

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
106

9. FUND BALANCE AND NET POSITION
A. Fund Balance Classification
Detailed classifications of the City’s fund balances, as of June 30, 2021, are below:

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
107

9. FUND BALANCE AND NET POSITION, Continued
B. Contingency Reserve Policy
In fiscal year 2016, the City Council updated the fund balance policy to require the City to maintain a year-end contingency reserve balance of a minimum of 15% of the next year’s budgeted General Fund expenditures. This is the minimum needed to maintain the City’s creditworthiness and to adequately provide for economic and legislative uncertainties, cash flow needs and contingencies. City Council approval is required before any cash can be withdrawn from the reserve fund. The Council shall have the discretion to use the reserve for one time emergencie s only and not to be used for ongoing expenses. At the time of City Council approval of any use of reserves, a Stabilization Policy laying out the plans for restoration of reserves must be simultaneously put in place with the Council’s approval. The City’s cash reserve as of June 30, 2021, which is a component of unassigned fund balance of the General Fund, is $22,477,829 which is approximately 12.5% of fiscal year 2021-22 budgeted General Fund expenditures. As the City experiences net revenue gains in future years, the cash balance must continue to be maintained at or above to 15% of total expenditures, following th e stabilization policy, in order to allow the City to build up its capacity to handle future short term economic downturns or emergencies without cutting services.

C. Deficit Fund Balances and Accumulated Deficits
At June 30, 2021, the following funds had deficit fund balance or deficit net position, which will be eliminated by future revenues:

D. Restatement of Net Position
During fiscal year 2021, the City continued to reconcile the activities of the Richmond Housing Authority for fiscal years 2017, 2018, 2019, 2020, and 2021. As a result, beginning net position in the Richmond Housing Authority Enterprise Fund has been restated and decreased in the amount of $2,307,404. The City also restated its beginning net position the of the Governmental Activities, Business Type Activities, Richmond Housing Authority fund, the Port of Richmond fund, Municipal Sewer fund, nonmajor enterprise funds and the Insurance Reserve fund to correct the allocation of OPEB erroneously recorded in prior years.

In addition, the City has restated the beginning fu nd balance of Business-type Activities Fund and increased in the amount of $535,094. For Non-Major Enterprise Fund, the beginning fund balance was restated and increased in the amount of $42,247 and for Insurance Reserves Fund, the beginning fund balance was restated and decreased in the amount of $480,172.

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
108

9. FUND BALANCE AND NET POSITION, Continued
D. Restatement of Net Position, Continued
Governmental
Activities
Business-type
Activ ities
Richmond
Housing
Authority Fund
Port of
Richmond
Fund
Municipal
Sew er Fund
Non-Major
Enterprise
Fund
Insurance
Reserve Fund
Custodial
Funds
Net Position as prev iously
reported at June 30, 2020 (298,192,717)$ 64,742,982 $ 10,049,921 $ 11,291,778 $ 43,236,443 $ 164,840 $ 526,175 $ - $ Prior Period Adjustments:

Correct interfund activities - (2,307,404) (2,307,404) - - - - - OPEB Allocation (535,094) 535,094 1,162,596 114,197 (783,946) 42,247 (480,172) - GASB 84 Implementation - - - - - - - 6,236,000 Net Position as restated at
June 30, 2020 (298,727,811)$ 62,970,672 $ 8,905,113 $ 11,405,975 $ 42,452,497 $ 207,087 $ 46,003 $ 6,236,000 $ Government-w ide
Financial Statements Fund Statements

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
109

10. EXPENDITURES IN EXCESS OF APPROPRIATIONS
The following funds incurred departmental expenditures in excess of appropriations.

Excess of Expenditures
Fund/Department over Appropriations
General Purpose Fund
General Government 1,179,000 $
Community Development 8,989
Housing and redevelopment 437
Lighting and Landscaping Districts Fund
Public works 74,679
Developer Impact Fees Fund
Public Safety 79,430
Publlic works 414,829
Cultural and recreational 28,345
Capital outlay 654,260
Richmond Neighborhood Stabilization Corporation Fund
Housing and development 30,826
General Debt Service Fund
Interest and fiscal charges 849
Civic Center Debt Service Fund
Principal 77,315,000
Interest and fiscal charges 11,213
General Capital Improvement Fund
Capital outlay 839,634
Measure C/J Fund
Publlic works 716,192
Capital outlay 985,430
Secured Pension Override Fund
General Government 6,563

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
110

11. DEFINED BENEFIT PENSION PLANS
The following is a summary of the City’s pension plan amounts for the year ended June 30, 2021:

A. California Public Employees’ Retirement System Pension Plans I. General Information about the CalPERS Pension Plan
Plan Descriptions – All qualified permanent and probationary employees are eligible to participate in the City’s separate Safety (police and fire) and Miscel laneous (all other) Plans, agent multiple-employer defined benefit pension plans administered by Ca lPERS, which acts as a common investment and administrative agent for its participating member employers. Benefit provisions under the Plans are established by State statute and City resolution. CalP ERS issues publicly available reports that include a full description of the pension plans regarding benefit provisions, assumptions and membership information that can be found on the CalPERS website.

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 non-duty 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.

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
111

11. DEFINED BENEFIT PENSION PLANS, Continued
A. California Public Employees’ Retirement System Pension Plans, Continued I. General Information about the CalPERS Pension Plan, Continued The City’s employees hired on or before December 31, 2012 participate in the Miscellaneous Plan under the 2.7% @ 55 Benefit Formula or the Safety Plan under the 3.0% @ 50 (Police) or 3.0% @ 55 (Fire) Benefit Formula. The Pension Reform Act of 2013 (PEPRA), Assembly Bill 340, is applicable to employees new to CalPERS and hired after December 31, 2012. The City’s employees hired on or after January 1, 2013 participate under the Miscellaneous Plan 2.0% @ 62 Benefit Formula or the 2.7% @ 57 (Police and Fire) Benefit Formula.

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

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
112

11. DEFINED BENEFIT PENSION PLANS, Continued
A. California Public Employees’ Retirement System Pension Plans, Continued I. General Information about the CalPERS Pension Plan, Continued Beginning in fiscal year 2016, CalPERS collects employer contributions for each Plan as a percentage of payroll for the normal cost portion as noted in the rates above and as a dollar amount for contributions toward the unfunded liability (UAL). The dollar am ounts are billed on a monthly basis. The City’s required contributions for the unfunded liability in the Miscellaneous and Safety Plans were $10,090,307 and $14,418,684, respectively, as noted in the tables above.

Employees Covered – As of the June 30, 2019 actuarial valuation date and the June 30, 2020 measurement date, the following employees were covered by the benefit terms for each Plan:

As of June 30, 2021, the City had 413 active employees in the Miscellaneous Plan and 220 active employees in the Safety Plan.

Contributions – Section 20814(c) of the California Public Em ployees’ 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 un funded accrued liability. The City is required to contribute the difference between the actuarially determined rate and the contribution rate of employees.

Contributions for the measurement period were $13,783,427 for the Miscellaneous Plan and $19,355,578 for the Safety Plan.

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
113

11. DEFINED BENEFIT PENSION PLANS, Continued
A. California Public Employees’ Retirement System Pension Plans, Continued II. Net Pension Liability
The City’s net pension liability for each Plan is meas ured as the total pension liability, less the pension plan’s fiduciary net position. The net pension liability of each Plan is measured as of June 30, 2020, using an annual actuarial valuation as of June 30, 2019 ro lled forward to June 30, 2 020 using standard update procedures. A summary of principal assumptions and methods used to determine the net pension liability is shown below.

Actuarial Assumptions – For the measurement period ended June 30, 2020, the total pension liabilities were determined by rolling forward the June 30, 20 19 total pension liability. The June 30, 2020 total pension liabilities were based on the following actuarial methods and assumptions:

Miscellaneous (1) Safety (1)
Valuation Date June 30, 2019 June 30, 2019
Measurement Date June 30, 2020 June 30, 2020
Actuarial Cost Method Entry-Age Normal Cost Method Entry-Age Normal Cost Method Actuarial Assumptions:

Discount Rate 7.15% 7.15%
Inflation 2.50% 2.50%
Salary Increase Varies by Entry Age and Service Varies by Entry Age and Service Mortality (1) Derived using CalPERS’ membership
data for all funds
Derived using CalPERS’ membership data
for all funds
Post Retirement Benefit Increase Contract COLA or 2.50% until Purchasing Power ProtectionAllowance
floor on purchasing power applies,

2.50% thereafter
Contract COLA or 2.50% until Purchasing
Power ProtectionAllowance floor on
purchasing power applies, 2.50%
thereafter
(1) The mortality table used was developed based on CalPERS-specific data. The table includes 15 years of mortality improvements using the Society of Actuaries Scale 90% of scale MP 2016. For more details on this table, please refer to the December 2017 experience study report (based on CalPERS demographic data from 1997 to 2015) that can be found on the CalPERS website.

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
114

11. DEFINED BENEFIT PENSION PLANS, Continued
A. California Public Employees’ Retirement System Pension Plans, Continued II. Net Pension Liability, Continued
The underlying mortality assumptions and all other actuarial assumptions used in the June 30, 2019 valuation were based on the results of a December 2017 actuarial experience study for the period 1997 to 2015. Further details of the Experience Study can be found on the CalPERS website.

Discount Rate – The discount rate used to measure the total pension liability for each Plan was 7.15%.

The projection of cash flows used to determine the discount rate for each Plan assumed that contributions from all plan members in the Public Employees Reti rement Fund (PERF) will be made at the current member contribution rates and that contributions fr om employers will be made at statutorily required rates, actuarially determined. Based on those assumptions, each Plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members for all plans in the PERF. 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 for each Plan.

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

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
115

11. DEFINED BENEFIT PENSION PLANS, Continued
A. California Public Employees’ Retirement System Pension Plans, Continued II. Net Pension Liability, Continued
The table below reflects the long-term expected real rate of return by asset class. The rate of return was calculated using the capital market assumptions ap plied to determine the discount rate and asset allocation. These geometric rates of return are net of administrative expenses.

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
116

11. DEFINED BENEFIT PENSION PLANS, Continued
A. California Public Employees’ Retirement System Pension Plans, Continued III. Changes in the Net Pension Liability
The changes in the Net Pension Liability as of the June 30, 2020 Measurement Date for each Plan follows:

Miscellaneous Plan:

Total Pension Plan Fiduciary Net Pension
Liability Net Position Liability/(Asset)
Balance at June 30, 2019 Measurement Date 504,296,912 $ 373,530,332 $ 130,766,580 $ Changes in the year:

Service cost 7,529,439 - 7,529,439 Interest on the total pension liability 34,974,846 - 34,974,846 Differences between actual and
expected experience (4,393,691) - (4,393,691) Contribution - employer - 13,778,755 (13,778,755) Contribution - employees - 2,749,990 (2,749,990) Net investment income - 18,237,576 (18,237,576) Administrative expenses - (526,586) 526,586 Benefit payments, including refunds of
employee contributions (29,018,486) (29,018,486) - Net changes 9,092,108 5,221,249 3,870,859 Balance at June 30, 2020 Measurement Date 513,389,020 $ 378,751,581 $ 134,637,439 $ Safety Plan:

Total Pension Plan Fiduciary Net Pension
Liability Net Position Liability/(Asset)
Balance at June 30, 2019 Measurement Date 676,597,009 $ 469,826,178 $ 206,770,831 $ Changes in the year:

Service cost 10,958,278 - 10,958,278 Interest on the total pension liability 47,218,257 - 47,218,257 Differences between actual and
expected experience (2,189,929) - (2,189,929) Contribution - employer - 19,362,087 (19,362,087) Contribution - employees - 4,232,707 (4,232,707) Net investment income - 22,875,702 (22,875,702) Administrative expenses - (662,340) 662,340 Benefit payments, including refunds of
employee contributions (38,982,005) (38,982,005) - Net changes 17,004,601 6,826,151 10,178,450 Balance at June 30, 2020 Measurement Date 693,601,610 $ 476,652,329 $ 216,949,281 $ Totals - Miscellaneous and Safety Plans 1,206,990,630 $ 855,403,910 $ 351,586,720 $ Increase (Decrease)
Increase (Decrease)

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
117

11. DEFINED BENEFIT PENSION PLANS, Continued
A. California Public Employees’ Retirement System Pension Plans, Continued III. Changes in the Net Pension Liability, Continued
Sensitivity of the Net Pension Liability to Changes in the Discount Rate – The following presents the net pension liability of the City for each Plan, calculated using the discount rate for each Plan, as well as what the City’s net pension liability would be if it were ca lculated using a discount rate that is 1-percentage point lower or 1-percentage point higher than the current rate:

Pension Plan Fiduciary Net Position – Detailed information about each pension plan’s fiduciary net position is available in the separately issued CalPERS financial reports.

IV. Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions For the year ended June 30, 2021, the City recognized pension expense of $45,199,642. At June 30, 2021, the City reported deferred outflows of resources an d deferred inflows of resources related to pensions from the following sources:

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
118

11. DEFINED BENEFIT PENSION PLANS, Continued
A. California Public Employees’ Retirement System Pension Plans, Continued IV. Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions, Continued $35,754,074 reported as deferred outflows of reso urces related to contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2022. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows:

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
119

11. DEFINED BENEFIT PENSION PLANS, Continued
B. Other City Pension Plans
I. Plan Descriptions and Funding Policies
The City administers three single-employer pens ion plans which are funded entirely by City contributions. These are the General Pension Plan, Police and Firemen’s Pension Plan, and Garfield Pension Plan (collectively, the “Plans”). The General Pension Plan, a defined benefit pension plan, covers ten former City employees (or their beneficiaries) not covered by CalPERS, all of whom have retired. The Police and Firemen’s Pension Plan, a defined benefit pension plan, covers twenty-seven retired police and fire personnel (or their beneficiaries) employed prio r to October 1964. The Garfield Pension Plan is a defined benefit pension plan established for a retired police chief. The Plans provide retirement, disability, and death benefits based on the employee’s years of service, age and final compensation. Benefit provisions for the Plans are established by City Ordinance. No separate financial statements are issued for the Plans.

The City established the Secured Pension Override Special Revenue Fund to which proceeds of a special incremental property tax levy voted by the citizens of the City of Richmond are credited for the payment of benefits under the City’s pension plans. The incr emental property tax revenue received for the year ended June 30, 2021 was $11,352,354, and the City used the funds to pay General Pension Plan and the Police and Firemen’s Pension Plan contributions of $319,025 and $937,004, respectively.

Police and Firemen’s Pension Plan – Funding for the Plan is provided from the Secured Pension Override Special Revenue Fund. Employees were vested after five years of service. Members of the Plan are allowed normal retirement benefits after 25 or more continuo us years of service. The City is required under its charter to contribute the remaining amounts necessary to fund the Plan using the entry age- normal actuarial method as specified by Ordinance. Management of the Plan is vested in the Pension Board which consists of seven members: the Mayor, City Manager, Director of Finance, two members appointed by the Mayor, with the concurrence of four members of the City Council, each of whom shall be and remain a resident of the City in order to be a member of the Board and serve a term of five years, one representative of the Police Department and one representative of the Fire Department.

The Plan is closed to new members. Retirement benefi ts for Plan members are calculated as one-half of the annual salary attached to the rank or position held by the retiree one year prior to the date of retirement. Surviving spouses receive 100% of the retiree’s pension. Benefit terms provide for annual cost- of-living adjustments to each member’s retirement allowance subsequent to the member’s retirement date. The annual adjustments are an increase each year for changes in the salary attached to the retiree’ s rank in the year before retirement.

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
120

11. DEFINED BENEFIT PENSION PLANS, Continued
B. Other City Pension Plans, Continued
I. Plan Descriptions and Fun ding Policies, Continued
General Pension Plan – Retirement and other benefits are paid from the assets of the Plan and from related investment earnings. The City is required un der its charter to contribute the remaining amounts necessary to fund the Plan using the entry age-normal actuarial method as specified by Ordinance.

Management of the Plan is vested in the General Pension Board which consists of seven members: the Mayor, City Manager, Director of Finance, two members appointed by the Mayor, with the concurrence of five members of the City Council, each of whom shall be and remain a resident of the City in order to be a member of the Board and serve a term of five years, and two members to be elected every five years by secret ballot vote of the rank and file of Plan employees and of Plan employees who have retired and are receiving pensions from the Plan. Four members of the General Pension Board are to be concurred in by four members.

The Plan is closed to new members. Retirement benefi ts for Plan members are calculated as one-half of the average annual salary attached to the position held by the retiree during the three years prior to the date of retirement. Surviving spouses receive 100% of the retiree’s pension. Benefit terms provide for annual cost-of-living adjustments to each member’s retirement allowance subsequent to the member’s retirement date. The annual adjustments are an automatic increase of 2% per year. City Council may grant additional increases of up to 3% per year to bring the total increase in a given year to 5%.

Garfield Pension Plan – Retirement and other benefits are paid from the assets of the Plan and from related investment earnings. Plan provisions ha ve been established and may be amended upon agreement between the City and Mr. Garfield. Management of the Plan is vested in the City Council.

Mr. Garfield’s pension and any continuation to his spouse receive the same cost-of-living increases as the City’s police employees covered by CalPERS (CalPERS cost-of-living increases include a 2% per year increase, subject to CPI increase constraints, an d purchasing power protection through the CalPERS Purchasing Power Protection Allowance). Mr. Garfield ’s surviving spouse receives 50% of the retiree’s pension.

II. Significant Accounting Policies
City contributions for all plans are recognized when due and the City has made a formal commitment to provide contributions. Benefit payments and refunds are recognized when due and payable in accordance with the terms of the Plan. Administrative costs for all plans, except the investment management fees of the Police and Fireman’s Pension Plan, are paid by the City’s General Fund. The investment management fees are financed through investment earnings. Assets are valued at fair value based on available market information obtained from independent sources.

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
121

11. DEFINED BENEFIT PENSION PLANS, Continued
B. Other City Pension Plans, Continued
III. Pension Plan Assets
At June 30, 2021 the pension plans reported assets av ailable for benefits as sh own below. For actuarial purposes, the value of the Plans’ assets were determined to be fair value.

The Wellington Trust Company Fund investments, classi fied in Level 2 of the fair value hierarchy, are valued using the market approach, which uses pric es and other information generated from market transactions, which typically includes securities priced with unadjusted market quotes, evaluated bids, market multiples, and trade information, and also ge nerally includes short term securities valued at amortized cost which approximates market value. The City of Richmond Investment Pool and the California Local Agency Investment Fund (LAIF) are not subject to the fair value hierarchy. Fair value is defined as the quoted market value on the last trading day of the period.

Investment Policies
The General Pension and Police and Firemen’s Pensio n Plans’ policies in regard to the allocation of invested assets is established and may be amended by Resolution of the respective Boards. The Plans allow investments in the following:
(a) In investments which are authorized by General law for savings banks. (b) In investments other than those specified in su bdivision (a) hereof, including, but not limited to, corporate bonds and securities, common stocks, preferred stocks, investments in real estate and investment trusts, provided that the total amount inve sted pursuant to this subdivision shall not exceed fifty percent (50%) of the total amount of funds invested pursuant to this section, and provided further that the following conditions are met:
(1) Any stocks or other corporate securities, in wh ich funds are invested, except stocks of banks, insurance companies or mutual funds, shall be registered on a national securities exchange as provided by the Federal Securities Exchange Act.
(2) The total amount invested in common and preferre d stocks shall not exceed at cost at the time of purchase twenty-five percent of the total amount invested pursuant to this section.

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
122

11. DEFINED BENEFIT PENSION PLANS, Continued
B. Other City Pension Plans, Continued
III. Pension Plan Assets, Continued
Investment Policies, Continued
(3) The total amount invested in the common and preferred stocks of any one company shall not exceed at cost of the time of purchase two percent of the total amount invested pursuant to this section and shall not exceed five percent of the outstanding preferred or common stock of that company. (4) No funds shall be invested in the common stocks of any company unless it has paid cash dividends on such stocks in eight of the ten years immediately preceding its purchase by the Board. (5) No funds shall be invested in the stocks or other securities of any company other than a bank or insurance company unless it has assets of at least one hundred million dollars ($100,000,000), or in the stocks or other securities of a bank or insurance company unless it has assets of at least fifty million dollars ($50,000,000).
(6) The total amount invested in real estate and other than real estate owned by or leased to the City of Richmond, which amount may include land, buildings, land and buildings or real estate loans, shall not exceed twenty-five percent of the total amount invested pursuant to this section and such investments shall be restricted to first trust deeds which are insured by the Federal Housing Administration or which are guaranteed by the Veterans Administration.

The Garfield Pension Plan does not have a separate investment policy, therefore it uses the City’s investment policy.

Interest and Credit Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Normally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. The City invests in equities which may be drawn down as needed, subject to terms of the underlying trust agreement. The investments held in th e Pension Trust Funds all mature in less than one year.

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. As of June 30, 2021, the investments in the Pension Trust Funds were not rated.

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
123

11. DEFINED BENEFIT PENSION PLANS, Continued
B. Other City Pension Plans, Continued
III. Pension Plan Assets, Continued
Rate of Return
For the year ended June 30, 2021, the annual money-weighted rate of return on pension plan investments, net of pension plan investment expense, for the Police and Firemen’s, General Pension and Garfield Pension Plans was 22.61%, 0.44% and 0.72%, respectively. The money-weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested.

IV. Net Pension Liability of the Plans
The components of the net pension liability of the City for each of the Plans is the total pension liability, less each Plan’s fiduciary net position.

Actuarial Assumptions. The total pension liability for each plan as of June 30, 2021 was determined based on June 30, 2021 actuarial valuations. The following actuarial assumptions applied to all periods included in the measurement:

Mortality rates were based on the California PERS Mortality Table in its 2017 experience study (based on CalPERS 1997-2015 experience).

Discount Rates. The discount rates used to measure the total pension liability for the Police and Firemen’s Pension Plan, General Pension Plan and Garfield Pension Plan were 3.50%, 1.00%, and 1.00%, respectively, as of June 30, 2021 and 4.50%, 1.98%, and 1.75%, respectively, as of June 2020. Page 570 of 789 City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
124

11. DEFINED BENEFIT PENSION PLANS, Continued
B. Other City Pension Plans, Continued
IV. Net Pension Liability of the Plans, Continued
For the Police and Firemen’s Pension Plan, based on the 5 previous years the City has on average contributed 97% of the Actuarially Determined Contribution (ADC). A sufficiency test was performed including: (1) expected benefit payments for all future years; (2) assuming that 96% of the ADC is contributed to the Plan in future years; (3) assuming that future contribution losses are amortized according to the Plan’s funding policy; (4) using th e Plan’s assumed investment return before the projected asset depletion (if any); and (5) using a 20-year AA tax-exempt general obligation municipal bond index rate of 2.45% (using as a municipal bond rate source the Fidelity 20-Year General Obligation AA Municipal Bond Index as of June 30, 2021) after the projected asset depletion. Based on these parameters, plan assets are projected to be sufficient to pay all future benefits until a de minimus amount of estimated future benefits remain. Therefore, the Plan’s long-term expected rate of return of 3.50% was used as the discount rate.

Based on the 5 previous years the City has on average contributed 78% and 113% of the Actuarially Determined Contribution (ADC) for the General Pension Plan and Garfield Pension Plan, respectively. A sufficiency test was performed including: (1) expected benefit payments for all future years; (2) assuming that 74% of the ADC is contributed to the General Pension Plan and 100% of the ADC is contributed to the Garfield Pension Plan in future years; (3) assuming that future contribution losses are amortized according to the Plans’ funding policies; (4) using the Plans’ assumed investment return before the projected asset depletion (if any); and (5) using a 20-year AA tax-exempt general obligation municipal bond index rate of 2.45% (using as a municipal bond rate source the Fidelity 20-Year General Obligation AA Municipal Bond Index as of June 30, 2021) after the projected asset depletion. Based on these parameters, each of the Plan’s assets are projected to be sufficient to pay all future benefits until a de minimus amount of estimated future benefits remain. Therefore, the long-term expected rate of return of

1.00% was used as the discount rate for each of these Plans.

The long-term expected rate of return on pension pl an investments was determined for each Plan using a building-block method in which best-estimates of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These asset class estimates are combined to produce the portfolio long-term expected rate of return by weighting the expected future real rates of return by the current asset allocation percentage (or target allocation, if available) and by adding expected inflation (2.25%). All results are then rounded to the nearest quarter percentage point.

The best-estimate of expected future real rates of return were developed by aggregating data from several published capital market assumption surveys and deriving a single best-estimate based on the average survey values. These capital market assumptions reflect both historical market experience as well as diverse views regarding anticipated future returns. The expected inflation assumption was developed based on an analysis of historical experience blen ded with forward-looking expectations available in market data.

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
125

11. DEFINED BENEFIT PENSION PLANS, Continued
B. Other City Pension Plans, Continued
IV. Net Pension Liability of the Plans, Continued
Best estimates of geometric real and nominal rates of return for each major asset class included in the Plans’ asset allocation as of the measurement date are summarized below:

Asset Class
Allocation at
Measurement Date
Long-Term Expected
Real Rate of Return
Long-Term Expected
Nominal Rate of
Return
Police and Firemen's Plan:

Domestic Equity 55% 3.66% 5.66%
International Equity 0% 4.26% 6.26%
Fixed Income 35% -0.03% 1.97%
Real Estate and Alternatives 0% 3.38% 5.38%
Cash and Equivalents 10% -0.97% 1.03%
Total 100% 4.19%
Reduced for assumed investment expense -0.60%
Total (weighted avg, rounded to 1/4%) 3.50%
General Pension Plan:

Domestic Equity 0% 3.66% 5.66%
International Equity 0% 4.26% 6.26%
Fixed Income 0% -0.03% 1.97%
Real Estate and Alternatives 0% 3.38% 5.38%
Cash and Equivalents 100% -0.97% 1.03%
Total 100% 0.99%
Reduced for assumed investment expense 0.00%
Total (weighted avg, rounded to 1/4%) 1.00%
Garfield Pension Plan:

Domestic Equity 0% 3.66% 5.66%
International Equity 0% 4.26% 6.26%
Fixed Income 0% -0.03% 1.97%
Real Estate and Alternatives 0% 3.38% 5.38%
Cash and Equivalents 100% -0.97% 1.03%
Total 100% 0.99%
Reduced for assumed investment expense 0.00%
Total (weighted avg, rounded to 1/4%) 1.00%

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
126

11. DEFINED BENEFIT PENSION PLANS, Continued
B. Other City Pension Plans, Continued
IV. Net Pension Liability of the Plans, Continued
Changes in Assumptions. In addition to the change in the discount rates noted above, changes in assumptions from the prior valuation for each plan was as follows:

Police and Firemen’s Plan:
x The expected investment return and discount ra te decreased from 4.50% to 3.50% to reflect updated capital market assumptions.

General Pension Plan:
x The discount rate was updated from 1.98% to 1.00% to reflect updated GASB 68 trust depletion projections.
x The expected trust investment return on assets decreased from 1.75% to 1.00% to reflect updated capital market assumptions and the plan's anticipated short future duration.

Garfield Pension Plan:
x The expected investment return and discount ra te decreased from 1.75% to 1.00% to reflect updated capital market assumptions.

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
127

11. DEFINED BENEFIT PENSION PLANS, Continued
B. Other City Pension Plans, Continued
V. Changes in the Net Pens ion Liability of Each Plan
The net pension liability of each Plan is measured as of June 30, 2021 as follows:

Police and Firemen's Plan:

Total Pension Plan Fiduciary Net Pension
Liability Net Position Liability/(Asset)
Balance at June 30, 2020 13,176,626 $ 11,062,378 $ 2,114,248 $ Changes in the year:

Interest on the total pension liability 561,163 - 561,163 Differences between actual and expected experience (3,680,825) - (3,680,825) Changes in assumptions Changes in benefit terms 28,483 - 28,483 Contribution - City - 937,004 (937,004) Contribution - employer - - - Contribution - employees - - - Net investment income - 2,527,138 (2,527,138) Benefit payments, including member contribution refunds (1,412,673) (1,412,673) - Net changes (4,503,852) 2,051,469 (6,555,321) Balance at June 30, 2021 8,672,774 $ 13,113,847 $ (4,441,073) $ Plan fiduciary net position as a percentage of the total pension liability 151.21% General Pension Plan:

Total Pension Plan Fiduciary Net Pension
Liability Net Position Liability/(Asset)
Balance at June 30, 2020 1,995,238 $ 1,170,491 $ 824,747 $ Changes in the year:

Interest on the total pension liability 35,526 - 35,526 Differences between actual and expected experience 106,639 - 106,639 Changes in assumptions Changes in benefit terms 72,660 - 72,660 Contribution - City - 319,025 (319,025) Contribution - employer - - - Contribution - employees - - - Net investment income - 5,501 (5,501) Benefit payments, including refunds of employee contributions (401,991) (401,991) - Net changes (187,166) (77,465) (109,701) Balance at June 30, 2021 1,808,072 $ 1,093,026 $ 715,046 $ Plan fiduciary net position as a percentage of the total pension liability 60.45% Increase (Decrease)
Increase (Decrease)

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
128

11. DEFINED BENEFIT PENSION PLANS, Continued
B. Other City Pension Plans, Continued
V. Changes in the Net Pension Li ability of Each Plan, Continued Sensitivity of the Net Pension Liability to Changes in the Discount Rate. The following presents the net pension liability of the City for each of the Plans, calculated using the discount rate as well as what the City’s net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower or 1-percentage-point higher than the current rate:

VI. Actuarially Determined Contributions
As of the June 30, 2020, actuarial valuations used to calculate the actuarially determined contributions (ADC) for each Plan, the ADC’s were determined using the entry-age normal cost method and the assumptions in Note 11B above.

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
129

11. DEFINED BENEFIT PENSION PLANS, Continued
B. Other City Pension Plans, Continued
VI. Actuarially Determined Contributions, Continued
For the Police and Firemen’s Pension Plan, the City’s contribution policy is to annually contribute an amount equal to (1) amortization of the unfunded liabi lity as a level-dollar over a 10-year closed period as of July 1, 2013, plus (2) future gains and losses amortized over the same period, but not less than five years. Over the past five years, the City has contributed an average of 97% of the Actuarially Determined Contribution.

For the General Pension Plan, the City’s contribution policy is to annually contribute an amount equal to (1) amortization of the unfunded liability as a level-doll ar over a 6-year closed period as of July 1, 2013, plus (2) future gains and losses amortized over the same period, but not less than five years. Over the past five years, the City has contributed an average of 78% of the Actuarially Determined Contribution.

For the Garfield Pension Plan, the City’s contribution policy is to annually contribute an amount equal to (1) amortization of the unfunded liability as a level-doll ar over a 7-year closed period as of July 1, 2013, plus (2) future gains and losses amortized over the same period, but not less than five years. Over the past five years, the City has contributed an average of 113% of the Actuarially Determined Contribution.

The Actuarially Determined Contribution and the actual contributions for each Plan for the year ended June 30, 2021 are presented below:

VII. Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions For the year ended June 30, 2021, the City recognized pension expense for each of the Plans as follows:

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
130

11. DEFINED BENEFIT PENSION PLANS, Continued
B. Other City Pension Plans, Continued
VII. Pension Expenses and Deferred Outflows/Inflo ws of Resources Related to Pensions, Continued At June 30, 2021, the City reported deferred outflo ws of resources and deferred inflows of resources related to pensions for these Plans from the following sources:

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

VIII. Plan Financial Statements
The Statement of Net Position for the Plans at June 30, 2021 follows:

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
131

11. DEFINED BENEFIT PENSION PLANS, Continued
B. Other City Pension Plans, Continued
VIII. Plan Financial Statements, Continued
The Statement of Changes in Plan Net Position for the year ended June 30, 2021 follows:

IX. PARS Defined Contribution Plan
Effective July 1, 2014, the City contracted with the Public Agency Retirement System (PARS), to sponsor a Section PARS 457 FICA Alternative Retirement Plan created in accordance with IRC Sections 3121(b) (7) (F) and 457(b), which is a qualified defined contributi on pension plan covering all eligible part-time, seasonal and temporary employees of the City on that date and hired thereafter.

The Plan requires these employees to contribute 6.2% and the City to contribute 1.3% of the employees pay plus administration costs. The City’s required contributions of $15,534 and the employees’ required contributions of $74,085 were made during the fiscal year ended June 30, 2021.

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
132

12. OTHER POSTEMPLOYMENT BENEFITS
The following is a summary of the City’s OPEB amounts for the year ended June 30, 2021:

A. General Information about the City’s Other Post Employment Benefit (OPEB) Plans Plan Description - In order to qualify for postemployment medical and dental benefits an employee must retire from the City and maintain enrollment in one of the City’s eligible health plans. The City pays a portion of the CalPERS premiums for retirees an d their dependents that vary by employment classification. In addition, the following eligibility ru les and contribution requirements apply for future retirees, followed by current retirees. The City has two plans:

City OPEB Plan
The City is the Plan administrator, while PARS admi nisters the investment trust. The City OPEB Plan does not issue separate financial statements. PARS issues a publicly available financial report that includes financial statements and required supplementary information. That report may be obtained from Public Agency Retirement Services, 4350 Von Karman Avenue, Suite 100, Newport Beach, CA, 92660.

RPOA OPEB Plan
The City of Richmond’s Police Officers Association (RPOA) Plan was established during fiscal year 2019 and the RPOA OPEB Plan joined the California Employers’ Retiree Benefit Trust (CERBT), an agent multiple-employer plan administered by CALPERS, consisting of an aggregation of single- employer plans. RPOA members who were actively employed as of January 1, 2017 transferred from the City OPEB Plan to the RPOA OPEB Plan. The CERBT issues a pu blicly available financial report that includes financial statements and required supplementary info rmation. That report may be obtained from the California Public Employees’ Retirement System, CERBT, P.O. Box 942703, Sacramento, CA 94229-2703.

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
133

12. OTHER POSTEMPLOYMENT BENEFITS
A. General Information about the City’s Other Post Employment Benefit (OPEB) Plans, Continued A summary of the City OPEB Plan provisions follows:

Classification Eligibility (Age / Service Years) Monthly Premium Paid by City Before/After Medicare Eligibility
Employee Monthly
Contribution (1)
SEIU Local 1021 Service Retirement:
50/20, 51/18, 52/16, 53/14,
54/12, 55/10
Disability Retirement: any age/10
years service
Retiree only or surviving spouse: the lesser of $435 and medical premium Retiree +1 or more: the lesser of $567 and medical premium
Plus PEMHCA Minimum: $136
Retired on or after 7/1/1995: Reimbursement allowed
towards non-PERS plans
None
IFPTE, Miscellaneous Executive
Management, City Council
Service Retirement: Same as SEIU Retiree only or surviving spouse: the lesser of $435 and medical premium Retiree +1 or more: the lesser of $567 and medical premium
Plus PEMHCA Minimum: $136
Effective 1/1/2017: $50
Effective 1/1/2018: $100
Fire Local 188 35/15 Percentage of premium (medical premium minus PEMHCA minimum) for retiree / dependents/surviving spouse up to premium for coverage. Percentage is 90%, increased to
100% after 27 years of service.

Total City contribution, excluding PEMHCA minimum, is
capped at Kaiser non- Medicare eligible premium for
coverage selected.

Plus PEMHCA minimum: $136
Effective 1/1/2017: $200
Effective 1/1/2018: $300
Effective 7/1/2019: $400
Fire Management and Fire Executive
Management
35/15 Percentage of premium (medical premium minus PEMHCA minimum) for retiree/dependents/surviving spouse up to
premium for coverage. Percentage is 80%, increased to 90% after 15 years of service and 100% after 25 years of service.

Total City contribution, excluding PEMHCA minimum, is
capped at Kaiser non-Medicare eligible premium for
coverage selected.

Plus PEMHCA minimum: $136
Effective 1/1/2017: $200
Effective 1/1/2018: $300
Effective 7/1/2019: $400
Police Widows Death in line of duty Full premium of medical, dental and vision None Police Management and Police
Executive Management
50/20, 51/18, 52/16, 53/14,
54/12, 55/10
Service includes non City service
Minimum 5 years City Service
Percentage of premium (medical premium minus PEMHCA
minimum) for retiree/dependents/surviving spouse up to
Kaiser (1) (Pre Medicare) and 2nd highest premium plan
(post Medicare). Percentage is 65% after 10 years of service, increased to 75% after 20 years of service, and 100% after 25 years of service.

Effective 7/1/2017: $300
Effective 7/1/2018: $425
Effective 7/1/2019: $525
Plan Provisions for Future Retirees
(1) Prior to January 1, 2017, active Employees were not required to make monthly contributions.

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
134

12. OTHER POSTEMPLOYMENT BENEFITS
A. General Information about the City’s Other Post Employment Benefit (OPEB) Plans, Continued Classification Subgroup
Retired July 1, 2007 or later
Retired prior to July 1, 2007
Retired July 1, 2007 or later
Retired November 5, 1999 to June
30, 2007
Retired before November 5, 1999
Fire Local 188
Fire Management Retire on or after 7/1/2006
Retire before 7/1/2006
Same as future retirees
Same as future retirees
Eligible at 35/15
Same as future retirees, but caps are:

Percentage of premium for retiree/dependents/surviving spouse up to Kaiser non- Medicare eligible premium for coverage selected. Percentage is 90%, increased to 100% after 27 years of service.

Plan Provisions for Current Retirees
SEIU Local 1021
IFPTE, Miscellaneous Executive
Management
Monthly Premium Reimbursement Before/After Medicare Eligibility Same as future retirees
Same as future retirees, but caps are:

Retiree only or surviving spouse: $224/$182
Retiree +1 or more: $344/$284
Same as future retirees
Same as future retirees, but caps are:

Retiree only or surviving spouse: $224/$182
Retiree +1 or more: $344/$284
Same as future retirees, but caps are:

Retiree only or surviving spouse: $124/$82
Retiree +1 or more: $244/$184

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
135

12. OTHER POSTEMPLOYMENT BENEFITS
A. General Information about the City’s Other Post Employment Benefit (OPEB) Plans, Continued Classification Subgroup
Retire on or after 7/1/2008 but
before 1/1/2017
Retired between 7/1/2004 and
6/30/2008
Retired between 7/1/1997 and
6/30/2004
Retired between 7/1/1994 and
6/30/1997
Retired before 7/1/1994 Plus PEMHCA minimum: $136 Percentage of premium (medical premium minus PEMHCA minimum) for retiree/dependents/surviving spouse including dental and vision. Percentage is 65% for 10-19 years of service, increased to 75% after 20 years of service, and 100% after 27 years of service
Reimbursement, excluding the PEMHCA minimum, capped at $210 for single coverage and $300 for 2-party coverage
Premium paid for dental and vision.

Plus PEMHCA minimum: $136
Plan Provisions for Current Retirees (Continued)
Richmond Police Officer Association
(RPOA)
Monthly Premium Reimbursement Before/After Medicare Eligibility Lesser of: percentage of premium for retiree/dependents/surviving spouse times medical, dental, and vision premium or percentage of premium for retiree/dependents/surviving spouse but no more than $827 per month, minus dental and vision premiums. Percenta
ge is 50% after 10 years of service, increased to 90% after 15 years of service, and 100% after 25 years of service PEMHCA minimum
Lesser of: percentage of premium for retiree/dependents/surviving spouse times medical premium or percentage of premium for retiree/dependents/surviving spouse but no more than $827 per month, minus dental and vision premiums. Percentage is 50% after 10 years of service, increased to 90% after 15 years of service, and 100% after 25 years of service
City also pays PEMHCA minimum.

Reimbursement capped at $614.

Lesser of: percentage of premium for retiree/dependents/surviving spouse times medical premium minus PEMHCA minimum or percentage of premium for retiree/dependents/surviving spouse but no more than $827 per month, minus dental and vision premiums. Percenta
ge is 50% after 10 years of service, increased to 90% after 15 years of service, and 100% after 25 years of service Plus PEMHCA Minimum: $136 City also pays PEMHCA minimum.

Reimbursement capped at $550.

Percentage of premium (medical premium minus PEMHCA minimum) for retiree/dependents/surviving spouse including dental and vision. Percentage is 65% for 10-19 years of service, increased to 75% after 20 years of service, and 100% after 27 years of service
Premium paid for dental and vision.

Plus PEMHCA minimum $136

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
136

12. OTHER POSTEMPLOYMENT BENEFITS
A. General Information about the City’s Other Post Employment Benefit (OPEB) Plans, Continued A summary of the RPOA OPEB Plan provisions follows:

Classification Subgroup
Retired on or after 7/1/2008
Retired between 1/1/1995 (1) and
6/30/2008
Plan Provisions for Current Retirees (Continued)
1) The City did provide medical premium benefits with single and 2-party caps for Police Management that retired prior to January 1, 1995, and as of June 30, 2020 there were two retirees receiving such benefits
Police Management and Police
Executive Management
Monthly Premium Reimbursement Before/After Medicare Eligibility Same as future retirees
Percentage of premium (medical premium minus PEMHCA minimum) for retiree/dependents/surviving spouse. Percentage is 65% for 10-19 years of service, increased to 75% after 20 years of service, and 100% after 27 years of service.

Retired after 1/1/2007 - Reimbursement capped at Kaiser premium, excluding the PEMHCA minimum, for pre-Medicare and 2nd highest premium plan for post- Medicare for coverage selected
Retired on or before 1/1/2007 - Reimbursement capped at 2nd highest premium plan, excluding the PEMHCA minimum, for coverage selected
Retired on or after 7/1/1995: Reimbursement allowed towards non-PERS plans NOTE: PEMHCA is billed to employers for all CalPERS medical plans. if a member is not enrolled in a PERS plan the employer is not billed.

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
137

12. OTHER POSTEMPLOYMENT BENEFITS, Continued
A. General Information about the City’s Other Post Employment Benefit (OPEB) Plans, Continued For retirees eligible to continue health benefits, but failing to meet the criterion in the tables above, the City pays the Public Employees Medical and Hospit al Care Act (PEMHCA) minimum, which is $136 in 2021.

City OPEB Plan Membership – As described above, Plan membership varies based on different employee bargaining groups. As of the June 30, 2019 valuatio n date, membership in the City OPEB Plan consisted of the following:

RPOA Plan Membership – As of the June 30, 2019 valuation date, membership in the RPOA OPEB Plan consisted of the following:

B. Funding Policy and Actuarial Assumptions
City OPEB Plan
Funding Policy – During the year ended June 30, 2008, the City joined the Public Agencies Post- Retirement Health Care Defined Benefit Plan, an agen t multiple employer trust administered by Public Agency Retirement Services (PARS). The balance in the City’s PARS trust account as of June 30, 2021 was $32,439,802.

The City’s policy is to partially prefund these benefits by accumulating assets with PARS discussed above along with making pay-as-you-go payments pursuant to Resolution No. 52-06 of June 27, 2006. In July 2016, the City adopted an additional funding policy to place into the PARS trust half of any one-time revenues and half of any year-end surplus in excess of the City’s minimum reserve policy (15%) in an effort to pay down the unfunded lia bility. The City did not make any additional transfers to the PARS Trust in fiscal year 2021.

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
138

12. OTHER POSTEMPLOYMENT BENEFITS, Continued
B. Funding Policy and Actuarial Assumptions, Continued
RPOA OPEB Plan
A new Richmond Police Officers Association (RPOA) contract was implemented on January 17, 2017. The new RPOA plan includes members who were actively employed as of the January 17, 2017 contract date.

The RPOA members were transferred from the OPEB Plan to the new RPOA OPEB Plan during fiscal year 2021.

Funding Policy – The RPOA plan has assets designated for OPEB. These assets are invested in California Employers' Retiree Benefit Trust (CERBT) Strategy 2, which is a qualified irrevocable trust. Annual contributions by the City are made on an ad hoc basis as funds are available. Benefit payments are not expected to be made from the trust in the near future. The City currently pays the annual retiree benefit payments using its general assets plus the annual active member contributions.

The balance in the CERBT trust account was $6,307,879 as of June 30, 2021.

Actuarial Assumptions – The total OPEB liability for each plan was determined by an actuarial valuation as of June 30, 2019 rolled forward to June 30, 2021 using standard update procedures. The City OPEB plan valuation used the following actuarial assumptions a pplied to all periods included in the measurement, unless otherwise specified:

Actuarial Assumptions
Valuation Date June 30, 2019
Measurement Date June 30, 2021
Actuarial Cost Method Entry Age Normal Cost, level percent of pay Actuarial Assumptions:

Discount Rate 5.75%
Inflation 2.50%
CPI Medical Care 3.75%
Payroll Growth 2.75%
Investment Rate of Return 5.75%
Index Rate for 20 year, tax exempt
municipal bonds

1.92%
Mortality Based on assumptions for Public A
gency Miscellaneous, Police and Fire members
published in the December 2017 CalPERS Experience Study.

Healthcare Cost Trend Rates:

Health - Not Medicare Eligible 6.40% for FY2020, gradually decreasing over several decades to an ultimate rate of 4% in FY2076 and later years
Health - Medicare Eligible 5.10% for 2020, 5.10% for 2021, 5.10% for 2022, 5.20% for 2023 and 5.20% for 2024-2051, transitioning to ultimate rate of 4.00% in 2076 and further years Dental To increase 3.75% annually
Vision To increase 2.75% annually

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
139

12. OTHER POSTEMPLOYMENT BENEFITS, Continued
B. Funding Policy and Actuarial Assumptions, Continued
The RPOA OPEB Plan valuation used the following actuarial assumptions applied to all periods included in the measurement, unless otherwise specified:

Discount rate – The discount rate used to measure the total City OPEB liability was 5.75% for the City OPEB Plan and 5.50% for the RPOA OPEB Plan. 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 OPEB plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long term expected rate of return on City OPEB plan investments was applied to all periods of projected benefit payments to determine the total City OPEB liability.

Actuarial Assumptions
Valuation Date June 30, 2019
Measurement Date June 30, 2021
Actuarial Cost Method Entry Age Normal Cost, level percent of pay Actuarial Assumptions:

Discount Rate 5.50%
Inflation 2.50%
CPI Medical Care 3.75%
Payroll Growth 2.75%
Investment Rate of Return 5.50%
Index Rate for 20 year, tax exempt
municipal bonds

1.92%
Mortality Based on assumptions for Public A
gency Police members published in the
December 2017 CalPERS Experience Stud y.

Healthcare Cost Trend Rates:

Health - Not Medicare Eligible 6.40% for FY2020, gradually decreasing over several decades to an ultimate rate of 4% in FY2076 and later years
Health - Medicare Eligible 5.10% for 2020, 5.10% for 2021, 5.10% for 2022, 5.20% for 2023 and 5.20% for 2024-2051, transitionin g to ultimate rate of 4.00% in 2076 and further years Dental To increase 3.75% annually
Vision To increase 2.75% annually

City of Richmond
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
140

12. OTHER POSTEMPLOYMENT BENEFITS, Continued
B. Funding Policy and Actuarial Assumptions, Continued
Generally accepted accounting principles require that the liability discount rate be the single rate that reflects the following:

A. The long-term expected rate of return on City OPEB plan investments that are expected to be used to finance the payment of benefits, to the extent that (1) the City OPEB plan’s fiduciary net position is projected to be sufficient to make projected benefit payments and (2) City OPEB plan assets are expected to be invested using a strategy to achieve that return; and B. A yield or index rate for 20-year, tax-exempt general obligation municipal bonds with an average rating of AA/Aa or higher (or equivalent quality on another rating scale), to the extent that the conditions in A. are not met. The municipal bond rate source used as of June 30, 2021 the Fidelity 20- Year General Obligation AA Municipal Bond Index.

Changes of assumptions since the prior actuarial valuation for the City OPEB Plan were:
x The long-term investment return assumption was changed from 6.50% to 5.75% based on updated capital market assumptions.
x The discount rate was changed fr om 5.76% to 5.75% based on updated expectations of long-term returns on trust assets and 20-year municipal bond rates. x An underlying wage growth rate of 2.75% per year was added to the salary scale table based on a revised understanding of the CalPERS assumption.

City OPEB Plan
Rate of Return – For the year ended June 30, 2021, the annual money-weighted rate of return on City OPEB Trust Fund investments, net of City OPEB plan investment expense, for the City OPEB Plan was 26.66%.

The money weighted rate of return expresses inve stment performance, net of investment expense, adjusted for the changing amounts actually invested.